Japan Tobacco (JAPAF) Q1 2025 Earnings Call

Investor webinar replay

Replay transcript excerpt

Good afternoon. I'm Hiromasa Furukawa, CFO of the JT Group. Thank you for joining us today for JT Group's first quarter 2025 earnings briefing. First, I'd like to touch on the transfers of both the pharmaceutical business to Shionogi and the shares of Torii, which we have announced today. JT entered the pharmaceutical business back in 1987 and welcomed Torii as a member of the group in 1998. Over the years, together with Torii, JT built an integrated value chain for the pharmaceutical business and by maximizing synergies and opportunities, the pharmaceutical business has been providing prescription drugs that are trusted by many patients. The environment surrounding the pharmaceutical business has been changing in recent years. International competition has intensified. Also, joint R&D activities of the pharmaceutical business with external partners have been gradually restricted due to the constraints related to the presence of tobacco products at JT. Based on our assessment, it appears that under the current structure and considering the highlighted environmental changes, the mid- to long-term growth outlook of the pharmaceutical business will be uncertain as a result. We have decided to transfer the pharmaceutical business, including Torii, to Shionogi. Shionagi is a global pharmaceutical company that has grown over the past 140 years by primarily providing prescription drugs. Unlike JT's pharmaceutical business, it has strengths in original drugs based on small molecules. We believe that this aligns well with JT's pharmaceutical business R&D strategy. In addition, the compound pipeline of both companies have little overlap, creating incremental complementarity across their portfolio. Moreover, Shionogi has a long-standing policy by investing in R&D and in a consi...