Pharmaceuticals: Earnings Outlook (Apr-Jun) Stock picks heading into a phase of sector reevaluation

Research evidence excerpt

Pharmaceuticals: Earnings Outlook (Apr-Jun) Stock picks heading into a phase of sector reevaluation

J P M O R G A N Asia Pacific Equity Research

09 July 2026

Pharmaceuticals: Earnings

Outlook (Apr-Jun)

Stock picks heading into a phase of sector reevaluation

Looking at pharmaceutical sector share price trends since Jan-Mar results, we note Japan Equity Research

that the sector has been relatively weak due to the concentration of funds in

Biotechnology & Pharmaceuticals/

semiconductor and AI-related stocks. In addition, some companies announced Medical Technologies & Services

guidance that fell short of market expectations, while others have run out of short- AC Seiji Wakao, Ph.D.

term positive news flow, resulting in varying levels of performance even within the

(81-3) 6736-8612

sector. However, excluding the impact of patent expirations for individual seiji.wakao@jpmorgan.com

products, we expect Apr-Jun results to confirm strong fundamentals for the sector, Yugo R. Kamimura, Ph.D.

which is not affected much by macroeconomic factors. There are also several (81-3) 6736-8635

pipeline-related catalysts for the second half of the year, which we expect will yugo.kamimura@jpmorgan.com

trigger a reassessment of the sector. We recommend companies with strong Naoko Saito

fundamentals and significant share price catalysts. Our picks among large-cap (81-3) 6736-8693

stocks are Otsuka Holdings followed by Chugai Pharmaceutical, and among small naoko.saito@jpmorgan.com

and mid-cap stocks, Santen Pharmaceutical and Sumitomo Pharma. JPMorgan Securities Japan Co., Ltd.

• Otsuka Holdings: We expect FY2026 business profit to remain in line with

that of FY2025 given Voyxact’s strong market penetration and the limited

impact of generics on Jynarque and Abilify Maintena. We expect Otsuka