Message from the President & CEO - Takeda

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Message from the President & CEO - Takeda

Message from the President & CEOThe specific strategies Takeda is pursuing under the2012–2014 Mid-Range Plan are discussed below.1. InnovationWe are targeting various core therapeutic areas asfields with high unmet medical needs where we canmaximize the Takeda Group’s R&D experience andplatform. These are “Cardiovascular & Metabolic,”“Oncology,” “Central Nervous System,” “Respiratory &Immunology,” “General Medicine (Gastrointestinal &Genitourinary),” and “Vaccine.” In all of these fields,we aim to create highly innovative new medicines thatcan prevent or cure diseases. More specifically, we willleverage our global in-house R&D network structuredaround Drug Discovery Units (DDUs) that are focusedon these core therapeutic areas; while at the sametime, strengthen our drug-discovery research based oncollaborative links with external research and academicinstitutions. Moreover, we will bolster our competitiveportfolio through aggressive in-licensing and R&Dalliance activity and the promotion of life cyclemanagement. We will also strengthen our regulatoryaffairs function globally, and focus on securingapprovals for late-stage pipeline compounds. In thefield of vaccines, we are developing our globalbusiness to serve the pressing needs of emergingmarkets, in particular.Our overall aim is to raise R&D productivity byaccurately determining the efficacy, safety and marketpotential of compounds at early stages so that we canthen best prioritize for allocation of R&D resources.2. CultureWe continue to create an empowering, internationalcorporate culture and working environment at Takeda,based on recruiting and developing a global talentbase and promoting greater employee diversity. Weare actively promoting the exchange of personnelbetween Japan and overseas sites to develop a globalframework for the diversity-oriented development ofhuman resources within the Takeda Group. We alsocontinue to promote a strict compliance regimen in allaspects of our global operations, while seeking to playan active role as a corporate citizen in environmentaland CSR activities. These activities include supportingongoing post-disaster reconstruction and relief effortsin Japan as well as healthcare initiatives in emergingcountries.3. GrowthTakeda is pursuing strategies where we seek to targetboth developed and emerging markets, based on theirdifferent characteristics. In developed markets, thecompound annual growth rate of pharmaceuticalmarkets to 2016 is expected to average just 2% due togovernment measures to restrict healthcare expenditureand stricter regulatory approval procedures of newproducts. Nevertheless, the scale of these markets issignificant, and they remain important for Takeda. Webelieve that the major growth potential in thesemarkets is in new drugs for treating diseases with high,unmet medical needs. In emerging markets, thecompound annual growth through to 2016 isexpected to remain in double digits, reaching 11%despite the relatively high business risks in thesemarkets. These markets are forecast to generate about70% of the total growth in the global pharmaceuticalmarket over this period. We see branded generics foroff-patent products driving this growth in the short andmedium term, but over the longer term there will beincreasing opportunities for patented products.Based on this outlook for the global pharmaceuticalmarket, we are looking to shift our product portfoliofor developed markets in Japan, the U.S., and Europefrom a product mix centered on mature, high sellingproducts to a more diverse product lineup targetingdisease areas with unmet medical needs. This approachwill depend on the early and rapid market penetrationof new products. At the same time, we are working toreduce our costs and restructure our business model torealize sustainable growth. In the U.S., we have alreadymoved to boost our product lineup by completing theacquisition of URL Pharma Inc. in June 2012, therebyadding its leading product Colcrys (colchicine) for thetreatment of gout flares.In emerging markets, which are the growth drivers inthe industry, market growth through to fiscal 2016 isestimated at about 11%. We plan to outpace this bysteadily expanding sales of products of the legacyNycomed to achieve growth of around 17% over thesame period. In China, Russia/CIS (Commonwealth ofIndependent States), and Latin America, we willactively invest in both securing talented humanresources as well as preparations for the launch of newproducts. In these ways, we will strengthen ourbusiness base to ensure that these markets serve asmedium to long-term growth drivers. As the latestexample of this initiative, we reached an agreement inMay 2012 to acquire Multilab Indústria e Comércio deProdutos Farmacêuticos Ltda, which deals mainly withproducts that are in high demand in Brazil.Moreover, we aim to maximize synergies with legacyNycomed by launching a steady stream of Takedaproducts through the new business base we obtainedthrough the acquisition, while steadily realizing costsynergies as well.14 Takeda Annual Report 2012


