After her victory in this month’s general election, Sanae Takaichi has set out a “Japan Growth Strategy” targeting 17 priority sectors: AI, semiconductors, energy, health, critical materials. Against that backdrop, three Japanese companies stand out for their positioning: a global champion in test equipment, an energy giant in transition and a pharmaceutical lab refocusing on cutting-edge therapies.
Rules:
EBITDA margin > 7/10: As industry moves upmarket, only companies capable of generating solid margins will be able to fund innovation and the heavy investment required by strategic sectors One-year earnings revisions > 7/10: Takaichi’s policy targets high-growth sectors (AI, hydrogen, rare diseases). This filter therefore captures companies whose outlook is already improving in tangible terms.Analyst coverage > 7/10: To avoid overly speculative bets, we favour well-followed, liquid stocks, with enough documentation to assess their real alignment with government priorities.
Advantest, the unseen architect of the AI era
In the shadow of chipmakers, one Japanese company holds the keys to the artificial intelligence revolution. Advantest makes the equipment that tests semiconductors before they end up in data centres and smartphones
A discreet but strategic company: without these ultra-precise machines, it would be impossible to guarantee the reliability of the GPUs that power AIs such as ChatGPT or Gemini.
After a dip in 2024, with revenue at JPY 486bn, the group rebounds sharply: JPY 779bn in 2025, then JPY 1,033bn in 2026, rising to JPY 1,268bn in 2027. Growth of 160% between 2024 and 2027 reflects the surge in demand for test equipment for AI processors. In October 2025, Advantest crossed a symbolic threshold by teaming up with NVIDIA to integrate AI directly into its production testing processes, notably for Advantest’s next-generation Blackwell chips. The group, the global leader in this oligopolistic market, is now riding a spectacular growth cycle: its EBITDA margin jumps from 32% in 2025 to 46% this year, reaching 50% in 2027. This rise points to formidable pricing power in a cyclical sector where demand is exploding.
Above all, Advantest shows a fortress balance sheet, with net cash of JPY 278bn in 2026, up sharply. The company invests little (CAPEX at 7% of EBITDA) and generates far more cash than it consumes. In Sanae Takaichi’s “Japan Growth Strategy”, which puts semiconductors at the top of the 17 priority sectors, Advantest embodies Japan’s bet on technological sovereignty
INPEX, an energy giant in the midst of a transformation
Japan’s largest oil and gas company by market capitalisation, INPEX extracts and markets hydrocarbons and mineral resources around the world, with 73% of its revenue generated in Asia. Long focused on extracting Australian oil and Indonesian gas, the group has been orchestrating a quiet shift since 2020 towards Japanese hydrogen and floating wind turbines. INPEX is thus moving from a model of importing foreign fossil fuels to that of producing decarbonised energy on Japanese soil.
In November 2025, INPEX inaugurated its Kashiwazaki Hydrogen Park in Niigata Prefecture to produce blue hydrogen and ammonia, then launched the Goto floating wind farm, Japan’s first commercial floating offshore wind project. Two symbols of a pivot towards the energy transition, also carried by carbon capture and geothermal projects.
This shift does not undermine financial discipline. Free cash flow rises from JPY 259bn in 2025 to JPY 320bn in 2027, despite a CAPEX-to-FCF ratio of 159% that signals heavy investment. Debt remains under control at 0.53 times EBITDA in 2026. In the Takaichi strategy, which also places energy among its priorities, INPEX embodies Japan’s bet on energy sovereignty by developing hydrogen, floating wind and carbon storage directly across the archipelago.
Shionogi, from generalist to rare-disease specialist
Paradoxically, however, the group generates 56% of its revenue in the United Kingdom, compared with only 30% in Japan, reflecting a successful international expansion driven by its HIV portfolio co-developed with ViiV Healthcare. In December 2025, the group made a major move by announcing the acquisition, for $2.5bn, of global rights to RADICAVA, a treatment for amyotrophic lateral sclerosis (ALS), which generates $700m in annual sales. A clear strategic pivot towards rare and orphan diseases.
The shift shows up in the numbers: despite an EBITDA margin steady at around 40%, signalling a profitable portfolio, the free cash-flow margin (FCF/revenue) fluctuates sharply, falling from 41.8% in 2025 to 24.3% in 2026 before rising to 28.8% in 2027. This volatility reflects the intensity of investment in R&D and targeted acquisitions in high-potential therapeutic niches. The balance sheet nonetheless remains solid, with net cash of JPY 601bn in 2026, giving the group the means to fund its R&D internally without cash pressure.
This turn towards rare diseases matches Takaichi’s ambition to make Japan a leader in high value-added pharmaceuticals. Shionogi is leaving generics behind for cutting-edge science.
AloJapan.com