Market Overview

Takeda Reports First Quarter FY2018 Results

  • Strong start on underlying revenue and profitability led by
    Growth Drivers and Opex discipline
  • Reported operating profit and EPS impacted by large transactions
    in Q1 FY2017:

    106.3 billion yen one-time gain on
    the sale of Wako and 16.8 billion yen from the 2
    tranche of products sold to Teva JV. Operating profit excluding these
    items was +37.5%

Takeda Pharmaceutical Company Limited (TYO:4502):

Underlying Revenue growth +6.4% with growth in every region

  • Underlying Revenue grew +6.4%, led by Takeda's Growth Drivers
    (Gastroenterology, Oncology, Neuroscience and Emerging Markets)
    displaying strong growth of +11.8% over prior year. Key products
    Entyvio (+34.1%) and Ninlaro (+43.3%) made important contributions to
    revenue growth.
  • Underlying Revenue increased in every region, particularly the U.S.
    which posted double-digit growth, and Japan which grew despite a price
    cut in April. Emerging Markets benefited from a return to growth in
    China. (U.S. +14.1%, Japan +6.6%, Europe & Canada +2.0%, Emerging
    Markets +6.2%).
  • Reported revenue grew +0.4%, with the positive contribution from
    Takeda's Growth Drivers offsetting the negative impact of currency
    (-0.5pp) and divestitures (-5.6pp), mainly the long listed products
    sold to the Teva JV in May 2017.

Underlying Core Earnings +40.3% with margin +6.4pp predominantly
driven by Opex discipline

  • Underlying Core Earnings grew +40.3%, reflecting revenue growth and a
    margin step-up of 6.4pp. Gross margin contributed 1.6pp, driven by
    improved product mix, and the Opex ratio improved 4.8pp, driven by
    improved cost consciousness as the Global Opex initiative is fully
    integrated into ways of working.
  • Reported operating profit declined -49.3%, impacted by the sale of
    additional products to the Teva JV in Japan, and a 106.3 billion yen
    one-time gain from the sale of Wako Pure Chemical Ltd., both of which
    were booked in Q1 FY2017. Excluding these items, operating profit
    increased +37.5%.
  • Underlying Core EPS was up +51.1%, and reported EPS declined -46.1% to
    100 yen per share impacted by one-time gain on sale of Wako and the
    second tranche of products sold to the Teva JV. Excluding these items,
    EPS grew at +32.6%.

Achieved several important pipeline milestones in Q1

  • Vedolizumab approved for ulcerative colitis in Japan, and a
    subcutaneous formulation achieved the primary endpoint in a Phase 3
    study as maintenance therapy in ulcerative colitis.
  • Primary endpoints achieved in Phase 3 studies for Alunbrig in
    frontline non small cell lung cancer, and Ninlaro in post-transplant
    multiple myeloma maintenance.

On track with plan to divest non-core assets

  • Year-to-date Operating Free Cash Flow decreased -90.6% due to positive
    R&D milestones and the impact of the sale of additional products to
    the Teva JV in Q1 FY2017.
  • Sale of non-core assets generated an additional 31.9 billion yen of
    cash, in line with plan.

Costa Saroukos, Chief Financial Officer, commented:
strong business momentum continues into 2018 as we make solid progress
against our key priorities to grow the portfolio, strengthen the
pipeline, and boost profitability.

I am pleased to report
that we made a very strong start on underlying revenue and
profitability, with the underlying Core Earnings margin expanding by 640
basis points in Q1 versus prior year. This margin growth was
predominantly driven by Opex discipline, which is indicative of how the
Global Opex Initiative is now fully integrated into how we work through
KPIs, objectives, budgets and systems."


Reported Results for Q1 (April - June) FY2018

(billion yen)       FY2017 Q1   FY2018 Q1   % Growth vs Prior Year
    Reported   Underlying2
Revenue 448.2 449.8 +0.4% +6.4%
Core Earnings1 106.3 116.8 +9.8% +40.3%
Operating Profit 195.0 98.9 -49.3% -
Net Profit3 144.8 78.2 -46.0% -
EPS       186 yen   100 yen   -46.1%   +51.1%
  1   Core Earnings represents Operating Profit adjusted to exclude
amortization and impairment losses on intangible assets associated
with products as well as other operating income, other operating
expenses and certain other significant items that are unusual,
non-recurring or unrelated to its ongoing operations.
2 Underlying Growth compares two periods (quarters or years) of
financial results under a common basis and is used by management to
assess the business. These financial results are calculated based on
constant currency basis and excluding the impacts of divestitures
and other amounts that are unusual, non-recurring items or unrelated
to our ongoing operations.
3 Attributable to the owners of the company.

FY2018 Management Guidance: Strong Q1 confirms confidence in
full year underlying guidance

    Guidance (growth %)
Underlying Revenue Low single digit
Underlying Core Earnings High single digit
Underlying Core EPS Low-teens
Annual Dividend per Share   180 yen

FY2018 Reported Forecast unchanged

(billion yen)   FY2017 Results   FY2018 Forecast   % change
Revenue 1,770.5 1,737.0 -1.9%
Core Earnings 322.5 309.5 -4.0%
Operating Profit 241.8 201.0 -16.9%
Net Profit 186.9 139.0 -25.6%
EPS 239 yen 178 yen -25.7%
Exchange Rate
(annual average)
  1 US$= 111 yen

1 euro= 129 yen

  1 US$= 108 yen

1 euro= 133 yen


The forecast for consolidated results for the full year of fiscal 2018
has not been changed from the previous forecast (announced at the fiscal
2017 financial results announcement on May 14, 2018). This forecast does
not include the full fiscal year 2018 estimated financial impact related
to the proposed acquisition of Shire plc by Takeda. A forecast that does
include the estimated financial impact of the deal will be announced by
Takeda once a reasonable assumption has been confirmed.

