Takeda Pharmaceutical Co. Ltd. · TSE:4502

Takeda Pharmaceutical — Q3 FY2018 Earnings Presentation

39 slides from Takeda Pharmaceutical's earnings presentation, Feb 4, 2019

  1. Slide 1: Consolidated financial results for FY2018 Q3

    Consolidated financial results for FY2018 Q3 February 1, 2019 Costa Saroukos Chief Financial Officer Better Health, Brighter Future

  2. Slide 2: Important Notice

    Important Notice For the purposes of this notice, “presentation” means this document, any oral presentation, any question and answer session and any written or oral material discussed or distributed by Takeda Pharmaceutical Company Limited (“Takeda”) during the presentation. This presentation (inclu

  3. Slide 3: Important Notice

    Important Notice While Takeda plans to announce an earnings forecast which includes an estimated financial impact of the Shire acquisition once a reasonable financial estimate is determined, the consideration of the asset valuation as well as purchase price allocation, schedule and manner of amortiz

  4. Slide 4: FY2018 revised full year guidance including Shire impact to be announced in April

    FY2018 revised full year guidance including Shire impact to be announced in April Revised guidance reflecting the following: 1 th st • Consolidation of Shire's P&L for Jan 8 – Mar 31 2019 APR FEB Revised guidance for • Takeda's underlying performance Takeda FY2018 Q3 full year FY2018 on • Interest o

  5. Slide 5: Strategic Focus & Superior Execution driving robust Q3 YTD performance

    Strategic Focus & Superior Execution driving robust Q3 YTD performance • Continued to deliver against our key strategic priorities to: Grow Strengthen Boost Portfolio Pipeline Profitability • Strong underlying growth YTD driven by business momentum and strict OPEX discipline Revenue +4.8%; Core Earn

  6. Slide 6: Continued to deliver against our key strategic priorities in Q3

    Continued to deliver against our key strategic priorities in Q3 • Underlying Revenue +4.8% YTD with growth of prescription drug portfolio in all regions Grow • Growth Drivers maintained strong momentum +10.5% • Robust performance from key growth products Portfolio (e.g. ENTYVIO +35.1%; NINLARO +36.6

  7. Slide 7: Underlying revenue growth of prescription drug portfolio in all regions

    Underlying revenue growth of prescription drug portfolio in all regions FY2018 YTD Underlying Revenue: 1,357.5 Bn yen, +4.8% EUCAN Japan U.S. 245.6 Bn yen 394.1 Bn yen 470.1 Bn yen +4.9% +4.9% +8.5% 1 [+3.0%] Europe and Canada EM 49.6 Bn yen 197.9 Bn yen -22.1% +5.1% Consumer Healthcare & Emerging M

  8. Slide 8: Growth Drivers maintained strong momentum

    Growth Drivers maintained strong momentum FY2018 YTD Underlying Revenue growth GI +18.6% Oncology +7.0% Neuroscience +15.2% Growth Drivers Emerging Markets +5.1% Total + 10.5% Growth Drivers now 63% of total Takeda revenue 7 Growth Drivers maintained strong momentum FY2018 YTD Underlying Revenue gro

  9. Slide 9: Robust performance from key growth products

    Robust performance from key growth products Underlying Revenue Main indications Bn yen (YTD) vs. PY Ulcerative Colitis, Crohn's Disease 194.4 +35.1% Acid-related Diseases 44.4 +18.5% (Gastric ulcer, duodenal ulcer, reflux esophagitis, etc.) Relapsed/Refractory Multiple Myeloma 44.8 +36.6% Front line

  10. Slide 10: Important R&D milestones expected in FY2018

    Important R&D milestones expected in FY2018 Therapeutic Area Compound Expected Event On track. Positive CHMP opinion issued in December Front-Line Hodgkin's Lymphoma EU approval decision (H2) Oncology ADCETRIS Front-Line Hodgkin's Lymphoma Japan approval decision (H2) ü ALTA-1L Front-line ALK+ NSCLC

  11. Slide 11: Strong YTD underlying performance; reported EPS impacted by one-time items

    Strong YTD underlying performance; reported EPS impacted by one-time gains in FY2017 and Shire related costs in FY2018 • Reported EPS decreased -32.0% impacted by divestitures and Shire related costs - Revenue +0.8% with Growth Drivers offsetting negative impact of FX (-1.1pp) & divestitures (-3.0pp

