# Sumitomo Pharma (4506.JP)

Canonical: https://gigainvestors.com/s/4506.JP

Analysis as of: 2026-10-15T07:10:20.091Z. Financial observations: FY2013–FY2026.

Listing currency: JPY. Reporting currency: JPY.

## Verdict

Not a wonderful business

Quality tests for Buy: not passed (profit record: fail; earnings resilience is evidence only). Published buy qualification: no.

Share price: JPY 1,842.00 per share; close as of 2026-10-15.

Estimated value: low JPY 1,106.58 per share, central JPY 1,246.92 per share, high JPY 1,433.74 per share. Buy at or below the central value JPY 1,246.92 per share. Valuation as of 2026-10-15T07:10:20.091Z; scenarios are not confidence intervals.

Expected annual return: 7.6% at the stated quote. About 7.6% a year at today's price (required return 10.0%). required return 10.0% a year (10% floor; JP 10-year bond 2.9% + 4 points).

## Checklist

### understandable: fail

- 3 revenue declines in the last 10 years (informational)

- negative average operating margin

- operating margin variation exceeds 0.35

- Financial history: 10 years

- Years with declining revenue: 3

- Years with a net loss: 2

- Operating margin variation: 40.28×

Chart: Operating margin; fiscal year observations.

- FY2017: 0.13×

- FY2018: 0.19×

- FY2019: 0.13×

- FY2020: 0.17×

- FY2021: 0.14×

- FY2022: 0.11×

- FY2023: -0.14×

- FY2024: -1.13×

- FY2025: 0.07×

- FY2026: 0.24×

### moat: fail

- ROIC median below threshold

- ROIC worst years below threshold (more than 1 bad year allowed)

- Recent gross margin fell 15.9pp below the typical margin (limit 4pp)

- ROIC, median of available years: 10.5%

- ROIC, second-lowest year: -15.7%

- Typical minus recent gross margin: 15.9 pp

- Typical gross margin (annual median): 72.5%

- Recent gross margin (lower of latest and 3-year median): 56.7%

- Years with nonpositive capital: 0

- Capital spending / revenue: 2.7%

- ROIC including acquisitions, ten-year median: 9.7%

Chart: ROIC excluding acquisitions; fiscal year observations.

- FY2017: 12.1%

- FY2018: 22.3%

- FY2019: 14.8%

- FY2020: 9.7%

- FY2021: 9.6%

- FY2022: 8.2%

- FY2023: -15.7%

- FY2024: -81.0%

- FY2025: 11.3%

- FY2026: 42.2%

### economics: fail

- owner earnings cash conversion below threshold

- Cash conversion uses consolidated totals: No

- Owner earnings, five-year total: JPY -120B

- Net income, five-year total: JPY -203B

- Return on incremental invested capital: >100%

- Working capital / revenue, annual change: 0.3 pp

- Working capital / revenue, change between three-year averages: 4.8 pp

- Working capital / revenue, final three-year average: 36.3%

Chart: Owner earnings · five years; fiscal year observations.

- FY2022: JPY 77B

- FY2023: JPY -50B

- FY2024: JPY -297B

- FY2025: JPY 33B

- FY2026: JPY 118B

### management: fail

- Historical market-dollar context (not the management verdict): 2017 to 2026 (9 years)

- buybacks unrelated to price (informational)

- ROIC first 3 years vs last 3 years: 14.8% vs 11.3%

- Per-share earnings: 78.82 to 59.49 (three-year endpoint medians)

- per-share value declined or ends nonpositive

- Management verdict uses per-share economic progress: Yes

- Ordinary dilution, 10-year annual growth: -0.0%

- Ordinary dilution, 5-year annual growth: -0.0%

- Market cap gain: JPY 94B

- Cumulative retained earnings: JPY -205B

- Diluted shares, 10-year annual growth: -0.0%

- Diluted shares, 5-year annual growth: -0.0%

- $1 test, starting fiscal year: FY2017

- $1 test, ending fiscal year: FY2026

- Per-share value growth: -3.5%

- Per-share value change: JPY -19.33

- Per-share value, starting three-year median: JPY 78.82

- Per-share value, ending three-year median: JPY 59.49

- Buyback history: 0 years

- Debt-funded buybacks: No

- Acquisition spending: JPY 507B

- Cumulative net income, 10 years: JPY 28B

- ROIC, first three-year median: 14.8%

- ROIC, last three-year median: 11.3%

Chart: Earnings per share; fiscal year observations.

