Takeda Pharmaceutical Company Limited — FY2022 Form 20-F
Reporting period: Fiscal year ended March 31, 2022; filed June 29, 2022. This is an annual report, not a standalone fourth-quarter filing. Financial statements are audited and prepared under IFRS, with Japanese yen (JPY) as the presentation currency.
Business context
Takeda is a global biopharmaceutical company focused on gastroenterology, rare diseases, plasma-derived therapies (PDT), oncology and neuroscience. The five areas represented 82.5% of FY2022 revenue. The U.S. contributed 48.0% of revenue and Japan 18.5%. The Shire acquisition remains a major influence on leverage, amortization and operating costs.
Key financial metrics
| Metric | FY2022 | FY2021 | Change |
|---|---|---|---|
| Revenue | JPY 3,569.0bn | JPY 3,197.8bn | +11.6%; +6.3% at constant exchange rates |
| Operating profit | JPY 460.8bn | JPY 509.3bn | -9.5% |
| Operating margin | 12.9% | 15.9% | Down about 3.0 percentage points |
| Profit before tax | JPY 302.6bn | JPY 366.2bn | -17.4% |
| Net profit | JPY 230.2bn | JPY 376.2bn | -38.8% |
| Basic EPS | JPY 147.14 | JPY 240.72 | Lower |
| Net cash from operating activities | JPY 1,123.1bn | JPY 1,010.9bn | Higher by JPY 112.2bn |
| Cash and cash equivalents at year-end | JPY 849.7bn | JPY 966.2bn | Down JPY 116.5bn |
| Bonds and loans | JPY 4,345.4bn | JPY 4,635.4bn | Down JPY 290.0bn |
FY2022 cost of sales was JPY 1,106.8bn, SG&A JPY 886.4bn, R&D JPY 526.1bn and product-related amortization and impairment JPY 472.9bn. The filing does not provide a clear company-wide gross-margin figure in the supplied text. Capital expenditures were JPY 239.9bn. Cash used in investing activities was JPY 198.1bn, while cash used in financing activities was JPY 1,070.3bn.
Year-end liquidity included a JPY 700bn undrawn committed bank facility. Cash included JPY 207.5bn temporarily held for third parties related to vaccine operations and a receivables sales program. JPY 203.9bn of borrowing principal and JPY 95.4bn of interest were due within one year. Takeda reported compliance with its financial covenants. Two wholesalers, AmerisourceBergen and McKesson, each accounted for more than 10% of revenue.
Material changes versus FY2021
- Revenue rose, supported by foreign-exchange translation, growth in core products and a JPY 133.0bn sale price for four Japanese diabetes products recorded as revenue. Excluding that sale price, reported revenue growth was 7.4%; at constant exchange rates, reported growth was 6.3%.
- Core therapeutic-area revenue increased 12.2% to JPY 2,944.9bn. ENTYVIO revenue rose 21.5% to JPY 521.8bn; immunoglobulin revenue rose 15.2% to JPY 385.9bn; and VYVANSE/ELVANSE revenue rose 20.4% to JPY 327.1bn. Rare Diseases grew 3.3%, but Rare Hematology declined 2.1% amid competition.
- Operating profit and net profit declined despite higher revenue. R&D and product amortization/impairment increased, while FY2021 had included JPY 228.9bn of divestiture gains and a JPY 60.2bn SHP647-related revaluation gain. FY2022 also included higher tax expense, including a charge related to the Irish tax assessment.
- Operating cash flow increased, but investing cash flow moved from a JPY 393.5bn inflow to a JPY 198.1bn outflow, primarily reflecting fewer business-sale proceeds than in FY2021. Debt declined following repayments and refinancing activity.
Outlook, commentary and notable matters
- Management said it was positioned for medium-term revenue and profit growth. Capital priorities are investment in growth drivers, rapid deleveraging and shareholder returns. The stated target is net debt/adjusted EBITDA of about 2x by FY2024; the filing excerpt does not provide a numerical FY2023 earnings or revenue forecast.
- Takeda intends to maintain annual dividends of JPY 180 per share, subject to company decisions. FY2022 dividends paid totaled JPY 284.2bn; a JPY 90-per-share dividend was declared for payment in June 2022.
- Major development setbacks included discontinuation of TAK-994 after a liver-related safety signal, termination of the pevonedistat program after its Phase 3 trial missed the primary endpoint, and discontinuation of TAK-721 following an FDA complete response letter. The FDA also declined the NATPARA supplement addressing particulate formation; next steps were under evaluation.
- Takeda recorded a JPY 491mn? No—JPY is not the assessment currency: it recorded a EUR 491mn tax provision, including interest, for the Irish Revenue Commissioners’ assessment concerning Shire’s 2014 AbbVie break fee. Takeda intends to appeal the ruling.
- Risks include patent expiry and generic/biosimilar competition, pricing and reimbursement pressure, clinical and regulatory failures, manufacturing and supply constraints, foreign-exchange exposure, substantial debt, acquisition-related impairment risk, litigation and evolving tax rules. COVID-19 effects had limited overall financial impact to date, but continued disruption remained uncertain. Russia/CIS represented 1.7% of revenue; Takeda suspended non-essential activities in Russia following the invasion of Ukraine.
- Other notable items: goodwill was JPY 4,407.7bn and intangible assets JPY 3,818.5bn; no goodwill impairment was recorded. The independent auditor issued unqualified opinions on the financial statements and internal controls.
Most important facts for investors to verify
- How much of revenue growth and cash generation is recurring, excluding the JPY 133.0bn diabetes-product sale and currency effects.
- Progress toward the FY2024 leverage target, the definition of adjusted EBITDA used for the target, debt maturities and refinancing needs.
- Commercial growth and competitive durability of ENTYVIO and other major products, alongside expected VELCADE and VYVANSE exclusivity-related declines.
- Pipeline filing timelines and outcomes, particularly following TAK-994, pevonedistat and TAK-721 discontinuations and delays affecting soticlestat and EXKIVITY.
- Resolution and potential cash impact of the Irish tax appeal, AbbVie supply litigation, ongoing government investigations and other material legal proceedings.
- Assumptions supporting impairment tests for substantial goodwill and intangible assets, and the effects of future pricing, supply or competitive changes.