Summary

Rohto Pharmaceutical Co., Ltd. is a comprehensive pharmaceutical manufacturer specializing in the health and beauty care sector, offering a diverse product line centered on eye care and skin care. In particular, within the OTC pharmaceutical market, the “V Rohto” brand boasts the top market share in Japan and is widely recognized by consumers.Roto Pharmaceutical leverages its in-house R&D capabilities to differentiate itself from competitors by supplying highly functional new products to the market. With “Well-being” as its corporate philosophy, the company aims to extend customers’ healthy lifespans and focuses on providing products and services that contribute to overall lifestyle.The company’s business is divided into four major segments: eye care, skincare, oral medications, and regenerative medicine, with skincare accounting for approximately 60% of total sales. Rohto Pharmaceutical is strengthening its international expansion in over 110 countries, in addition to the domestic market, with particular growth expected in the Asian market.For the fiscal year ending March 2026, the company reported sales of 343.7 billion yen and operating profit of 41.1 billion yen, representing increases of 11.4% and 7.5%, respectively, compared to the same period the previous year.This growth in performance is driven by the launch of new products and the strong performance of existing products, with the company’s competitiveness increasing particularly in the eye care market. In its mid-term management plan, Rohto Pharmaceutical has positioned the maximization of profits in its core businesses, the establishment of new business areas, and the utilization of phytoscience as its strategic pillars, aiming for sustainable growth.Furthermore, the company is strengthening its ESG initiatives and advancing the development of environmentally conscious products and the establishment of sustainable business models. For investors, Rohto Pharmaceutical’s growth strategy and stable dividend policy are attractive, and further improvement in performance is expected. The company is expected to pursue sustainable growth while taking appropriate measures to address risk factors.

1. Summary of Cumulative Results for the Fiscal Year Ending March 2026

Rohto Pharmaceutical Co., Ltd.’s consolidated financial results for the cumulative period ending March 2026 (April 2025–March 2026) recorded net sales of 343.7 billion yen and operating income of 41.1 billion yen, representing year-on-year increases of 11.4% and 7.5%, respectively.This marks the third consecutive year of growth, driven primarily by the Asian and European markets. In the Japanese market as well, strong performance of existing products and the launch of new products contributed to sales growth, enhancing the company’s competitiveness in the eye care market.This growth was driven by the launch of a diverse range of products under brands such as “Rohto V5” and “Hada Labo,” with product developments that cater to consumers’ health-conscious trends proving successful. An increase in non-operating income also contributed to higher ordinary income, confirming solid overall performance.Geographically, in addition to growth in the Southeast Asian market, the success of products in the U.S. market has come into focus, brightening the outlook for future performance.In the income statement, net sales of 343.7 billion yen represent an 11.4% increase compared to the same period last year, while operating profit stood at 41.1 billion yen, a 7.5% increase from the previous period, maintaining stable performance.The operating profit margin stood at 12.0%. While the overall market recovery and sales of new products contributed to this figure, it was impacted by a rise in the cost of goods sold and an increase in selling, general, and administrative expenses.In particular, soaring raw material costs and rising labor expenses are expected to potentially impact future profit margins. The increase in non-operating income was driven by higher dividend income and other gains; ordinary income reached 47.9 billion yen, and net income reached 33.2 billion yen, with further improvement anticipated.The balance sheet as of March 31, 2026, shows total assets of 421.8 billion yen, confirming a stable financial foundation, with current assets of 217.8 billion yen and a healthy current ratio.Cash on hand stands at 79.9 billion yen, indicating ample liquidity, while interest-bearing debt amounts to 50.2 billion yen, and the equity ratio remains at a high level. In the cash flow statement, operating cash flow remained robust at 36.9 billion yen, while investing cash flow was -45.3 billion yen, reflecting active investment in growth.Free cash flow exceeded 61.0 billion yen, indicating ample cash on hand. In terms of performance metrics, ROE stands at 13.6%, ROA remains at a high level, and EBITDA is 58,496 million yen with a healthy EBITDA margin of 17.0%.Overall, while Rohto Pharmaceutical is demonstrating stable growth, efforts are needed to secure sustainable profit margins and manage costs efficiently.

2. Earnings Outlook for the Fiscal Year Ending March 2026

The earnings outlook for the fiscal year ending March 2026 projects revenue of 343.7 billion yen, operating profit of 41.1 billion yen, ordinary profit of 47.9 billion yen, and net profit attributable to the parent company of 33.2 billion yen, representing year-on-year increases of 11.4% and 7.5%, respectively.Growth in the Asian market is driving these results, with strong performance of existing products and the launch of new products contributing to the sales growth. In the eye care market, competition is intensifying, and sales of the flagship brand “V Rohto” are strong.In the skincare division, “Hada Labo” is gaining popularity, and demand for functional skincare products is increasing. The operating profit margin is expected to reach 12.0%, though rising raw material costs and increased selling, general, and administrative expenses (SG&A) could have an impact. In particular, the impact of rising raw material costs on profit margins cannot be ignored, and expense management and cost reduction are considered crucial for securing future profits.Furthermore, an increase in non-operating income is expected to boost ordinary profit, leading to solid overall performance. In the cash flow statement for fiscal year 2026, operating cash flow is projected to remain robust at 36.9 billion yen, while free cash flow is expected to exceed 61.0 billion yen, indicating ample cash on hand.Consequently, strong cash liquidity is a positive factor for future funding plans aimed at business expansion. Overall, while Rohto Pharmaceutical demonstrates stable growth, efforts to secure sustainable profit margins and implement efficient cost management are required. In particular, expansion strategies targeting overseas markets and new businesses will likely be key drivers of future growth.

