Clarifying the path for CDMO

Research evidence excerpt

Clarifying the path for CDMO

Global Markets Research

29 July 2026Terumo

4543.T 4543 JP / EQUITY: JAPAN PHARMACEUTICALS

Clarifying the path for CDMO Rating Up from Neutral Buy

We raise our rating to Buy, hike our target price to ¥2,900 Target price

Increased from JPY JPY 2,900

2,100We raise our rating to Buy; improved understanding of CDMO business should ease

stock market's concerns Closing price

After conducting a detailed analysis of the circumstances affecting Terumo's contract 28 July 2026 JPY 2,289.0

development and manufacturing organization (CDMO) business, including the Leverkusen

plant in Germany, we now believe the CDMO business is not as much a cause for concern Implied upside +26.7%

as the stock market assumes, but rather should be valued in terms of upside potential.

Generally speaking, companies engaged in CDMO do not disclose their contract

counterparties, which creates significant information asymmetry between companies and Relative performance chart

the stock market. Conversely, once the equity market begins to gain confidence in the

outlook for the CDMO business, concerns about acquisition-related uncertainties should

recede.

Reasons for confidence in CDMO outlook

(1) Zeon [4205] is ramping up production of cyclo olefin polymer (COP), the raw material

used in Terumo's plastic syringe PLAJEX, which is used in CDMO. Zeon is also building

the Tokuyama East Plant (Shunan City, Yamaguchi Prefecture) near Terumo Yamaguchi.

(2) CDMO projects tend to expand from companies with which a firm already has business

relationships. Terumo's partnerships began with Kyowa Kirin [4151], with FKB becoming

the current mainstay product, and this relationship now extends to Biocon [BIOS IN],

India's largest biopharmaceutical company.