Eisai Co. Surpasses FY 2024 Expectations Amid Challenges

Eisai Co ((JP:4523)) has held its Q4 earnings call. Read on for the main highlights of the call.

Eisai Co. Reports Strong FY 2024 Results Amidst U.S. Market Challenges

Eisai Co. delivered a robust performance in fiscal year 2024, showcasing increased revenue and profit driven by the success of their global brands, particularly LEQEMBI. Despite these positive results, the company faces challenges in the U.S. market, including slow penetration of LEQEMBI and rising costs. While structural reforms and global expansion efforts are promising, competitive pressures and cost management remain significant hurdles.

Record Revenue and Profit for FY 2024

Eisai Co. achieved record financial results for fiscal year 2024, with total revenue reaching ¥789.4 billion, marking a year-over-year increase of ¥47.6 billion. This growth exceeded the company’s forecast, highlighting the strong performance of their global operations.

Strong Performance of Global Brands

The company’s three global brands, LENVIMA, Lemborexant (Dayvigo), and LEQEMBI, collectively generated ¥426.5 billion in revenue, representing a 24% increase compared to the previous year. This underscores the brands’ significant contribution to Eisai’s overall financial success.

LEQEMBI Approval and Global Expansion

LEQEMBI has gained approval in 44 countries and surpassed its full-year revenue forecast, achieving ¥44.3 billion in global revenue for FY 2024. This expansion highlights the drug’s growing acceptance and potential in international markets.

R&D Expense Reduction

Eisai successfully reduced its R&D expenses by 1.6 percentage points, attributed to the closure of inactive research laboratories and a decrease in impairment losses. This strategic move reflects the company’s focus on optimizing operational efficiency.

Structural Reforms in Americas

The completion of structural reforms in the Americas has streamlined Eisai’s sales force and administrative functions, aiming to enhance financial performance. These changes are expected to bolster the company’s competitiveness in the region.

Increased Cost of Sales

The cost of sales rose by 0.5 percentage points, influenced by a one-time decrease in revenue and the impact of the Inflation Reduction Act on Lenvima. This increase underscores the challenges of managing costs amidst regulatory changes.

Challenges in U.S. Market for LEQEMBI

Despite its approval, LEQEMBI’s penetration in the U.S. market has been slower than anticipated. The company faces difficulties in establishing treatment pathways across diverse healthcare systems, delaying the expected demand expansion phase.

SG&A Expenses Increase

Eisai reported a 1.2 percentage point increase in SG&A expenses, driven by continued investment in LEQEMBI and temporary costs associated with U.S. structural reforms. This reflects the company’s commitment to supporting its key products.

LEQEMBI’s Competitive Pressure

Concerns have been raised about competition from other Alzheimer’s treatments, which could impact LEQEMBI’s market share. Eisai must navigate these competitive pressures to maintain its position in the market.

Forward-Looking Guidance

Looking ahead, Eisai forecasts LEQEMBI’s revenue to reach ¥76.5 billion in fiscal 2025, driven by expected demand expansion in key markets like the U.S. and Japan. The company plans to continue investing in LEQEMBI while implementing organizational transformations to enhance efficiency and achieve profitability by fiscal 2026.

In conclusion, Eisai Co.’s earnings call highlighted a year of strong financial performance, driven by their global brands and strategic reforms. While the company faces challenges in the U.S. market and competitive pressures, their forward-looking guidance suggests continued growth and investment in key areas. Investors and stakeholders will be keenly watching how Eisai navigates these challenges to sustain its upward trajectory.