This is Okuzawa. Thank you for taking out of your busy schedule today to attend Daiichi Sankyo's financial results briefing. I will now explain the financial results for 2024, which were announced at 1:00 P.M. today on the basis of the presentation materials. Please see slide three. We will discuss consolidated financial results for FY 2024, business update, R&D update, five-year business plan update, FY 2025 forecast in this order. Dr. Takeshita, Global R&D Head, will give the R&D update. We will take your questions at the end of the presentation. Please refer to slide four. This slide shows a summary of consolidated financial results for FY 2024. Revenue increased JPY 284.6 billion, or 17.8% year-on-year, to JPY 1 trillion 886.3 billion. Cost of sales increased JPY 1.0 billion from the previous year. HG&A expenses increased JPY 97.5 billion, and R&D expenses increased JPY 68.5 billion.
As a result, core operating profit increased JPY 117.6 billion, or 60.2%, to JPY 312.8 billion. Operating profit, including temporary income and expenses, increased by JPY 120.3 billion, or 56.9%, to JPY 331.9 billion, and profit attributable to the parent company rose by JPY 95.0 billion, or 47.3%, to JPY 295.8 billion. The exchange rate for the dollar was 152.57 yen per U.S. dollar, a depreciation of 7.95 yen per dollar, and 163.74 yen per euro, a depreciation of 6.95 yen per euro year-on-year. Please refer to slide five. I will now explain the factors behind the year-on-year positive and negative factors. Revenue increased by JPY 284.6 billion year-on-year, and I will explain the breakdown by business unit. First, the Japan business unit, etc., reported an increase in sales of Lixiana oral anticoagulant, Tarlige pain treatment, and Enhertu anti-cancer agent, as well as the sales of Daiichi Sankyo Healthcare.
A gain on realization of unrealized gains on inventories related to Daiichi Sankyo SVA's products was also recorded. On the other hand, sales decreased by JPY 13.5 billion due to the exclusion of Daiichi Sankyo SVA from consolidation, and that sales of its products are no longer recorded from April 2024 onwards, as well as a decrease in sales in the vaccine business. Next, I will explain the overseas business units. This section excludes the impact of foreign exchange rates. The Oncology business unit reported an increase in sales of JPY 105 billion due to growth in sales of Enhertu in the U.S. and Europe. The American region reported sales increase by JPY 2.4 billion, mainly due to an increase in sales of generic injections, despite a decrease in sales of Venofer and Iron Deficiency Anemia treatment.
In the EU specialty business, sales increased by JPY 38.2 billion, mainly due to sales growth of Lixiana and Nilemdo/Nustendi, a treatment for hypercholesterolemia. The ASKA business, which is in charge of Asia/Latin America, reported an increase of JPY 27 billion, mainly due to sales growth of Enhertu, especially in Brazil. Upfront payments, development, and sales milestone payments related to the collaboration with AstraZeneca and Merck increased sales in total by JPY 74.2 billion, which include development milestone payments from AstraZeneca for the approval of Enhertu for chemotherapy naïve, hormone receptor positive, HER2-low or ultra-low breast cancer in the United States and Europe, and sales milestone payments for the achievement of $3.5 billion in annual sales. An upfront payment based on the strategic collaboration agreement with Merck, signed in October last year, contributed to sales throughout fiscal 2024.
The total impact of foreign exchange rate on revenue was JPY 51.3 billion. Slide 6 shows the factors behind the increase or decrease in core operating profit. As explained earlier, revenue increased by JPY 284.6 billion, including a JPY 51.2 billion increase due to foreign exchange effects, and this shows the breakdown of the increase of revenue: JPY 117.6 billion. Next, I will explain cost of sales and expenses, excluding the effect of foreign exchange rates. Cost of sales decreased by JPY 9.8 billion due to an improvement in the cost of sales ratio, despite an increase in revenue reflecting an increase in sales of in-house developed products such as Enhertu, a change in the product mix due to the no longer including sales of Daiichi Sankyo SVA products, and an increase in development and sales milestone income from strategically collaborated products.
SG&A expenses increased by JPY 71.9 billion, mainly due to an increase in profit sharing with AstraZeneca in relation to Enhertu. R&D expenses increased by JPY 54.5 billion due to an increase in investment in R&D, mainly as a result of an increase in R&D personnel in line with the progress of the development of five DXd ADCs. The total increase in expenses due to foreign exchange effects was JPY 50.5 billion, and the actual increase in core operating profit, excluding foreign exchange impact, was JPY 116.8 billion. Slide 7 shows the changes in profit. As explained earlier, core operating profit increased by JPY 117.6 billion, including the impact of foreign exchange. Temporary income and expenses increased by JPY 2.8 billion from the previous year, mainly due to a decrease in temporary expenses.
Financial income and expenses decreased by JPY 1.9 billion year-on-year, mainly due to a deterioration in foreign exchange gains and losses. Income taxes increased by JPY 23.7 billion year-on-year due to an increase of income before income taxes. As a result, profit attributable to the owners of the company was JPY 295.1 billion, an increase of JPY 95 billion from the previous year.
Next, I would like to talk about business updates. First, let me explain the progress made in FY 2024 towards the maximization of three ADCs. Please turn to slide 10. This slide shows the sales status of Enhertu. Product sales for FY 2024 increased by JPY 156.9 billion year-on-year to JPY 552.58 billion, achieving double-digit growth across all regions, mainly driven by increased sales in second-line treatment for HER2-positive breast cancer and chemotherapy-treated HER2-low breast cancer.
For FY2025, we expect product sales to increase by JPY 109.3 billion, reaching JPY 662.1 billion. In the U.S., sales for FY2024 rose by 34% year-on-year to JPY 302 billion. Enhertu has solidified its number one position by maintaining over 50% new patient share in existing indications for breast, gastric, and lung cancers. In addition, in the newly approved indication for previously untreated HR-positive HER2-low or ultra-low breast cancer, granted approval this January, Enhertu has already achieved the number one share among new patients. Moreover, in HER2-positive solid tumors, prescriptions are expanding steadily across major applicable cancer types, with Enhertu taking the top new patient share position in second-line treatment for multiple cancers, including HER2 overexpressing non-small cell lung cancer, endometrial cancer, and ovarian cancer. In Europe, sales grew by 47% year-on-year to JPY 149.6 billion.
