I would like to begin my presentation about first half results in FY 2023, and the following are the key points. As for the Pharmaceutical segment, for which we received many questions after the announcement of the first quarter results, Kobayashi, COO of the business, will explain the key points of growth strategy. First, let me explain the key points in first half. Consolidated net sales for first half was JPY 546 billion, and operating profit was JPY 44.4 billion, resulting in an increase in both sales and profits. Especially, operating profit exceeded the initial plan by JPY 12.4 billion, maintaining the strong performance of first quarter. Details will be explained later by segment. Net income was JPY 27.9 billion.
This was mainly due to share of loss of entities accounted for using equity method, which was recorded in profit in previous year, and an increase in tax expenses. This was more than JPY 7 billion from the initial plan, but this was due to operating profit significantly exceeding the plan, as well as progress in the sales of strategic shareholdings. The dividend was increased by JPY 5 per share in first half, making it the 10th consecutive year of annual dividend increases. This is a summary by segment. Sales in the Food segment totaled JPY 445.4 billion, increased by 5.9% against previous year, almost in line with the plan. Operating profit increased 1.2% to JPY 29.6 billion, resulting in an increase in both sales and profit.
Looking at the factors behind the increase in profit, as shown in the graph, an increase in raw material costs was a negative factor of JPY 17.2 billion. In contrast, the positive effect of price hike was JPY 30.4 billion, which, as in the first quarter, exceeded the cost increase, and after excluding the JPY 10.5 billion effect of volume and product mix. While marketing expenses are being invested to recover volume, energy cost in manufacturing, including subsidies, are decreasing and have turned into profit increase. As for subsidiaries, the business in the United States performed well, but China and the feed business decreased in profit. The operating profit increased 14.6% compared to the plan announced in May.
The main reason for this were the energy costs and IT expenses were less than expected, while the volume of mainstay products in yogurt and cheese did not reach the plan, and the profit and loss of overseas business did not deteriorate as much as expected. Next is the Pharmaceutical segment. Net sales was JPY 100.8 billion, up 3.8% year-on-year. Operating profit was JPY 15.9 billion, up 8.5% year-on-year. Again, both sales and profit increased. As shown in the graph, mainly sales of antibacterial drugs increased as in the first quarter, but a decrease in the contract revenue of AstraZeneca's COVID vaccine had a negative impact on profits. In addition, there was a negative impact from NHI drug price revision and increased raw material costs.
On the other hand, at the cost level, although R&D expenses increased, the growth of domestic and overseas sales improved the production efficiency, including subsidiaries, and the decrease in expenses due to more efficient operation became apparent. We have significantly exceeded the plan announced in May. This is mainly due to the postponement of some R&D expenses to the second half, together with sales growth in Japan and increased profits at overseas subsidiaries. This is a slide we showed at the financial results meeting in May. We positioned FY 2023 as a period for making preparation for the new midterm business plan that will start next year, and we are focusing on the initiatives shown here. We've made a good progress in the first half, and as I explained earlier, the numbers are following.
In the second half, we will continue to make steady efforts to ensure this trend to continue into the next midterm business plan. From here, I'd like to explain the key points of the second half and the full year outlook based on the initiatives mentioned earlier. First, about the numbers. Sales for the full year have been revised to JPY 1,098,500,000,000 billion. Although slightly below the initial plan, there is no change in both Foods and Pharmaceutical expected to increase. On the other hand, operating profit was revised upward to JPY 80 billion. By segment, Food sales and profits are revised upward for full year.
Sales for the second half are expected to be in line with our initial plan, but profits for the second half are expected to be higher than our initial plan due to lower energy and other costs in the first half. Price hike have had a positive effect on profitability, but the recovery in volume is still in progress. We continue to address this issue in the second half. In the Pharmaceuticals, we have revised our full year forecast downward for both sales and profits. Sales are expected to remain strong in the second half, but profits have been revised down significantly. This is mainly due to postponement of R&D expenses to the second half, and exclusions of the contributions of ARCT-154 COVID-19 vaccine from the plan, as we do not expect it to contribute to earnings this fiscal year.
In the second half, we expect to post a year-on-year decrease in profit. Sales are expected to increase, particularly for antibacterial drugs, and influenza vaccine returns are expected to be on par with typical year, but R&D expenses are expected to increase by approximately JPY 4 billion. Since the base business itself is performing well, we will aim to have an upside based on the current forecast as a minimum level. Next, I will explain our efforts to achieve this plan. First, we will address cost increases. As shown in the graph on the right, price hikes were implemented for all products in FY 2023.
