Message from the President
I am Toru Kimura, newly appointed as the Representative Director, President and CEO of Sumitomo Pharma Co., Ltd. as of June 25, 2024.
I would like to report a summary of our Group's business results for the second quarter of the year ended March 31, 2024 (from April 1, 2023 to March 31, 2024) and express my sincere gratitude for your continuing support and understanding.
In FY2023, we announced the Mid-term Business Plan 2027, the ongoing five-year plan that commenced in FY2023, in April 2023 and has pursued business activities accordingly. However, our consolidated revenue was 314.6 billion yen, down 241.0 billion yen year-on-year as revenue growth of ORGOVYX® (therapeutic agent for advanced prostate cancer), MYFEMBREE® (therapeutic agent for uterine fibroids and endometriosis), and GEMTESA® (therapeutic agent for overactive bladder) came below expectations in North American business. Core operating loss was 133.0 billion yen, profit decreased 149.3 billion yen year-on-year, owing chiefly to a decrease in gross profit on account of a revenue decline, despite decreases in selling, general and administrative expenses and research and development expenses mainly stemming from the restructuring of the group companies in North America. In addition, the net loss attributable to owners of the parent was a loss of 315.0 billion yen, profit decreased 240.5 billion yen year-on-year. This was due to the recording impairment losses of 133.5 billion yen and 35.9 billion yen on the part of patent right for MYFEMBREE® and goodwill, respectively, as well as some compounds whose development was discontinued, making for a total of 180.9 billion yen in impairment losses.
In order for the Group to initiate renewed growth in FY2024, we consider turning core operating profit positive as a must-achieve goal, and will steer business management.
Therefore, we will put the greatest focus on maximizing the value of the three key products, ORGOVYX®, MYFEMBREE®, and GEMTESA®, early in North America. Furthermore, we will make concerted efforts to accelerate streamlining by increasing efficiency in organizational operations and trimming costs to the minimum.
In research and development activities, we will carry out the selection and concentration of the pipeline in each area under strict cost controls so that we can allocate our management resources to pipelines that will forge the future of the Group.
In the Oncology area, we will concentrate our resources on DSP-5336 and TP-3654 to continue their development, obtain early approval, and maximize their value. As for DSP-5336, we will start collecting data to apply for approval of its monotherapy as part of the Phase 1/2 clinical study for acute leukemia and consider conducting a clinical study for its adjunctive therapy. As for TP-3654, on the other hand, we will start collecting data for adjunctive therapy with JAK inhibitors as part of the Phase 1/2 clinical study for myelofibrosis.
In the Psychiatry & Neurology area, in a bid to become the first in the world to commercialize iPS cells and realize game-changing treatments, we will steadily move forward with preparation for an application for approval in Japan and a Phase 1/2 clinical study in the U.S. of allogeneic iPS cell-derived dopaminergic neural progenitor cells for Parkinson’s disease.
We believe it important to distribute surpluses in an appropriate manner reflecting any improvement in its performance. Accordingly, a performance-linked dividend hike will be considered in addition to consistent dividend payments.
Pursuant to this dividend policy, during the five-year period of the Mid-term Business Plan 2027 (FY2023-FY2027), we would suspend dividends for FY2023, as negative core operating profit is forecasted. For FY2024, we had expected to resume dividends as core operating profit was expected to return to positive. We also aimed to make a consistent dividend payment thereafter. However, as we recorded core operating loss and a net loss attributable to owners of the parent in FY2023, we suspended dividends in FY2023 in accordance with the dividend policy and given our performance in FY2023.
As for the forecast for FY2024, we expect our revenues to increase by 23.4 billion yen year-on-year to 338.0 billion yen and our core operating profit to increase 134.0 billion yen year-on-year to a profit of 1.0 billion yen due to sales expansion of the three key products. Unfortunately, as this is far below the target core operating profit of 40.0 billion yen laid out in the Mid-term Business Plan 2027, it is to our great regret that we plan to suspend dividends for FY2024, as well. We would like to extend its deepest apologies to its shareholders for the suspension of dividends.
We will work together as one group globally to drive our business strategy and deliver results. We will make every effort to promptly recover our performance and deeply appreciate your kind understanding and continued support.
June 2024