Sales are steadily expanding, especially in the EU four countries: Germany, France, Italy, and Spain. In second-line treatment for HER2-positive breast cancer, the new patient share remains above 60%, while in chemotherapy-treated HER2-low breast cancer, the share exceeds 50%. Enhertu has secured the top position in both indications across all four countries. Furthermore, in March of this year, Enhertu received additional approval for previously untreated HR-positive and HER2-low or ultra-low breast cancer. In Japan, sales rose by 30% year-on-year to JPY 331 billion. Enhertu continues to maintain and expand its number one new patient share across all approved indications: breast, gastric, and lung cancers. The new patient share for second-line HER2-positive breast cancer remains above 50%, while for chemotherapy-treated HER2-low breast cancer, it has expanded to over 60%, solidifying its top position in the market.
In the ASKA region, sales increased by 58% year-on-year to JPY 70.3 billion, with significant growth, particularly in China and Brazil. In China, as of January this year, second-line HER2-positive breast cancer and chemotherapy-treated HER2-low breast cancer were included in the National Reimbursement Drug List, or NRDL, and reimbursement has started, leading to increased sales. In Brazil, prescriptions are steadily expanding in existing indications. Enhertu holds more than 70% new patient share in second-line HER2-positive breast cancer and has also achieved the top share in chemotherapy-treated HER2-low breast cancer, firmly establishing itself as the market leader. It should be noted that sales figures in the ASKA region include co-promotion revenue from countries such as China and Hong Kong, where AstraZeneca books product sales.
Going forward, we will continue working to further penetrate the existing market, expand the number of countries and regions where Enhertu is launched, and obtain additional indications so that we can deliver this medicine to as many patients in need as possible. Next, I would like to talk about the regulatory approvals for Datopotamab deruxtecan. Please turn to slide 11. Since December of last year, we have obtained regulatory approvals for Datopotamab deruxtecan, our anti-TROP2 ADC in Japan, the U.S., and Europe. Datopotamab deruxtecan is the second product developed using our DXd ADC platform following Enhertu. It was approved in Japan in December, in the U.S. in January, and in Europe this month. The approved indication is for patients with unresectable or metastatic HR-positive HER2-negative breast cancer who have received endocrine therapy and chemotherapy. Sales have already started in Japan and the United States.
In FY 2024, global product sales reached JPY 1.4 billion, indicating a smooth market launch. By offering a new treatment option for breast cancer, we aim to contribute to improving outcomes for more patients. Please take a look at slide 12. In August last year, we added MK-6070, an asset under development by U.S. Merck, to our strategic collaboration agreement covering three DXd ADC products. Like the other three products, this asset will be co-developed and co-promoted worldwide, excluding Japan. We are also expecting synergies through combination therapies with candidates such as IDXD. Next, let me update you on our progress in FY 2024 toward driving profit growth of existing businesses and products. Please turn to slide 14. First, progress in Japan. We obtained a new indication for the anti-cancer agent Ezalmia and took over the marketing of the insomnia drug Belsomra from MSD.
In the vaccine segment, we launched the COVID-19 vaccine Daijirona and the intranasal influenza vaccine FluMist. Additionally, in February this year, Lixiana received approval for a new indication. In Europe, in May last year, Nilemdo, Nustendi, our treatment for hypercholesterolemia, received approval for the reduction of cardiovascular event risk. We will continue to strengthen our product portfolio to further enhance our contribution to patients. Next, I will talk about progress in FY2024 toward identifying and building the next pillars of growth. Please turn to slide 16. In December of last year, based on the potential of DS-3939, our sixth DXd ADC product, we acquired the intellectual property rights for the anti-TA MARC1 antibody. Currently, DS-3939 is undergoing phase 1/2 clinical trials for various solid tumors. Next, I will speak about our FY2024 progress toward co-creating value with stakeholders. Please turn to slide 18.
This slide shows our FY2024 annual dividend forecast. With strong business performance, especially driven by Enhertu, we plan to increase the annual dividend per share by JPY 10 year-on-year to JPY 60. Please turn to slide 19. To enhance and enrich shareholder returns, we decided to conduct two rounds of share buybacks since April 2024, acquiring a total of JPY 250 billion worth of our own shares. We will continue working to maximize shareholder value through improved capital efficiency and enhanced shareholder returns. From now on, we have R&D update. The Head of Global R&D, Takeshita, will take over.
Thank you very much, Okuzawa. Next slide, please. It is a pleasure to give you an update on our progress towards maximizing our three ADCs.
First, as a review of achievement for fiscal year 2024, I would like to highlight this one single slide here as our major achievement in the fiscal year 2024, Destiny Breast 06, a phase three study. I think all of you are quite aware of this, but I have to say that we are still very proud of our accomplishment here that we have demonstrated within HER2 efficacy in the HER2 ultra-low, as well as HER2-low chemo navy breast cancer, and it is now approved in the U.S. and Europe. The data are shown here for both the HER2-low patient population and the HER2-low plus ultra-low patient population. In both cases, you'll see that the hazard ratio is very strong with very significant p-values, and it is now approved in many countries, including the U.S. and Europe.
These approvals cover about 90% of all patients with metastatic breast cancer. Next slide. Okay, now this is our breast cancer map, and I'm going to talk now about the new study, breast cancer DB09. Here in this slide, it illustrates exactly where DB09 sits in our breast cancer map. It is in the front-line setting for patients with HER2-positive breast cancer. It is basically a phase three study evaluating the efficacy and safety of Enhertu compared to Pertuzumab plus standard of care in the front-line setting. Next slide. As you are all aware, we have issued a press release indicating that we have achieved positive clinical trial data. Therefore, Enhertu plus Pertuzumab is a highly statistically significant and clinically meaningful improvement in progression-free survival as a front-line therapy. Just to go over the details of this clinical trial, it is a three-arm study.
