Takeda Announces FY2023 Full Year Results and FY2024 Outlook, Affirming Commitment to Late-Stage Pipeline Development and Core Operating Profit Margin Expansion
Takeda announced its FY2023 full year results, showing +5.9% revenue growth at AER and +1.5% at CER, with a -13.3% core operating profit change at CER due to generic impact and R&D investment. The company aims for a 100-250 basis points core operating profit margin improvement each year from FY2025. Takeda's financial performance exceeded expectations, with three new therapy approvals from the U.S. FDA in FY2023 and up to six NMEs in phase 3 development in FY2024. The company plans to implement an efficiency program in FY2024 to drive organizational agility, procurement savings, and leverage data, digital, and technology capabilities.
Takeda exceeded its Management Guidance for Revenue and Core EPS performance at CER in FY2023 despite loss-of-exclusivity impact, demonstrating strong financial performance.
The company received three new therapy approvals from the U.S. FDA in FY2023 and has up to six NMEs with significant revenue potential in phase 3 development in FY2024, showing promise in its late-stage pipeline.
Takeda's commitment to a multi-year efficiency program in FY2024 focused on organizational agility, procurement savings, and leveraging data, digital, and technology capabilities signals strategic growth and cost discipline.
Takeda experienced a -13.3% core operating profit change at CER in FY2023, reflecting the impact of generic entrants for high-margin products and investments in R&D and data, digital, and technology.
The company anticipates flat or slightly declining revenue at CER in FY2024 and a double-digit CER revenue growth from Growth & Launch Products to offset generic competition impact, highlighting short-term revenue challenges.
While Takeda aims for a core operating margin improvement of 100-250 basis points per year from FY2025, the company expects a mid-10s% decline in core EPS in FY2024, indicating near-term financial challenges.
Insights
Takeda's reported revenue growth of +5.9% at Actual Exchange Rates (AER) and +1.5% at Constant Exchange Rate (CER) suggests a stable expansion, though modest when adjusting for currency fluctuations. The core operating profit decline of -13.3% at CER indicates pressures from generic competition and increased R&D spending. An investor might appreciate the proactive stance Takeda is taking towards efficiency improvements and digital investments, which are important in a sector characterized by high development costs and the need for innovation.
The announcement of three new FDA approvals and up to six NMEs in Phase 3 development is promising. However, the near-term forecast of flat or slight revenue decline at CER, paired with an estimated 10% decline in Core Operating Profit for FY2024, may temper expectations. Notably, the dividend increase from 188 yen to 196 yen per share signals management's confidence in long-term growth, despite the short-term challenges.
While the long-term outlook seems positive, with no significant loss of exclusivity expected from FY2025, investors will have to weigh the prospects against the current investment in AI, agility and digital capabilities, which may not bear fruit immediately but are integral for longer-term competitiveness.
Focusing on the pharmaceutical industry, Takeda's emphasis on late-stage pipeline development is a strategic move to ensure a future stream of innovative treatments, which can be a significant growth driver. The six potential therapies in Phase 3 trials underscore the company's commitment to biopharma R&D, a key factor in sustaining long-term growth.
However, an investor should note that R&D investment, while vital for innovation, generally involves a long lead time before potential commercialization and revenue realization. With the pipeline's success not guaranteed, Takeda's current generic competition impact and anticipated R&D costs underscore the inherent risks of the industry.
It's important to monitor whether the operational efficiency program starting in FY2024 will balance out these expenditures and how the market will respond to the new therapy approvals. The industry-specific concern of patent cliffs that Takeda has managed to avoid until the early 2030s provides a measure of stability, but only if the pipeline successfully converts to marketable products.
In today's biopharma industry, digital transformation is no longer a luxury but a necessity. Takeda's investment in data, digital and technology, including AI, is indicative of a necessary pivot to stay relevant and competitive. For investors, the potential efficiency gains from these investments could mean a leaner, more agile organization capable of faster time-to-market for its products and services.
Yet, the ROI on such technological investments might not be immediate. Investors should consider the timeline for these investments to materialize in terms of cost savings and enhanced profitability. As digital and AI strategies become increasingly integral for driving R&D innovation and operational efficiencies, the success of Takeda's strategy will hinge on execution and integration with its core biopharmaceutical expertise.