Takeda is currently in an offer period (as defined in the City Code on
Takeovers and Mergers (the "Code")) with respect to Shire plc. Pursuant
to Rule 28 of the Code, statements made regarding Takeda's guidance for
FY2018 (including statements regarding forecasts for FY2018 revenue,
Core Earnings, Operating profit, Profit before income taxes, Net profit
attributable to owners of the Company, Basic earnings per share, R&D
expenses, Amortisation and impairment and other income/expense,
Underlying Revenue, Underlying Core Earnings and Underlying Core EPS)
constitute a profit forecast for the year ending March 31, 2019 (the
"Takeda Profit Forecast"). For additional information regarding the
Takeda Profit Forecast and the required statement by its Directors that
such profit forecast is valid and has been properly compiled on the
basis of the assumptions stated and that the basis of accounting used in
consistent with Takeda's accounting policies, please see page 21 of
Takeda's Financial Results (Tanshin) for the Fiscal Year Ended March 31,
2018, dated May 14, 2018.

For more details on Takeda's FY2018 1st quarter results and other
financial information, please visit

About Takeda Pharmaceutical Company Limited

Takeda Pharmaceutical Company Limited is a global, research and
development-driven pharmaceutical company committed to bringing better
health and a brighter future to patients by translating science into
life-changing medicines. Takeda focuses its R&D efforts on oncology,
gastroenterology and neuroscience therapeutic areas plus vaccines.
Takeda conducts R&D both internally and with partners to stay at the
leading edge of innovation. Innovative products, especially in oncology
and gastroenterology, as well as Takeda's presence in emerging markets,
are currently fueling the growth of Takeda. Approximately 30,000 Takeda
employees are committed to improving quality of life for patients,
working with Takeda's partners in health care in more than 70 countries.
more information, visit

Important Notice

This release is not intended to, and does not constitute, represent or
form part of any offer, invitation or solicitation of any offer to
purchase, otherwise acquire, subscribe for, exchange, sell or otherwise
dispose of, any securities or the solicitation of any vote or approval
in any jurisdiction. No shares are being offered to the public by means
of this release. This release is being given (together with any further
information which may be provided to the recipient) on the condition
that it is for use by the recipient for information purposes only (and
not for the evaluation of any investment, acquisition, disposal or any
other transaction). Any failure to comply with these restrictions may
constitute a violation of applicable securities laws.

Unless specified otherwise, no statement in this release (including any
statement of estimated synergies) is intended as a profit forecast or
estimate for any period and no statement in this release should be
interpreted to mean that earnings or earnings per share for Takeda
Pharmaceutical Company Limited ("Takeda") for the current or
future financial years would necessarily match or exceed the historical
published earnings per share for Takeda.

The companies in which Takeda directly and indirectly owns investments
are separate entities. In this release, "Takeda" is sometimes used for
convenience where references are made to Takeda and its subsidiaries in
general. Likewise, the words "we", "us" and "our" are also used to refer
to subsidiaries in general or to those who work for them. These
expressions are also used where no useful purpose is served by
identifying the particular company or companies.

Forward-Looking Statements

This release may contain forward-looking statements, beliefs or opinions
regarding Takeda's future business, future position and results of
operations, including estimates, forecasts, targets and plans for
Takeda. In particular, this release contains forecasts and management
estimates related to the financial and operational performance of
Takeda, including statements regarding forecasts for FY2018 revenue,
Core Earnings, Operating profit, Profit before income taxes, Net profit
attributable to owners of the Company, Basic earnings per share, R&D
expenses, Amortisation and impairment and other income/expense. Without
limitation, forward looking statements often include the words such as
"targets", "plans", "believes", "hopes", "continues", "expects", "aims",
"intends", "will", "may", "should", "would", "could", "anticipates",
"estimates", "projects" or words or terms of similar substance or the
negative thereof. Any forward-looking statements in this document are
based on the current assumptions and beliefs of Takeda in light of the
information currently available to it. Such forward-looking statements
do not represent any guarantee by Takeda or its management of future
performance and involve known and unknown risks, uncertainties and other
factors, including but not limited to: the economic circumstances
surrounding Takeda's business, including general economic conditions in
Japan, the United States and worldwide; competitive pressures and
developments; applicable laws and regulations; the success of or failure
of product development programs; decisions of regulatory authorities and
the timing there of; changes in exchange rates; claims or concerns
regarding the safety or efficacy of marketed products or products
candidates; and post-merger integration with acquired companies, any of
which may cause Takeda's actual results, performance, achievements or
financial position to be materially different from any future results,
performance, achievements or financial position expressed or implied by
such forward-looking statements. Neither Takeda nor its management gives
any assurances that the expectations expressed in these forward-looking
statements will turn out to be correct, and actual results, performance
or achievements could materially differ from expectations. Persons
receiving this document should not place undue reliance on forward
looking statements. Takeda undertakes no obligation to update any of the
forward-looking statements contained in this document or any other
forward-looking statements it may make. Past performance is not an
indicator of future results and the results of Takeda in this document
may not be indicative of, and are not an estimate, forecast or
projection of Takeda's future results.

Medical information

This document contains information about products that may not be
available and in all countries, or may be available under different
trademarks, for different indications, in different dosages, or in
different strengths. Nothing contained herein should be considered a
solicitation, promotion or advertisement for any prescription drugs
including the ones under development.

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