In the first half, as shown in the bar graph on the left, price hikes had the positive effects of JPY 30.4 billion, and the cost increases of JPY 17.9 billion, resulting in a positive effect of JPY 12.5 billion. Price hikes to date have been reflected in street prices and are now firmly in place. We need to keep monitoring the trend towards lower prices seen in some distributors, as well as trends in domestic milk prices, the cocoa market, and exchange rates, and continue to promote value-added products to keep prices firm, which will lead to recovery and growth in sales volume. Next, I will give an overview of our core business. First, the yogurt and cheese business.
In our mainstay products, Probio, based on the trend in the first half, we plan sales in the second half to be at the same level as the previous year. In the second half of last year, we strengthened our promotional activities, so the key point is how we can achieve this level. In R-1, R-1 The GOLD, shown in the lower left image, was launched in October, containing double the amount of EPS and at a higher unit price. The promotion campaign is designed to emphasize the function of EPS. The aim is to develop new users of regular R-1 and to cultivate loyal users through R-1 The GOLD.
Next, I will explain about yogurts other than functional yogurts. As shown in the graph above right, the sales price is on an upward trend after a series of price hikes. There are two challenges. One is to recover the volume of Bulgaria Yogurt, and the other is to nurture growth drivers other than Bulgaria Yogurt. First, about Bulgaria Yogurt. We will significantly review the product mix in the second half of the year, focusing on a drink-type yogurt, which has been a factor in weak sales. The key phrase will be reinforcement of personalized yogurt products that respond to the diversification of a customer's eating scenes. The large volume, 900 g drink type, for which price competition has become severe, has been discontinued. The medium volume product has been redesigned with added nutrients and priced at a higher unit price of JPY 235 .
Considering that the suggested retail price for the large volume type has been around JPY 300 , you can understand how high the price for the medium volume type is. The plain type, which was renewed with a new manufacturing method in March, is now available in 180 g, a portion for one person to finish. In this way, we will change our product lineup to suit the current times, and this will lead to a recovery in sales volume. In terms of growth drivers other than Bulgaria, we are nurturing SAVAS Yogurt and Meiji Kyushu Support. SAVAS Yogurt enjoyed double-digit growth in the first half of the year. With the launch of a new product in October, we have high expectations for the second half of the year as well.
Meiji Kyushu Support is a yogurt that uses V1 lactic acid bacteria to support nutrient absorption contained in vegetables, and then we will steadily expand the lineup of this product as well. Next is the chocolate and the gummy business. We have increased the prices repeatedly, and the business has been performing well, supported by such factors as a recovery in people's activities. In order to maintain this strong performance in the second half of the year, we will work on improving product quality and strengthening marketing as a set. We are particularly looking forward to the October launch of Chocolate Kouka W Plus, which has two functional claims. Chocolate Kouka itself has been performing well despite the price hikes while expanding its customer base, but we will cultivate a new customer base by adding products that can further appeal its functionality.
We will also work to enhance the value of existing products, such as milk chocolate. The hook in this process will be sustainable cacao. We will create a logo mark, like the one on the lower left, which will be placed on product packages. We will make sourcing ratio visible and display as a differentiation factor not found in other companies. We are thinking of taking in new trends, such as ethical consumption, or creating such a trend ourselves. We will promote added value that is not only functional and lead to sustainable growth. Next is the nutrition business. First is sports protein. Soy protein sales, which had been sluggish, have finally bottomed out, and then we expect the growth of strong products to make a straightforward contribution to overall growth.
We will enhance our whip promotions for SAVAS milk with increased protein content, and empower SAVAS with new premium ingredients, and expand the series as a whole. Infant formulas are also performing well. The contribution of liquid milk and in cubes is increasing year-on-year, and I think this is a good example of how products with technology and added value that other companies do not have, can conquer the market. Next, about the food business for B2B, which has been performing well. We are redefining and then reinforcing this business as one that contributes to expanding sales channels and strengthening development capabilities. First, about sales channel expansion. In the retail and the restaurant industries, as inflation continues to rise, there is a growing need for value-added products. To meet this need, we are not only expanding our existing B2B products, but also expanding our branded products for B2B use.
