Slower Growth For Chugai Forecast

A slowdown in earnings growth is forecast for several Japanese pharmaceutical companies by analysts at Lehman Bros. Among these is Chugai, whose fiscal term year-end changes from December to March, they believe, will be one of the factors leading to this.

Sales of Epogin (erythropoietin) for renal anemia are expected to grow, but the analysts estimate its market share will fall 3%-6% from the 65.5% held in the fiscal year 12/94. They explain that the reason for this declining share is the additional indications for renal anemia granted to Kirin and Sankyo's product Espo. Also coming under competitive pressure from Kyowa Hakko's second-generation granulocyte-colony stimulating factor Nen-Up is Chugai's leukopenia drug Neutrogin (lenograstim); the latter's exports, however, are expected to mitigate this.

No new major product launches are planned for fiscal 3/96, and because of the change in fiscal term end, fiscal 3/96 will include the January-March 1996 quarter. Sales during this three-month period will likely slow owing to the upcoming official drug price cuts in April 1966, after which general practitioners and medical institutions can buy the same drugs at a lower price. The analysts forecast year-on-year sales growth of 3%, and because of Chugai's need to maintain a high level of R&D spending, they see operating profit also rising 3% but recurring profit slightly less.