(197A) Towns - New Analyst Report 6/21

Towns is a pharmaceutical manufacturer for in vitro diagnostics that develops, manufactures, and sells rapid diagnostic kits for infections caused by the novel coronavirus, influenza virus, etc., and is one company leading the domestic POCT market.

Sales breakdown has not been disclosed, but the product groups handled are classified as ① novel coronavirus (single item test kit), ② novel coronavirus and influenza virus (combo kit), ③ influenza virus (single item test kit), ④ other infectious diseases depending on the test target. There are many products mainly for internal medicine, pediatrics, and otolaryngology.

Until the novel coronavirus antigen test kit “ImmunoAce rSARS-CoV-2” was released in 20/10, influenza antigen test kits were the center of sales. Since the release of the novel coronavirus antigen test kit, sales to products related to the novel coronavirus infection have accounted for 50% or more. Other than the novel coronavirus and influenza virus, we manufacture and sell many antigen test kits, such as adenovirus antigen test kits and mycoplasma antigen test kits.

Towns provides products to end users such as hospitals, medical practitioners, research institutes, and biotechnology ventures through pharmaceutical wholesalers. As of the end of April, the number of sales staff (people in charge of clinical reagent information) was only 35 people and about 13% of employees, and we have established a small number of elite sales systems where more than 60% of them have 10 years or more of industry experience.

As the main sales destination, sales to the Ministry of Health, Labor, and Welfare accounted for 48.2% of sales in the 22/6 fiscal year. Also, for Suzuken (9987 Tokyo Stock Exchange Prime, Passport Premium) and its group companies, the 22/6 period accounted for 20.3% of sales, and 73.0% of sales in the 23/6 period. In addition to this, pharmaceutical wholesalers such as Masaaki (Higashi-ku, Fukuoka-shi), Mediceo under the umbrella of Medipal Holdings (7459 TSE Prime), and Toho Pharmaceutical under the umbrella of Toho Holdings (8129 TSE Prime) are sales destinations.

The reason why the Ministry of Health, Labor, and Welfare accounted for a large ratio in the 22/6 period is that the Ministry of Health, Labor, and Welfare purchased antigen test kits while demand for antigen tests rapidly expanded due to the spread of the novel coronavirus infection. The reason why the composition ratio for the Suzuken Group rose significantly in the 23/6 period is that purchases by the Ministry of Health, Labor, and Welfare disappeared, but there was an upward trend for medical institutions directly responsible for testing patients.

Also, at the end of '21, a joint sales agreement for the novel coronavirus antigen test kit was signed with Shionogi Pharmaceutical (4507 Tokyo Stock Exchange Prime), and sales by Shionogi Pharmaceutical's MR etc. began. Towns is paying compensation for sales promotion activities to Shionogi Pharmaceutical.

Also, the overseas sales ratio, which they are considering expanding in the future, is 9.3% for the 22/6 period and 1.8% for the 23/6 fiscal year. Sales in the UK were significant during the 22/6 period.