Towa Pharmaceutical Co (4553) AI Stock Analysis

• Market Cap: ¥176.93B
• Dividend Yield: 2.14%
• Average Volume (3M): 112.31K
• Price to Earnings (P/E): 8.6
• Beta (1Y): 0.72
• Revenue Growth: 9.32%
• EPS Growth: 30.85%
• Country: JP
• Employees: 4,588
• Sector: Healthcare
• Sector Strength: 45
• Industry: Drug Manufacturers - Specialty & Generic
• EPS (TTM): 115.80
• Shares Outstanding: 51,516,000
• 10 Day Avg. Volume: 138,760
• 30 Day Avg. Volume: 112,306
• PEG Ratio: 0.40
• Price to Book (P/B): 0.77
• Price to Sales (P/S): 0.51
• P/FCF Ratio: -24.72
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: N/A
• Price Target Upside: N/A
• Rating Consensus: N/A
• Number of Analyst Covering: 0
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 81 Outperform
• Price Target: ¥4,152.00 ▲(14.70% Upside)

Towa Pharmaceutical Co's stock is rated highly due to strong technical indicators and attractive valuation metrics. The financial performance is solid, but negative free cash flow warrants attention. The absence of earnings call data and corporate events does not impact the score.

Positive Factors

Strong revenue growth

Reported 13.9% revenue growth in 2025 shows durable top-line momentum driven by generic launches and market share gains. Sustained growth supports scale economies, reinvestment in manufacturing capacity and lifecycle management, lowering execution risk over 2-6 months.

Healthy margin profile

A 36.5% gross margin and 18.5% EBITDA margin reflect effective cost control and manufacturing efficiency. In-house production and regulatory/quality capabilities underpin margin durability, providing a buffer versus pricing pressure and supporting steady operational cash generation.

Strong cash conversion

Operating cash flow exceeding reported earnings (OCF/Net Income = 1.23) indicates solid cash generation from core operations. Durable cash conversion enhances ability to fund working capital, service debt and sustain operations even during cyclical headwinds.

Negative Factors

Negative free cash flow

Persistent negative free cash flow driven by high capex can strain liquidity and constrain strategic optionality. If capital investments do not produce timely cash returns, the company may face pressure on dividends, debt servicing or incremental financing over the medium term.

Moderate leverage

A debt/equity ratio of 1.35 denotes moderate leverage for a generics manufacturer. Elevated indebtedness raises interest and refinancing risk, reducing financial flexibility to fund launches or absorb pricing shocks if operating cash flow weakens or capex remains high.

Regulatory and market concentration risk

Revenue dependence on the Japanese generics market exposes the company to regulatory pricing and reimbursement changes. Structural policy shifts or tendering dynamics in Japan could compress margins and growth absent geographic diversification or differentiated product positioning.

Towa Pharmaceutical Co Business Overview & Revenue Model

Company Description

Towa Pharmaceutical Co., Ltd., together with its subsidiaries, researches, develops, produces, and sells ethical drugs, active pharmaceutical ingredients, and intermediates in Japan. The company provides its products in the therapeutic areas of diabetes, digestive system, nervous system, and allergic diseases, as well as vitamins, antibiotics, and oncology products. It had a portfolio of approximately 700 drug products. Towa Pharmaceutical Co., Ltd. was founded in 1951 and is headquartered in Osaka, Japan.

How the Company Makes Money

Towa Pharmaceutical generates revenue primarily through the sale of generic drugs and ethical pharmaceuticals. Its revenue model is largely based on producing high-quality, cost-effective medications that cater to the needs of healthcare providers and patients. Key revenue streams include the sale of prescription medications, which account for a significant portion of its earnings. Additionally, Towa collaborates with healthcare organizations and other pharmaceutical companies for product development and distribution, which can lead to licensing agreements and joint ventures that further enhance its revenue. The company's focus on R&D allows it to expand its product portfolio, thereby increasing market share and driving sales growth. Factors contributing to its earnings include the rising demand for generic medications, strategic partnerships, and an emphasis on innovation in pharmaceutical formulations.

Towa Pharmaceutical Co Financial Statement Overview

Summary

Towa Pharmaceutical Co shows strong revenue and profit growth with effective cost management. However, negative free cash flow due to high capital expenditures poses a risk to long-term financial stability. Moderate leverage is manageable but requires careful monitoring.

Income Statement

Towa Pharmaceutical Co has demonstrated strong revenue growth with a Revenue Growth Rate of 13.9% in 2025, indicating an upward trend over recent years. The Gross Profit Margin is healthy at 36.5%, showing effective cost management. The Net Profit Margin stands at 7.3%, which is competitive within the industry. While the EBIT Margin improved to 8.9%, up from previous years, the EBITDA Margin at 18.5% reflects substantial non-cash expenses, suggesting room for improvement.