3. Medium- to Long-Term Growth Strategy

Rohto Pharmaceutical has placed “health” at the core of its management and has formulated a medium-term management plan to achieve sustainable growth.The strategic pillars for the period from fiscal 2024 to fiscal 2030 include maximizing profits in core businesses, establishing new business areas, and leveraging phytoscience; these are interrelated and serve as key elements supporting the company’s growth.In the domestic market, the company is focusing on improving the quality of existing products and developing new ones to promote the adoption of eye care and skin care products. It also places a high priority on expanding into overseas markets, with particular expectations for growth in the Asian region. Plans are underway to launch products tailored to regional characteristics through the establishment of local subsidiaries and the expansion of sales channels.Furthermore, the company places significant importance on initiatives in the regenerative medicine field and the promotion of digital healthcare, which are expected to generate new revenue streams. Rohto Pharmaceutical plans to invest a total of 100 billion yen in capital expenditures to establish new production facilities and improve efficiency, thereby building a system capable of meeting rapidly growing demand.The company has also allocated 90 billion yen for research and development, with a strategy focused on developing new products utilizing phytoscience. Specific performance targets have been set to achieve sustainable corporate growth and high profitability, aiming for sales of 415 billion yen and operating profit of 54 billion yen by fiscal year 2030.Appropriate measures to address risk factors are also required; in particular, when entering new markets or introducing new products, understanding regional characteristics and making flexible management decisions are crucial. Rohto Pharmaceutical has demonstrated its commitment to steadily executing strategies aimed at enhancing corporate value while pursuing sustainable growth.

• For the fiscal year ending March 2026, Rohto Pharmaceutical Co., Ltd. recorded cumulative net sales of 343.7 billion yen and operating profit of 41.1 billion yen, representing year-on-year increases of 11.4% and 7.5%, respectively, with growth in the Asian and European markets driving these results.
• For the fiscal year ending March 2026, the company expects revenue of 343.7 billion yen,operating profit of 41.1 billion yen, ordinary profit of 47.9 billion yen, and net profit attributable to the parent company of 33.2 billion yen, all of which are expected to increase year-on-year. While growth in the Asian market and strong performance of flagship brands are expected to drive results, rising raw material costs and increased selling, general, and administrative expenses may impact profit margins.
• Rohto Pharmaceutical has formulated a plan to achieve sustainable growth from fiscal 2024 through fiscal 2030 by maximizing profits in its core businesses and establishing new business areas, with targets of 415 billion yen in revenue and 54 billion yen in operating profit for fiscal 2030

Business Overview

1. Business Model Overview

Rohto Pharmaceutical is a comprehensive pharmaceutical manufacturer specializing in the health and beauty care sector, offering a wide range of products centered on eye care and skin care. Specifically, the company provides a diverse array of products, ranging from OTC eye care products—including eye drops and eye washes—to topical medications, oral medications, and even products in the regenerative medicine field.In particular, within the eye care business, the “V Rohto” brand—which boasts the top market share in Japan—is a key strength and is widely recognized among consumers. In this way, Rohto Pharmaceutical aims to meet the diverse needs of consumers in support of their health and beauty.

Rohto Pharmaceutical’s uniqueness lies in its research and development capabilities for product development. By conducting both production and R&D in-house, the company supplies highly functional new products to the market and differentiates itself from competitors. As a result, it continues to provide products that enjoy high consumer trust.Furthermore, with “Well-being” as its corporate philosophy, the company is committed to extending customers’ healthy lifespans and focuses on providing products and services that contribute to overall lifestyle well-being.

Rohto Pharmaceutical is also strengthening its expansion into international markets, operating in over 110 countries. High growth is particularly anticipated in the Asian market, where the company is developing products that incorporate local needs. Furthermore, the development of new treatments in the field of regenerative medicine is positioned as part of its long-term growth strategy and will serve as a key factor in further enhancing its competitiveness in the market.

2. Major Business Segments

Rohto Pharmaceutical’s business is classified into four major segments: Eye Care, Skin Care, Oral Medicines, and Regenerative Medicine. Each segment addresses distinct market needs and possesses its own revenue streams and growth potential. Specifically, they are as follows:

1. Eye Care:

Brands such as “V Rohto,” which boasts an overwhelming market share in the domestic OTC eye drop market, are widely recognized by consumers. In recent years, the company has strengthened its online sales through expansion into the digital market, thereby increasing its points of contact with consumers.

2. Skincare:

This segment accounts for approximately 60% of sales, with “Hada Labo” serving as the flagship brand. Functional skincare products are gaining popularity, and the company is focusing on evidence-based product development. Against the backdrop of rising social health awareness, the company is maintaining its competitiveness.

3. Oral Medications:

The company primarily handles gastrointestinal medicines and traditional Chinese medicines, with new product development progressing particularly in the health food sector. To meet consumer health needs, the company is expanding its lineup of functional foods and other products.

4. Regenerative Medicine:

This is an emerging field focused on developing treatments utilizing stem cell technology, representing a strategy aimed at long-term growth. It is a key segment for establishing new competitive advantages in the prescription drug market.

Rohto Pharmaceutical’s segments are complementary; for example, the company employs a strategy of enhancing overall brand strength through synergies between its eye care and skin care products.

3. The Company’s Market Position and Competitive Advantages

Rohto Pharmaceutical has established a solid position in the eye care market and maintains a high level of competitiveness through domestic and international brand strategies. In particular, its leadership in the OTC eye drop market is the result of reliability and technological innovation.The company successfully differentiates its products from competitors by incorporating proprietary technologies and know-how into its products and offering unique offerings to the market.

In research and development, the company is working to enhance its competitiveness through the introduction of new technologies and joint development with companies in other industries. In the field of regenerative medicine, in particular, the development of new treatments utilizing cutting-edge technology is underway, and the company anticipates products that will meet the growing health consciousness of consumers. As a result, Rohto Pharmaceutical is recognized as a company that makes significant contributions to society and has earned the trust of the public.

Furthermore, as part of its effective marketing strategy, the company places a strong emphasis on connecting with customers through digital channels. This allows the company to build direct relationships with consumers and establish a system to quickly incorporate customer feedback into product development. Its flexible production system, which enables immediate responses to changing market needs, is another factor contributing to Rohto Pharmaceutical’s competitive advantage in the market.

