Chugai earns more from drugs it discovers and others sell

Chugai Pharmaceutical is Roche's Japanese partner and a drug discoverer in its own right. First-half 2026 core revenue was JPY 663.3 billion, up 14.7%. Chugai-originated products sold through partners include Foundayo, the oral GLP-1 drug licensed to Eli Lilly, and Nemluvio, licensed to Galderma.

The technology

Chugai describes Enspryng as developed using its proprietary antibody engineering technologies. Its newer work includes macrocyclic peptides, with AQUA07 the third project to reach the clinic, and small-molecule approaches such as the RAF-MEK molecular glue SPYK04, which it licensed to InxMed in September.

The product to watch is NXT007 for hemophilia A. Chugai reported proof of concept from the high-dose cohort of a phase 1/2 trial, and two phase 3 trials, one against emicizumab and one against factor VIII prophylaxis, are recruiting.

The odds

NXT007's phase 3 trials are the clearest binary risk. The BIO/Informa/QLS 2011-2020 base rate is 57.8% from phase 3 to filing and 90.6% from filing to approval for all drugs. Hematology programs reach approval from phase 1 at 23.9%, against 7.9% for all drugs. NXT007 is tested against effective current treatments, so the primary bleed-rate comparison against emicizumab is the harder of the two.

Several other programs are nearer. The company said it filed eight applications in Japan in the first half, and expects the highest number of filings it has ever planned. Chugai said in April it was preparing an Enspryng filing in MOGAD within the year, and the FDA had accepted the thyroid eye disease filing with priority review. Sparsentan is due to be filed in Japan in 2026 after positive phase 3 results.

The money

Chugai is highly profitable. Its H1 core operating profit of JPY 329.1 billion is about 49.6% of revenue. StockAnalysis lists cash and short-term investments of JPY 962.6 billion at June 30. Management kept the forecast of JPY 1,345.0 billion in revenue and JPY 670.0 billion in core operating profit.

Domestic and overseas product sales were JPY 237.9 billion and JPY 328.6 billion in the half, and other revenue was JPY 96.8 billion, up 44.5%. The mix is shifting toward licensing income. The 2026 forecast calls for other revenue of JPY 245.0 billion, up 36.0%, while overseas product sales are forecast to fall 0.6%.

The risks

Dependence on Roche is the first. Roche's interest in Chugai was 61.1% at December 31, 2025, according to Roche's 2025 finance report, and Chugai's overseas sales rely on exports to Roche of Hemlibra and Actemra.

Second is earnings quality. The company itself said first-half other revenue was lifted by one-time income, which will not repeat. Third is price pressure at home: its forecast cites Japanese drug price revisions and generics as a drag on domestic sales.

Our read

Chugai combines high margins with a large cash balance, and its royalty income is rising as Foundayo launches. Lilly said it had submitted orforglipron in more than 40 countries and plans to launch in each shortly after approval, which is the base for Chugai's royalty stream. The story is less about a single drug and more about whether its in-house research can keep producing products that others sell.

The next tests are practical: NXT007 enrollment, the sparsentan filing, and the Korean subsidiary due on November 2. Foundayo royalties are the number to watch, since the company has not broken them out in the figures reviewed here.