- FY2017: JPY 78.82

- FY2018: JPY 134.53

- FY2019: JPY 122.39

- FY2020: JPY 102.58

- FY2021: JPY 141.50

- FY2022: JPY 141.99

- FY2023: JPY -187.55

- FY2024: JPY -792.79

- FY2025: JPY 59.49

- FY2026: JPY 268.99

### accounting: pass

- latest-year receivables to sales index (DSRI) exceeds 1.465

- Sloan accruals: 4.4%

- Receivables to sales index (DSRI): 1.54×

- Restructuring years, last five: 0

- Stock compensation / operating cash flow: 0.0%

- Earnings backed by cash: Yes

- Operating cash / earnings: 0.67×

- Accounting red flags: 1

- Goodwill and intangibles / equity: 1.27×

Chart: Sloan accruals; fiscal year observations.

- FY2017: 1.6%

- FY2018: -4.9%

- FY2019: -0.0%

- FY2020: -0.4%

- FY2021: -6.1%

- FY2022: 1.9%

- FY2023: -7.6%

- FY2024: -8.1%

- FY2025: 1.0%

- FY2026: 4.4%

## Holders

## Price story

Down 33% since Nov 2025 · sales +13.7%

Story as of 2026-10-16T10:00:14.185Z; price observation 2026-10-15.

Price needs cash profits to grow 6.1% a year for ten years

### Sales · FY2025–2026

sales +13.7%; source https://disclosure2dl.edinet-fsa.go.jp/searchdocument/pdf/S100YH3M.pdf; observed 2026-06-23.

- FY2017: JPY 408B 

- FY2018: JPY 467B 

- FY2019: JPY 459B 

- FY2020: JPY 483B 

- FY2021: JPY 516B 

- FY2022: JPY 560B 

- FY2023: JPY 556B 

- FY2024: JPY 315B 

- FY2025: JPY 399B 

- FY2026: JPY 453B 

### Gross margin · FY2026

gross margin 56.7%; source https://disclosure2dl.edinet-fsa.go.jp/searchdocument/pdf/S100YH3M.pdf; observed 2026-06-23.

- FY2017: 76.3% 

- FY2018: 75.9% 

- FY2019: 75.3% 

- FY2020: 73.1% 

- FY2021: 73.3% 

- FY2022: 71.9% 

- FY2023: 67.8% 

- FY2024: 59.8% 

- FY2025: 61.5% 

- FY2026: 56.7% 

## Owner memo

Memo as of 2026-10-16T08:06:05.509Z.

### How it makes money

Annual sales are JPY 453.3 billion.

- Source: https://disclosure2dl.edinet-fsa.go.jp/searchdocument/pdf/S100YH3M.pdf (filed 2026-06-23); FY2026: revenue 453294000000; grossProfit 256893000000; margin = grossProfit / revenue.

### Why customers stay

Margins ranged from 56.7% to 61.5% during 2024–26; it earns 10.5% on its capital.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-06-23); FY2024: grossProfit / revenue = 59.8%.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-06-23); FY2025: grossProfit / revenue = 61.5%.

- Source: https://disclosure2dl.edinet-fsa.go.jp/searchdocument/pdf/S100YH3M.pdf (filed 2026-06-23); FY2026: grossProfit / revenue = 56.7%.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-06-23); 10-year return on capital observations [[2017,0.12070872932066173],[2018,0.222788055245655],[2019,0.1479747286712954],[2020,0.09740322749055769],[2021,0.09561275426012858],[2022,0.0817699370102421],[2023,-0.1565048691104866],[2024,-0.8099533105857268],[2025,0.11323261747235425],[2026,0.42218332710574447]]; median 0.10531792248145597. ROIC follows the displayed moat series; financial companies use return on tangible equity.

