- FY2020 Q3 Year-to-Date Results Driven by 15% Underlying Revenue Growth of 14 Global Brands (e.g., ENTYVIO +24.0%, TAKHZYRO +38.1%, Immunoglobulin +13.7%); Generated Strong Margins and Cash Flow
- R&D Engine Continues to Advance Wave 1 Pipeline With Submission of TAK-721, the First of Seven Potential NME Filings Over Next 12 Months
- Confirming Full-Year Management Guidance and Raising Forecasts for Free Cash Flow and Reported EPS
- Purpose-Led Sustainability Commitment Drives Recent Carbon Neutrality Achievement Across Value Chain


Osaka, JAPAN, February 4, 2021 – Takeda Pharmaceutical Company Limited (TSE:4502/NYSE:TAK) (“Takeda”) today announced financial results for the third quarter of fiscal year 2020 (period ended December 31, 2020).

TAKEDA CHIEF FINANCIAL OFFICER COSTA SAROUKOS commented:

“Our third-quarter results demonstrate the resilience of our business model and the depth of our portfolio, with strong growth generated by our 14 global brands. As a values-based and R&D driven biopharmaceutical company, we remain focused on bringing life-transforming treatments to people with high unmet needs around the world. With the first of our seven potential filings in the next 12 months complete, we look forward to delivering the next generation of potentially transformative medicines and maintaining our commitment to patients, our people and the planet.

“While maintaining business momentum, we also continue to deliver on our financial commitments, realizing strong year-to-date margins and cash flow, and exceeding our target for non-core asset divestitures. This progress reflects our ability to effectively and efficiently integrate the operations of Takeda and Shire, as we capture synergies and focus investment in our key business areas.

“Takeda’s strong financial performance in Q3 allows us to confirm management guidance for FY2020, with further growth acceleration expected in Q4 as we conclude the fiscal year. Reflecting on the transformation of Takeda over the past few years and the world-class R&D engine we have built, we look to 2021 as an important inflection point, filled with a number of pivotal milestones that will position us for long-term sustainable growth.”

FINANCIAL AND BUSINESS HIGHLIGHTS
Results for Q3 FY2020 YTD (Nine-Month Period Ended December 31, 2020)

(billion yen, except percentages and per share amounts)
REPORTED CORE (Non-IFRS)(1) UNDERLYING (2) (Non-IFRS) (1)
Q3 FY2020 YTD vs. PRIOR YEAR Q3 FY2020 YTD vs. PRIOR YEAR
Revenu 2,427.5 -3.6% 2,427.5 -3.6% +1.1%
Operating Profit 358.7 +120.7% 780.6(3) -1.5% +8.5%
Margin 14.8% +8.3pp 32.2% +0.7pp 32.1%
Net Profit 178.9 +320.8% 519.8 -7,2
EPS (JPY) 115 yen +87 yen 333 yen -27 yen +4.5%
Operating Cash Flow 610.0 +25.9%
Free Cash Flow (Non-IFRS)(1) (4) 717.5 -3.8%

(1) Further information on certain of Takeda’s Non-IFRS measures is posted on Takeda’s investor relations website at https://www.takeda.com/investors/reports/quarterly-announcements/

(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 on a constant currency basis and excluding the impact of divestitures and other amounts that are unusual, non-recurring items or unrelated to our ongoing operations.

(3) Core Operating Profit represents net profit adjusted to exclude income tax expenses, the share of profit or loss of investments accounted for using the equity method, finance expenses and income, other operating expenses and income, amortization and impairment losses on acquired intangible assets and other items unrelated to Takeda’s core operations, such as purchase accounting effects and transaction related costs.

(4) Free Cash Flow represents cash flows from operating activities, excluding acquisition of plant, property and equipment, and including proceeds from sales of plant, property and equipment, as further adjusted to exclude the acquisition of intangible assets and the acquisition of investments, and to include the proceeds from sales and redemption of investments and proceeds from sales of business, net of cash and cash equivalents divested.

FY2020 Q3 YTD RESULTS DEMONSTRATE TAKEDA’S CONTINUED RESILIENCE
Reported revenue, at JPY 2,427.5 billion (~$23.5B), was impacted primarily by foreign exchange and divestitures, however Takeda delivered year-to-date underlying revenue growth of 1.1% in the third quarter of FY2020, which was driven by strong growth in ENTYVIO, TAKHZYRO, and Immunoglobulin, and was consistent with full year guidance of “low-single-digit growth.”

Takeda delivered reported operating profit of JPY 358.7 billion (~$3.5B), which grew 120.7%, reflecting lower purchase price accounting (PPA) and integration costs. Core operating profit, which adjusts for PPA and non-recurring items, declined year-on-year to JPY 780.6 billion (~$7.6B) owing to foreign exchange impact and divestitures. The core operating profit margin was 32.2%. Underlying core operating profit grew 8.5% year-on-year. Underlying core operating profit margin, which adjusts for the impact of foreign exchange and divestiture effects, was 32.1%, driven by synergies and OPEX efficiencies.

