Astellas Pharma (ALPMF, Financial) (ALPMY, Financial) is a Japanese drug company specializing in urology, oncology and transplant drugs. Sales have been growing and the stock is reasonably priced. The pipeline is huge and aging Baby Boomers are sure to continue to use the company's products. It is a major holding of IVA International Fund.
Astellas' market cap is ¥3.874 trillion ($31.5 billion). For reference, it takes 123 yen to buy one dollar. The company estimates that it will produce ¥1.384 trillion ($11.25 billion) in sales in FY2015. The fiscal year ends in March 2016. It also estimates it will earn ¥80.76 per share in FY2015. Astellas earned ¥69.37 per share in 2014, and ¥59.11 per share in 2013. The dividend yield is 1.85%, while the forward PE is 21.2. Not a bad price for that type of growth.
For the first six months of 2015, sales were ¥687.5 billion ($5.59 billion) and EPS was ¥47.3. Both were up 15.7% from the first six months of FY 2014.
The balance sheet shows ¥388 billion ($3.15 billion) in cash, ¥372 billion ($3 billion) in accounts receivable, and ¥120 billion ($979 million) in financial assets. I assume financial assets is stock held in other companies. The liability side shows ¥203.8 billion ($1.656 billion) in accounts payable and from what I can tell, next to no debt. There are other liabilities but they are negligible. Moody's rates their liabilities as A1.
XTANDI is one of the company's major sellers and is used to treat prostate cancer. VESIcare and Myrbetriq are used in overactive bladder treatment. Prograf is used after an organ transplant. Lexiscan is used to prepare for a nuclear heart scan. These are all drugs that older folks in the developed world use. As people in developed countries like Japan and the U.S. continue aging, these drugs should experience sales growth. Here is a link to its pipeline.
Astellas acquired stem cell pioneer Ocata Therapeutics in November for $379 million. Astellas also sold off its dermatology unit to Leo Pharmaceuticals last month for $736 million.
Growth has been outstanding. According to Morningstar, sales were ¥944 billion ($7.7 billion) in 2011 and EPS was ¥29.27. Trailing 12 month EBITDA is ¥302 billion ($2.45 billion). Again, outstanding. Operating margins are 12%, which is very profitable. Return on equity is 12.89%.
Japanese annual reports are a little hard to read. I didn't notice any major shareholders or funky dual voting stock structures. IVA Funds and First Eagle Investment are major holders, along with a few Fidelity international funds.
Before I'd make a purchase in Astellas, I'd have to learn more about its drug pipeline. This article merely looks at financials and a little information on the company. It's too bad that there is not more coverage in the U.S. My guess as to why is that the Japanese aren't known as pharmaceutical leaders like the U.S. and Europeans. The major investment banks probably have enough pharma to follow and don't want to add another name to their stable.
What investors should look out for is a sell-off in the biotech markets. If there is a sell-off, Astellas goes too. It's just that simple. The S&P Biotech ETF (XBI)Â sold off in June, rebounded in September, and seems to headed back down. Now might be a better time to get acquainted with Astellas, but not to buy.
Astellas is an interesting stock. The financials are quite impressive with growing sales and low liabilities. I'd but this stock before I'd buy 90% of the other pharmaceutical stocks out there. The stock deserves more coverage.