Specifically, in the second half of this fiscal year, we plan to have a Bulgaria Yogurt used as an ingredient in the products of a major convenience store, and we plan to put the Bulgarian mark on the packages of these products. In terms of strengthening development capability, we have high expectations for our self-developed product called Mizuneri. This is the, ganache developed as an ingredient for B2B, and it can be stored at room temperature. We have received strong inquiries from various fields, and we are working on the development of recipes and the menu using the application center. We hope to gain new insights from these effects with our business partners and leverage them for the development of our next products for consumers. Next, our overseas business. The graph on the left shows sales by region.
The figures in the balloon show growth rates in local currency terms, with double-digit growth in both China and the United States, which have a large share of sales. In the current fiscal year, profits are expected to be negative due to increased costs associated with the operation of a new plant in China and the business expansion. But first, we will strive to achieve solid sales growth. To give you details by region, first of all, in the United States, the Meiji brand of chocolate snacks with high added value and the Stauffer brand, which has penetrated the market as a commodity brand, are contributing to stable growth in the market that is bipolarized after COVID. Having those brands has contributed to the stable growth of the company.
At the same time, we are working to improve profitability and then plan to reduce the number of SKUs by more than 10% this fiscal year as well. As last year, we are concentrating management resources on product lines that can increase sales with profits. Next, China. Although there has been much talk about its sluggish economy and the consumption, the scale of our business there is still not that large, and we have achieved double-digit growth on the local currency basis. Of course, we are keeping a close eye on consumption trends, but since all of our businesses are mainly in the medium to high-end price range, we believe that the key to success is to offer products that are worth the price. In this sense, we have been able to increase sales of confectionery, ice cream, and B2B products because they are recognized for their unique value.
We will continue to strengthen our product capabilities so that we can maintain our superiority and differentiation from other companies' products. On the other hand, as we have reported in the past, we are currently reviewing product and then channel policies, utilizing local human resources and making use of their knowledge and the know-hows of the strong businesses of Meiji China, the regional headquarters, as a hub. In particular, we are working to strengthen local development of chilled milk products in light of the fact that the chilled milk products are suffering as local manufacturers are catching up. In the future, we intend to introduce new products developed through this process and grow them together with existing products.
I have explained the first half result summary, full year forecast, and the key points on sales in the Food segment. Mr. Kobayashi will now explain about the Pharmaceutical segment. Thank you for your attention.
I am Kobayashi, COO of Pharmaceutical segment. I will talk about the key points of our growth strategy for the pharmaceutical business. In order to shift to the infectious disease business, our specialty area, in the midst of pandemic, the Pharmaceutical segment has decisively implemented structural reform, as described here, to build a stable revenue base. We believe that there are three risks in developing our pharmaceutical business. One is a decline in the unit prices due to NHI price cut. The second is a breakdown in the value chain. And the third is the emerging new technologies, which has greatly accelerated due to pandemics. We believe that responding appropriately to these three risks is a strategic perspective that will support the sustainable growth of our business. The left side of the schema is an image of revenue contributions of ethical drugs after the 2023 midterm business plan.
With the exception of vaccines, we have been forced to operate our business in a highly volatile environment due to the impact of the NHI price revisions. Under circumstances, we have decisively implemented the structural reforms shown in the middle section, and have now shifted to the product portfolio shown on the right side for the future. Specifically, we have established essential drugs, such as vaccines and antibacterial agents, as a product portfolio that is not affected by NHI price revisions, and has become a stable foundation for our domestic business. In addition, we are designated as a stable supplier of essential antimicrobials. We believe that our efforts to strengthen the penicillin supply chain under the support of Japanese government, have also contributed to the strengthening of our business foundation.
In addition, as for the red portion of the product portfolio on the right, we intend to strengthen our portfolio of new drugs in our priority areas, and accelerate growth by responding to the risks with new technologies. This slide describes the upside of the growth with new drugs. I'd like to introduce here, other than COVID vaccines. We are finally approaching the launch phase of our new drug pipelines. First, ME3208, belumosudil, a drug for a rare hematological disease called chronic GVHD, is a breakthrough new drug with a completely new pharmacological action as a selective ROCK2 inhibitor. It has already been approved in the United States and designated breakthrough therapy. If all goes well, it will be approved in March and launched in May next year in Japan.
We have licensed belumosudil from Kadmon Corporation in the Sanofi group, and we have the rights to market the product in Japan and 12 Asian countries, and planning to roll out it gradually. Next is a 5-in-1 combination vaccine. KM Biologics pediatric tetravalent combination vaccine was already approved in September this year, and is scheduled to be launched in the first half of next year. We plan to start supplying the vaccine as a routine vaccination as early as possible. We hope that this will expand the market for pediatric routine vaccination and lead to the hexavalent vaccine, which is currently under development only by us. The two agents on the left are new drugs expected to be launched in the first half of next year. On the right are the two new drugs in the late stage development, OP0595 and ME3183.
