UNIVERSIDAD DE ALCALÁ (UAH) MADRID, JANUARY 2018

Daiichi-Sankyo &
Astellas Pharma:
Financial Analysis
Chiselita Cristin
Wang Yu
Zhang Tong
Introduction
2
 Daiichi-Sankyo

▰ Established in 2005 through the merger of Sankyo and Daiichi Pharmaceutical Main Products:

▰ Number of employees (2016): 14.670 ▰ Efient

▰ Main stock exchange market: Tokyo Stock Exchange ▰ Pralia

▰ Independence indicator: A+ ▰ Tenelia
▰ Number of recorded shareholders: 40 ▰ Ranmark
▰ Number of recorded subsidiaries: 89
▰ Lixiana
▰ Number of recorded branches: 15
▰ Industry classification: Manufacture of pharmaceutical preparations 3
 Astellas Pharma

▰ Established in 2005 through the merger of Yamanouchi Main Products

Pharmaceutical and Fujisawa Pharmaceutical
▰ Urology :Vesicare and Harnal
▰ It is a member of the Mitsubishi keiretsu
▰ Transplants and immunology:
▰ Number of employees (2016): 17.202 Prograf, Protopic and Intal
▰ Main stock exchange market: Tokyo Stock Exchange ▰ Cardiovascular: Lipitor, Micardis,
▰ Independence indicator: A+ Dorner
▰ Number of recorded shareholders: 82 ▰ gastrointestinal organs: Gaster
▰ Number of recorded subsidiaries: 122 ▰ infection diseases:
▰ Number of recorded branches: 1 Fubguard, Targosid and Cefzon

▰ Industry classification: Manufacture of pharmaceutical ▰ Psychiatry: Myslee, Luvox and

preparations Seroquel

4
 200
400
600
800
1000
1200

0
799

2008
2009
830.6

2010
888.2

2011
963.2

2012
964.4

2013
993.1
billion U.S. dollars
Pharmaceutical Industry

2014
1062

2015
1067.2
Pharmaceutical Industry Revenue in

2016
1105.2

0
10000
20000
30000
40000
50000
60000

Pfizer Inc
Novartis AG
F. Hoffmann-La…
Sanofi
Merck & Co Inc
Johnson & Johnson
GlaxoSmithKline Plc
Gilead Sciences Inc
AbbVie Inc
Amgen Inc
AstraZeneca Plc
Bristol-Myers Squibb Co
Teva Pharmaceutical
Bayer AG
Eli Lilly and Co
Novo Nordisk AS
Allergan Plc
5

Takeda…
Celgene Corp
Astellas Pharma Inc
Revenue of the Top 25 pharmaceutical

Shire Plc
companies (2016) in million U.S. dollars

Biogen Inc
Baxter International Inc
Daiichi Sankyo Co Ltd
CSL Ltd
Financial Analysis (I)
6
 Top 10 Shareholders

Daiichi-Sankyo's Top 10 Shareholders Astellas Pharma's Top 10 Shareholders

Ownership Ownership
Name Country Name Country
Direct (%) Total (%) Direct (%) Total (%)
MASTER TRUST BANK OF JAPAN LTD BLACKROCK INC via its funds - 8.33 US
7.8 n.a JP
(TRUST ACCOUNT) BLACKROCK JAPAN CO, LTD 6.04 n.a JP
MASTER TRUST BANK OF JAPAN, LTD 6.46 n.a JP MASTER TRUST BANK OF JAPANLTD
5.87 n.a JP
JAPAN TRUSTEE SERVICES BANK LTD (TRUST ACCOUNT)
6.38 n.a JP STATE STREET NAMK AND TRUST
(TRUST ACCOUNT) 5.77 n.a US
BLACKROCK INC via its funds - 6.21 US COMPANY
JAPAN TRUSTEE SERVICES BANK LTD
JAPAN TRUSTEE SERVICES BANK LTD 6.08 n.a JP 4.66 n.a JP
(TRUST ACCOUNT)
NIPPON LIFE INSURANCE COMPANY 5.05 n.a JP NOMURA HOLDINGS INC via its funds - 4.08 JP
ASSET MANAGEMENT ONE CO., LTD via its ASSET MANAGEMENT ONE CO., LTD via its
- 4.37 JP - 4.07 JP
funds funds
NOMURA HOLDINGS INC via its funds - 2.81 JP WELLINGTON MANAGEMENT COMPANY LLP 3.29 n.a US
VANGUARD GROUP INC via its funds - 2.04 US JPMORGAN CHASE BANK 2.54 n.a US
TRUST & CUSTODY SERVICES BANK LTD
T ROWE PRICE GROUP INC via its funds - 2.34 US
(RETIREMENT BENEFIT TRUST A/C FOR
2.03 n.a JP
MIZUHO BANK LTD REENTRUSTED BY
MIZUHO TRUST)
7
 Total Assets