  12. Slide 12: YTD Reported P&L reflects large one-time gains in FY2017 and Shire related costs

    YTD Reported P&L reflects large one-time gains in FY2017 and Shire related costs in FY2018 Reported P&L – FY2018 YTD FY2018 YTD Shire FY2018 YTD (Bn yen) FY2017 YTD Incl. Shire vs. PY related Excl. Shire vs. PY related costs costs* related costs Revenue 1,369.6 1,380.0 +0.8%－ 1,380.0 +0.8% Core Earn

  13. Slide 13: YTD Underlying P&L reflects business momentum & execution of the Global Opex Initiative

    YTD Underlying P&L reflects business momentum & execution of the Global Opex Initiative Underlying P&L – FY2018 YTD (Bn yen) FY2017 YTD FY2018 YTD vs. PY Revenue 1,295.0 1,357.5 +4.8% Gross Profit 925.8 991.9 +7.1% % of revenue 71.5% 73.1% +1.6pp OPEX -666.0 -648.1 -2.7% % of revenue -51.4% -47.7% +

  14. Slide 14: Operating Free Cash Flow -20.2% due to impact of Long-Listed Products sold to Teva JV

    Operating Free Cash Flow -20.2% due to impact of additional Long-Listed Products sold to Teva JV in FY2017 Cash Flow Statement – FY2018 YTD (Bn yen) vs. PY FY2017 YTD FY2018 YTD Net profit 240.7 164.4 -76.3 -31.7% Depreciation, amortization and impairment loss 127.8 124.3 -3.5 Decrease (increase) in

  15. Slide 15: Global Opex Initiative fully integrated into how we work

    Global Opex Initiative fully integrated into how we work and delivering stellar results • Total underlying OPEX spend reduced by 2.7% vs. prior year, trending ahead of plan • OPEX savings contributed 70% of underlying Core Earnings margin improvement (370bps of the 530bps) • Zero Based Budgeting ( Z

  16. Slide 16: Strategic Focus & Superior Execution driving robust Q3 YTD performance

    Strategic Focus & Superior Execution driving robust Q3 YTD performance • Continued to deliver against our key strategic priorities to: Grow Strengthen Boost Portfolio Pipeline Profitability • Strong underlying growth YTD driven by business momentum and strict OPEX discipline Revenue +4.8%; Core Earn

  17. Slide 17: Shire acquisition completed, integration progressing as planned

    Shire acquisition completed, integration progressing as planned th • Acquisition completed on January 8 , 2019 - 8 months from deal announcement to deal close, including shareholder and regulatory approvals - Takeda American Depository Shares listed on the New York Stock Exchange on December 24 - De

  18. Slide 18: A global, R&D-driven biopharmaceutical leader with significant financial strength

    A global, values-based, R&D-driven biopharmaceutical leader with significant financial strength • Substantial cash flow generation to support capital allocation priorities - Internal investment in R&D and product launches - Well established dividend policy (180 yen per share annually) - Committed to

  19. Slide 19: Appendix

    Appendix Appendix

  20. Slide 20: We Have an Innovative Pipeline Across our Therapeutic Areas

    We Have an Innovative Pipeline Across our Therapeutic Areas PHASE 1 PHASE 2 PHASE 3/FILED Approved* TAK-385 TAK-573 TAK-228 TAK-924 ® TAK-659 ADCETRIS TAK-981 TAK-788 (relugolix) ® ® ICLUSIG Teva (sapanisertib) (pevonedistat) NINLARO SUMO inhibitor EGFR/HER2 inhibitor SYK/FLT-3 inhibitor Seattle Gen

  21. Slide 21: Maximizing the value of Life Cycle Management programs

    Maximizing the value of Life Cycle Management programs PHASE 1 PHASE 2 PHASE 3 FILED ® ® ® ® ® ® ADCETRIS ® ® ADCETRIS ADCETRIS ® Cabozantinib ADCETRIS ALUNBRIG NINLARO NINLARO ALUNBRIG ICLUSIG Seattle Genetics Exelixis Seattle Genetics Seattle Genetics Seattle Genetics BCR-ABL inhibitor ALK inhibit

