Recovery in the pharmaceutical business and widening losses in MedTech create a sharp split in FY2026-Q3 performance

For the first half of the fiscal year ending December 2026, reported segment revenue in the pharmaceutical business was ¥8,919 million, up 8.8% year on year, and segment profit was ¥2,734 million. By contrast, the medical devices business reported revenue of ¥3,017 million, down 25.6% year on year, and a segment loss of ¥2,200 million. The medical devices business generated a profit of ¥502 million in the same period of the previous year, so the key issue for Q3 is not only whether revenue grows, but also the extent of the turnaround in profit.

Looking at quarterly changes, the pharmaceutical business improved from a segment loss of ¥2,408 million in Q1 to cumulative segment profit of ¥2,734 million at the interim period, implying a substantial improvement in profit in Q2 on a simple difference basis. The earnings presentation stated that standalone Q2 revenue in the pharmaceutical business was ¥4,654 million, with an operating margin of 19.8% and year-on-year growth of 14.3%. This allows investors to assess whether sales of アイスーリュイ and stronger sales and marketing efforts were effective in the short term.

In the medical devices business, revenue benefited from the consolidation of ZOO LABO, but this was insufficient to offset the revenue decline in the biomaterials business resulting from revisions to the U.S. Medicare system. The earnings presentation also reported a ¥667 million impairment loss related to BB. In Q3, it will be important to determine whether the company can disclose separately, by operating company and product, the sales decline resulting from the Medicare revisions, the impairment and deteriorating profitability of BB, and ZOO LABO's revenue contribution, rather than presenting them as a single item.

The earnings presentation shows four business categories, namely pharmaceuticals, drug discovery, MedTech and Other, while the reportable segments in the earnings summary are centered on the two categories of pharmaceuticals and medical devices. In Q3, it will be necessary to confirm the definitions of the business categories, including あゆみ製薬 and Cullgen following their acquisitions, and to assess the extent to which higher pharmaceutical profit is absorbing MedTech losses after ensuring comparability with the same period of the previous year.