Takeda reports top line results in line with guidance, with underlying growth of +2.8% EPS affected by one-time charges in FY2014 Back to profitable growth from FY2015 onward

May 15, 2015

Operational guidance met

Underlying revenue +2.8% year-over-year, in line with guidance
(reported revenue growing +5.1% to 1,777.8 billion yen)
Underlying core earnings of -2.1%, in line with guidance

Growth supported by innovative new products

Entyvio sales in US and EU support $2bn peak sales target
Brintellix outperforming two recent branded antidepressant launches in the US, 1 year after launch
Contrave off to a promising start in the US
Azilva growing strongly (80% year-over-year) in Japan
Takecab launched in Japan in February 2015

Regional top line performance on track

Price pressure and generic erosion in Japan, partially mitigated by successful product launches
Very strong performance in US and Europe and Canada driven by new products
Emerging Markets up 10% year-on-year (excluding inventory adjustment), double-digit growth in China and Russia

Efficiency gains above target

Project Summit achieving more than half of 5-year savings target in 2 years

Exceptional items impacting bottom line

$2.7 billion related to Actos settlement and associated costs.
Other one-time items related to product / pipeline impairment and Japanese tax reform

Guidance: Back to profitable growth from FY2015

Low single-digit underlying revenue growth in FY2015, with underlying core earnings growth higher than underlying revenue growth, and underlying core EPS growth higher than underlying core earnings growth
Excluding the Actos settlement impact in FY2014, reported net profit is expected to more than double in FY2015
180 yen dividend per share for FY2015 and strives to at least maintain the 180 yen annual dividend per share after fiscal year 2015

Christophe Weber, President and Chief Executive Officer of Takeda, commented:

“FY2014 was a year of transformation for Takeda, and at the same time, a year during which we delivered our business targets. We obtained approval for four important new treatments with Entyvio, Contrave, Takecab and Zafatek, and achieved significant pipeline milestones, including the phase 3 interim results for ixazomib. EPS was mainly impacted by the Actos settlement agreement expected to resolve the vast majority of Actos product liability lawsuits pending in the U.S, which will reduce financial uncertainties for the company and allow us to focus on developing innovative medicines for patients around the world.

Last year, I outlined my plan for the new Takeda organization, and we are steadily progressing to execute our strategic roadmap on all fronts to continue building a patient and customer centric organization with a focused world class R&D engine. Takeda’s growth drivers are gastroenterology, value brands in emerging markets, and oncology along with the launch of ixazomib. Financial discipline will sustain our business momentum, and I anticipate FY2015 will be a turnaround year for Takeda as we have positioned the company for long-term sales and profit growth."

Key figures for FY2014

	FY 2013	FY 2014	Growth
billion yen				Underlying²
Revenue	1,691.7	1,777.8	+5.1%	+2.8%
Operating Profit	139.3	-129.3	–	–
Core Earnings¹	314.2	288.3	-8.2%	-2.1%
Net Profit³	106.7	-145.8	–	–
EPS	135 yen	-185 yen	–	–
Core EPS	266 yen	225 yen	-15.6%	-3.7%
Dividend per Share	180 yen	180 yen	–	–

¹ Core Earnings is calculated from operating profit by excluding the impact of exceptional items, such as purchase accounting, amortization and impairment loss of intangible assets, restructuring costs and litigation costs.

² Underlying performance aims at understanding the real performance of the business. Underlying Revenue and Underlying Core Earnings excludes the same as above¹ plus product divestments and foreign exchange.

³Attributable to the owners of the company

With underlying revenue growth of 2.8% and underlying core earnings -2.1%, Takeda met its operational guidance for FY2014. Reported revenue grew by 5.1% to 1,777.8 billion yen. The booking of a $2.7 billion provision to cover the Actos settlement and estimated costs associated with remaining cases and other related litigations, along with other one-time exceptional items, impacted operating profit (-129.3 billion yen), net profit (-145.8 billion yen) and earnings per share (-185 yen).

Revenue growth was driven by new products – mainly Entyvio and Brintellix in the US, Entyvio and Adcetris in Europe, and Azilva in Japan – adding 97.2 billion yen. Performances in the US (+14.5% underlying revenue growth) and Europe and Canada (+5.4%) were very strong. Emerging Markets grew at 8.1%, with key countries China and Russia both achieving double-digit growth, while several other markets were impacted by a volatile economic environment. Excluding inventory adjustment, sales in Emerging Markets grew 10% year-on-year, in line with our mid-term ambition. In Japan, new products contributed 35.6 billion yen, a growth of 6.2%, which could not yet overcome the impact from generics and price pressure (Japan total -4.1%).

Project Summit – a company-wide strategic initiative to increase efficiency – delivered savings of 28 billion yen in FY2014, bringing the accumulated total achieved in the first two years to 62 billion yen. Thus, the company has achieved over 50% of its 5-year target of 120 billion yen in just 2 years.

Takeda is positioned for organic growth, with innovative products in the United States and Value Brands in Emerging Markets being the main growth drivers. Entyvio is expected to be a key global contributor to sales growth over the next few years, and Azilva and Takecab are among the new products in Japan that will enable Takeda to overcome increased generic penetration and price pressure and maintain a leading position. The ongoing efforts of the R&D organization will contribute in the mid- and long-term, with assets such as ixazomib for multiple myeloma that is currently in late phase 3 development with approval expected in FY2016. From FY2018 onward, Takeda expects to globally launch a range of innovative products in all its therapeutic areas and vaccines.

The new company structure, effective from April 1, 2015, reflects the new strategic growth focus, prioritizing patients’ needs, clarifying accountabilities, and increasing operational efficiency. The company continues to be R&D driven, focusing on four therapeutic areas and vaccines.

The transformations in FY2014 have positioned Takeda for long-term sales and profit growth. In FY2015, Takeda sets the following guidance.

Guidance for FY2015

billion yen	FY 2015¹	Underlying Growth
Revenue	1,820.0	Low single digit
Operating Profit	105.0	–
Core Earnings	–	Higher than revenue growth
Net Profit²	68.0	–
EPS	87 yen	–
Core EPS	–	Higher than core earnings growth
Dividend per Share	180 yen	–

¹The exchange rate assumptions for FY2015 are 1US$=120 yen and 1 euro=130 yen.

² Attributable to the owners of the company

For more details on Takeda’s FY2014 results and other financial information please visit http://www.takeda.com/investor-information/results/

Contact:

Tsuyoshi Tada
Takeda Pharmaceutical Company Limited
Phone：+81-3-3278-2417
E-mail: [email protected]

Tobias Cottmann
Takeda Pharmaceuticals International GmbH
Phone: +41-79-217-7252
E-mail: [email protected]

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