Takeda’s reported net profit was JPY 178.9 billion, a 320.8% increase compared with the same period in the prior year.

Operating cash flow increased by 25.9% to JPY 610.0 billion, strengthening Takeda’s balance sheet and more than enabling the Company to satisfy dividend, debt, and interest payments. Free cash flow, which also reflects capital expenditures and proceeds from asset sales, was JPY 717.5 billion (~$7.0B). This represented a decrease of 3.8% in reported free cash flow versus the prior year; the growth rate was impacted by the ~JPY 375.5BN cash received in July 2019 for XIIDRA®. Robust cash flow enabled further de-leveraging in Q3 and led to a 3.6x net debt/adjusted EBITDA ratio at the end of the period.

The overall impact of the global spread of COVID-19 on Takeda’s consolidated financial results for the nine-month period ended December 31, 2020 was not material, with several offsetting factors. There were adverse effects due to COVID-19 observed in certain therapeutic areas, especially in Neuroscience during periods when stay-at-home restrictions were in place reducing patient visits to medical care providers. This trend has fluctuated throughout the nine-month period, especially in recent months, as transmission of COVID-19 has increased significantly in many parts of the world. These adverse impacts have been partially offset by benefits from prescribing trends during the pandemic, such as an expansion of certain products with a more convenient administration profile that was observed in the early phase of the outbreak. With regard to operating expenses, voluntary suspension of certain business activities such as business travel and events in response to COVID-19 led to lower spending. As a result of these factors, the impact on Takeda’s profit was immaterial.

For the latest Takeda communications regarding COVID-19, please click here to visit the COVID-19 Information Center on Takeda’s website.

COMMERCIAL UPDATES ACROSS FIVE KEY BUSINESS AREAS
Takeda’s five key business areas — Gastroenterology, Rare Diseases, Plasma-Derived Therapies, Oncology and Neuroscience — with JPY 1,982.1 billion of reported revenue representing approximately 82% of total Q3 YTD revenues – delivered year-on-year underlying revenue growth of 4.4%. Takeda’s 14 global brands, with reported revenue of JPY 910.3 billion (~$8.8B) in aggregate, delivered a 15.4% increase in Q3 YTD underlying revenue growth compared to a year before.

Gastroenterology
The Gastroenterology franchise with JPY 588.8 billion in reported revenue represented 24% of sales, with underlying revenue growth of 14%. This was spearheaded by continued exceptional growth through expanded first line share of gut-selective ENTYVIO in the U.S., EU, and Japan.

Rare Diseases
The Rare Diseases franchise with JPY 446.7 billion in reported revenue represented 18% of sales, with underlying revenue growth declining 3%. The hereditary angioedema portfolio saw 16% underlying revenue growth, driven by continued excellent performance from TAKHZYRO, which continues to expand the hereditary angioedema prophylaxis market. Rare Hematology declined 11% on an underlying basis, with the competitive landscape in line with expectations. Rare Metabolic declined 1% on an underlying basis, but excluding NATPARA the portfolio saw 7% growth. Takeda is working closely with the U.S. Food and Drug Administration (FDA) on a proposed plan to resupply NATPARA in the U.S. and had announced earlier in FY2020 that the required device modifications and product testing will likely delay availability beyond FY2020.

PDT Immunology
PDT Immunology with JPY 313.0 billion in reported revenue represented 13% of sales, with underlying revenue growth of 9% driven by continued strong Gammagard-Liquid demand in the U.S. and subcutaneous IG worldwide. Albumin sales declined 10% versus prior year, partially due to phasing and supply dynamics in China in 2019 and in some part due to a temporary interruption in submitting batches of Albumin Glass for release in China in Q3, for which we expect a resolution soon.

Oncology
Oncology with JPY 318.5 billion in reported revenue represented 13% of sales, with underlying revenue growth of 3%. Takeda’s portfolio continues to expand indications as growth brands offset the decline of older products in the portfolio.

Neuroscience
Neuroscience with JPY 315.1 billion in reported revenue represented 13% of sales, declining 2% on an underlying basis. The portfolio experienced a slowdown in momentum attributable to COVID-19 stay-at-home restrictions that reduced patient visits and diagnoses. A recovery of prescribing trends has been noted, but new patient starts are not yet back to pre-COVID levels.

Q3 YTD Global Brand Highlights
see & read more on
http://www.takeda.com/newsroom/newsreleases/2021/takeda-fy2020-q3-results-demonstrate-growth-acceleration-and-continued-resilience--full-year-management-guidance-for-fy2020-confirmed--forecast-raised-for-free-cash-flow-and-reported-eps/