### Where the cash goes

Paid dividends in 10 of 10 years.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-06-23); FY2017: growth capex 401000000; upkeep 13058000000; owner earnings 31316000000. Growth capex / owner earnings = 0.012804955933069358.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-06-23); FY2018: growth capex 0; upkeep 12354000000; owner earnings 53981000000. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-06-23); FY2019: growth capex 0; upkeep 12914000000; owner earnings 48630000000. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-06-23); FY2022: growth capex 0; upkeep 13494000000; owner earnings 76768000000. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-06-23); FY2025: growth capex 0; upkeep 13030000000; owner earnings 32552000000. Growth capex / owner earnings = 0.

- Source: https://disclosure2dl.edinet-fsa.go.jp/searchdocument/pdf/S100YH3M.pdf (filed 2026-06-23); FY2026: growth capex 0; upkeep 7312000000; owner earnings 117799000000. Growth capex / owner earnings = 0.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-06-23); Dividend observations: [[2017,7151000000],[2018,7944000000],[2019,11122000000],[2020,13106000000],[2021,11120000000],[2022,11126000000],[2023,11125000000],[2024,2792000000],[2025,3000000],[2026,2000000]]. Zero only counted when supported by a complete cash-flow statement.

### What the price says

The price assumes cash profits grow 6.1% yearly over ten years; actual growth was 38.5%.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-06-23); Ten-year compound average after fade. Initial solved rate 0.07437528964369322. Price 1842; FX 1; discount 0.1; same standard ten-year fade to terminal 0.03. FY2016 owner earnings/share 11.424981151042976 → FY2026 296.5119825012867. Closing-price date 2026-10-15.

