Japanese Drugmaker Chugai Optimistic on 2005 Performance

Medium-sized Japanese drugmaker Chugai is forecasting record profit this year, largely as a result of restructuring and the ongoing impact of its 2002 merger with the local unit of Switzerland's Roche.

Chugai's profit margin increased by roughly 17.5% last year, from 12.6% prior to Roche's acquisition of a 50.1% stake in the company. The 2004 profit estimate of JPY34.1bn (US$322.13mn) is some 8% higher than previously forecast, although broadly in line with market expectations. One-off proceeds of JPY9.3bn (US$87.85mn) from the sale of the company's OTC business to local consumer goods producer Lion Corp in August, as well as solid sales, have also pushed profit above Chugai's earlier estimates.

Accounting for the better-than-expected results, Chugai now forecasts a 15% net profit rise in 2005 to JPY39bn (US$368.45mn). The disposal of its OTC business, in line with its Swiss partner's recent change of focus, is likely to decrease revenue to US$2.78bn this year, although profitability should be underpinned by brisk sales of anaemia treatment Epogin, osteoporosis therapy Evista and better results for Hepatitis C drug Pegasys.