Message - Takeda

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Message - Takeda

MessageKunio TakedaChairmanYasuchika HasegawaPresident


To Our StakeholdersTakeda's sustained growth towards a world-classpharmaceutical company.Focused on Takeda's goal of "growth towards a worldclasspharmaceutical company," as set forth in the2006-2010 Medium-Term Plan, and maximizing the advantagesof our corporate philosophy of "Takeda-ism =Integrity," Takeda continues to implement a variety ofstrategies in our business operations. The foremost ofthose strategies is the "Enhancement of the R&D Pipeline,"by achieving sustained growth through the discoveryand development of in-house products and the strategicinvestment of resources in high priority researchareas. Furthermore, Takeda continues to reinforce itsR&D pipeline through alliances—such as the in-licensingof products and technologies—corporate acquisitionsand product life-cycle management to maximize the valueof marketed products. Through these efforts, Takeda'spipeline now has greater depth and in December 2007,we successfully submitted two New Drug Applications(NDA) in the U.S. for the anti-diabetic treatment SYR-322, and the anti-peptic ulcer treatment TAK-390MR.Moving forward, Takeda will continue to further enhanceits current strength in the lifestyle related diseases area,while it has also positioned oncology—a field where therecontinues to be a high level of unmet patient needs—as anext generation core therapeutic area. As an R&D-drivenpharmaceutical company, Takeda has a strong desireto develop superior therapeutic oncology products tobenefit both patients and medical professionals alike.The oncology market is forecast to have sustainedgrowth into the future, which is why we believe that establishinga position as a leading company in this fieldwill allow us to not only contribute to the needs of patientsand medical professionals but also provide forTakeda's sustained growth into the future as well. Aimingto realize Takeda's vision of becoming a top three globaloncology company, the Company has concluded a numberof key agreements in 2008.The first of these agreements in February 2008 wascentered on strengthening Takeda's domestic oncologypipeline, with Takeda entering into a licensing agreementwith the U.S. company Amgen Inc. (Amgen) forthe development rights of thirteen clinical candidatesfrom their pipeline, as well as a separate agreement toacquire all the shares of Amgen's Japanese subsidiary.The newly acquired company launched their activitiesas Takeda Bio Development Center Limited (Takeda Bio)in April 2008.In April, Takeda also entered into an agreement withMillennium Pharmaceuticals, Inc. (Millennium)—one ofthe world's leading biopharmaceutical companies in theoncology area—to acquire the company and in May,Takeda was successful in making Millennium a whollyownedsubsidiary. Millennium has outstanding R&D capabilitiesin the oncology field, with numerous promisingcandidates in its oncology pipeline. By realizing the inherentsynergies of Takeda's own research technologiestogether with those of Millennium, we look forward tofurther enhancing our pipeline.Takeda is also actively establishing an optimum sales infrastructure,to meet the various market characteristicsof Japan, the U.S., Europe and Asia. In order to reinforceTakeda's operating base in the U.S. market—a marketthat accounts for more than 40 percent of the globalpharmaceutical market—in March 2008, Takeda agreedwith Abbott Laboratories (Abbott) to evenly divide thevalue of the joint venture TAP Pharmaceutical ProductsInc. (TAP) thereby realizing it as a wholly-owned subsidiaryof Takeda. Following the consolidation of TAP as awholly-owned subsidiary at the end of April, TAP's marketingand development functions were integrated intoTakeda Pharmaceuticals North America, Inc. (TPNA) andTakeda Global Research & Development Center Inc.(TGRD) respectively at the end of June. Takeda will continueto quickly implement flexible systems that are ableresponsive to market needs and to improve the efficienciesof its operations base.This series of events have significantly contributed toTakeda's progress towards accomplishing its operationaltargets given in the 2006-2010 Medium-Term Plan,namely, "sales of consolidated in-house ethical productsof 1.4 trillion yen in fiscal 2010" and "sales of consolidatedin-house ethical products of 2 trillion yen in fiscal2015," and we believe they will serve as a strong basefor making the leap to becoming a world-class pharmaceuticalcompany.