4. Market Background

The pharmaceutical and healthcare market is expected to continue growing due to Japan’s aging population and declining birthrate, as well as increasing health consciousness. In Japan specifically, there is a growing demand for personal health management, leading to expanding demand for over-the-counter (OTC) medicines. Looking overseas, the Asian market in particular is experiencing rapid growth and has become one of the company’s key investment regions.

Against this market backdrop, Rohto Pharmaceutical is leveraging its proprietary technologies and brand strength to build a framework capable of addressing a wider range of market needs. The “well-being” trend is shifting consumer expectations regarding products and services, and whether companies are prepared to respond has become a critical factor determining market success.

Furthermore, ESG initiatives are being strengthened, and interest in environmentally conscious product development and sustainable business models is growing. Amid this trend, Rohto Pharmaceutical continues its efforts toward realizing a sustainable society, and its management approach, which prioritizes corporate social responsibility, is likely to be a key factor contributing to future growth.

5. Future Outlook

Looking ahead, Rohto Pharmaceutical’s entry into the regenerative medicine sector and strategic business expansion in international markets are drawing attention. In particular, the development of new treatments utilizing stem cell technology could be a key factor in enhancing the company’s future prospects. In addition, further expansion into global markets, particularly the development of sales channels in the Asian market, is an urgent priority.

ESG initiatives are a key factor in strengthening the company’s brand power, and there is a need to address environmental issues and establish a business model based on the Sustainable Development Goals (SDGs). Furthermore, improving efficiency and reducing costs through the promotion of digital transformation (DX), as well as responding quickly to customer needs, will also be key factors in enhancing competitiveness.

Going forward, Rohto Pharmaceutical is expected to move toward a new stage of growth while incorporating these elements. The progress of this strategy will be a key point of interest that investors cannot afford to overlook.

Rohto Pharmaceutical is building a framework to further enhance its valuation by pursuing sustainable growth while adapting to market changes. This chapter has clarified the company’s overall business structure, major segments, competitive advantages, and market context. Based on this, the next chapter will examine performance trends and their evaluation in detail.

Performance Trends

1. Recent Performance Overview

For the fiscal year ended March 2026, Rohto Pharmaceutical Co., Ltd. (hereinafter “Rohto”) reported net sales of 343.7 billion yen and operating profit of 41.1 billion yen, representing increases of 11.4% and 7.5%, respectively, compared to the same period the previous year.This marks the third consecutive year of growth, driven primarily by the Asian and European markets. In the Japanese market as well, strong performance of existing products and the launch of new products have boosted sales, with the company’s competitiveness particularly increasing in the eye care market.

This growth is driven by the launch of a diverse range of products under brands such as “Rohto V5” and “Hada Labo,” with product lines designed to meet consumers' health-conscious needs proving successful. Additionally, an increase in non-operating income contributed to higher ordinary income, confirming solid overall performance.Geographically, in addition to growth in the Southeast Asian market, the success of products in the U.S. market has come into focus, brightening the outlook for future performance.

2. Analysis of the Income Statement

In the income statement for fiscal year 2026, net sales of 343.7 billion yen represent an 11.4% increase compared to the same period last year, while operating profit stood at 41.1 billion yen, a 7.5% increase year-over-year, maintaining stable performance.The operating profit margin stood at 12.0%. While the overall market recovery and sales of new products contributed to this result, it was also impacted by a rise in the cost of goods sold and an increase in selling, general, and administrative expenses. Specifically, surging raw material costs, rising labor costs, and increased promotional expenses are anticipated, which could affect future profit margins.

On the other hand, the increase in non-operating income was driven by higher dividend income and other revenue, resulting in ordinary income of 47.9 billion yen and net income of 33.2 billion yen, with further improvement expected.Although sales of new products have been strong, efforts to manage expenses and reduce costs are considered crucial for future growth. Maintaining profitability in a highly competitive environment will pose a significant challenge.

3. Balance Sheet Analysis

An examination of the balance sheet as of March 31, 2026, reveals total assets of 421.8 billion yen, confirming a stable financial foundation. Current assets stand at 217.8 billion yen, and the current ratio is favorable; notably, cash holdings of 79.9 billion yen underscore the company’s ample liquidity.On the other hand, interest-bearing debt stands at 50.2 billion yen, and with the equity ratio remaining at a high level, the company’s financial health can be described as sound. This position is expected to provide the flexibility needed for future investments.

The increase in fixed assets reflects investments in new manufacturing facilities and technology, indicating that asset management is being conducted with an eye toward future growth. However, proper cash management remains essential, and maintaining healthy cash flow from investments will be a key challenge moving forward. The fact that strong equity supports financial stability is a factor that provides reassurance to investors.

4. Analysis of the Cash Flow Statement

The cash flow statement for fiscal year 2026 shows that operating cash flow remained robust at 36.9 billion yen. This is a key indicator that operating activities remain consistently strong and are supporting business growth.Investing cash flow stands at -45.3 billion yen, indicating that the company is making aggressive investments to drive growth. In particular, investments in new businesses and product development are evident; however, caution is warranted as these may impact short-term cash flow.

Free cash flow exceeded 61 billion yen, and given the ample cash on hand, the company’s strong cash liquidity is a positive factor for future business expansion financing plans. Furthermore, dividend payments remain stable, and the continuation of a corporate policy prioritizing returns to shareholders provides reassurance to investors.

5. Analysis of Financial Ratios

An examination of Rohto Pharmaceutical’s financial metrics reveals that ROE (Return on Equity) reached 13.6%, indicating a stable return of profits to shareholders. ROA (Return on Assets) has also maintained a high level compared to the past few years, with the medical products and over-the-counter (OTC) drug sectors in particular demonstrating steady growth.EBITDA reached 58,496 million yen, with a healthy EBITDA margin of 17.0%.