Arm A is in HER2 alone plus placebo. Arm B is in HER2 plus Pertuzumab. Arm C is the standard of care THP, which stands for Trastuzumab plus Paclitaxel plus Pertuzumab. This is their interim analysis and not the final analysis. The interim analysis is really designed to show only the superiority of progression-free survival. This is exactly what we saw. We have indicated in the press release that arm B achieved a PFS improvement that was highly statistically significant and clinically meaningful. We are very, very happy with that result. In HER2 monotherapy arm, this is arm A, remains blinded to patients and investigators and will continue to the final PFS analysis. We will be reporting the data from this study at some point in the very near future at an upcoming medical meeting.
We also plan to share the data with regulatory authorities. Next slide. Now moving on to gastric cancer, and this is also here a gastric cancer disease map. I want to make sure to mention that we reported recently that the gastric 04 study was positive. The gastric 04 is the, you can see here that it's a second-line clinical trial. As you may know, we are already approved in the U.S. for second-line gastric cancer, but in other regions of the world, such as Japan, Europe, and China, where we either are not approved for second-line or where we only have a conditional approval, the gastric 04 study will be very useful to bring this therapy to second-line cancer patients. I think we also want to mention that the front-line study, that we have two of them,DESTINY-Gastric05 and ARTEMIDE-Gastric01 study.
Both of these are phase three studies in the front-line setting, and both of these started in March of 2025. Next slide. Okay, just to go beyond these indications to include now the non-small cell lung cancer, particularly in the HER2 overexpressing non-small cell lung cancer, we are planning to start this clinical trial, HL06. And here is the study design. It is a combination of Enhertu plus pembrolizumab versus a standard of care, which is pemetrexed plus platinum of choice plus pembrolizumab. We plan to start this in the first half of the fiscal year 2025. Next slide. Okay, now here's a brief update on our pan-tumor program for Enhertu. As you know, we are approved in the U.S. as a pan-tumor indication for Enhertu patients with any positive HER2 positive solid tumors.
As an update for you, we have filed in Japan for a HER2 expressing or recurrent or metastatic solid tumors based on the Harold study, which was a Japan-only, Japan-specific clinical trial, as well as the supporting data from the pan-tumor 02, a colorectal cancer study and lung cancer study. We hope to therefore bring this therapy to the many patients in Japan in a tumor-agnostic manner. In terms of expanding our HER2 expressing tumor program, I would like to mention that we have initiated, based on the various promising data, DESTINY-BTC01 study focusing on biliary tract cancers, targeting not anymore the relapse refractory setting, but the front-line setting. This is a phase three study that we have started with the aim of obtaining approval in this patient population.
We have also started now our plans to initiate a new study in ovarian cancer called Ovarian 01 study. The next slide shows the details of this ovarian cancer study. We plan to start this in the first half of fiscal year 2025, and here is the study design. This is a front-line setting patient population in which we are comparing bevacizumab maintenance therapy, which is a standard of care, versus a combination of bevacizumab plus Enhertu. This is a 580-patient study, and we are, of course, very hopeful that it will give us positive data in ovarian cancer in the very near future. Next slide. Okay, now we are going to move on to the Datroway program, and we're going to start with, again, our breast cancer disease map.
You'll see here that our major Detroit focus is in blue, which is a triple negative breast cancer patient population. I think you are aware that we have obtained approval for triple negative breast cancer based on the Tropion Breast Cancer 01 study. Okay. We are still waiting on the results of some of our ongoing clinical trials, particularly Tropion Breast Cancer 02 in the PD-L1 low patient population, the sister study of the Tropion Breast 05 in the PD-L1 high patient population. Okay, I want to mention that the top-line results for Tropion Breast 02 are anticipated in the first half of fiscal year 2025. Next, we're going to touch on our progress in the rest of the non-small cell lung cancer program, specifically focusing on the EGFR mutated patient population.
Here again is the entire disease map for lung cancer, and to really focus here on EGFR mutated patient population. Here is our update for you here. First, as you remember, the FDA issued a CRL, complete response letter, for HER3-DXd, HER3 lung 01 study back in June based on some manufacturing issues found at an inspection. We did report that in September, HER3 lung 02 met its primary endpoint. In the meantime, we have submitted the Detroit submission as a priority review for EGFR mutated non-small cell lung cancer. We are expecting a decision from the FDA by July 12, 2025, for Detroit approval or not in this EGFR mutated patient population. It's a PDUFA date of July 12.
You can also see here in the rest of the lung cancer program that we have a number of phase three Datopotamab deruxtecan studies that are started in fiscal year 2024. We are, of course, awaiting the results of the AVANZAR study in the front-line setting, which is anticipated in the second half of the calendar year 2025. Okay, now I do want to mention here that we have seen the ORCHARD clinical trial data in which Datopotamab deruxtecan is combined with osimertinib in patients with EGFR mutated small cell lung cancer who have progressed after the front-line osimertinib therapy. This is really a data generation hypothesis testing clinical trial in phase two setting in the ORCHARD study.
You can see here that even in this patient population, we are seeing very promising efficacy data in terms of progression-free survival in terms of the number of months that we're seeing. Particularly on the right-hand side, you'll see 11.7 months with the osimertinib plus a higher dose of DATO. Based on these, we have two new studies, phase three studies of Tropion-Lung 14 and Tropion-Lung 15, which will evaluate the efficacy of DATO in combination with osimertinib in the EGFR mutated non-small cell lung cancer. Next slide. Okay, now we are going to move on to the HER3-DXd program. Just to give you an update on this study, this is a new study that we plan to initiate in the first half of fiscal year 2025. This study is called HER3 Breast 03 study.