## Monthly share-price history (JPY per share)

- 2016-11: JPY 1,869.00 per share

- 2016-12: JPY 2,010.00 per share

- 2017-01: JPY 1,904.00 per share

- 2017-02: JPY 1,983.00 per share

- 2017-03: JPY 1,838.00 per share

- 2017-04: JPY 1,828.00 per share

- 2017-05: JPY 1,690.00 per share

- 2017-06: JPY 1,533.00 per share

- 2017-07: JPY 1,548.00 per share

- 2017-08: JPY 1,494.00 per share

- 2017-09: JPY 1,464.00 per share

- 2017-10: JPY 1,617.00 per share

- 2017-11: JPY 1,628.00 per share

- 2017-12: JPY 1,674.00 per share

- 2018-01: JPY 1,612.00 per share

- 2018-02: JPY 1,643.00 per share

- 2018-03: JPY 1,786.00 per share

- 2018-04: JPY 1,995.00 per share

- 2018-05: JPY 2,263.00 per share

- 2018-06: JPY 2,345.00 per share

- 2018-07: JPY 2,163.00 per share

- 2018-08: JPY 2,365.00 per share

- 2018-09: JPY 2,609.00 per share

- 2018-10: JPY 2,362.00 per share

- 2018-11: JPY 3,700.00 per share

- 2018-12: JPY 3,495.00 per share

- 2019-01: JPY 2,546.00 per share

- 2019-02: JPY 2,747.00 per share

- 2019-03: JPY 2,737.00 per share

- 2019-04: JPY 2,450.00 per share

- 2019-05: JPY 2,229.00 per share

- 2019-06: JPY 2,043.00 per share

- 2019-07: JPY 2,007.00 per share

- 2019-08: JPY 1,856.00 per share

- 2019-09: JPY 1,775.00 per share

- 2019-10: JPY 1,902.00 per share

- 2019-11: JPY 2,067.00 per share

- 2019-12: JPY 2,130.00 per share

- 2020-01: JPY 1,903.00 per share

- 2020-02: JPY 1,561.00 per share

- 2020-03: JPY 1,403.00 per share

- 2020-04: JPY 1,498.00 per share

- 2020-05: JPY 1,523.00 per share

- 2020-06: JPY 1,490.00 per share

- 2020-07: JPY 1,316.00 per share

- 2020-08: JPY 1,342.00 per share

- 2020-09: JPY 1,383.00 per share

- 2020-10: JPY 1,222.00 per share

- 2020-11: JPY 1,323.00 per share

- 2020-12: JPY 1,523.00 per share

- 2021-01: JPY 1,697.00 per share

- 2021-02: JPY 1,683.00 per share

- 2021-03: JPY 1,927.00 per share

- 2021-04: JPY 1,895.00 per share

- 2021-05: JPY 2,086.00 per share

- 2021-06: JPY 2,328.00 per share

- 2021-07: JPY 1,889.00 per share

- 2021-08: JPY 1,972.00 per share

- 2021-09: JPY 1,998.00 per share

- 2021-10: JPY 1,607.00 per share

- 2021-11: JPY 1,382.00 per share

- 2021-12: JPY 1,325.00 per share

- 2022-01: JPY 1,246.00 per share

- 2022-02: JPY 1,263.00 per share

- 2022-03: JPY 1,208.00 per share

- 2022-04: JPY 1,157.00 per share

- 2022-05: JPY 1,103.00 per share

- 2022-06: JPY 1,091.00 per share

- 2022-07: JPY 1,039.00 per share

- 2022-08: JPY 1,039.00 per share

- 2022-09: JPY 1,031.00 per share

- 2022-10: JPY 1,037.00 per share

- 2022-11: JPY 1,067.00 per share

- 2022-12: JPY 999.00 per share

- 2023-01: JPY 910.00 per share

- 2023-02: JPY 853.00 per share

- 2023-03: JPY 810.00 per share

- 2023-04: JPY 851.00 per share

- 2023-05: JPY 637.00 per share

- 2023-06: JPY 639.00 per share

- 2023-07: JPY 589.40 per share

- 2023-08: JPY 508.50 per share

- 2023-09: JPY 535.70 per share

- 2023-10: JPY 460.00 per share

- 2023-11: JPY 468.00 per share

- 2023-12: JPY 466.00 per share

- 2024-01: JPY 434.00 per share

- 2024-02: JPY 372.00 per share

- 2024-03: JPY 404.00 per share

- 2024-04: JPY 399.00 per share

- 2024-05: JPY 305.00 per share

- 2024-06: JPY 405.00 per share

- 2024-07: JPY 418.00 per share

- 2024-08: JPY 669.00 per share

- 2024-09: JPY 596.00 per share

- 2024-10: JPY 528.00 per share

- 2024-11: JPY 564.00 per share

- 2024-12: JPY 563.00 per share

- 2025-01: JPY 610.00 per share

- 2025-02: JPY 740.00 per share

- 2025-03: JPY 729.00 per share

- 2025-04: JPY 787.00 per share

- 2025-05: JPY 760.00 per share

- 2025-06: JPY 971.00 per share

- 2025-07: JPY 1,324.00 per share

- 2025-08: JPY 1,525.00 per share

- 2025-09: JPY 1,711.00 per share

- 2025-10: JPY 1,684.50 per share

- 2025-11: JPY 2,730.00 per share

- 2025-12: JPY 2,318.00 per share

- 2026-01: JPY 2,297.00 per share

- 2026-02: JPY 2,524.00 per share

- 2026-03: JPY 2,075.50 per share

- 2026-04: JPY 1,719.50 per share

- 2026-05: JPY 1,623.00 per share

- 2026-06: JPY 1,501.00 per share

- 2026-07: JPY 1,248.00 per share

- 2026-08: JPY 1,554.00 per share

- 2026-09: JPY 1,626.50 per share

- 2026-10: JPY 1,597.50 per share

## Annual estimated value (JPY per share)

- FY2026: low JPY 1,106.60 per share, central JPY 1,246.94 per share, high JPY 1,433.77 per share

Historical values use today's bond yield for every fiscal year

Historical values use today's FX rate into trading currency for every fiscal year

Historical values use current restated fundamentals and current commodity classification; they are not point-in-time estimates

Prior published observations retained from 2026-10-15T07:10:20.091Z where newer inputs omit a numeric field or fiscal period.

## Sources

[Original EDINET filing](https://disclosure2dl.edinet-fsa.go.jp/searchdocument/pdf/S100YH3M.pdf); period 2026-03-31, filed 2026-06-23.

Estimates depend on assumptions and are not guarantees or investment advice. Underlying data remains subject to its source licenses; public reading does not grant bulk redistribution rights.

## Reported holder observations