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Roche subsidiary grows into Japan pharma giant

Roche subsidiary grows into Japan pharma giant

Tokyo (SCCIJ) – Chugai, the Japanese unit of Switzerland’s Roche Holding, has become the leading pharmaceutical company in its home market in terms of market value. Analysts attribute this rise partly to a potential coronavirus treatment in the pipeline of its Swiss parent company.

Roche subsidiary grows into Japan pharma giant

The research center of Chugai Pharmaceutical in Kamakura (© Roche)

High profitability

With a surge of about 60 percent, Chugai Pharmaceutical is the best performer among the 225 members of the Nikkei 225 stock index in the first half of this year. The market value of 9.1 trillion yen (85 billion dollars) puts the stock at #7 in a ranking of all Japanese listed companies, only slightly smaller than Sony Corp. at #6 with a market value of 9.3 trillion yen.

As a result, Chugai has also become the largest pharmaceutical company in Japan. Its market value overtook Daiichi Sankyo Co. at the end of 2019 and Takeda Pharmaceutical Co. earlier this year. The momentum can be seen in the fact that Takeda’s revenue of 3.3 trillion yen is almost five times higher than Chugai’s. But investors are looking at the difference in earnings per share. On this basis, Chugai earns almost 200 times more than Takeda.

New treatments

Chugai Pharmaceutical is considered as Japan’s leading oncology company. In May, the U.S. Federal Drug Administration approved a combination therapy of Roche’s tumor drugs Tecentriq and Avastin for liver cancer. This approval already boosted Chugai’s stock. But most of its advance is attributed to Roche’s immune suppressor Actemra. It has been used against arthritis but is now viewed as a potential treatment for critically ill Covid-19 patients.

At the end of May, enrollment started in Japan in Chugai’s Phase 3 clinical trial targeting hospitalized patients with severe Covid-19 pneumonia. At the same time, investors were losing faith in another potential Covid-19 treatment. The drug Avigan of Fujifilm Holdings unexpectedly was not approved quickly because the clinical trials are inconclusive so far.

Merger in 2002

Besides, Chugai Pharmabody Research, a Chugai Group research center in Singapore, has begun joint research on a therapeutic antibody to fight Covid-19, with the Agency for Science, Technology and Research in Singapore. Outside of Japan, Roche is implementing or is expected to initiate multiple clinical trials targeting hospitalized patients with severe Covid-19 pneumonia including a phase 3 study Covacta and a phase 3 study Redacta for a combination of Actemra with Gilead Science’s medicine remdesivir.

In 2002, Chugai had become a unit of Switzerland’s Roche Holding AG through a merger with Roche Nippon. The Swiss parent company holds officially a stake of 61%. Theoretically, less than 39% of its shares can be traded publicly, one of the lowest shares of any Nikkei 225 member. This explains why a Bloomberg report attributed the strong price increase of Chugai’s shares partly to the scarcity of the stock.

Text: Martin Fritz for SCCIJ

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