  22. Slide 22: An experienced and diverse executive team with a strong track record

    An experienced and diverse executive team with a strong track record MWANA LUGOGO CHRISTOPHE WEBER COSTA SAROUKOS HARUHIKO HIRATE YOSHIHIRO PADMA MILANO FURUTA Chief Ethics & President & CEO Chief Financial Officer Corporate NAKAGAWA THIRUVENGADAM Corporate Strategy Compliance Officer Communications

  23. Slide 23: Board composition for best-in-class governance

    Board composition for best-in-class governance INTERNAL Compensation Independent CC Committee External Director DIRECTORS NC Nomination NC Committee Christophe Weber Masato Iwasaki Andrew Plump Representative Director, Director, President, Director, President, President & CEO Japan Pharma Business U

  24. Slide 24: Definition of Core and Underlying Growth

    Definition of Core and Underlying Growth Takeda uses the concept of “Underlying Growth” for internal planning and performance evaluation purposes. Underlying Growth compares two periods (quarters or years) of financial results under a common basis and is used by management to assess the business. Th

  25. Slide 25: Definition of EBITDA / Adjusted EBITDA

    Definition of EBITDA / Adjusted EBITDA We present EBITDA and Adjusted EBITDA because we believe that these measures are useful to investors as they are frequently used by securities analysts, investors and other interested parties in the evaluation of companies in our industry. We further believe th

  26. Slide 26: Reconciliation from net profit to EBITDA / Adjusted EBITDA

    Reconciliation from net profit to EBITDA / Adjusted EBITDA Full year ended March 31 9 months ended December 31 (Bn yen) 2016 2017 2018 2017 2018 Net profit for the year 83.5 115.5 186.7 240.7 164.4 Income tax expenses 37.1 27.8 30.5 47.2 44.0 Depreciation and amortization 182.2 171.4 182.1 142.7 116

  27. Slide 27: Underlying revenue of Growth Drivers

    Underlying revenue of Growth Drivers (Bn yen) FY2017 YTD FY2018 YTD vs. PY ENTYVIO 143.9 194.4 +50.5 +35.1% TAKECAB 37.5 44.4 +6.9 +18.5% DEXILANT 49.4 53.0 +3.7 +7.4% ALOFISEL－ 0.0 +0.0 NA AMITIZA 25.3 24.5 -0.8 -3.3% LANSOPRAZOLE 27.3 19.6 -7.7 -28.3% GI* 283.3 335.9 +52.6 +18.6% NINLARO 32.8 44.8

  28. Slide 28: FY2018 YTD reported income statement

    FY2018 YTD reported income statement (Bn yen) FY2017 YTD FY2018 YTD vs. PY Revenue 1,369.6 1,380.0 +10.4 + 0.8% Gross Profit 984.5 1,010.2 +25.6 + 2.6% % of revenue 71.9% 73.2% +1.3pp SG&A -456.3 -447.7 +8.7 - 1.9% R&D -236.7 -228.9 +7.8 - 3.3% Non-recurring Items 1.1 11.0 Core Earnings 292.7 344.6

  29. Slide 29: FY2018 Q3 reported income statement

    FY2018 Q3 reported income statement (Bn yen) FY2017 Q3 FY2018 Q3 vs. PY Revenue 488.2 499.4 +11.3 + 2.3% Gross Profit 345.9 360.9 +15.0 + 4.3% % of revenue 70.9% 72.3% +1.4pp SG&A -159.1 -153.9 +5.2 - 3.3% R&D -81.6 -77.5 +4.1 - 5.0% Non-recurring Items 0.4 3.1 Core Earnings 105.6 132.6 +27.0 + 25.6

  30. Slide 30: Bridge from Reported Revenue to Underlying Revenue

    Bridge from Reported Revenue to Underlying Revenue Q3 YTD (Bn yen) FY2017 FY2018 vs. PY FY2017 FY2018 vs. PY Revenue 488.2 499.4 +11.3 + 2.3% 1,369.6 1,380.0 +10.4 + 0.8% FX effects* -14.1 -8.8 +5.3 +1.2pp -28.7 -14.6 +14.1 +1.1pp Revenue excluding FX effects* 474.0 490.6 +16.5 + 3.5% 1,340.8 1,365.