Against the backdrop of enhanced sales promotion plans and research and development, significant improvement in future performance is highly anticipated. In particular, if effective market strategies focused on long-term growth are implemented, they are likely to contribute to future performance improvements and attract attention from investors.

Overall, while Rohto Pharmaceutical is demonstrating stable growth, the company must implement initiatives to secure sustainable profit margins and manage costs efficiently. In particular, expansion strategies targeting overseas markets and new business ventures will likely be key drivers of future growth. Consequently, it is expected that the perception among investors will solidify that this is a company capable of delivering stable returns from a long-term perspective.

Mid-Term Management Plan and Growth Strategy

1. Business Environment and Challenges

Rohto Pharmaceutical Co., Ltd. has declared that it will conduct its business activities with “health” at the core of its management to achieve sustainable growth.The current business environment is characterized by an aging population, growing health consciousness, and advancing digitalization. In this environment, companies must respond swiftly to new consumer needs. At the same time, maintaining a competitive advantage is becoming increasingly difficult in markets where competition is intensifying.

Despite facing these challenges, Rohto Pharmaceutical has decided to focus its efforts on expanding its business both domestically and internationally, as well as on developing new markets.Clarifying these management challenges forms the foundation of the company’s growth strategy. Furthermore, as environmental issues and ESG (Environmental, Social, and Governance) considerations gain importance, sustainable business operations are essential. In response, Rohto Pharmaceutical has demonstrated a proactive commitment to eco-friendly products and social contribution activities, which is a positive factor for investors.

As the business environment evolves, a strategy is needed to achieve sustainable growth while leveraging the company’s strengths. The mid-term management plan, which outlines specific policies, serves as a crucial roadmap for the company’s future. The ability to respond flexibly to changes in the business environment and accurately identify consumer needs is essential for future growth.

2. Overview of the Strategy

Rohto Pharmaceutical’s mid-term management plan evolves “Rohto Science” and provides a clear vision for the company’s future. In particular, it identifies the maximization of core business profits, the establishment of new business areas, and the utilization of phytoscience as strategic pillars for the period from fiscal 2024 to fiscal 2030.These three pillars are interrelated and constitute key strategies that underpin the company’s sustainable growth.

Regarding core businesses, the company aims to further strengthen its solid foundation in areas such as eye care and skincare, with the goal of securing corresponding revenue. In new fields, the company is expected to enhance its competitive advantage by advancing initiatives in medical domains such as regenerative medicine. This strategy is not merely aimed at expanding market share but is a key measure to enhance the company’s brand strength.

Furthermore, product development through phytoscience demonstrates a new business model that seeks to balance environmental sustainability with social contribution. This multifaceted approach will serve as a catalyst for accelerating the company’s growth while addressing consumers’ health-conscious and environmentally conscious preferences. The alignment of the company’s vision with its clear strategy is expected to contribute to enhanced competitiveness in the future.

3. Key Initiatives (Domestic/Overseas/By Business Segment)

In its mid-term management plan, Rohto Pharmaceutical has established clear priority initiatives for each of its domestic and international business segments. In the domestic market, particular emphasis is placed on initiatives aimed at further expanding the market penetration of eye care and skin care products. Alongside improving the quality of existing products, research and development for new product development is being promoted, with a focus on supplying products that meet consumer needs.

Expansion into overseas markets is also a major focus, with growth particularly anticipated in the Asian region.Against the backdrop of an aging population and rising health awareness, this region presents new business opportunities for Rohto Pharmaceutical. Plans include establishing local subsidiaries and expanding sales channels to introduce products tailored to local needs. Furthermore, by strengthening collaboration with local employees, the company is establishing a framework to implement marketing strategies more swiftly and flexibly.

In terms of business-specific initiatives, strengthening the medical business is a particular priority. The company aims to enter the fields of ophthalmology and dermatology medical devices as well as regenerative medicine, which is expected to create new revenue streams.Furthermore, the company is required to transform its business model through the promotion of digital healthcare and innovation in medical products. By advancing these initiatives, Rohto Pharmaceutical is expected to further enhance its competitiveness in the market and contribute to the company’s growth.

4. Investment Policy (Capital Expenditures / R&D)

In its medium-term management plan, Rohto Pharmaceutical plans to invest a total of 100 billion yen in capital expenditures. As part of this initiative, the company will proceed with the development of new production facilities and the streamlining of existing ones. The goal is to enhance manufacturing capacity while establishing a system capable of meeting rapidly growing demand.In particular, the establishment of manufacturing bases with a focus on the growth of the Asian market is a key measure to strengthen the company’s overall competitiveness.

The company has allocated 90 billion yen for research and development (R&D) and plans to focus on developing new products utilizing phytoscience.To enhance the company’s R&D capabilities, it will strengthen collaboration with universities and specialized research institutions, enabling the rapid creation of products that meet future market needs. Furthermore, the strategy to promote digital transformation (DX) and provide personalized healthcare utilizing customer data is expected to be a major driver of future growth.

The investment policy extends beyond mere improvements in facilities and technology to include transforming corporate culture and pursuing new business models, fostering expectations for sustainable growth through a multifaceted approach. Such an investment strategy also fosters a sense of optimism among investors regarding the company’s future.

5. Results, Expected Effects, and KPIs

Rohto Pharmaceutical’s mid-term management plan sets specific performance targets for fiscal year 2030, aiming for sales of 415 billion yen and operating profit of 54 billion yen. This is expected to drive the company’s sustainable growth and high profitability.KPIs such as net sales, operating profit margin, and return on equity are key indicators that contribute to the company’s goal of “realizing a well-being society,” and achieving them is expected to further strengthen the company’s market influence.

The results of specific initiatives are also crucial, and the success of new businesses and the expansion of market share, in particular, will lead to significant recognition. This plan requires the steady execution of key initiatives, and establishing a unique competitive edge is key, particularly in deepening the company’s technological product capabilities.For investors, the achievement of these KPIs is a key factor to watch, as it is directly linked to future shareholder value and the company’s competitiveness.