2012 2013 2014 2015 2016

Assets (in bn JPY)
Daiichi Astellas Daiichi Astellas Daiichi Astellas Daiichi Astellas Daiichi Astellas
Fixed assets 700.4 618.4 863.4 739.8 1197.0 827.6 775.3 901.8 717.2 944.2
Intangible fixed assets 223 295 257 397 271 432 289 490 217 563
Tangible fixed assets 303 218 316 191 266 203 250 201 296 191
Other fixed assets 174 105 290 151 660 193 236 211 204 190
Current assets 943.6 827.2 990.6 913.3 785.3 966.0 1125.3 897.5 1197.8 876.7
Stock 174 128 189 135 150 157 144 162 153 183
Debtors 236 284 243 308 218 333 229 328 209 265
Other current assets 533 415 558 470 417 476 752 408 836 429
Cash & cash equivalent 372 313 183 391 189 396 222 360 378 341
TOTAL ASSETS 1644.1 1445.6 1854.0 1653.1 1982.3 1793.6 1900.5 1799.3 1915.0 1820.9

8
 Sales

Daiichi-Sankyo & Astellas Pharma overseas sales

(bn JPY)
1000 70%
875.5
830.9 60%
800 748.6
50%
609.3 555.3 579.7
600 511.2 563.8 497.2 40%
486.7 530.6 526.8 498.7 480.8
431
554.5 392.5 375.4 30%
400
20%
200
10%
0 0
0 0%
FY 2012 FY2013 FY2014 FY2015 FY2016
Daiichi-Sankyo Overseas Daiichi-Sankyo Domestic
Astellas Pharma Overseas Astellas Pharma Domestic
Daiichi-Sankyo Overseas/Net Sales Astellas Pharma Overseas/Net Sales 9
Financial Analysis (II)
10
 Profitability Ratios (1)

Daiichi-Sankyo Profitability Ratios

70.00% 63.93%
63.11%
60.00%
50.81%
47.93% 50.07%
50.00%

40.00% 34.69%

30.00% 27.56% 21.15%

20.74% 22.44%
20.00% 16.63% 18.34%
17.10%
10.00% 4.21% 7.62% 6.68% 8.34%
4.24% 6.34% 6.48%
4.45% 5.45% 5.60%
3.48% 2.80%
0.00%
ROA using Net ROE using Net Turnover Net Margin (%) R&D Expenses/
Income (%) Income (%) (Sales/Assets) Operating
(%) Revenue (%)
11
2012 2013 2014 2015 2016
 Profitability Ratios (2)

Astellas Pharma Profitability Ratios

90.00%
73.57% 76.41%
80.00%
70.65% 72.37% 72.46%
70.00%
60.00%
50.00%
40.00% 17.28%
30.00% 10.78%
12.08%
15.03% 16.67% 18.09% 16.44%15.87%
10.89% 16.56%
20.00% 7.88% 7.97% 10.51% 8.24% 14.11% 16.80%
5.82% 7.80% 7.97%
10.00% 5.87%

0.00%
ROA using Net ROE using Net Turnover Net Margin (%) R&D Expenses/
Income (%) Income (%) (Sales/Assets) (%) Operating
Revenue (%)
12
2012 2013 2014 2015 2016
 Leverage Effect
Daiichi- Astellas
Financial Leverage Ratios Sankyo Pharma
2
0
0.94% 4.95%
1
Daiichi-Sankyo & Astellas Pharma 2