To Our Stakeholdersstock for Wyeth K.K. and Takeda-Kirin Foods Corporation,House Wellness Foods Corporation and SumitomoChemical Takeda Agro Company, Limited in fiscal 2007,net income reached ¥355.5 billion (a 5.9 percent increaseover the previous year).Earnings ForecastOutlook for Fiscal 2008For fiscal 2008, we estimate net sales of ¥1.57 trillion (a14.2 percent increase over the previous year), operatingincome of ¥280 billion (a 33.8 percent decrease over theprevious year), and net income of ¥200 billion (a 43.7percent decrease over the previous year). As for netsales, we anticipate increased revenue from the previousyear, based on growth in the sales of our core productscentering on Actos, both at home and abroad, as well ason the consolidation of TAP and Millennium as whollyowned subsidiaries.Expensing of the consolidation costs of TAP and acquisitioncosts of Millennium will be heavily concentrated infiscal 2008, leading to a transient decrease in operatingincome and net income. However, through the consolidationof U.S. operations with the integration of TAP andthe synergistic effects of the Millennium acquisition—suchas enhancement of Takeda's pipeline and oncologyresearch capabilities—Takeda is strategically aiming toachieve stable growth into the future.Return to ShareholdersPolicies for Return to ShareholdersTakeda's dividend policy is focused on providing stablereturns to shareholders over the long-term in accordancewith the company's consolidated financial results.Accordingly, the Company will continue to target incrementalincreases in the consolidated dividend pay-outratio (before amortization of assets associated with theMillennium acquisition) to approximately 45 percent forthe final year of the 2006-2010 Medium-Term Plan.In addition to incremental increases in the consolidateddividend pay-out ratio, Takeda will continue to considerits overall capital requirements while flexibly conductingshare buybacks in order to improve capital efficiencyand provide further returns of our profits to our shareholders.In fiscal 2007, the consolidated dividend payoutratio was 40.1 percent, and the dividend per share is¥168 (an increase of ¥40 over the previous year). Theoutlook for the fiscal 2008 dividend is ¥170 per share.In fiscal 2007, Takeda implemented an open marketshare buyback, acquiring 16,497,000 of the Company'sstock for ¥128.6 billion, which was followed in the firstquarter of fiscal 2008 with a share buyback acquiring27,994,000 of the Company's stock for ¥157.8 billion.Takeda retired 57,130,000 of the Company's stock that itheld in May and a further 16,990,000 of stock held inJuly 2008.Dividend per Share / Dividend Pay-out RatioDividend per Share(Yen)(%) Dividend per ShareDividend Pay-out RatioDividend Pay-out Ratio[2006-2010 Medium-Term Plan] Business Goal in Fiscal 2010Enhancement of the R&D pipeline, toward targeted sales of consolidatedethical products (excluding stocks) of ¥2 trillion in fiscal 2015Consolidated net sales ofethical products*Achievements in Fiscal 2007 Business Goal in Fiscal 2010¥1.0798 trillion ¥1.4 trillionMarket share in the countrieswith Takeda's presence2.7% 2.5%R&D expenses (ethical drugs)EPS (Earnings per share)**¥271.5 billion22.4% of net sales in ethical products¥391.48 (an 8.5% increase per yearon average)Investment of up to 20% of thesales of ethical productsAn annual increase of more than7% on averageROE (Return on equity)15.1%Maintenance of the level in fiscal 2005(14.4 %)* excluding stocks** excluding extraordinary gains or losses as well as special factors due to M&A and similar


Positioning of Fiscal 2008The Significance of Fiscal 2008 in the2006-2010 Medium-Term PlanTakeda initiated the 2006-2010 Medium-Term Plan focusedon becoming a "world-class pharmaceutical company,"and to achieve this vision has been striving to enhanceits R&D pipeline to realize "sales of consolidatedethical products of ¥2 trillion in fiscal 2015," to strengthenits operating bases worldwide and establish a globalbusiness operating system that will support futuregrowth, and to foster the Company's human capital.Fiscal 2008 will be a key year for Takeda's initiatives toachieve the goals of the 2006-2010 Medium-Term Plan.Takeda has a number of challenges this fiscal year, suchas obtaining FDA approval and the product launch for theanti-diabetic treatment SYR-322 and the anti-peptic ulcertreatment TAK-390MR—both of which are anticipatedto become core products in the U.S.—maximize thepotential of Takeda Bio Development Center (formerlyAmgen K.K.), ensure the smooth operations of TPNAand TGRD following the integration of TAP's sales anddevelopment functions, and also further establish andenhance Takeda's oncology research, development andmarketing infrastructures through the transition ofMillennium into a member of the Takeda Group. Takeda willtake a leap forward by decisively managing each of theseinitiatives and accelerating their successful completion.In order to accomplish Takeda's goals for fiscal year2008 and consequently the 2006-2010 Medium-TermPlan beyond, we will be focusing all of the TakedaGroup's energies into one.Fiscal 2008 Management TasksThree Management Tasks and Their Action PlansThe three main management tasks for fiscal 2008 are asfollows:Management Task 1Establishing a Path for Growth inKey Markets[U.S.]•Sound restructuring of U.S. operations and the earliestpossible launch and market penetration of new products.•Growing the sales of Millennium's core product"VELCADE"[Japan]•Firmly maintaining the number one market share in Japan[Europe & Asia]•Pursuit of a variety of opportunities to further strengthenand expand operating basesFocused on realizing sustained growth into the future,Takeda is working to maximize the product value of itsexisting products as well as the earliest possible launchof its pipeline products—such as the anti-diabetictreatment SYR-322 and the anti-peptic ulcer treatmentTAK-390MR—and to further strengthen and expandoperating bases around the world.In order to strengthen Takeda's U.S. operations, the salesand development functions of TAP were integrated intoTPNA and TGRD. Under this new structure, Takeda isaiming for the earliest possible market penetration ofboth SYR-322 and TAK-390MR. The Company is alsoaiming for the earliest possible U.S. marketing approvaland launch of TMX-67, a treatment for gout and hyperuricemia.In June of this year, Millennium's core productVELCADE (generic name: brotezomib) received an approvalas a front-line treatment for multiple myelomawhichallows the drug to be used in patients with previouslyuntreated multiple myeloma—and by leveragingthis additional indication Takeda will accelerate salesgrowth for the product.As for Japan, we will focus on the marketing of our coreproducts centering on the anti-diabetic treatment Actosand the anti-hypertension treatment Blopress, in order tofurther strengthen and maintain our leading position interms of market share. In addition to growing our existingproducts, Takeda will also focus on establishing an optimumsales infrastructure that will be able to ready for thefuture marketing of the 13 primarily oncology clinical candidatesin-licensed from Amgen.By leveraging Takeda Pharmaceuticals Europe Limited(TPEU) pan-European leadership of Takeda's six Europeanmarketing subsidiaries, Takeda is working to realizefurther expansion into new markets within the Europeanregion, thereby creating a third marketing pillar in additionto Japan and the U.S. supporting Takeda's activities.Yasuchika Hasegawa, President