Furthermore, improving employee engagement and building trust with customers are also essential elements for corporate growth; progress in these areas will lead to sustainable growth. For Rohto Pharmaceutical, the success of its “Well-being Management” will have a significant impact on the company’s future.

6. Addressing Risk Factors

As Rohto Pharmaceutical advances its growth strategy, it must implement appropriate measures to address risk factors.In particular, when entering new markets or launching new products, the company is highly likely to face cultural barriers and regulatory challenges. To address this, market research to deepen understanding of regional characteristics and product development tailored to local needs are crucial. Such initiatives will help enhance the company’s credibility as a local brand and contribute to establishing a long-term revenue base.

Furthermore, expansion into the healthcare sector also entails new risks. Flexible management decisions are required to address market fluctuations and the rapid pace of technological innovation. It is essential to strengthen risk management systems and provide regular performance reports to ensure corporate transparency and build investor trust.

The success of Rohto Pharmaceutical’s growth strategy is believed to depend largely on how effectively these risk factors are managed and how appropriate feedback is provided. To achieve both corporate growth and stability, a mindset that pursues sustainable growth while confronting risks is necessary.

7. Implementation Structure

Rohto Pharmaceutical has established a framework to execute its effective mid-term management plan. In particular, the heads of each business division demonstrate strong leadership, and smooth communication is maintained to ensure the execution of the strategy. Under the leadership of top management, a system has been established to promote communication between departments and to constantly monitor the progress of the strategy.

In addition, training programs have been established to share the company’s values and objectives, which are expected to enhance the engagement of each employee and contribute to the growth of the entire company. In particular, efforts are underway to introduce new business models and prepare for digital transformation, demonstrating a commitment to revitalizing the corporate culture.

By establishing an effective execution framework, Rohto Pharmaceutical is expected to pursue sustainable growth and become a more competitive company. For investors, this execution capability is a key factor in enhancing corporate value.

Rohto Pharmaceutical’s medium-term management plan and growth strategy have established a solid foundation for achieving sustainable growth based on a clear vision. By adapting to changes in the business environment and executing strategies while managing risks, the company is expected to make further strides. Overall, attractive growth opportunities are being provided from an investor’s perspective as well.

News & Topics

1. Corporate Overview and Development of Growth Strategy

Rohto Pharmaceutical Co., Ltd. reported consolidated net sales of 308,625 million yen for the fiscal year ended March 2024, marking a significant year-on-year increase of 14.0%.This growth stems from product offerings tailored to domestic customer needs, increased inbound demand, and strong performance in Asian markets. In particular, Asian regions such as Vietnam and Indonesia are attracting attention, with notable contributions from Yuyangsan International and Mono, which the company has recently consolidated.

Rohto Pharmaceutical positions “Well-being” as the core of its business, aiming to extend healthy life expectancy and improve quality of life. New product development and marketing strategies based on this vision have been well-received by consumers, and the company is steadily strengthening its major brands, such as “Hada Labo” and “V-Rohto.”Experts have assessed that this growth strategy is crucial for maintaining a competitive advantage in both domestic and international markets.

From an investor’s perspective, this growth is expected to contribute not only to short-term profit improvement but also to the enhancement of corporate value over the medium to long term. In particular, with growth anticipated in Asian markets, the success of international expansion will serve as a key factor in further strengthening the company’s competitiveness.

2. Acquisition of a Consolidated Subsidiary

On June 3, 2024, Rohto Pharmaceutical made Singapore-based Yu Yang San International a consolidated subsidiary for a purchase price of 694.5 million Singapore dollars (approximately 80,840 million yen).This company is engaged in the manufacture and sale of traditional Chinese medicines and food products, and the acquisition aims to strengthen the company’s influence in the regional market. This acquisition is expected to diversify the product portfolio and enhance competitiveness in the Asian market.

Furthermore, on August 23, 2024, the company acquired a 51% stake in Mono, establishing it as a new consolidated subsidiary. This move is intended to expand the product line in the European market, with growth opportunities expected particularly in the Asian and European markets.According to experts, these M&A transactions represent a crucial step in Rohto Pharmaceutical’s sustainable growth strategy and are expected to contribute to expanding market share.

For investors, while these acquisitions may increase costs in the short term, they are viewed as an effective means of maximizing profits in the long term. In particular, entering new markets is attractive from the perspective of risk diversification, and future developments are being closely watched.

3. Progress in Research and Development

Rohto Pharmaceutical is focusing on research and development, particularly advancing research into new therapeutic agents in the field of regenerative medicine. At the newly established Nakanoshima Qross laboratory, the company is promoting the commercialization of regenerative medicine using stem cells and is also working to strengthen collaborations with other companies and universities.Furthermore, as the company continues to launch new OTC medicines and skincare products, its marketing activities are also active in response to consumer needs.

Experts point out that investments in the fields of regenerative medicine and functional foods will be key to securing a competitive advantage in the healthcare market in the future. These technological advancements are likely to generate new product lines and contribute to further market share expansion.

From an investor’s perspective, active investment in R&D is expected to enhance the company’s growth potential and contribute to improving its brand image. In the highly competitive healthcare market, possessing proprietary technology is a significant advantage, increasing the company’s appeal as a long-term investment.

4. Promotion of Digital Transformation (DX)

Rohto Pharmaceutical is promoting digital transformation (DX) with the aim of building new business models that meet customers’ healthcare needs. Through the introduction of a D2C platform, the company is building close relationships with customers and working to identify new needs.

Internally, the company is streamlining operations and promoting DX training for all employees. According to expert assessments, these DX initiatives are expected to contribute to a transformation of corporate culture and foster the flexibility needed to respond swiftly to market changes. This is anticipated to lead to improved customer satisfaction and the creation of new market opportunities.

For investors, the progress of DX is noteworthy not only for its positive impact on business performance but also for its role in enhancing corporate competitiveness. In the digital age, meeting the diverse needs of customers is expected to further strengthen the revenue base and has the potential to accelerate sustainable growth.