It is a follow-up to the very promising data that were reported already as single-agent HER3-DXd from the French ICARU.S. study. This is designed to be a signal-seeking study in a neoadjuvant setting in which we are studying various combinations of HER3-DXd plus pembrolizumab in various patient populations. Okay, next slide. Now in terms of profit growth for current business and products, next slide, I do want to briefly update you on the rest of the program, particularly for the IDXd and the RDXd programs. On the IDXd side, we are making very steady progress in advancing the pipeline, particularly in a small cell lung cancer setting. This is a small cell lung cancer, which is in contrast to the non-small cell lung cancer program that I mentioned to you earlier.
In the small cell lung cancer, we know already based on earlier data that this drug appears to have a very active profile in small cell lung cancer, and that we are proceeding to confirm that activity as well as to make progress in advancing our pipeline towards an approval. We hope to be able to give you a very good update on this in the very near future. In addition, for the IDXD program, we are planning to start a new trial in esophageal cancer and also in prostate cancer, and I'll go over this with you a little bit more in the next few slides. Moving on to the RDXD program, please go back, yes, okay. Moving over onto the right-hand side in the RDXD program in ovarian cancer.
Again, we want to mention that we are making very steady progress in advancing the ovarian cancer program and that we do hope to update you on any advances in the near future, but we are very happy so far with the results that we are seeing. We do want to mention here again that we have initiated additional RDXD programs beyond ovarian cancer to include exploratory studies in multiple solid tumors, including lung cancer and various GI cancers. Okay, next slide. This is some results, I mean, some details of a new clinical trial in the IDXD program. We plan to start this clinical trial in the first half of fiscal year 2025. This is a prostate cancer program in a chemo-naive metastatic castrate-resistant prostate cancer. This is a clinical trial, very simple design of IDXD versus docetaxel. This is a 1,400-patient study.
As I mentioned, we are basing this, we're starting this in the first half of this fiscal year based on some early data already that we have seen in the phase one two study that we have already presented to you back in ESMO 2023. In addition, next slide, we show you that in addition to the prostate 01 study, we are also investigating various ways in which we can give IDXD as combination. This is the ID8 prostate 02 study, which is a phase one/two combination study, again in a chemo-naive setting in which we want to bring combinations of IDXD with two important drugs. One is the MK-5686 drug. This is a Merck investigational drug, which is a SIP11A inhibitor, again being developed by Merck in prostate cancer indication.
Of course, this is a major advantage of our alliance and partnership with Merck that we are able to access very promising drugs in combination with DXd. The second combination is with the ARPIs, abiraterone or enzalutamide, and this is also going to be a combination that we studied in this prostate 02 study. This is a study that will be initiated in the first half of this year. Okay, next slide. Finally, just to round out the update on the DXd program, this is a new study in which we are going to study diseases other than ovarian cancer. Prostate cancer, biliary tract cancer, colorectal cancer, and GE adenocarcinomas. This is an exploratory signal-seeking study, and we will start this in the first half of 2025. Okay, next slide.
Okay, and this is just really to complete the rest of the major pipeline advances with the Azarmeab and FLYTA 3939, 2243, Onyxia, TauLagi, and Daijiro. We are also making very steady progress in the rest of our pipeline. Okay, next slide. Okay, in terms of ASCO 2025, next slide, I want to alert all of you to the fact that we want to hold an investor relations conference call at ASCO, as ASCO highlights, and here are the dates and times listed here. We do hope that you will call into this and join us as well. Next slide. Okay, in terms of the news flow for 2025. Okay, next slide. Okay, here it is. For ASCO, these are the confirmed presentations at ASCO.
I guess I want to just emphasize the word confirmed because there are, as you can imagine, some potential late-breaking abstracts which have not yet been accepted formally by ASCO. For example, some of the most recent data sets like DB09 may or may not be part of the late-breaker session. At least for this slide, it does show what is already confirmed as major presentations at ASCO from the Enhertu program, the Datroway program, and HER3 programs. Okay, in terms of regulatory decisions, this is a listing of what we are expecting to be hearing from various regulatory agencies, particularly in terms of Destiny Breast 06 study. We do hope to hear from the Japanese agency sometime in the first half of 2025.
In terms of TROPION programs, Datroway programs, TROPION-Lung05, the EGFR mutated patient population, we do expect to hear a decision from the FDA sometime in the first half of 2025. Actually, July is our PDUFA date there. In terms of key readouts, there's a listing of the key readouts that we're expecting sometime in the near future from the breast cancer DB11 study, DB05 study, and DL04 study. These are all coming from Enhertu programs. From the Datroway program, the TB02 study, the triple-negative patient population, and the Avanza study, these are going to be the key readouts that we're expecting in the near future. From the I-DXD program, the small cell lung cancer phase two data should be available in the near future.
I do want to mention that we do have major plans for presentation of new data at ESMO and WCLC, etc., and the San Antonio Breast Cancer meetings also. However, they are not part of this because we do not have any confirmation from any of the submitted abstracts. Once we have confirmation, we will give you updates on ESMO and WCLC and other conferences. Okay, I think now it is time for me to turn back to Okuzawa-san for the rest of the call. [Foreign language]
And then from me, Okuzawa, I would like to talk about the fifth five-year business plan update. Please refer to slide 44. This slide shows the FY2025 targets of the fifth five-year business plan and the four strategic pillars for moving into the sustainable growth stage.
On the next two slides, I will explain the progress of each strategic pillar over the four years since FY 2021, when the fifth five-year business plan started. Please refer to slide 45. First, about the progress of realization of the three ADC maximization. Regarding Enhertu, in addition to the existing indication for the second-line treatment of HER2-positive breast cancer and chemotherapy-treated HER2-low breast cancer, we obtained an indication for the treatment of chemo-naive hormone receptor-positive HER2-low or ultra-low breast cancer in fiscal 2024. In addition to the NSCLC indication, the product also received an indication for the second-line treatment of HER2-positive solid tumors, the first anti-HER2 therapy approved across the cancer types, and it's making steady progress in maximizing product value.