-
Revenue Growth of +
5.9% at Actual Exchange Rates (AER); +1.5% at Constant Exchange Rate (CER) Driven by Growth & Launch Products -
Core Operating Profit Change of -
13.3% at CER Reflecting Generic Impact and Investment in R&D and Data, Digital & Technology -
Three New Molecular Entity (NME) Approvals from
U.S. FDA in FY2023 - Up to Six NMEs with Significant Revenue Potential in Phase 3 Development in FY2024
- Committed to 100-250 Basis Points Core Operating Profit Margin Improvement Each Year from FY2025 Towards Low-to-Mid 30s% Target
Takeda is committed to growing its business through continued advancement of its Growth & Launch Product portfolio and progression of six promising programs through its late-stage pipeline, while maintaining cost discipline and achieving its Core Operating Profit margin improvement target. Beginning in FY2024, the company will implement a significant, multi-year efficiency program focused on organizational agility, procurement saving, and capitalizing on its ongoing investment in data, digital and technology, including AI.
Takeda president and chief executive officer, Christophe Weber, commented:
“With three new therapy approvals from the
“As we look ahead to FY2024, we anticipate having up to six programs in Phase 3 development. Advancing these promising potential therapies through late-stage development while moderately increasing our biopharma R&D investment is requiring rigorous prioritization, efficiencies and organizational agility.
“Furthermore, beginning in FY2024 we are implementing a multi-year program to improve our efficiency through organizational agility, capital savings and leveraging our capabilities in data, digital and technology. In addition to revenue growth from our Growth & Launch Products and significant decline in generic exposure, we expect this program will help drive Core Operating Margin improvement of 100 – 250 basis points per year from FY2025.”
Takeda chief financial officer, Milano Furuta, commented:
“Takeda delivered or exceeded full year Management Guidance for Revenue, Core Operating Profit and Core EPS performance at CER, driven by continued strong performance in our Growth & Launch Product portfolio—with Core Operating Profit performance impacted by generic entrants for high-margin products and strategic investments in R&D and our data, digital and technology capabilities to ensure our long-term competitiveness.
“In alignment with our progressive dividend policy and reflecting confidence in our long-term growth outlook and cash flow generation, we are proposing a dividend increase for a second consecutive year from
“While we anticipate revenue to remain flat or decline slightly at CER in FY2024, we expect double-digit CER revenue growth from our Growth & Launch Products, accounting for approximately
FINANCIAL HIGHLIGHTS |
|||||
Results for FY2023 Ended March 31, 2024 |
|||||
(Billion yen,
|
REPORTED |
CORE
(Non-IFRS)
|
|||
FY2023 |
vs. PRIOR YEAR (Actual % change) |
FY2023 |
vs. PRIOR YEAR (Actual % change) |
vs. PRIOR YEAR (CER % change) |
|
Revenue |
4,263.8 |
+ |
4,263.8 |
+ |
+ |
Operating Profit |
214.1 |
- |
1,054.9 |
- |
- |
Margin |
|
-7.2pp |
|
-4.8pp |
|
Net Profit |
144.1 |
- |
756.8 |
- |
- |
EPS (yen) |
92 |
- |
484 |
- |
- |
Operating Cash Flow |
716.3 |
- |
|
|
|
Free Cash Flow
|
283.4 |
- |
|
|
|
FY2024 Outlook |
||
(Billion yen) |
FY2024
|
FY2024
|
Revenue |
4,350.0 |
|
Core Revenue |
4,350.0 |
Flat to slightly declining |
Reported Operating Profit |
225.0 |
|
Core Operating Profit |
1,000.0 |
Approximately |
Reported Net Profit |
58.0 |
|
Reported EPS (Yen) |
37 |
|
Core EPS (Yen) |
431 |
Mid-10s% decline |
Adjusted Free Cash Flow* |
350.0 - 450.0 |
|
Annual Dividend per Share (Yen) |
196 |
|
*From FY2024, we will re-name Free Cash Flow as currently calculated as “Adjusted Free Cash Flow” (with “Free Cash Flow” to be reported as Operating Cash Flow less Property, Plant and Equipment).
For more details on Takeda’s FY2023 results and other financial information including key assumptions in FY2024 forecast and management guidance and definitions of non-IFRS financial measures, please refer to Takeda’s FY2023 Q4 investor presentation (available at: https://www.takeda.com/investors/financial-results/ quarterly-results/)
Other Notable Progress
-
As of the end of FY2023, Takeda has increased to
46% female or non-binary representation across its senior most leaders (up15% from FY22). This increase represents strong progress towards achieving its aspiration to have50% representation by female or non-binary leaders among its senior-most leaders by the end of fiscal year 2027.
