Wakamoto Q1 Revenue Up 12% on Contract Eye-Drop Manufacturing, but Drug Price Cuts Take 7.8 Points Off Gross Margin

More revenue, less gross profit

Wakamoto Pharmaceutical Co., Ltd. (TSE: 4512) published non-consolidated results for the three months to June 30, 2026 on August 5, 2026 under Japanese GAAP. Revenue rose 11.9%, or ¥256 million, to ¥2,425 million, driven by growth in sales of its flagship Kyōryoku Wakamoto product at home and abroad and by increased contract manufacturing of eye drops in the global business.

Gross profit nevertheless fell 6.7%, or ¥68 million, to ¥952 million, which the company attributes chiefly to the effect of Japan's drug price revisions. That is the number that defines the quarter: a 7.8-point contraction in gross margin, from 47.1% to 39.3%, on 11.9% higher revenue. Selling, general and administrative expenses fell 6.5%, or ¥75 million, to ¥1,089 million as the previous year's heavier advertising spending did not repeat.

The net effect was an operating loss of ¥136 million, ¥6 million narrower than the ¥143 million loss a year earlier, and an ordinary loss of ¥107 million, ¥10 million narrower. Below that, an extraordinary gain of ¥152 million on the sale of investment securities lifted the company to a net profit of ¥6 million against a ¥108 million loss, for earnings per share of ¥0.19 against a loss of ¥3.12.

Pharmaceuticals: new products against price cuts

The pharmaceuticals business grew revenue 4.5% to ¥1,150 million. Newer products contributed: a sodium hyaluronate ophthalmic viscoelastic device, whose marketing approval was taken over in November 2025 in the expectation of synergies with the intraocular lens business, and Epinastine Hydrochloride LX Ophthalmic Solution 0.1%, launched in December 2025, both benefited from increased medical-representative activity and closer coordination with wholesalers. Sales of MaQaid ophthalmic injection and similar products fell, however, on price revisions including the clawback of the premium for new drug creation. Against that, Dorzolamide-Timolol combination ophthalmic solution grew as the market shifted toward generics under the selective medical treatment rules for long-listed products introduced in October 2024.

In medical devices, the company is treating this year as the first of a full push behind the multifocal intraocular lens Acriva Trinova Pro, its toric model for astigmatism, and a sub-Tenon injection needle launched last year.

Healthcare steady, global up 42%

The healthcare business grew revenue 4.3% to ¥625 million. The company began new advertising and television sponsorship in June to widen domestic awareness of Kyōryoku Wakamoto, with events arguing the case for starting the product when age-related digestive decline first appears, and worked with retailers on set promotions and samples to capture inbound demand.

The global business was the growth driver, with revenue up 41.7% to ¥600 million. Domestically that came from increased contract manufacturing of eye drops; overseas, from sales of Kyōryoku Wakamoto in Asian markets including Taiwan, an advertising push through Chinese cross-border e-commerce, and exports of MaQaid ophthalmic injection. The group also continues in- and out-licensing activity across Europe, the Americas, Asia and Oceania and is expanding its lactic-acid bacteria business at home and abroad.

Guidance unchanged, and it implies a much stronger rest of the year

Guidance for FY3/2027 is unchanged: revenue of ¥11,000 million (+11.0%), operating profit of ¥200 million (−21.7%), ordinary profit of ¥200 million (−22.0%) and net profit of ¥230 million (+1.2%), for earnings per share of ¥6.62. Reaching a full-year operating profit of ¥200 million from a first-quarter loss of ¥136 million requires ¥336 million of operating profit over the remaining nine months — so the plan is heavily weighted to the rest of the year.

Total assets fell 3.9% from the March year-end to ¥15,857 million and net assets 2.4% to ¥11,718 million, but because assets fell faster the equity ratio rose to 73.9% from 72.8% — an unusually unleveraged balance sheet. Net assets per share were ¥337.66 against ¥346.00. The annual dividend forecast is unchanged at ¥3.50 per share, paid once at year-end.

JapanStockPulse provides informational content only and does not constitute investment advice. Figures are taken from the company's published earnings short report and may be subject to subsequent revision.