With steady market penetration and expansion of the number of countries and regions where the product has been launched, sales of Enhertu are growing faster than originally planned. In addition, as mentioned earlier in the R&D update, further indication expansion, the studies are progressing smoothly. Datopotamab deruxtecan was approved in Japan, the U.S., and Europe, and launched in Japan and the U.S. for the treatment of hormone receptor-positive and HER2-negative breast cancer with prior endocrine therapy and chemotherapy. In addition, a filing for the indication of previously treated EGFR mutated NSCLC has been accepted in the U.S., and the studies to expand the indication to the early treatment line of NSCLC are progressing. HER3-DXd, along with IDXd and RDXd, has been in need of capacity, resources, and capability enhancement to maximize the DXd ADC franchise, and we have decided to form a strategic collaboration with U.S. Merck.
Quickly, that we have started co-development with U.S. Merck so that we'll be able to deliver it to more patients more quickly. In addition, we have added MK-6070 from U.S. Merck to our strategic partnership and have started co-development as well. With respect to profit growth of existing business and products, sales of Lixiana, whose product value has been enhanced by the addition of new dosage and administration, are steadily increasing. In addition, sales of Tafamidis, Bempedoic acid, Nilemdo, Nustendi have steadily increased, contributing to the generation of resources for investments for sustainable growth and shareholder returns. Transformation of the business structure to one based on new drugs is also progressing steadily.
In addition to the launch of new products such as Emgality and Ezharmia, and the transfer of products after the expiration of exclusivity periods in various countries and regions, the decision to transfer shares of Daiichi Sankyo Espha and its execution have steadily strengthened profitability. Profits at American Regent and Daiichi Sankyo Healthcare are also growing steadily. Please refer to slide 46. We have also made significant progress in identifying and building further growth pillars. We have positioned IDXD and RDXD as the next growth drivers after the three ADCs, as favorable clinical trial data has been accumulated and product potential has been further enhanced. Development of IDXD for small cell lung cancer SCLC and RDXD for ovarian cancer is preceding, and exploratory studies in a wide range of cancer types have also been initiated. In addition, the sixth DXd ADC, DS-3939, has started clinical trial for solid tumors.
In addition, clinical studies have been initiated for DS-9606 and an ADC with a modified PBD payload, which is different from DXd, and approval and supply of Daijirona, a messenger RNA vaccine against COVID-19, have been achieved, and the selection of post-DXd ADC modalities is progressing steadily. In addition, we have established research and innovation institutes in the EU and the U.S. to accelerate continuous innovation through collaboration with external business partners and academia, and established a smart research lab in the U.S. to make progress in establishing next-generation drug discovery processes such as AI drug discovery through robot-based experiments and the use of advanced software. With regard to value co-creation with stakeholders, we decided to increase the dividend for the third consecutive year, reflecting the profit growth of Enhertu and the receipt of an upfront payment from the strategic collaboration with U.S. Merck.
In addition, since April 2024, we have twice acquired and canceled own shares to strengthen and enhance shareholder returns. We have also made progress in addressing pandemic risks such as the supply of Daijirona. In addition, in order to reduce the environmental load of our entire value chain, we have joined the international initiative RE100, which aims to achieve 100% renewable energy for the electricity consumed in business activities. We are making progress in our efforts to address environmental issues. Furthermore, through workshops and other activities conducted by management and all employees, we are deepening understanding of the three core behaviors common to the group and promoting efforts to embody them, thereby fostering a one-tier structure in which all employees can work vigorously across national and cultural boundaries.
As described above, the four strategic pillars of the fifth five-year business plan are progressing smoothly, and we are even more confident to achieve our goals for FY 2025. Next, I'd like to discuss the prospects for achieving the KPIs of the fifth five-year business plan based on the progress made so far. Please refer to slide 47. We expect revenue for FY 2025 to reach JPY 2 trillion. Although there was a change in the development strategy for Datroway, the strong sales growth of core products such as Enhertu and Lixiana supports our continued commitment to the revenue target set one year ago. Revenue from the oncology segment is expected to reach JPY 900 billion. I will go into the details later.
We are aiming to achieve a core operating profit margin of 40% before deducting R&D expenses supported by improvements in cost of sales due to changes in product mix and efficient and effective execution of expenses. We also aim to achieve an ROE of 16% or higher by balancing R&D investment for sustainable growth and shareholder returns. For DOE, dividend on equity, we continue to target 8.5% or more by further improving capital efficiency and enhancing shareholder returns. The assumed exchange rates as of April 2025 for KPI outlook are JPY 140 to the dollar and JPY 160 to the euro. Please turn to slide 48. This slide presents our FY2025 revenue outlook for the oncology segment. Although we expect some decline in revenue due to changes in Datroway's development strategy for lung cancer and delays in the launch timing of HER3-DXd, Enhertu continues to show strong growth.
As such, we expect oncology revenue to reach JPY 900 billion. Slide 49 shows our forecast for R&D expenses. For FY2025, we expect R&D expenses to be approximately JPY 455 billion, which is about JPY 75 billion lower than the estimate as of April 2024. As for clinical development costs, our strategic partnership with U.S. Merck has progressed, and as a result of refining development plans for HER3-DXd, I-DXd, and R-DXd, expenses have decreased compared to the previous estimate a year ago. The partnership with U.S. Merck remains a critical collaboration for us, and we will continue development in close cooperation with them. In addition, medical affairs expenses have also decreased due to changes in the development strategy for Datroway in lung cancer and delays in HER3-DXd launch timing compared to one year ago. Over the past four years, Datroway's product value has exceeded initial expectations significantly.