This data includes permanent and fixed-term employees.
Additional Information About Takeda’s FY2023 Earnings Results
For more details on Takeda’s FY2023 results and other financial information, including key assumptions in FY2024 forecast and management guidance, please visit: https://www.takeda.com/investors/financial-results/quarterly-results/
For more information on Takeda’s commercial progress across the six key business areas and pipeline updates, please visit: https://takeda.info/qr2023_q4_qfr_en
About Takeda
Takeda is focused on creating better health for people and a brighter future for the world. We aim to discover and deliver life-transforming treatments in our core therapeutic and business areas, including gastrointestinal and inflammation, rare diseases, plasma-derived therapies, oncology, neuroscience and vaccines. Together with our partners, we aim to improve the patient experience and advance a new frontier of treatment options through our dynamic and diverse pipeline. As a leading values-based, R&D-driven biopharmaceutical company headquartered in
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Financial information and Certain Non-IFRS Financial Measures
Takeda’s financial statements are prepared in accordance with International Financial Reporting Standards (“IFRS”).
This press release and materials distributed in connection with this press release include certain financial measures not presented in accordance with IFRS, such as Core Revenue, Core Operating Profit, Core Net Profit, Core EPS, Constant Exchange Rate (“CER”) change, Net Debt, EBITDA, Adjusted EBITDA and Free Cash Flow. Takeda’s management evaluates results and makes operating and investment decisions using both IFRS and non-IFRS measures included in this press release. These non-IFRS measures exclude certain income, cost and cash flow items which are included in, or are calculated differently from, the most closely comparable measures presented in accordance with IFRS. Takeda’s non-IFRS measures are not prepared in accordance with IFRS and such non-IFRS measures should be considered a supplement to, and not a substitute for, measures prepared in accordance with IFRS (which we sometimes refer to as “reported” measures). Investors are encouraged to review the definitions and reconciliations of non-IFRS financial measures to their most directly comparable IFRS measures, which are in the Financial Appendix appearing at the end of our Q4 FY23 investor presentation (available at www.takeda.com/investors). Beginning in the first quarter of FY24, Takeda will (i) change its methodology for CER adjustments to results of subsidiaries in hyperinflation countries to present those results in a manner consistent with IAS 29, Financial Reporting in Hyperinflation Economies, and (ii) re-name Free Cash Flow as currently calculated as “Adjusted Free Cash Flow” (with “Free Cash Flow” to be reported as Operating Cash Flow less Property, Plant and Equipment). For more information about the changes, including how the new methodology would have impacted Takeda’s FY23 results, refer to the Financial Appendix included in our Q4 FY23 investor presentation (available at www.takeda.com/investors).
Medical information
This press release contains information about products that may not be available in all countries, or may be available under different trademarks, for different indications, in different dosages, or in different strengths. Nothing contained herein should be considered a solicitation, promotion or advertisement for any prescription drugs including the ones under development.
Please refer to slide 9 of Takeda’s FY2023 investor presentation (available at https://www.takeda.com/investors/financial-results/quarterly-results/) for the definition of Growth & Launch Products.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240508769614/en/
Investor Relations
Christopher O’Reilly
Christopher.oreilly@takeda.com
+81 (0) 3-3278-2543
Media Relations
Brendan Jennings
Brendan.jennings@takeda.com
+81 (0) 3-3278-2111
Source: Takeda Pharmaceutical Company Limited
FAQ
<p>What were Takeda's revenue growth rates in FY2023?</p>
Takeda achieved +5.9% revenue growth at AER and +1.5% at CER in FY2023.
<p>How many NME approvals did Takeda receive from the U.S. FDA in FY2023?</p>
Takeda received three new molecular entity (NME) approvals from the U.S. FDA in FY2023.
<p>What is Takeda's plan for core operating profit margin improvement from FY2025?</p>
Takeda aims for a 100-250 basis points core operating profit margin improvement each year from FY2025.
<p>What efficiency program is Takeda implementing in FY2024?</p>
Takeda is implementing a significant multi-year efficiency program focused on organizational agility, procurement saving, and leveraging data, digital, and technology capabilities in FY2024.
<p>What is Takeda's financial outlook for FY2024?</p>
Takeda expects flat or slightly declining revenue at CER in FY2024 and a mid-10s% decline in core EPS, with a focus on returning to sustainable revenue and profit growth from FY2025 onwards.
