Takeda Pharmaceutical Company Limited Q4 FY2024 earnings call

• Fiscal year '24 core operating profit was JPY 1.2 billion, growing 4.9% at constant exchange rate, with a core operating profit margin of 25.4%.
• Significant OpEx savings from an enterprise-wide efficiency program, with approximately JPY 200 billion in annualized savings to date, including ~65% from compensation and benefits, ~20% from procurement, and ~15% from other areas.
• Late-stage pipeline progress: 6 Phase III programs underway, including positive top-line results for rusfertide in polycythemia vera, and enrollment completed for zasocitinib in psoriasis and oveporexton in narcolepsy type 1.

Fiscal year '24 core revenue grew 2.8% at constant exchange rate. The Growth and Launch Product portfolio grew 14.7% and now accounts for 48% of Takeda total core revenue. Albumin growth in FY '24 was impacted by manufacturing operation upgrades and lower demand in China but is expected to return to high single-digit growth in FY '25.

• Fiscal year '25 guidance: broadly flat core revenue, core operating profit, and core EPS at constant exchange rate. Free cash flow outlook is JPY 750 billion to JPY 850 billion.
• Dividend increase to JPY 200 per share.
• Tariff impact: Potential exposure to U.S. and China tariffs is limited based on current manufacturing and supply chain structure.

• Potential tariff impact on pharmaceutical products, though exposure is limited due to manufacturing and supply chain location.
• Reimbursement challenges for ENTYVIO PEN in the U.S. due to changing access landscape and insurance plan differences.

Q: Yamaguchi from Citi. I have 2 questions. The first question is regarding company guidance, especially ENTYVIO sales growth and VYVANSE decline. The second question is about oveporexton's data readout timing.

A: Julie Kim commented on VYVANSE erosion expecting smoother progress in FY '25 and ENTYVIO's continued above-market growth. Andy Plump discussed oveporexton's data readout timing, stating summer with details to be shared at scientific congresses once abstracts are accepted.

Q: Muraoka from Morgan Stanley. First question about dividends and potential future increases. Second question about $30 billion investment in the U.S. over 5 years.

A: Milano Furuta explained the progressive dividend policy and consideration of various factors for future increases. Christophe Weber elaborated on the $30 billion investment in the U.S. as maintaining and developing the company's presence in the leading biopharmaceutical market.

Q: Barker from Jefferies. First question about zasocitinib's vitiligo indication. Second question about Julie Kim's appointment as CEO.

A: Andy Plump discussed zasocitinib's vitiligo indication based on scientific rationale, unmet need, and mechanism. Julie Kim expressed commitment to honoring legacy and listening to stakeholders for future direction.

Q: Nedelcovych from TD Cowen. First question about oveporexton's launch trajectory. Second question about GATTEX revenue durability.

A: Julie Kim discussed oveporexton's launch considering diagnosis challenges and patient services support. She noted GATTEX's revenue durability due to delayed generic entry and patient services support.

Q: Matsubara from Nomura Securities. First question about IP and tariffs. Second question about ENTYVIO PEN reimbursement and second-line market share.

A: Christophe Weber commented on IP location and tariff exposure. Julie Kim discussed ENTYVIO PEN's reimbursement progress and focus on first-line usage with plans to increase pen usage.

Q: Wakao from JPMorgan. First question about MFN policy impact on U.S. business. Second question about fourth-quarter gross margin improvement.

A: Julie Kim discussed MFN policy challenges and efforts to work with Congress. Milano Furuta explained gross margin improvement due to seasonality, product mix, and FX impact.

Q: Ren from Macquarie. First question about tariffs and COGS transfer price. Second question about Medicare Part D and 340B impact.

A: Christophe Weber explained tariff exposure based on manufacturing and supply chain. Julie Kim and Milano Furuta discussed Medicare Part D redesign and 340B program impact on revenue.

Q: Ueda from Goldman Sachs. First question about R&D expense outlook. Second question about margin outlook.

A: Milano Furuta discussed R&D expense increase due to clinical program progress and efficiency program carryover. He outlined margin outlook targeting mid-30% core OP and ongoing investment in new product launches.

Q: Sakai from UBS. First question about PDT geographic footprint and tariff impact. Second question about zasocitinib's head-to-head trial.

A: Giles Platford discussed PDT's geographic footprint and tariff management. Andy Plump explained zasocitinib's head-to-head trial to demonstrate best-in-class status against deucravacitinib.