Financial Leverage Ratios 2

0
2.83% 4.99%
0.90 3.50% 1
3.27% 3
0.80 3.00%
2.88% 2
0.70 0
2.50% 1
15.96% 6.54%
0.60
4
0.50 2.00%
2
0.40 1.35% 1.51% 1.50% 0
1.36% 9.90%
0.88% 1
0.30 0.87% 0.88% 0.92% 1.00% 5
0.20 0.65% 2
0.10 0.67% 0.50% 0
0.80 0.36 0.84 0.30 0.52 0.36 0.54 0.43 0.63 0.43 1.29% 11.16%
1
0.00 0.00% 6
2012 2013 2014 2015 2016
Daiichi-Sankyo Leverage/gearing Astellas Pharma Leverage/gearing
13
Daiichi-Sankyo Financial interest (%) Astellas Pharma Financial interest (%)
 Solvency Ratios

Daiichi-Sankyo & Astellas Pharma Solvency Ratios

4.00
3.67
3.50
3.20
2.96
3.00
2.64 2.642.68 2.58 2.56
2.50 2.30
2.16 2.15 2.17 2.14 2.232.28
2.19 1.98
1.92
2.00 1.78
1.761.74 1.74

1.50 1.40 1.321.38

1.221.21
1.13 1.07
0.99
1.00

0.50

0.00
Daiichi-Sankyo Astellas Pharma Daiichi-Sankyo Acid Astellas Pharma Daiichi-Sankyo Acid Astellas Pharma
Current ratio Current ratio Test 1 ((CA-Inv)/CL) Acid Test 1 ((CA- Test 2 ((CA-Inv - Acid Test 2 ((CA-Inv
(CA/CL) (CA/CL) Inv)/CL) Rec)/CL) -Rec)/CL)
14
2012 2013 2014 2015 2016
 Cash Flow Ratios

Daiichi-Sankyo & Astellas Daiichi-Sankyo & Astellas

Pharma Cash Flow 1 Ratio Pharma Cash Flow 2 Ratio
80.00% 75.90% 70.00%

70.00%
62.89% 60.00% 58.09%
58.92% 55.70%
60.00%

48.14% 47.99% 50.00%

50.00% 45.90% 42.91%
44.59% 41.69% 39.35% 39.46%
40.00% 40.00%
29.64%
30.00% 30.00% 26.13%
21.14%
20.00% 18.32%
20.00% 17.75%
8.09%
10.00%
10.00%
0.00% 4.41%
2012 2013 2014 2015 2016
0.00%
2012 2013 2014 2015 2016
15
Daiichi-Sankyo Cash Flow 1 (CL) Astellas Pharma Cash Flow 1 (CL) Daiichi-Sankyo Cash Flow 2 (TL) Astellas Pharma Cash Flow 2 (TL)
 Book to Market Ratio

Daiichi-Sankyo & Astellas Pharma Book to Market Ratio

1.00
0.91
0.90 0.84
0.81
0.80 0.75
0.73
0.70
0.62
0.60
0.50
0.50
0.42
0.38
0.40 0.34

0.30

0.20

0.10

0.00
2012 2013 2014 2015 2016
16
Daiichi-Sankyo Book to Market ratio Astellas Pharma Book to Market ratio
Conclusion
17
 Daiichi-Sankyo vs. Astellas Pharma

According to our analysis, Daiichi-Sankyo is doing worse than

Astellas Pharma on almost every level.

We can observe a not so big difference in 2012, but which

became bigger and bigger with every year.

Not only Astellas Pharma has higher Profitability Ratios, it is

also better able to generate cash.

However… 18
 Daiichi-Sankyo & Astellas Pharma vs. Industry Average

According to BizMiner, a provider of data services, in 2014, both Astellas Pharma and
Daiichi-Sankyo results are above the industry average in several cases.

Daiichi-Sankyo’s leverage ratio is bellow the average 1.28, meaning that it is less
riskier than a big share of its competitors.

By looking at Daiichi-Sankyo’s ROE, ROA and Net Margin in 2014, it would seem that
the results skyrocketed. However, with a Turnover ratio (sales/assets) lower than in
the previous years, it becomes clear that 2014 was the least profitable year in the
analyzed period. Nonetheless, it is still better than the industry average (47.93% vs.
29.49%).

In other years, Daiichi-Sankyo’s ROE and Net Margin are still bellow the industry
average. 19
THANKS!
Any questions?

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