仿制药：前两名支撑日本医药基础设施

Initiatecoverage on Towa with Buy EquityJapan In addition to Sawai GHD, the No.1 player in the generics (GX) industry (Buy;B-1-7; PO¥2,600), we initiate coverage on the No.2, Towa, with Buy (B-1-7)and set a PO of¥5,500. While GX has faced persistent supply instability as a side effect of governmentpromotion policies—raising questions about the industry’s sustainability—structuralreforms to be fully implemented from 2026 set a clear path for the top two to keepgaining share. Our POs are based on a 20‑year DCF. On FY3/27 multiples, eachcorresponds to 13-15x PER and 7-8x EV/EBITDA, levels we see as achievable within their Healthcare Ritsuo Watanabe>>Research AnalystBofAS Japan+81 3 6225 6259 Kei Takeuchi>>Research AnalystBofAS Japan GX underpins Japan’s pharmaceutical demand GX makes up 54% of domestic drug consumption, but around20% of products are stillunder limited shipment or supply suspension. The government has committed to offerpricing and production-investment support to generic manufacturers with strong supplyreliability and information disclosure; it has also revised its policy on authorized generics(AG), removing a key constraint for Sawai and Towa. We view these changes as Exhibit1:GenericsnamesRatings and share price (¥, as of2Apr) Low market growth, but share gains drive growth Based on medical expenditure and pharma market trends anchored in demographics, weestimate the GX market will grow just 1% per year. However, we expect Sawai andTowa’s combined market share (value-based, BofA estimate) to rise from 23% in FY3/26to 35% in FY3/31, lifting their combined sales by 74% over the same period. We Near term, we prefer Towa We see both companies’FY3/27 results roughly in line with consensus, but Towa hasmultiple positives: ramp at the Yamagata plant and the launch of Effient AG (prasugrel/antiplatelet). During FY3/27, the company is also expected to disclose productionstrategy toward the 22.5bn/year capacity. Sawai likewise enjoys contributions from Related reports:Generic drug industry:Generics: Top two to underpin Japanese pharmaceutical Towa Pharmaceutical:Initiating with Buy: apolicy-backed play supporting Japan’s HC Sawai GHD:Policy reform restores GXindustry discipline, favoring supply-capable Contents Concentration by the domestic top two4 Policy failures and corrective measures4Column: Authorized generics in Japan6What is the risk scenario7 GX market model14 Healthcare spending assumptions based on demographicsExpect GX drug market to grow 1% per year Valuation and investment assessment18 Individual names20 Sawai GHD (4887): Buy, PO¥2,60020Towa Pharmaceutical (4553): Buy, PO¥5,50020 Summary: Consolidation in GX As part of Japan’s healthcare structural reform, we expect oligopolization to advance inthe generics (GX) industry, an important healthcare infrastructure. In addition to SawaiGHD (4887), to which we already assign Buy, we initiate coverage on Towa (4553), the No.2 by sales, with Buy (report dated April 1:“Initiating with Buy: a policy-backed namesupporting Japan’s healthcare infrastructure”). Since the 2000s, the Japanese government has promoted the use of GX as part of itsmeasures to curb medical costs. As a result, GX penetration has exceeded 90%, but dueto failures in pricing policy the current market suffers from chronic supply shortage. Tobreak through this, the government has been advancing discussions aimed at rebuildinga sustainable industry structure. Policies entered the implementation phase from 2024, We expect Japan’s GX market to expand at 3% per year by volume and 1% per year byvalue. We estimate the combined market share of Sawai and Towa (our estimate) to risefrom 23% in FY3/26 to 35% in FY3/31, with their combined sales up c70% over thesame period. Furthermore, under the new system we expect benefits from capturinghigher‑margin new products and from support for manufacturing efficiency, and we In the near term, we prefer Towa for its reassuring FY3/27 guidance and the possibilityof announcements related to production capacity increases. Sawai’s strong new productperformance should also support near‑term results, and we find its share price—havingsignificantly underperformed Towa’s since the disclosure of the NHI revision rate—appealing. We set POs of¥5,500 for Towa and¥2,600 for Sawai GHD, implying upside of Concentration by the domestic top two Unlike branded drugs, where innovation and evidence drive value, success in GX hingeson the ability to supply what local authorities and healthcare systems require. Japan’s GXpenetration had been low historically, but policies since 2000 expanded the market Policy failures and corrective measures Japan is in the midst of population aging, and current annual demand for GX—around100 billion tablets—grows by roughly 3% per year. Fiscal constraints make itunavoidable to continue promoting the use of GX, and someone must meet this demandeven under the supply constraints. To solve this, since 2023