We also successfully launched Datopotamab deruxtecan Datroway as the second DXd ADC product, and efforts to maximize its value are progressing. Toward achieving the FY 2025 targets and realizing our 2030 vision, we will continue to pursue sustainable growth while maintaining a balanced approach to necessary investments for future growth and shareholder returns. We will continue to challenge ourselves to deliver innovative solutions and contribute to healthier and more enriched lives for people around the world. Finally, I would like to present our financial forecast for FY 2025. Please turn to slide 53. For FY 2025, we are targeting revenue of JPY 2 trillion and a core operating profit of JPY 350 billion.
While we expect some negative impact from foreign exchange due to yen appreciation, we anticipate revenue growth of JPY 113.7 billion compared to the previous year, driven by increased sales of Enhertu and other products, as well as higher milestone income from our strategic partnerships with AstraZeneca and U.S. Merck. Cost of sales is expected to increase by JPY 14.3 billion in line with sales growth. SG&A expenses are forecast to increase by JPY 40.2 billion, reflecting greater profit sharing with AstraZeneca due to Enhertu's sales growth, increased investment in the oncology business, and strategic investments in DX and IT and human capital to support medium to long-term growth. R&D expenses are expected to rise by JPY 22.1 billion due to increased investment in the development of five DXd ADCs, expanded medical affairs activities, and enhancements to our R&D infrastructure.
As a result, core operating profit and operating profit are expected to increase by JPY 37.2 billion and JPY 18.1 billion, respectively, reaching JPY 350 billion. Profit attributable to owners of the parent is expected to increase by JPY 4.2 billion year on year to JPY 300 billion. The assumed exchange rates are JPY 140 to the dollar and JPY 160 to the euro. We expect a negative impact of approximately JPY 75 billion on revenue and about JPY 3.5 billion on core operating profit due to exchange rates. As of now, no decision has been made regarding the introduction of tariffs on pharmaceuticals in the United States, and the details are still unclear. Therefore, we have not included the potential impact of such tariffs in our earnings forecast, as it is very difficult to calculate the impact. Slide 54 shows our FY2025 annual dividend forecast.
As I mentioned earlier, due to strong performance led by Enhertu, we plan to increase the dividend again in FY2025, marking the fourth consecutive year of dividend hikes. We forecast an annual dividend of JPY 78 per share, which is a JPY 18 increase from the JPY 60 dividend in FY2024. Next, please turn to slide 55. To enable flexible responses considering our share price levels and other factors, we have set a new share buyback limit. The buyback period will be from May 1, 2025, to March 24, 2026. The maximum amount is JPY 200 billion, and the maximum number of shares to be acquired is 80 million. Through profit-linked dividend increases and agile share buybacks, we expect the dividend on equity, or DOE, in FY2025 to exceed 8.5%. We will continue to maximize shareholder value through improved capital efficiency and further enhancement of shareholder returns.
Now, we will move on to the Q&A session to take your questions.
Now, anyone, if you have any questions, please. The first question, Citi Group, Yamaguchi-san, please. [Foreign language]
Citi of Yamaguchi speaking. Can you hear me okay? Thank you. I have three simple questions. First, about R&D expenses level. You have explained that, and I think that it's been lowering. After the next fiscal, [Foreign language] I think that it is still lower than the pre-existing levels. Do you think that you can manage R&D activities with this level, or only for 2025 it is at this level of the 4.5? Could you comment on this? That's my first question. [Foreign language]
Thank you for your question. The first question is about the level of R&D expenses. This time, [Foreign language] s ome of them, we have reviewed our development plan, and the prioritizations of the plan were reviewed, and we made it more precise. Including the timings, we revisited the programs, and as a result, we came up with this level. For the long-term level, as we move forward, we will also study, and probably we'll be able to discuss this when we talk about the update of the midterm plan, so on. Currently, over 22% of the R&D expenses out of revenue, that's the current level. As much as possible in the long run, we would like to achieve a 20% level. Going forward, while making necessary investment in R&D activities, we would like to develop the precise development so that managing the budget well, we would like to be active in our R&D programs. Thank you very much.
Yes, I'll be delighted to comment. Yes. Let me just first get to the conclusion of your question, which is that yes, I think that we are sufficiently funded for R&D expenses for the next three years or so. No problems. You know, a lot of the changes that you're seeing now are really a result of, I don't know, assessment of what initially was an overly optimistic programs that we had considered in terms of the number of trials and also the timing. When would these studies actually start? That accounts for a substantial amount of the change in our R&D expenses, as well as, as you know, some of the changes we had to make because of the outcomes of our DATO program in lung cancer and also the HER3 program in lung cancer. We made substantial changes to respond to those, the clinical trial data.
Those also resulted in some changes in R&D expenses downwards that you're seeing here that I think you're concerned about. As I said, overall, I'm very happy with the dollars that are, or the yen that's being spent on R&D. Thank you. [Foreign language]
May I ask you another question? Thank you. [Foreign language] Regarding the tariff, you mentioned that it is just too difficult for you to estimate or forecast. As your assumption, the businesses that you have been conducting in the U.S. American region, I believe that their production manufacturing is in the U.S., but Enhertu and other ADCs. My understanding is that they are produced overseas and imported into the U.S. Oncology business, innovative business, other than American region, what is your manufacturing rate in the U.S. out of your total business? Can you comment on this?
Thank you for your question. Concerning the tariff issue, as of today, it is quite limited regarding what we can comment on. In December, when we had a science and technology meeting, especially regarding the ADCs, we introduced you to the manufacturing sites and there regarding the CapEx into ADC facilities in Japan and in the U.S., we have been making investment that was discussed on that occasion. Currently, we do have CMOs and also our own manufacturing facilities, and especially centering around the U.S., Japan, and EU, we have supply chains with a target of optimizing this supply chain as a whole. On this occasion, if the tariffs increase, then what will be the future situation? We will need a full review and study. At the moment, what kind of products or materials are produced in the U.S.? Regarding in-house products in the New Albany, Ohio plant, we have Enhertu packaging lines in operation.