5. Environmental Protection and Sustainability

Rohto Pharmaceutical is strengthening its proactive efforts to address environmental issues and is striving to develop products with low environmental impact and provide sustainable services. The company’s commitment to sustainability is expected to contribute from a CSR perspective and lead to an enhanced brand image as a socially responsible enterprise.

Specifically, the company prioritizes environmental efficiency in product development and aims to contribute to the realization of a circular economy. According to experts, this approach is highly effective as a marketing strategy that pursues long-term profits and aligns with consumers’ growing environmental awareness.

From an investor’s perspective, a company’s environmental protection initiatives are highly regarded and are recognized as a key factor contributing to sustainable growth. Particularly as ESG investing gains prominence, a company’s commitment to environmental considerations has become a crucial element in enhancing risk management and its appeal as an investment target.

6. Outlook for the Future

Based on its 2023 performance, Rohto Pharmaceutical is planning new business initiatives in accordance with its “Comprehensive Management Vision 2030.”Aiming to expand its business both domestically and internationally, and with further growth expected in the Asian market, the company has outlined a strategy to strengthen its OTC pharmaceuticals, skincare products, and oral medications. Furthermore, the company emphasizes its commitment to ESG-conscious management, aiming to balance sustainable growth with social contribution.

Product diversification and entry into new markets to meet market expectations are key elements for maintaining and strengthening the company’s competitiveness. Experts also emphasize the necessity of a sustainable growth strategy from this perspective.

What is evident here is that Rohto Pharmaceutical is a company that takes an approach that goes beyond mere production and sales to consider the health of society as a whole. For investors, the company’s future outlook is full of promise, and its strategies for achieving sustainable growth appear highly attractive.

Rohto Pharmaceutical’s various initiatives continue to shape its growth strategy, and the results are likely to influence future market trends. Investors should pay close attention to these developments and ensure they do not miss the revenue opportunities arising from these strategies.

Company Overview

1. Basic Information

Rohto Pharmaceutical Co., Ltd. (English name: ROHTO PHARMACEUTICAL CO., LTD.) is an over-the-counter (OTC) pharmaceutical manufacturer headquartered in Ikuno Ward, Osaka City. The company traces its origins to Shintodo Yakubou, founded in 1956, and was incorporated in 1949 to take its current form.The company focuses primarily on the eye care, skin care, and oral medication sectors, and markets hit products such as the eye care product “V Rohto,” the skin care product “Hada Labo,” the topical medication “Mentholatum,” and the oral medication “Pansiron.”As a result, the company holds the top market share for many products in the OTC (over-the-counter) market and has established a strong brand presence.

Rohto Pharmaceutical operates internationally in over 110 countries and possesses strong competitive advantages, particularly in eye care and skincare products. With a mission to help customers achieve health and beauty, the company actively conducts research and development to provide high-quality products.In recent years, the company has also been active in the field of regenerative medicine using stem cells and is charting a corporate strategy aimed at sustainable growth. Additionally, it has established the Grand Front Osaka office in Osaka Prefecture, ensuring a highly agile administrative division. For investors, the company’s excellent product lineup and international expansion are major attractions.

2. Business Operations and Market Expansion

Rohto Pharmaceutical’s business is primarily divided into several segments, including OTC pharmaceuticals, skincare, functional foods, and regenerative medicine. In the OTC pharmaceutical segment in particular, demand has been increasing year by year in line with the growing trend toward “self-medication.”The “V Rohto” line of eye care products is particularly representative; it consistently holds the top market share in Japan and is widely recognized by consumers.Meanwhile, the skincare brand “Hada Labo” is gaining attention as a product that meets consumer needs for beauty and health. Additionally, in the oral medication category, “Pansiron” has garnered significant support as an effective product for relieving throat and cold symptoms.

In recent years, the company has been focusing on innovative product development and expanding into new categories to address market threats.Of particular note are its efforts in regenerative medicine; the development of pharmaceuticals using stem cell technology is underway and is highly likely to become a pillar of future growth. These business activities reflect the company’s commitment to responding swiftly to changing consumer needs and are likely to present attractive growth opportunities for investors.

3. Organizational Structure and Management

Rohto Pharmaceutical has established an efficient and flexible organizational structure that promotes autonomous operations within each department. In particular, President and CEO Masafumi Sugimoto leverages his extensive experience at Takeda Pharmaceutical to clearly define the company’s strategic direction. Under his leadership, the company is focusing on new business development and international expansion, driving business growth.

Rohto Pharmaceutical places a high priority on diversity within its management team and is actively promoting initiatives to advance the appointment of women. This fosters a healthy organizational culture that values diversity.In particular, each member of the management team has achieved outstanding results in their respective fields of expertise, which collectively serves as a key factor in enhancing the company’s competitiveness. This fosters expectations for sustainable development and represents an important consideration for investors in anticipating future growth.

4. Major Subsidiaries and Affiliates

Rohto Pharmaceutical has multiple consolidated subsidiaries, each of which generates unique synergies within its respective segment. In particular, Amato Pharmaceutical Co., Ltd. and Rohto Nitten Co., Ltd. possess specialized product expertise while expanding their businesses in collaboration with Rohto Pharmaceutical itself. This approach facilitates the diversification of the product lineup and the strengthening of the brand.

Furthermore, Rohto Pharmaceutical is actively expanding internationally, with subsidiaries in multiple countries, including Indonesia, Vietnam, and the United States. This enables the development of products tailored to specific national markets, laying the groundwork for maintaining competitiveness in the global marketplace.This organizational structure and collaboration among subsidiaries are crucial to the company’s sustainable growth strategy and serve as a key indicator of business stability for investors.

5. Research and Development Framework and Technological Innovation

The R&D framework that Rohto Pharmaceutical prioritizes is an indispensable factor for the company’s growth. In particular, product and technological innovation is crucial for securing long-term competitive advantage, and the company’s internal R&D team is dedicated to advancing this.In recent years, the company has been exploring new growth areas by venturing into regenerative medicine and stem cell technology, and is advancing product development based on scientific evidence.

