Takeda Pharmaceutical Company Limited — FY2023 Form 20-F
Reporting period: Fiscal year ended March 31, 2024; filed June 26, 2024. Although the request metadata refers to 2023 Q4, this is an annual report, not a standalone quarterly filing. Financial statements are audited and prepared under IFRS in Japanese yen (JPY).
Business context
Takeda is a global biopharmaceutical company focused on gastroenterology, rare diseases, plasma-derived therapies, oncology and neuroscience, with research also directed to vaccines. The company reports one operating segment. Markets outside Japan generated 89.4% of revenue; the U.S. alone contributed 51.5%.
Financial performance
| Metric (JPY billions unless stated) | FY2023 | FY2022 | Change |
|---|---|---|---|
| Revenue | 4,263.8 | 4,027.5 | +5.9% reported; +1.5% CER |
| Operating profit | 214.1 | 490.5 | -56.4% reported; -50.3% CER |
| Operating margin | 5.0% | 12.2% | Down 7.2 percentage points |
| Profit before tax | 52.8 | 375.1 | -85.9% |
| Net profit | 144.2 | 317.0 | -54.5% |
| Basic EPS | JPY 92.09 | JPY 204.29 | Lower year over year |
| Core operating profit (non-IFRS) | 1,054.9 | 1,188.4 | -11.2% reported; -13.3% CER |
| Core net profit (non-IFRS) | 756.9 | 866.4 | -12.6% reported; -15.0% CER |
| Net cash from operating activities | 716.3 | 977.2 | Down 260.8 |
| Adjusted free cash flow (non-IFRS) | 283.4 | 446.2 | Down 162.8 |
| Bonds and loans at year-end | 4,843.8 | 4,382.3 | Up 461.5 |
Revenue growth reflected favorable currency translation and momentum in plasma-derived therapies, gastroenterology, rare diseases and oncology; CER growth was modest. Major product revenue included ENTYVIO JPY 800.9 billion, VYVANSE/ELVANSE JPY 423.2 billion, immunoglobulins JPY 644.6 billion and TAKHZYRO JPY 178.7 billion.
Operating profit was pressured by higher cost of sales, R&D, amortization and impairment, and other operating expenses. FY2023 included JPY 130.6 billion of impairment losses on product-related intangible assets, partly offset by a JPY 35.7 billion EOHILIA impairment reversal. Net profit also benefited from a JPY 91.4 billion income-tax benefit, including a JPY 63.5 billion reversal related to settlement of the Irish tax assessment concerning Shire’s 2014 AbbVie break fee.
At March 31, 2024, cash and cash equivalents were JPY 457.8 billion, including JPY 107.8 billion temporarily held for third parties. Takeda had an undrawn JPY 700.0 billion committed credit line, and management said it did not anticipate short-term funding or liquidity shortfalls. Current assets were JPY 2,558.6 billion and current liabilities JPY 2,313.1 billion. Adjusted net debt to adjusted EBITDA, a non-IFRS leverage measure, increased to 3.1x from 2.6x; adjusted EBITDA was JPY 1,319.9 billion. Takeda remained in compliance with its financial covenants.
Material changes versus prior year
- Revenue rose 5.9% on a reported basis, but only 1.5% at constant exchange rates.
- Operating profit fell 56.4% and net profit fell 54.5%; core operating profit and core net profit also declined.
- Operating cash flow decreased to JPY 716.3 billion from JPY 977.2 billion. Cash at year-end declined to JPY 457.8 billion from JPY 533.5 billion.
- Debt increased by JPY 461.5 billion. Commercial paper outstanding rose to JPY 317.0 billion from JPY 40.0 billion.
- Generic competition reduced VYVANSE revenue to JPY 423.2 billion from JPY 459.3 billion; VELCADE revenue fell to JPY 5.5 billion from JPY 27.8 billion, and AZILVA-F fell to JPY 33.6 billion from JPY 72.9 billion.
- Growth included ENTYVIO, immunoglobulins, TAKHZYRO, ADCETRIS and launches or expansion of products including FRUZAQLA, EOHILIA and QDENGA.
Outlook, risks and unusual items
Takeda did not provide a full-year FY2025 revenue or earnings forecast in the supplied filing text. It plans an annual dividend of JPY 196 per share for FY2025, up from JPY 188 for FY2023. A multi-year efficiency program announced May 9, 2024 is expected to generate JPY 140.0 billion of restructuring expenses in FY2025, with possible lower expenses in later years; management cautioned that costs will weigh on near-term profitability and the expected benefits and timing are uncertain.
Key portfolio risks include patent expiry and generic or biosimilar competition, pricing and reimbursement pressure, R&D and regulatory uncertainty, and dependence on third-party suppliers and plasma supply. Takeda withdrew EXKIVITY globally after its confirmatory trial failed; the Phase 3 ALOFISEL study missed its primary endpoint and Takeda does not plan a U.S. filing. NATPARA manufacturing is expected to end globally at the end of 2024. The filing also cites pipeline terminations and impairment charges, including for TAK-007 and modakafusp alfa.
Unusual legal item: Takeda paid AbbVie USD 505 million, including interest, in March 2024 following a court judgment over a LUPRON supply agreement. The FY2023 impact included JPY 26.4 billion of other operating expense and JPY 7.1 billion of finance expense. More than 6,100 U.S. PREVACID/DEXILANT product-liability lawsuits were disclosed; Takeda reached an agreement in principle in April 2024 to resolve U.S. cases for a non-material amount. The company also disclosed ongoing DOJ investigations and other legal proceedings; outcomes or financial effects are not clear or estimable for certain matters.
Other notable exposure includes goodwill of JPY 5,410.1 billion and intangible assets of JPY 4,274.7 billion, together representing 64.1% of total assets and subject to impairment assumptions. Potential development, regulatory and launch milestone payments totaled JPY 1,331.4 billion, excluding commercial milestones not considered reasonably likely. The company identified foreign exchange, interest rates, cybersecurity, supply continuity and healthcare price controls as material risks.
Important facts for investors to verify
- Whether revenue and cash generation improve at constant exchange rates, and whether core profit measures translate into sustained IFRS profitability.
- FY2025 restructuring costs, execution milestones and realized savings from the efficiency program.
- Debt reduction, commercial paper usage, near-term maturities, the planned hybrid-bond refinancing and progress toward lower leverage.
- Growth and competitive durability of ENTYVIO and plasma-derived therapies, including supply capacity and the timing of generic or biosimilar entry.
- Pipeline trial outcomes, regulatory approvals and commercial uptake, especially for TAK-279, FRUZAQLA, QDENGA and other launch products.
- Developments in the AbbVie supply dispute, product-liability matters, government investigations and U.S. rebate estimates.
- Goodwill and intangible-asset impairment assumptions, including sales forecasts, discount rates and product exclusivity expectations.