Global structure to support international joint clinical trials

「Following the establishment of an Australian subsidiary in 2024, the Company is considering and pursuing cooperation with local CROs or the establishment of its own bases in regions where the Group currently has no bases, including South America and Southeast Asia, particularly to meet customer needs in Europe and the United States.」

「In the United States, the Company has received preliminary agreement to accept multiple large-scale international joint clinical trials involving the United States, Europe and Australia and is proceeding with contract execution. Some contracts have been completed, added to the order backlog and contributed to revenue.」

「In Europe, the Company is beginning to see sales benefits from strengthened coordination with its U.S. operations, but these have not yet contributed to revenue growth for the current fiscal year, resulting in a year-on-year revenue decline. On the earnings side, the operating loss narrowed as a result of cost reductions. Inquiries have recently been increasing, and the Company is strengthening its structure by hiring sales personnel in Europe and will focus on expanding orders.」

「To meet development needs for vaccines, treatments and other products targeting seasonal and geographically specific diseases, we will establish a structure capable of conducting development not only in the Northern Hemisphere, where we currently have many bases, but also in the Southern Hemisphere. Our U.S. subsidiary already conducts contracted trials in partnership with CROs in South America and Australia. In Australia, where preferential tax measures for biotechnology startups and active efforts to attract clinical trials are in place, inquiries from clients are increasing, and we aim to establish our own base there.」

「The Company will further strengthen coordination with its U.S. operations and global sales synergies to expand its acquisition of new projects, including European projects, from U.S. companies.」

「To address the deterioration in economic conditions in Europe, the Company will further strengthen coordination with its U.S. operations and global sales synergies to expand its acquisition of new projects, including European projects, from U.S. companies.」

「In Europe, revenue declined year on year and the Company reported an operating loss due to the cancellation of existing trials, postponements in starting new projects and progress in existing trials falling below expectations. The European economy faces concerns about deterioration in economic conditions because of higher energy prices resulting from the prolonged Russia-Ukraine war and other factors, continued high inflation and the high interest rates introduced in response. The Company will further strengthen coordination with its U.S. operations and global sales synergies to expand its acquisition of trial contracts, including European trials, from U.S. companies.」

「The aforementioned large-scale trial began in the second half of July and has since progressed generally smoothly. In addition, the start of other new projects and increased workloads resulting from contract changes have kept staff utilization at a high level.」

「Demand for clinical trials from pharmaceutical-related companies in Europe and the United States remains strong, and the order backlog has stayed at a high level. Although coordination took longer than expected, including reallocating clinical trial sites planned for Russia to countries across Europe, the aforementioned large-scale trial began in the second half of July and has since progressed generally smoothly.」

「The Group operates in 18 countries, including Japan, Asia, the United States and Europe, as a global CRO originating in Japan. The business environment continues to differ by region depending on the status of COVID-19 and vaccination progress. However, as Japan recovered and operations in the United States and Europe normalized, the Group’s performance remained strong, with monthly consolidated revenue exceeding ¥1 billion from October 2021 onward. Whereas Japan had previously led the acquisition of global joint clinical trials and overseas projects, projects originating in Europe, the United States and Asia have begun to increase. We believe that global synergies from providing global collaboration and one-stop services across the three regions targeted by the Group—Japan and Asia, Europe, and the United States—have begun to advance to the next stage.」

「The strengthening of the sales division since the previous fiscal year has produced significant results. The Company won multiple projects, including large-scale global projects conducted in Japan, the United States and Europe, and the order backlog expected to contribute to revenue in the current and subsequent fiscal years has increased substantially.」

「As a global CRO originating in Japan, the Company operates in 18 countries, including Japan, Asia, the United States and Europe, as well as Italy, Canada and South Africa.」

「In the United States, despite the severe impact of COVID-19 and differences in the response adopted by each state government, measures were generally taken to keep economic activity going. In addition, pharmaceutical companies, anticipating the end of the pandemic as the clinical trial environment improves and vaccinations begin, have restarted R&D investments that had been temporarily frozen. Inquiries about new projects have therefore increased sharply, and the Company is winning more new orders expected to contribute to future revenue.」

「Against this business backdrop, during the cumulative second quarter of the fiscal year, the Group had expanded into 15 countries across Japan, Asia, the United States and Europe and grown by establishing and expanding its global contract research structure. However, in addition to the continuing global spread of COVID-19 and the resulting stagnation of economic activity, restrictions on visits to medical institutions made some clinical trial operations difficult, while delays in starting clinical trials for newly won projects delayed the recognition of revenue from the order backlog.」

「To meet pharmaceutical companies’ global development needs, the Group has established and expanded a global contract research structure spanning Japan, Asia, the United States and Europe. As a result, the main focus has shifted from Japan alone at the time of establishment to three regions: Japan, the United States and Europe, primarily Germany, France and Spain.」

「In April 2018, the Company’s U.S. subsidiary made Accelovance, Inc., a U.S. CRO, a subsidiary; the company has since changed its name to Linical Accelovance America, Inc. This strengthened the Group’s capabilities in the United States, the world’s largest market, and further enhanced its structure for conducting international joint clinical trials centered on three regions: Japan and Asia, the United States, and Europe. In May 2019, the Company also established a new subsidiary in Shanghai, China.」