OP0595, nacubactam, is currently in the midst of global phase III study, supported by AMED, which is expected to demonstrate the efficacy against the carbapenem-resistant bacteria. Carbapenem is the most potent antibacterial drug currently in clinical use. As a breakthrough antimicrobial agent, this drug expected to be approved as soon as possible.
Lastly, about ME3183. It's a PDE4 inhibitor for psoriasis treatment being developed in-house in the United States. The result of the phase II clinical trial conducted in Canada showed that it met the primary endpoint, which is a very good result. It is expected to become a global product of our company in the future. In any case, other than vaccines, we are now finally close to the launch timing for such new drugs. In order to counter the threat of new technological substitutes, we would like to strengthen our product lineup based on unmet medical needs in specific areas that we are good at. Next, please. This shows the COVID-19 vaccine development status in Japan. This document is published by the Ministry of Health, Labour and Welfare. As you can see, the Meiji Group is currently developing two modalities of vaccine.
Meiji Seika Pharma's self-amplifying messenger RNA vaccine, ARCT-154, and the KM Biologics inactivated vaccine, KD-414. In particular, as you can see, the domestic phase III clinical trial of ARCT-154 has already been completed, and we have already submitted an application for ARCT-154 as a primary immunization drug and as a booster drug. The result of this phase III trial are very favorable to the existing drug, and if all goes well, we expect to receive approval at the end of this month. The result of this trial have also been accepted for publication in a sister journal of The Lancet, and are expected to be published in December. If approved, this will be the world first approval of self-amplifying mRNA vaccine, and we believe it will be of great significance for Japan, which has lagged behind vaccine development, to take the lead in this next generation vaccine.
However, for following the recommendation of WHO, as well as the policy of the Japanese government, that vaccination after fall, winter this year should respond to the variant strains, such as XBB.1.5. ARCT-154 will not, unfortunately, be purchased by the government even if it is approved this time. However, as I mentioned earlier, development is progressing smoothly, and we expect to succeed in the development for the original strains. So we are currently receiving guidance and support from the authorities, and ARCT-154 have started an additional clinical trial for the variant strains. If all goes well, we believe that we will be able to respond to the variant strains in the fall and the winter of next year. We expect to be able to commercialize it next year.
In addition, we are now working on initiative to internalize this vaccine, and are currently constructing a manufacturing base for the API in Minamisoma, in cooperation with ARCALIS, and a manufacturing base for formulation in our Ashigara plant, both of which have been designated as dual-use projects by the Ministry of Economy, Trade and Industry. We are required to deal with the variant strains every year in the future. We believe that the domestic manufacturing platform for inoculation will be completed by the end of next year. In this way, we aim to play a role in strengthening the vaccine development and the production system in Japan. Next, please. Finally, I would like to mention the significance and potential for the practical application of these two COVID-19 vaccines.
We tend to forget the hardship we have gone through when it is past the peak, and although the COVID seems to be overshadowed by the influenza, the number of cases is still being monitored at the fixed point, and approximately 12,000 cases have been reported in one week. Although it has been subsiding, it is still occurring on a nationwide scale. As for the necessity of the COVID vaccine, according to the data released by Ministry of Health, Labour and Welfare, the autumn and winter inoculation began in September 26th of this year, and as of today, about 15 million people have been inoculated, and the vaccination is still ongoing. As COVID will become like an endemic after next year, I believe that the similar vaccination to that for influenza will be given for COVID in the next year and beyond.
The significance of developing two vaccines is to offer choices of vaccines that can be safely taken by both children and adults, and hence, to increase the vaccination rate. Above all, if we can successfully develop self-amplifying mRNA vaccine, we can demonstrate the efficacy and the usefulness of the new self-amplifying mRNA technology, which were pioneered in the world for the first time in Japan, and we believe that we can lead the development of vaccines in the world. So the COVID-19 vaccine is the only entrance to this platform. We would like to use this modality to create valuable drugs that can contribute to a wide range of diseases.
In addition, we would like to complete the creation of platform to quickly respond to variant strains that will continue to emerge in the future, and contribute to strengthening the vaccine development and production system, to steadily provide the vaccines to the public without being affected by the circumstances in other countries. In any case, we would like to further enhance our competitive advantage as a corporate group that is unique in the field of infectious diseases that we are good at. This concludes my explanation. Thank you very much for your attention.