To Our StakeholdersAs for the Asia region, Takeda's current operations centeron Southeast Asia, and we will continue to considermeans for further expansion in China and entrance intothe Indian market.Management Task 2Strengthening In-house R&D Activities•Enhancement of in-house R&D capabilities in new drugdevelopment•Acceleration of R&D activities and maximization of productvalue, contributing to sales growth from fiscal year 2011Maximization of the synergistic effects in the oncologyarea related to the transition of Millennium into a memberof the Takeda Group.One of the core focuses for accomplishing the 2006-2010 Medium-Term Plan's goal of "growth towards aworld-class pharmaceutical company" is the enhancementof in-house R&D capabilities in new drug developmentactivity.Takeda aims to further improve its research productivitythrough exchanges and friendly competition among researchersat its domestic and overseas research bases,including Millennium, Takeda San Diego, Inc., TakedaCambridge Limited, Takeda Singapore Pte Limitedand Takeda San Francisco, Inc. In the oncology area inparticular, we will promote the development of innovativenew drugs through synergies in Takeda's hereforetoresearch approach and Millennium's own novel researchapproach.Takeda will also continue to aggressively pursue in-licensingand alliance activities that supplement in-houseresearch and provide for a well-balanced pipeline within-house compounds.As for the late-stage development products that will bedrivers for growth in fiscal 2011 and beyond, Takeda willcontinue to do its utmost to achieve their earliest possibleNDA submission and marketing approval.By sharing best practices between Takeda Group companiesin relation to sales infrastructure and initiatives inJapan, the U.S., Europe and Asia, we will establishTakeda's own unique, efficient management system thatremains flexible enough to meet the regulations and differentbusiness practices of each global region. Thus,we will realize sustained growth into the future throughthe consistent execution of precise business strategieswith a medium-to-long term focus.As the globalization of Takeda Group progresses, it becomesincreasingly important to foster leaders who arecapable of managing business operations globally. Withthis in mind, Takeda will purposefully foster personnelbothdomestically and abroad-to realize a human capitalbase that can meet such demands.CSR ActivitiesOur Efforts toward CSR ActivitiesTakeda recognizes that as a global company it needs toproactively participate in activities that are consistentwith its corporate social responsibility (CSR).Takeda has been implementing a variety of initiatives atthe global level in order to establish a relationship oftrust with its stakeholders, foremost of which are its"Relationship with Society," "Relationship with the Environment,""Relationship with Suppliers" and"Relationship with Employees". Specific achievementsof our CSR activities in fiscal 2007 are introduced in laterin this report.Takeda will continue to promote initiatives both to meetthe expectations of our stakeholders and to realize ourmanagement mission of "striving toward better health forindividuals and progress in medicine by developing superiorpharmaceutical products." We ask for your continuedunderstanding and support as Takeda focuses onachieving its goals in the 2006-2010 Medium-Term Planand beyond.Management Task 3Improvement of Operating Structure andAcceleration of Human Capital Development•Establishment of Takeda's own unique, efficient managementstructure•Establishment and execution of precise strategies witha medium-to-long term focus•Fostering of human capital, capable of managing globalbusiness operationsKunio TakedaChairmanAiming to become a "world-class pharmaceutical company"with a presence in the global market, Takeda isstriving to establish its own unique, efficient managementstructure.Yasuchika HasegawaPresident

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