「Synergies from establishing the Group’s global contract research structure in Japan, Asia, the United States and Europe have also emerged in Group-wide sales activities. Orders have remained strong, including orders for standalone country trials such as global trials for Japanese companies, Japan-U.S. trials for Taiwanese companies and large-scale trials for U.S. companies.」

「In addition, the expansion of the Group’s global contract research structure in Japan, Asia, the United States and Europe and its sales activities enabled it to win multiple new projects, including international joint clinical trials, despite competition from major foreign-affiliated global CROs, and the order backlog increased steadily. In China, a wholly owned subsidiary under the Company’s direct control also began operations and is expected to expand going forward.」

「In addition, the expansion of the Group’s global contract research structure in Japan, Asia, the United States and Europe and its sales activities enabled it to win multiple new projects, including international joint clinical trials, despite competition from major foreign-affiliated global CROs. The order backlog increased steadily as of the end of the first quarter.」

「Regarding current orders, in January 2019 we won a large-scale international joint clinical trial to be conducted in 4 countries—Japan, South Korea, China and Singapore—with some contract execution procedures still in progress. We have also received inquiries about many new projects, including international joint clinical trials involving the United States, Asia and Europe, and sales activities for projects expected to contribute to performance from the next fiscal year onward have become more active. The order backlog has begun to build up substantially. We believe this reflects the emergence of sales benefits from establishing a global contract research structure of a certain scale in Japan, Asia, the United States and Europe through the acquisition of LAA.」

「Regarding current orders, in January 2019 we won a large-scale international joint clinical trial to be conducted in Japan, South Korea and China, with some contract execution procedures still in progress. We have also received inquiries about many new projects, including international joint clinical trials involving the United States, Asia and Europe, and sales activities for projects expected to contribute to performance from the next fiscal year onward have become more active. The order backlog has begun to build up substantially. We believe this reflects the emergence of sales benefits from establishing a global contract research structure of a certain scale in Japan, Asia, the United States and Europe through the acquisition of LAA.」

「At present, in addition to large-scale international joint clinical trials, including those in the United States and China, we are receiving inquiries about many new projects, and sales activities for projects expected to contribute to performance from the end of the current period onward have become more active. We expect the sales benefits of establishing a global contract research structure of a certain scale in Japan, Asia, the United States and Europe through the acquisition of LAA to emerge gradually.」

「In the Group’s CRO business, our continued vigorous efforts to develop a global contract research structure in Japan, Asia, the United States and Europe resulted in an increase in contracts, mainly for international joint clinical trials. Revenue was also contributed by the acquisition of Accelovance, Inc. (now Linical Accelovance America, Inc.), through which the Group incorporated the revenue of that company and its subsidiaries.」

「In April 2018, the Company’s U.S. subsidiary made Accelovance, Inc., a U.S. CRO, a subsidiary, strengthening the Group’s capabilities in the United States, the world’s largest market. This expanded the structure for conducting international joint clinical trials based on three regions: Japan and Asia, the United States, and Europe.」

「In the Group’s CRO business, our continued vigorous efforts to develop a global contract research structure in Japan, Asia, the United States and Europe resulted in an increase in contracts, mainly for international joint clinical trials, which contributed to revenue.」

「In September 2017, LINICAL Europe Holding GmbH, a consolidated subsidiary wholly owned by the Company, established LINICAL Czech Republic s.r.o. as a wholly owned subsidiary in the Czech Republic and made it a consolidated subsidiary. As a result, as of 30 September 2017, the Group consisted of the Company and 13 subsidiaries.」

「In the Group’s CRO business, our continued vigorous efforts to develop a global contract research structure in Japan, Asia, the United States and Europe resulted in an increase in contracts, mainly for international joint clinical trials, which contributed to revenue.」

「In the Group’s CRO business, performance remained strong as we continued to vigorously develop a global contract research structure in Japan, Asia, the United States and Europe, supported by an increase in contracts for international joint clinical trials. Net sales were ¥7,548 million, up 6.1% year on year, and operating income was ¥2,890 million, up 5.4%.」

「In October 2016, LINICAL Europe Holding GmbH, a consolidated subsidiary wholly owned by the company, and its consolidated subsidiary LINICAL Europe GmbH jointly established LINICAL POLAND sp. z o.o., a wholly owned subsidiary, in Poland, which became a consolidated subsidiary. As of 31 December 2016, the group consisted of the company and 12 subsidiaries.」

「In our group's CRO business, we continue to strongly promote the establishment of a global service delivery organization in Japan, Asia, the United States, and Europe. This progress, accompanied by an increase in outsourced international clinical trial projects and growth in the performance of subsidiaries, made a significant contribution to revenue growth. On the profit side, higher revenue absorbed increased personnel expenses and amortization of goodwill, resulting in higher profit. As a result, revenue was ¥3,696 million, up 4.8% year on year, and operating profit was ¥1,503 million, up 2.7%.」

「In our group's CRO business, we continue to strongly promote the establishment of a global service delivery organization in Japan, Asia, the United States, and Europe. This progress, accompanied by an increase in outsourced international clinical trial projects and growth in the performance of subsidiaries, made a significant contribution to revenue.」

「We currently have local subsidiaries in the United States, Germany, France, Spain, the United Kingdom, Croatia, the Netherlands, South Korea, Taiwan, and Singapore. Going forward, we will further strengthen the functions of these local subsidiaries to build an organization capable of supporting international clinical trials.」