Seikagaku Reports FY 3Q18 Revenue of ¥7,330MM, -11.1% vs. FY 3Q17

Seikagaku posted FY 3Q18 revenue of ¥7,330MM (USD $64.7MM), -11.1% vs. FY 3Q17, as the company continues to deal with the impact from reduced drug prices as mandated by the NHI in Japan. The price reduction has filtered through to bottom line earnings as Seikagaku was able to lower administrative and general expenses, but still experienced reduced operating income due to the revenue shortfall.

Despite observing an overall orthobiologic market contraction on a volume basis, the company was able to increase deliveries of their ARTZ product, though this was not sufficient to offset the impact of price reductions. HERNICORE, launched in August 2018, is in a phased roll out and has not yet significantly contributed to sales. The condoliase-based injectable product is indicated to treat lumbar disc herniation.

Globally, Seikagaku is facing an increasingly difficult U.S. market through increased competition and tightening insurance reimbursement requirements. Sales of Gel-One single-injection hyaluronic acid treatment increased, but were offset by price erosion and shipments delayed into 4Q. SUPARTZ FX, a five-injection treatment, declined sharply due to increased reimbursement requirements. In China, however, ARTZ sales increased due to sales partner expansion in both urban and rural areas.

The company provided full fiscal year 2018 guidance of ¥28,100MM ($258.6MM), -6.9% vs. FY 2017.

Sales and growth on an as-reported basis are as follows. The company’s fiscal year 2018 runs from April 1, 2018 through March 31, 2019.

Source: Seikagaku

Mike Evers is ORTHOWORLD’s Market Analyst. He can be reached by email.