Furthermore, Rohto Pharmaceutical places great importance on external collaboration and continues to strive to gain new insights through joint research with universities and research institutions. This has established a system that incorporates advancements in science and technology into business operations, serving as the foundation for maintaining the company’s innovative capabilities.For investors, a company’s possession of new technologies and its commitment to continuous evolution will likely serve as key indicators for assessing investment value.

6. ESG and Sustainability Initiatives

Rohto Pharmaceutical is also strengthening its initiatives in corporate social responsibility (CSR) and ESG (environmental, social, and governance). In particular, the company places a strong emphasis on sustainability and actively promotes environmental considerations and social contribution activities. This is expected to enhance the company’s brand image and contribute to attracting new customer segments.

In recent years, as addressing environmental issues has become directly linked to a company’s competitiveness, Rohto Pharmaceutical has formulated strategies regarding eco-design and the sustainable development of products.Furthermore, promoting diversity within the company and creating a comfortable work environment for employees are also key elements based on the principles of CSR. This strengthens the relationship between the company and its stakeholders; for investors in particular, it represents a perspective that should be viewed as an investment in risk management and brand value enhancement.

The information revealed through Rohto Pharmaceutical’s company profile covers a wide range of topics, including the company’s history, philosophy, business operations, and organizational structure. In particular, the company’s commitment to sustainable growth and its proactive initiatives in research and development are key drivers for future growth. Given these characteristics and strengths, it will be necessary to consider future investment strategies accordingly.

Shareholder Returns

1. Dividend Policy and History

Rohto Pharmaceutical Co., Ltd. places a high priority on returning profits to shareholders and has established a basic policy of providing stable and continuous dividends. Dividends are intended to be returned to shareholders in accordance with business performance, and in recent years, the company has been implementing policies with a particular focus on the dividend payout ratio.Looking back at the specific dividend history, the company has clearly indicated that dividends will increase from fiscal year 2021 through fiscal year 2025. The annual dividend is projected to reach 72.62 yen in fiscal year 2023 and 82.79 yen in fiscal year 2025.Dividend decisions are made by the Board of Directors, which carefully considers business performance; therefore, the company has a system in place to pay higher dividends when performance is strong. The dividend payout ratio for fiscal year 2023 is at a high level of 44.1%, clearly demonstrating the company’s commitment to both corporate growth and returning value to shareholders.

This stable dividend policy, backed by the company’s growth, is enhancing shareholder confidence. The company’s approach—which balances building up retained earnings with investing in new businesses to secure future profits—is highly regarded.Investors expect stability and reliability in dividends, and confidence is growing in the company’s ability to balance corporate growth with shareholder returns. These initiatives serve as a strong guiding principle for promoting sustainable returns to shareholders.

2. Share Buyback Policy and Its Impact

Rohto Pharmaceutical is planning a share buyback program with the aim of enhancing shareholder value. For fiscal year 2025, based on a resolution by the Board of Directors, the company has decided to repurchase 2,174,300 shares, which is expected to reduce the number of outstanding shares.Share buybacks serve as a means to enhance the value of shares held by shareholders and provide a flexible strategy for responding to changes in the market environment. By implementing share buybacks, the company expects to tighten the supply and demand for its shares, thereby helping to further stabilize the stock price.

For investors, the implementation of this share buyback is viewed as part of shareholder returns and is expected to lead to an increase in corporate value.Furthermore, the execution of a share buyback sends a message that the company does not undervalue itself, creating a positive impression for shareholders. Additionally, the acquisition of treasury stock helps stabilize profits and optimizes the cost of capital. Such initiatives regarding shareholder returns demonstrate management’s confidence to investors and are likely to contribute to strengthening the relationship of trust.

3. Shareholder Returns and Financial Soundness

Rohto Pharmaceutical’s financial soundness is a key element of its shareholder return policy. The company maintains a high equity ratio of 71.0%, indicating a stable financial foundation. A high equity ratio serves as the foundation for the company to pay stable dividends to investors.Furthermore, the dividend payout ratio reached 44.1% in fiscal year 2023, reflecting the company’s commitment to returning value to shareholders while generating stable profits. This level of dividend payout ratio is an attractive indicator for investors, suggesting that the company has successfully balanced corporate growth with shareholder returns.

Furthermore, the return on equity (ROE) of 12.1% indicates that the company is providing investors with favorable returns, allowing them to anticipate both the company’s growth and an increase in their own assets. This combination of a sound financial foundation and a stable dividend policy has enabled the company to build long-term credibility, further enhancing its appeal to shareholders.It is expected that the company will continue to maintain this sound financial position and sustain its commitment to returning value to shareholders.

4. Dividend Policy and Adaptability to Market Conditions

Rohto Pharmaceutical’s dividend policy is fundamentally based on stable returns grounded in the company’s performance, and this flexibility enables the company to respond swiftly to changes in the market environment.The company is promoting a dividend policy focused on sustainable growth, without being swayed by temporary fluctuations in profits. In particular, the company is highly regarded for its commitment to shareholder returns, even amid urgent needs for investment in new businesses and product development.

In the future market environment, where inflation and geopolitical risks may exert influence, the company will be required to maintain stable dividends while appropriately managing these risks.Rohto Pharmaceutical is advancing product development that flexibly responds to customer needs while maintaining the ability to cope with these external factors. In this way, corporate dividend policies have become a strategy aimed at balancing long-term corporate growth with shareholder returns, rather than prioritizing short-term profits.

5. Outlook for Medium- to Long-Term Shareholder Returns

Expectations for Rohto Pharmaceutical’s shareholder return policy are very high. With record-high sales, operating profit, and net income projected for fiscal year 2027, attention is focused on how this will impact shareholder returns. If sustained performance improvements continue, even more substantial shareholder returns can be expected.