ADCs using both in-house and CMO facilities. I just mentioned that we have overall supply chain comprised of these two types. That includes the U.S.-based CMO as well. Going forward, as I mentioned earlier, in New Albany, Ohio American region site, we will already start the CapEx spending in the future ADC production preparedness. Currently, packaging lines are ongoing. Other than that, we are already making investment in this manufacturing facility. I understand.
You're trying to squeeze DBO9 into ASCO. I understand you are trying, but can you confirm that you are trying? That outcomes are not known at the moment. Is that correct understanding? Or when we know, that is the abstract, is the timing we know or not? Thank you.
I think we can say that we have contacted ASCO about the possibility of including DBO9 as a late-breaker abstract. Now, when the ASCO people will make a decision on this about the late-breaker abstract and when that will be published, it is really not up to us, but up to ASCO. We have to wait for their decision. Of course, once we know their decision, we will certainly let you know.
Thank you. [Foreign language] Yes, thank you. Yeah, it does. Thank you. Bye. Thank you. [Foreign language]
Next question. Goldman Sachs. From Goldman Sachs Securities, Ueda-san. [Foreign language]
Ueda from Goldman Sachs. [Foreign language] My first question is also about the impact of tariffs, as much as you can answer. [Foreign language] The impact is not incorporated in your plan as of now. [Foreign language]. Based on what has been reported so far, if tariffs are being imposed, what could happen on the actual performance of FY2025? Anything you can say, like cost of goods percentage? What about the price? What about the inventory? Can they all be controlled within your expectation?
Thank you for your question. Put it very simply, as of now, we really can't estimate anything in terms of the impact of tariffs, in terms of numbers. Once we know some numbers in impact on the occasion of financial results conference, we will update you on this. As of now, as far as we understand, public comment deadline is May 7th. From then on, in a quite short time, the actual tariff content will be announced. Accordingly, we will evaluate the potential impact on our business. In terms of the mechanism of tariffs, what are the products that are subject? Are there any alternatives? What are the forms, whether it's intermediates or drug substances or final products? What are the percentage of tariff that may be imposed?
What is the basis for the percentage? What is the valuation of our product? We don't really know anything about all of these factors. Once these factors are clarified, as soon as possible, we would like to evaluate the impact on our business and share that with you. We'll prepare for that. [Foreign language]
Thank you. My second question is about capital allocation policy. This time around, you have increased the dividend, and DOE 8.5% is being achieved already with the dividend alone. You are quite aggressive in terms of share buybacks. [Foreign language] What is the background of this announcement of share buybacks? Going forward, regardless of 8.5%, can you continue with those shareholder returns? You have already commented on the tariffs, and the business environment is quite murky. Is there any changes in your policy of capital allocation?
Thank you very much for your question. In terms of capital allocation, and especially share buybacks, and the timing thereof, and also, there is a major uncertainty that is the tariff issue. [Foreign language] Can we continue to have this level of share buybacks or shareholder returns? I think that's your question. In terms of the timing of share buybacks, when it's deemed appropriate, we will implement it in an agile manner. As has been announced, we will look at the share price levels and other factors and decide the appropriate timing. With agility, we will implement it. We will look at the business and also the capital allocation and the cash on hand. We will make a decision as to when to have share buybacks. That's our plan. [Foreign language]
In terms of the dividend, [Foreign language] Are you going to keep this trend of increasing the dividend?
As for the dividend, as a kind of foundational policy, we would like to have a stable dividend and also dividend in line with the profit increase. Based on this basic policy, we will pay the dividend to the shareholders.
Thank you very much. Understood. That's all from me. [Foreign language] please[Foreign language].
I think this fiscal year's guidance, JPY 350 billion, that's a very good core operating profit number. Regarding the details, I have some feelings therefore I'd like to ask a question. INABIL sales is now made to be zero. Are there any background issues or is it just a conservative number? Rixiana in Europe, that's already assuming a downward trend. Is it because of the competition? It's naturally against my estimate.
That was sales JPY 4.7 billion. I think that it is too low for the fiscal year this year. All those look upside. [Foreign language] Can you elaborate on the background of those?
Thank you very much for your question. First, starting with INABIL. INABIL, as of today, including wholesalers, there are high levels of inventories held. That is considered. For this fiscal year, sales will be difficult to be realized. That is why we put the forecast as of this point in time, zero. Rixiana in Europe, as you said correctly, because of competitors' generics impact, we have already seen some impact started. That is incorporated in our sales forecast. Talking about that all, as of this point in time, as our best estimated forecast in terms of that all sales, TROPION-Lung05 lung cancer sales is also expected.
Including that, as a best estimate at this point in time, the number we came up with, as you saw, I see. In three months, sometimes you modified numbers. I hope that those numbers will be quickly modified going forward. Next question is about DB09. ASCO rate breaking[Foreign language] ASCO rate breaking. We should wait for that occasion. The release of presentation is expected there. So far, Enhance continued excellent results, like hazard ratio of 0.5 or 0.6.
Can we expect as excellent as those existing hazard ratio expected for DB09, or it is a first-line treatment? Therefore, it is better for us to be more conservative. Give us a little more color on this, please.
Okay. Thank you very much. You know, I would love to provide some color, but unfortunately, I have to tell you that I ask you to wait until we give you the data presentation at maybe at ASCO or maybe at some other conference. You know, as you know, Enhertu is a great drug for breast cancer. Please wait for our data that we can show. Then we can have a discussion. Thank you [Foreign language].
Just a final question regarding the tariff. [Foreign language] For your CapEx, currently it's the JPY 80 billion-JPY 100 billion level. Is there any likelihood that this level will increase? Should we be prepared or the CapEx won't be that large number? Could you share with us what is your consideration or idea? CapEx[Foreign language].