Financial Forecastsin the 2012-2014Mid-Range PlanWe expect to expand sales through additional sales in emerging marketsand contributions from new products.In fiscal 2012, we forecast net sales of ¥1,550 billion(up 2.7% year-on-year), operating income of ¥160billion (down 39.6%), and net income of ¥155 billion(up 24.8%).We expect a loss of sales revenue in the U.S.stemming from the generic entry for Actos to becovered by a range of factors, including the full-yearcontributions from Nycomed and URL Pharma, thegrowth in Japan generated by NESINA and Vectibix,and growth in the U.S. by VELCADE, the gastroesophagealreflux disease treatment DEXILANT(dexlansoprazole) and ULORIC (febuxostat), atreatment for hyperuricemia for patients with gout.The projected fall in operating income reflects theimpact on profits of lower sales revenue from Actos,increased amortization of intangibles and goodwill,higher R&D expenses, and our aggressive investmentprogram, mainly focused on emerging markets. Theincrease in net income reflects anticipated extraordinarygains from the receipt of a government subsidyrelated to the construction of a new manufacturingfacility for influenza vaccines and a separate taxrefund linked to the re-investigation of a correctivenotice on transfer pricing.Our forecasts for the period to March 2015 areshown in the table below. From fiscal 2012, weexpect sales and profits to recover due to theexpansion of Takeda’s business in emerging marketsand contributions from the growth of new products.These forecasts also include the projected impactsfrom the acquisition of URL Pharma (positive impactsof ¥44.0 billion in sales and ¥5.0 billion in operatingincome for fiscal 2012).Outlook for the 2012–2014 Mid-Range PlanFY2011 ActualNet sales1,508.9R&D expenses281.9Operating income265.0excl. extraordinaryOperating income factors * 1414.5Net income124.2EPS (¥)157EPS (¥)314excl. extraordinary income/loss andextraordinary factors * 1(¥ Billion)FY2012 Forecast FY2013 Forecast FY2014 Forecast1,550.0310.0160.0305.0155.0196241* 21,630.0305.0225.0355.0150.01902911,700.0310.0240.0360.0120.0152285Note: Foreign exchange rates are assumed at $1=¥80; and 1 euro=¥105* 1 Extraordinary factors: amortization of intangible assets and goodwill resulting from corporate acquisition/integration and an increasein COGS related to inventory step-up due to revaluation to fair value* 2 Includes refund relating to transfer pricing (¥52.7 billion)Financial Strategyand ShareholderReturnsWe will strive to achieve a stable profit distribution emphasizing shareholderreturns, while maintaining and enhancing a sound financial position.The basic policy of our financial strategy for theperiod from fiscal 2012 to fiscal 2014 is to maintainand enhance a sound financial position, while alsoexecuting growth strategies to raise corporate value.We will tighten our capital management, includingthe streamlining of our assets by disposing ofmarketable securities and idle real estate. This willenable us to steadily repay debt, invest around ¥300billion in R&D for sustainable growth, and makestrategic investments.We decided to pay an annual dividend of ¥180 pershare for fiscal 2011, the same as the previous fiscalyear. In distributing profits for the period of the2012-2014 Mid-Range Plan, we will continue toemphasize shareholder returns with strong cash flows.Based on our results forecast, we intend to continueto pay a dividend of ¥180 per share in fiscal 2012and fiscal 2013, and we will strive to continue stablydistributing profits from fiscal 2014 and onward.Takeda Annual Report 201215


Message from the President & CEOCSR ActivitiesAddressing the social aspects of business growth opportunities and riskswill help to support the realization of sustainable growth.Growth of Takeda’s operations in emerging markets isone of key drivers in the 2012–2014 Mid-Range Plan.However, poverty is a serious social issue in emergingcountries, and organizations such as the UN and theWHO have identified the lack of access to health andmedical care as one of the major causes. Stakeholdersin the emerging markets increasingly expectmultinational pharmaceutical companies to tackle suchsocial issues. Takeda seeks to respond to them both inits pharmaceutical business and through its corporatecitizenship activities.We are striving to develop new vaccines for infectiousdiseases as part of the global expansion of our vaccinebusiness. In addition, Takeda is funding an endowmentprogram to the Global Fund to Fight AIDS, Tuberculosisand Malaria through to 2019.Takeda is also one of leaders in treatments fornon-communicable diseases (NCDs) such as lifestylediseases. As well as supplying these treatments topatients living in emerging countries, we also plan towork in partnership with highly specialized NGOs todevelop education and awareness programs related toNCDs that will help with prevention.Internally, we are undertaking various initiatives topromote employee diversity as part of ensuring that theTakeda Group operates as a leading global company. Atthe corporate level, meanwhile, we are reinforcinggovernance to make sure we promote a fair businessenvironment while also preventing corruption. All of ourCSR activities remain firmly rooted in the Takeda-ismphilosophy.Besides anticipating and responding to socialchanges, we are also taking initiatives to make changesthat can help promote a better society. Specifically, inJanuary 2011 Takeda became a member of the UnitedNations Global Compact LEAD* 1 program, throughwhich we will help to lead the implementation anddissemination of the principles of the United NationsGlobal Compact. In July 2011, Takeda joined theInternational Integrated Reporting Council (IIRC) PilotProgram.* 2 We will participate in proposing rules forintegrated corporate disclosure of financial andnon-financial information. We hope to make a usefulcontribution to this process based on our ownexperience.Takeda will resolutely carry out its strategies based onthe 2012-2014 Mid-Range Plan. In doing so, we aim tofulfill our mission of striving towards better health forpatients worldwide through leading innovation inmedicine. Thank you for your understanding andsupport.* 1 Launched in fiscal 2011, this program involves about 60 companies worldwidethat have taken a lead in activities to implement and disseminate the principlesof the United Nations Global Compact.* 2 The International Integrated Reporting Council (IIRC) is a private-sector bodyestablished with the aim of constructing a globally agreed framework forintegrated reporting by companies. A pilot program for formulating thisframework began in 2011 involving 65 firms from around the world.Associated InformationP.48 Creating Corporate Value through CSRP.72 Management OrganizationYasuchika HasegawaPresident & CEO“Leaders of all kinds must workand provides inclusion”together to blend a vision oftomorrow that inspires our peoplefor all levels of society.From the message video of the 2012 World Economic Forumin Davos at which President Yasuchika Hasegawaserved as co-chair.16 Takeda Annual Report 2012

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