Introduction
Eisai has announced a policy of investing approximately ¥1 trillion over the three years through the fiscal year ending March 2029 in research and development and the acquisition of new drug candidates. The plan is to allocate about ¥500 billion to in-house research and development and about ¥500 billion to acquiring new drug candidates from external companies, including through licensing deals. Behind this move is the patent expiration of its key anticancer drug, Lenvima. Generic versions of Lenvima may be launched in Europe from April 2027 and in the United States from June 2030 onward, making a future decline in sales difficult to avoid.
At the same time, Eisai aims to raise its revenue to ¥1 trillion in the fiscal year ending March 2029 through the growth of its Alzheimer’s disease drug lecanemab, marketed under the product name Leqembi, and its insomnia treatment Dayvigo. This ¥1 trillion investment can be seen as a major management decision aimed at reviewing a revenue structure that has depended heavily on Lenvima and securing the next sources of growth.
Patent Expiration Is an Inevitable Turning Point for Pharmaceutical Companies
For pharmaceutical companies, the patent expiration of a key drug is an extremely significant management risk. While a drug is protected by patents, a company can maintain high profitability. Once the patents expire, however, generic drugs enter the market, making price competition and a decline in market share more likely. In the case of a drug with a large sales scale like Lenvima, the impact directly affects the company’s overall revenue structure.
What is notable about this news is that Eisai is not treating the expected decline in Lenvima sales as merely a temporary issue, but rather as an opportunity to reorganize its business portfolio. Lenvima’s revenue in the fiscal year ending March 2029 is expected to be around ¥250 billion, down 27% from the fiscal year ending March 2026. This is a significant decrease, but at the same time, it also means that Lenvima still has a period during which it can generate a certain level of revenue.
In other words, Eisai is trying to build its next pillar of growth before Lenvima’s earnings fully diminish. Committing substantial funds at this timing to acquiring new drug candidates from external sources is both a defensive move and an offensive decision to capture growth opportunities.
The ¥500 Billion Allocation for External Licensing Marks a Major Shift in Policy
A key point in this plan is that Eisai will allocate approximately ¥500 billion not only to in-house research and development, but also to the acquisition of new drug candidates from external companies. During the three years through the fiscal year ending March 2026, research and development expenses were also at a high level of about ¥499.3 billion, but investment in new drug candidates was reportedly minimal. In other words, Eisai is expanding its investment stance from a conventional focus on in-house development to a broader approach that actively incorporates external technologies and drug candidates.
This is also consistent with the broader trend in the pharmaceutical industry. New drug development has a low probability of success and requires both time and substantial cost. It has become increasingly difficult for a company to secure a sufficiently promising pipeline on its own. As a result, it has become common for major pharmaceutical companies to bring in promising drug candidates from biotech ventures or other companies and enhance their value through late-stage development and commercialization.
It is also realistic that Eisai is first considering licensing drug candidates in the oncology field that are already in late-stage development. Early-stage candidates can offer large upside if successful, but they also involve high uncertainty. Late-stage development candidates, by contrast, already have a certain amount of clinical data, making investment decisions easier. For Eisai, which wants to secure post-Lenvima revenue sources relatively quickly, targeting late-stage assets is a rational choice.
The Key to Leqembi’s Growth Is Not Only the “Value of the Drug”
Another important element of Eisai’s growth strategy is Leqembi, its Alzheimer’s disease drug. Leqembi is attracting significant expectations in the field of Alzheimer’s disease, but expanding its sales requires not only the efficacy of the drug itself, but also the establishment of diagnostic and administration systems.
The news also reports that COO Keisuke Naito stated that the spread of definitive diagnosis through blood testing will be an important key to making major progress toward the fiscal year ending March 2029. This is a very important perspective. Dementia drugs cannot become widespread unless there is medical infrastructure capable of properly identifying eligible patients, diagnosing them early, and enabling continuous treatment.
In particular, Alzheimer’s disease treatment involves complex relationships among patients themselves, their families, medical institutions, testing systems, and insurance systems. Therefore, the growth of Leqembi is not simply a matter of “selling a good drug.” It will depend on whether society as a whole can establish a smooth pathway from diagnosis to treatment. For Eisai, this is a pharmaceutical business, but it is also a business that relates to the broader healthcare system.
Aggressive Investment Using Debt Also Involves Risks
In this plan, Eisai has also indicated that it will use debt, in addition to operating cash flow, to fund its investments. The company intends to diversify its financing methods, including domestic straight bonds, hybrid bonds, and foreign currency-denominated bonds. In April this year, Eisai reportedly established a corporate bond issuance framework for the first time in 18 years and plans to issue ¥300 billion over two years.
This is a point on which opinions may differ. Funds are necessary to make growth investments, and using debt to build future revenue sources is itself rational compared with accepting low growth. On the other hand, if the development of in-licensed drug candidates fails or if they do not generate the expected sales, only the financial burden may remain.
Investment by pharmaceutical companies differs from investment in factories or equipment. It is investment in intellectual assets, where the probability of success is difficult to predict. Licensing deals and M&A can strengthen a pipeline in a short period if successful, but acquisition prices and licensing costs tend to rise. In particular, promising late-stage assets are also targeted by other companies, so if competition intensifies, the hurdle for recovering the investment will also rise.
In that sense, it is important that Eisai has newly introduced adjusted ROIC and set a target of 9% for the fiscal year ending March 2029. This indicates a stance of focusing not merely on expanding sales scale, but on how much profit can be generated from the capital invested. Going forward, the key question will not be how much Eisai invests, but how much those investments lead to profitable results.
From Dependence on Three Core Drugs to the Next Portfolio
Eisai positions Lenvima, Leqembi, and Dayvigo as the three core drugs at the center of its growth. The structure is to expand revenue from existing businesses through these three drugs while using the earnings to invest in the next new drug candidates.
However, if Eisai relies only on these three core drugs, it will eventually face the same problem again. Continuous pipeline renewal is indispensable for the growth of a pharmaceutical company. While current core drugs are generating earnings, the company needs to develop multiple candidates that can become the next core products.
This ¥1 trillion investment is precisely a stepping stone for that purpose. In particular, the fact that Eisai is exploring investment opportunities in both oncology and neurology also reflects the company’s distinctive character. If Eisai can maintain its strength in oncology, where Lenvima has established a strong presence, while also increasing its presence in neurology centered on Leqembi, it will lead to a more diversified revenue base.
Conclusion
At first glance, Eisai’s ¥1 trillion investment appears to be a highly offensive strategy. However, behind it lies the clear crisis of Lenvima’s patent expiration. In other words, this investment is both an offensive investment aimed at growth and a defensive investment to prepare for declining revenue from a core drug.
What matters is not the investment amount itself. The key issues are how accurately Eisai can identify drug candidates to bring in from outside, how far it can establish the diagnostic systems needed for the spread of Leqembi, and whether it can convert debt-funded investment into results with high capital efficiency.
For pharmaceutical companies, patent expiration is an unavoidable fate. However, whether a company can prepare its next source of growth before that point arrives can greatly change its subsequent corporate value. Eisai’s current plan is a major bet aimed at drawing a growth scenario for the post-Lenvima era. Going forward, the greatest point of attention will be how the announced investment policy actually leads to the acquisition of drug candidates and concrete business results.