Under the Medium-Term Management Plan 2026, we have set consolidated operating profit and return on equity (ROE) as KPI (key performance indicators) and are working to increase corporate value.
The Board of Directors regularly examines the cost of equity and WACC (weighted average cost of capital), stock price and PBR (price book-value ratio), and analyzes the gap between the company's own assessment and that of securities analysts and institutional investors, as well as actual market assessments, and examines measures to eliminate this gap. At the same time, the Board of Directors implements management that is conscious of the cost of capital and stock price by improving medium-to long-term capital efficiency through earnings growth and appropriate shareholder returns. From FY2021 to FY2023, ROE greatly exceeded the cost of equity due to the extremely high level of profitability resulting from increased sales of new-type coronavirus testing-related reagents due to the Corona issue.In FY2024, however, the life sciences research market was sluggish worldwide due to the reaction to the Corona calamity and economic conditions. Furthermore, the level of profitability declined in FY2025, mainly due to the continued market slump, and ROE in FY2025 was 0.9%.ROE estimated from the forecast for FY2026 is 1.1%, a slight increase from FY2025.
We recognize that our share price and PBR have declined because the level of earnings has fallen and we expect to miss the quantitative targets in the Medium-Term Management Plan 2026. We have positioned CDMO businesses (development and manufacturing services for biologics) including the regenerative medicine products field as future growth businesses. However, this business requires upfront spending on facilities and human resources. We will strive to improve our share price, PBR and corporate value by improving consolidated operating income and ROE in line with the expansion of our CDMO business in the future and implementing appropriate capitalization policies.