Thank you very much. Regarding the CapEx, as we mentioned in the capital allocation, within this five-year business plan period, the guidance has been shared with you. [Foreign language] especially regarding ADC, overall it's 600 billion. That's the guidance number. At this point in time, we don't expect any addition to that New Albany plant investment that I mentioned earlier. That's been already in operation. Therefore, it's already included in the current guidance number. I see. [Foreign language] Even if some policies, measures are taken regarding the tariff, there won't be any great impact onto the CapEx. Yes, you are right. At the moment, we don't have any specific plan to make a change.
Understood. Thank you very much. That's all. [Foreign language].
Next question from Jefferies Barker, please.
This is Steve Barker from Jefferies. I'll ask in English if that's okay. I wanted to ask about your vaccine revenue. It appears to have been very negative in the fourth quarter, declining almost JPY 20 billion. Could you talk to what caused that? I guess Daichirona sales, I guess there was a lot of Daichirona returns. You are expecting the revenue to grow again this year. Could you talk to what's in that assumption, please? [Foreign language].
Thank you very much for your question. About the vaccine business and the revenue, that is your question. As you have pointed out, just a moment, please. [Foreign language] For the fiscal year 2025, our plan is JPY 15.3 billion. This includes Daichirona and FluMist. From the fiscal year 2024, FluMist is a factor that can increase the revenue. FluMist is a driver for the increased revenue for the vaccine business.
For the Daichirona sales, net sales in fiscal 2024?
[Foreign language]. For the fiscal year 2024, right? For fiscal year 2024, it's JPY 4.5 billion. [Foreign language] That is JPY 4.5 billion for Daichirona for the fiscal year 2024. What about for fiscal 2025? Just a moment. [Foreign language] We do not disclose product-wise revenue expectation. As I said, FluMist, Daichirona included, the vaccine business as a whole, we have the plan of JPY 15.3 billion. [Foreign language].
Understood. Thank you very much. [Foreign language].
Next question. UBS Securities. Sakai-san, please. [Foreign language].
Thank you. This is Sakai, UBS. [Foreign language]. Understand that we need to wait for ASCO presentation. I think at the same time, you have been discussing this with the authorities. Clinically meaningful, all those generated good topics. We understand that we have to wait until ASCO. [Foreign language] This is added onto PHP. There is already a pre-existing market.
To all of them, do you expect that Enhertu can be introduced? Meaning that at a very accelerated speed, we can expect penetration of Enhertu in terms of penetration. Is this way of thinking right, correct? Also, your sales expectation this fiscal year, it is JPY 1 billion plus. Does it include DB09 and 06 forecasted numbers? These are the questions.
Okay. Let me just first discuss the data part. Then I'll ask Ogawa-san to comment on the revenue forecast. In terms of the study itself, it's a very good study, as I said. I think to answer your question, yes, we are communicating with the various regulatory agencies on the data and what are the next steps from a regulatory standpoint. Once we have a firm decision on this, we will certainly let you know about our regulatory strategy plans.
Yes, regarding the revenue forecast. DB06. DB06. It's already included in our expectation. DB09. The approval timing is currently assumed in the second half of the year. Therefore, it is not a big number, but part of it is incorporated.
Takeshita, my second part of the question. How about the acceleration or penetration of Enhertu onto this first-line indication after given approval?
It is a bit difficult for me to predict the adoption of this regimen in the DB09 patient population. I will tell you that ultimately, it is not up to me to decide, but up to the prescribing physician to decide based on the clinical data that will be shown at ASCO. Subsequently, a full data set will be published somewhere, I am sure, for everyone to see beyond just a few slides at ASCO.
There will be, of course, updates to the various treatment guidelines, NCCN listing, and that sort of thing. I can only tell you that what is already discussed in the press release, which is that we think that it is clinically meaningful data. Of course, very highly statistically significant. We are very, very happy with what we have achieved in our DB09 clinical trial data. I do hope that many oncologists out there will agree with that assessment. [Foreign language].
Thank you very much. Another question as a follow-up. [Foreign language]. Question to Ogawa-san. About JPY 200 billion share buyback. In this uncertainty era, I think this is quite meaningful volume. [Foreign language] Regarding the JPY 80 billion, it is JPY 200 billion. Meaning that in terms of unit price, it is only 200 or so. This time, you conducted JPY 50 billion share buyback.
What is your commitment level to this JPY 200 billion? Or rather, the number of shares is the basis for your decision-making. I think it depends also on the capabilities of the brokers that you ordered this share buyback. Could you comment on this, please? [Foreign language].
Thank you for your question. Basically, this JPY 200 billion, the amount is the upper limit we are considering. We are looking at the stock price we will execute and buy back. Basically, this JPY 200 billion, that is the level we are referring to. This time, JPY 50 billion, this is 13.97 million shares shown in page 19 of the slide deck.
Understood. Thank you very much. [Foreign language].
Next question. [Foreign language], Hashiguchi-san from Daiwa Securities, please. [Foreign language].
Hashiguchi speaking. About ENHANCE price . What is your assumption for the price of Enhance? DB06. An indication is going to penetrate the market this fiscal year. Especially in Europe, the price reduction, is this incorporated in your revenue forecast? And DB09, you are going to penetrate the market with this. What would be your pricing strategy for this indication? [Foreign language].
Thank you very much. The price in Europe, we have some assumptions to set the price of the product. This number, based on the assumptions, is incorporated. As for the U.S., the current price is the assumption itself. I do not know whether I am answering your question, but we assume the current price in the U.S. is going to be maintained, or that is our assumption, at least. Meaning that. [Foreign language]. The differences between Europe and the U.S. and the price assumptions are also different between the two regions.
What about DB09? [Foreign language]. After the approval of DB09?
As of now, we're not really assuming any changes in the pricing. We're not really expecting any changes in the price assumptions. Qualitatively, directionally, the pricing policy is going to be the same for DB09 as for DB06, right? Yes. Thank you.
There are still more people raising a hand. Since the time has come to close this session, we'd like to close the meeting. For those who raised their hands, please kindly contact our IR. Thank you very much for your participation today.