However, strategic investment is essential to achieving corporate growth. As capital policies based on this approach are implemented, the continued payment of dividends to shareholders will serve as a source of reassurance for investors.Furthermore, as corporate growth and shareholder returns remain closely linked, the company can continue to offer attractive conditions for investors. For this reason, Rohto Pharmaceutical’s stock should be viewed as a well-balanced investment opportunity that strives to achieve both long-term growth and stable shareholder returns.

Rohto Pharmaceutical’s shareholder return initiatives are closely tied to its corporate growth strategy, and a policy of strengthening returns whenever business performance improves is firmly established. This allows shareholders to watch the company’s growth with confidence while anticipating future returns.

Rohto Pharmaceutical is expected to deepen its relationship of trust with investors while pursuing a balance between sustainable growth and shareholder returns. The company’s commitment to continuing stable shareholder returns through corporate growth will likely continue to meet shareholder expectations.

Business Risks

1. Analysis of Factors Affecting Business Performance

Since Rohto Pharmaceutical’s performance is influenced by many factors, understanding the risk factors in its business strategy is essential. In particular, sales and profit margins are heavily dependent on market conditions and consumer demand.While revenue from over-the-counter (OTC) pharmaceuticals and skincare products accounts for the majority of the company’s earnings, the risk of profit margins being squeezed by intensifying competition is increasing. For example, in the eye care and skincare product sectors, increased advertising and promotional expenses are necessary, and there is always the possibility of profit margins being squeezed by price competition.

Furthermore, the company’s tendency to rely on key customers is another risk factor. Since Rohto Pharmaceutical derives approximately 33.4% of its revenue from its top three customers, a decline in these customers’ performance would immediately have a negative impact on Rohto’s own earnings. Additionally, the impact of rising raw material costs on profit margins cannot be ignored.Cost of goods sold is projected to increase year-over-year in fiscal 2024, and if it proves difficult to pass on these costs, profitability may decline. Due to these factors, Rohto Pharmaceutical’s performance is significantly influenced by changes in the domestic and international environment, requiring management to respond flexibly to market needs.

2. Industry-Specific Risks

The pharmaceutical and cosmetics industries present numerous risks specific to Rohto Pharmaceutical.Compliance costs are one such risk; frequent changes to regulations such as the Pharmaceutical and Medical Device Act carry the risk of delaying the approval process for new products. There is concern that increased costs and operational burdens associated with complying with particularly stringent regulations could adversely affect the company’s competitiveness and strategic direction.

Furthermore, product liability risks are also a significant concern. If a product is defective, it may lead to lawsuits from consumers or product recalls, which could cause fatal damage to the company’s credibility. Strict quality control is necessary to prepare for such risks.In addition, supply chain risks are becoming increasingly apparent. Relying on specific regions for raw material procurement carries the risk of market supply disruptions due to political instability or natural disasters. To mitigate these risks, it is necessary to secure a diverse range of suppliers and strengthen waste management systems.

3. Financial and Management Risks

Rohto Pharmaceutical’s financial condition and management structure are closely linked to the company’s sustainable growth. First, it is necessary to examine borrowings and interest-bearing debt.As of the end of fiscal year 2023, interest-bearing debt stood at 11,693 million yen, showing an upward trend. This increase contributes to a heavier interest burden and heightens the risk that fluctuations in interest rates will directly impact the company’s profits.

Next is liquidity risk. Since the company relies on short-term financing for working capital, a sudden surge in funding needs could make it difficult to continue business operations.Furthermore, governance issues are significant; a lack of corporate transparency or internal controls risks eroding trust and causing a rapid deterioration in business performance. It is essential to implement thorough risk management and consistently identify and manage potential issues within daily operations.

As described above, Rohto Pharmaceutical faces a variety of financial and management risks, and appropriate measures for each risk are essential for the company’s growth. It is important for the company to recognize that accurate risk assessment and transparent management are key factors supporting sustainable growth.

4. Overseas Expansion Risks

Rohto Pharmaceutical is actively expanding overseas, with 47% of its consolidated revenue coming from overseas markets; however, this entails vulnerability to geopolitical risks as well as cultural and economic fluctuations. Changes in local political and economic conditions carry the risk of directly impacting business performance.

For example, the impact of the COVID-19 pandemic and instability in the international environment could cause supply chain disruptions and shifts in market demand, posing a risk of a sharp decline in sales. Additionally, there are concerns that costs associated with managing compliance with varying laws across countries will rise.Companies are required to strengthen their risk management systems while taking these external factors into account, and at the same time, strategic measures are necessary to ensure business continuity.

5. Risks Related to Intellectual Property Rights

Rohto Pharmaceutical relies on proprietary technologies for new product development; however, if intellectual property rights are not adequately protected, there is a risk that competitive advantages will be compromised. Conversely, there is also a risk of infringing on the intellectual property rights of others, which could lead to litigation risks or claims for damages.Patent-related litigation involves high costs and carries the risk of damaging trust with customers.

Therefore, strengthening preventive measures and management systems for intellectual property rights is essential to enhancing Rohto Pharmaceutical’s competitiveness. In areas exposed to such risks, the company must pay particular attention and ensure proper management of intellectual property rights.

6. Risks Associated with Investment Activities

Rohto Pharmaceutical forms partnerships with other companies and establishes new companies to expand into new business areas; however, there is a risk that if the value of these investee companies declines unexpectedly, it could have a serious impact on the company’s business performance and financial condition. In particular, amid fluctuations in the economic environment and market competition, there is a possibility that anticipated returns may not be realized.If investments in new businesses are unsuccessful, they may adversely affect cash flow, making market research and strategic management essential.

Taking all of the above risk factors into account, Rohto Pharmaceutical operates in a business environment influenced by numerous internal and external factors. It is important for investors to deepen their understanding of these business risks and act strategically. Recognizing that how a company addresses risks is critical to its sustainable growth, it is necessary to strive for a flexible response.