Balance Sheet

The Debt-to-Equity Ratio is 1.35, which indicates moderate leverage and is manageable given the industry's capital demands. Return on Equity (ROE) is robust at 11.1%, demonstrating effective use of shareholders' equity to generate profits. The Equity Ratio is stable at 36.5%, showing a solid equity base relative to total assets, although there is a need to monitor debt levels.

Cash Flow

Operating Cash Flow to Net Income Ratio is 1.23, indicating strong cash generation relative to reported earnings. However, the Free Cash Flow is negative, primarily due to high capital expenditures, leading to a negative Free Cash Flow to Net Income Ratio. This suggests potential liquidity pressures if capital investments don't translate into future cash flows.

Breakdown	TTM	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	266.67B	259.59B	227.93B	208.86B	165.62B	154.90B
Gross Profit	97.02B	94.73B	81.38B	72.71B	70.19B	65.45B
EBITDA	51.12B	48.05B	35.54B	25.14B	29.49B	29.34B
Net Income	20.64B	18.99B	16.17B	2.20B	15.91B	13.96B
Balance Sheet
Total Assets	480.53B	470.82B	430.65B	371.35B	329.94B	245.67B
Cash, Cash Equivalents and Short-Term Investments	49.58B	45.47B	29.65B	24.26B	32.83B	22.91B
Total Debt	236.26B	232.37B	202.36B	173.06B	144.13B	84.77B
Total Liabilities	300.67B	299.19B	274.76B	234.45B	197.77B	129.07B
Stockholders Equity	179.86B	171.63B	155.89B	136.89B	132.17B	116.60B
Cash Flow
Free Cash Flow	-1.13B	-5.33B	-31.11B	-27.93B	8.55B	2.13B
Operating Cash Flow	28.84B	23.40B	8.21B	2.54B	22.13B	12.01B
Investing Cash Flow	-33.81B	-31.29B	-40.39B	-30.28B	-59.73B	-9.10B
Financing Cash Flow	11.62B	21.57B	35.41B	17.48B	46.54B	184.00M

Towa Pharmaceutical Co Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 3620.00
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:4553, the sentiment is Neutral. The current price of 3620 is below the 20-day moving average (MA) of 3620.25, above the 50-day MA of 3519.30, and above the 200-day MA of 3063.07, indicating a neutral trend. The MACD of 18.61 indicates Positive momentum. The RSI at 50.49 is Neutral, neither overbought nor oversold. The STOCH value of 28.73 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for JP:4553.

Towa Pharmaceutical Co Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
4553	81 Outperform	¥176.93B	8.57	11.81%	2.14%	9.32%	30.85%
4521	80 Outperform	¥146.42B	213.21	0.44%	4.16%	-5.99%	-96.04%
4569	69 Neutral	¥85.28B	9.98	―	3.36%	11.65%	93.46%
4547	66 Neutral	¥187.89B	13.63	6.57%	2.48%	13.11%	41.57%
4887	63 Neutral	¥235.75B	-235.61	―	2.28%	12.78%	-105.43%
Sector *	51 Neutral	$7.86B	-0.30	-43.30%	2.27%	22.53%	-2.21%

Towa Pharmaceutical Co Corporate Events

Towa and Otsuka Forge Manufacturing Alliance to Stabilize Supply of Off‑Patent Drugs

Towa Pharmaceutical has entered into a basic agreement with Otsuka Pharmaceutical to establish a strategic collaborative framework for pharmaceutical manufacturing focused on long-listed and essential off-patent products. Under the collaboration, Towa will take on transfer and contract manufacturing of selected Otsuka drugs and use Otsuka’s licenses to develop generic versions, creating a mutual backup production system intended to address Japan’s growing problem of unstable pharmaceutical supply. While the company expects minimal impact on earnings for the fiscal year ending March 2026, management sees the partnership as a medium- to long-term driver of performance and a significant step in breaking down traditional barriers between brand-name and generic drug manufacturers, with implications for supply security and broader industry cooperation.

The most recent analyst rating on (JP:4553) stock is a Hold with a Yen3801.00 price target. To see the full list of analyst forecasts on Towa Pharmaceutical Co stock, see the JP:4553 Stock Forecast page.

Towa Pharmaceutical Reports Strong Financial Performance for H1 2025

Towa Pharmaceutical Co., Ltd. reported its consolidated financial results for the six months ending September 30, 2025, showing a 5.7% increase in net sales compared to the previous year. Despite a slight drop in operating profit, the company experienced a significant rise in ordinary profit and profit attributable to owners of the parent, indicating strong financial performance. The company maintained its dividend forecast and showed a stable financial position with increased equity. This performance underscores Towa Pharmaceutical’s robust market positioning and potential positive implications for stakeholders.

The most recent analyst rating on (JP:4553) stock is a Hold with a Yen3110.00 price target. To see the full list of analyst forecasts on Towa Pharmaceutical Co stock, see the JP:4553 Stock Forecast page.