  31. Slide 31: Bridge from Operating Profit to Underlying Core Earnings

    Bridge from Operating Profit to Underlying Core Earnings Q3 YTD (Bn yen) FY2017 FY2018 vs. PY FY2017 FY2018 vs. PY Operating Profit 87.9 112.5 +24.5 + 27.9% 322.3 284.4 -37.9 - 11.7% Amortization and impairment of intangibles 29.5 31.1 +1.6 -1.5pp 86.3 79.4 -7.0 -2.3pp Shire integration costs (Other

  32. Slide 32: Bridge from Net Profit to Underlying Core Net Profit

    Bridge from Net Profit to Underlying Core Net Profit Q3 YTD (Bn yen) FY2017 FY2018 vs. PY FY2017 FY2018 vs. PY Net Profit 68.1 37.8 -30.3 - 44.5% 240.9 164.4 -76.5 - 31.7% EPS 87 yen 48 yen - 39 yen - 44.8% 309 yen 210 yen - 99 yen - 32.0% Amortization and impairment of intangibles 21.2 23.9 +2.7 +3

  33. Slide 33: FY2018 YTD underlying income statement

    FY2018 YTD underlying income statement (Bn yen) FY2017 YTD FY2018 YTD vs. PY Underlying Revenue 1,295.0 1,357.5 +62.4 + 4.8% Underlying Gross Profit 925.8 991.9 +66.1 + 7.1% % of revenue 71.5% 73.1% +1.6pp SG&A -438.9 -427.6 +11.4 - 2.6% R&D -227.0 -220.6 +6.5 - 2.8% Underlying Core Earnings 259.8 3

  34. Slide 34: FY2018 Q3 underlying income statement

    FY2018 Q3 underlying income statement (Bn yen) FY2017 Q3 FY2018 Q3 vs. PY Underlying Revenue 462.8 490.6 +27.8 + 6.0% Underlying Gross Profit 328.5 353.8 +25.3 + 7.7% % of revenue 71.0% 72.1% +1.1pp SG&A -151.7 -148.3 +3.4 - 2.2% R&D -77.8 -73.6 +4.2 - 5.4% Underlying Core Earnings 99.0 131.8 +32.8

  35. Slide 35: Net debt/EBITDA ratio improved to 1.6x; non-core asset disposals generated 72.9 Bn yen

    Net debt/EBITDA ratio improved to 1.6x; non-core asset disposals generated 72.9 Bn yen (Bn yen) FY2017 YTD FY2018 YTD vs. PY Operating Free Cash Flow 152.1 121.4 -30.7 -20.2% － Sale of Wako shares 84.5 Sale of Techpool and Multilab shares－ 27.5 1 72.9 Sale of other shareholdings 21.5 39.3 1 36.9 6.1

  36. Slide 36: FY2018 YTD Teva JV impact

    FY2018 YTD Teva JV impact (Bn yen) FY2017 YTD FY2018 YTD vs. PY Revenue 15.3 0.9 -14.4 Sale of additional 7 LLPs* 14.5－ -14.5 Deferred gain of 7 LLPs* 0.8 0.9 +0.1 Core Earnings 15.3 0.9 -14.4 Other income 26.3 29.7 +3.3 Deferred gain (amortization)** 4.6 3.4 -1.2 Deferred gain (impairment)*** 21.7

  37. Slide 37: Glossary of Abbreviations

    Glossary of Abbreviations AD Alzheimer’s disease EE H erosive esophagitis healing LCM lifecycle management RCC renal cell cancer ADC antibody drug conjugate EE M erosive esophagitis maintenance mAb monoclonal antibody RTK receptor tyrosine kinase ADHD attention deficit hyperactivity disorder EFI ent

  38. Slide 38: “Takeda Pramaceutcl Company United

    “Takeda Pramaceutcl Company United

  39. Slide 39: Takeda Pharmaceutical Company Limited contact

    Takeda Pharmaceutical Company Limited (TSE code 4502) Contact: Global Finance, IR TEL: +81-3-3278-2306 https://www.takeda.com/ Quarterly Announcements / Presentations https://www.takeda.com/investors/reports/ Important Notice For the purposes of this notice, “Databook” means this document, any oral

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