Review of “FY2020 Results” and “Medium-Term Management Plan FY2020”
First of all, I would like to express my heartfelt impressions to everyone affected by the new Coronavirus disease (COVID-19).
The fiscal year ended March 31, 2020, was the final year of the “Takara Bio Medium-Term Management Plan FY2020” (from FY2018 to FY2020). Takara Bio promoted initiatives to "increase its presence as a global enterprise and regenerative medicine product company, aiming for dramatic growth" as set forth in the overall policy.
Consequently, consolidated net sales for the fiscal year under review declined to ¥34,565 million (Year-on-year ratio 96.4%), due to the business transfer of the AgriBio Unit in the previous fiscal year, etc. despite a year-on-year increase in sales of mainstay research reagents and contract services, as well as the receipt of compensation to jointly develop and exclusively market NY-ESO-1・siTCR™ and CD19・CAR gene therapy agents. The cost of sales decreased to ¥13,459 million (Year-on-year ratio 88.8%) due to a decrease in net sales and changes in the product mix. As a result, gross profit increased to ¥21,105 million (Year-on-year ratio 102.0%). Selling, general and administrative (SG&A) expenses declined to ¥14,830 million (Year-on-year ratio 97.4%), due to a decrease in R&D expenses, etc. Operating profit increased to ¥6,274 million (Year-on-year ratio 114.8%). As a result of the increase in operating profit, ordinary profit increased to ¥6,347 million (Year-on-year ratio 112.1%), income before income taxes and minority interests increased to ¥5,433 million (Year-on-year ratio 112.7%), and net income attributable to owners of the parent increased to ¥3,819 million (Year-on-year ratio 104.4%).
In the medium-term management plan, Takara Bio set numerical targets for net sales of ¥38.5 billion and operating profit of ¥4 billion (announced in May 2017). Net sales fell short of the target due to the business transfer of the AgriBio unit, etc. as described above. However, operating profit significantly exceeded the target mainly due to growth in sales of research reagents to overseas, expansion of CDMO business, and receipt of compensation for the gene therapy business.
“Long-Term Management Plan FY2026”, “Medium-Term Management Plan FY2023”, and outlook for the fiscal year ending March 31, 2021
From this fiscal year, Takara Bio has newly launched its “Long-Term Management Plan FY2026”, which covers the 6-year period ending in fiscal FY2026, and its “Medium-Term Management Plan FY2023”, which covers the 3-year period ending in fiscal 2023. Through its core businesses of “research reagents and scientific instruments businesses” and “CDMO business”, Takara Bio will continue to develop bio-drug discovery platform technologies and aims to be a drug discovery company that continues to create new modalities. Taking into account the negative impact of a decline in R&D activities by researchers, who are its clients, as a result of the temporary impact of the COVID-19 spread, Takara Bio forecasts lower sales and profits in the fiscal year under review, with net sales of ¥33,800 million (Year-on-year ratio 97.8%), operating profit of ¥4,500 million (Year-on-year ratio 71.7%), ordinary profit of ¥4,600 million (Year-on-year ratio 72.5%), and profit attributable to owners of parent of ¥2,600 million (Year-on-year ratio 68.1%). However, the life science industry is expanding worldwide, and the impact is expected to be temporary. In addition, the forecasts do not incorporate some positive factors (increased sales from new PCR testing kit products and contract manufacturing of DNA vaccines), and there is a possibility of a recovery in results. In the future, Takara Bio will promptly disclose information in the event that we are in a position to revise our earnings forecasts.