Takeda Pharmaceutical : Quarterly Securities Report for the 3rd Quarter

Table of Contents

Quarterly Securities Report

(The third quarter of 146th Business Term) for The Nine-month Period and Three-month Quarter Ended December 31, 2022

TAKEDA PHARMACEUTICAL COMPANY LIMITED

AND ITS SUBSIDIARIES

Table of Contents

Index

		Page
[Cover]	1
A. Company Information
I. Overview of Takeda	2
1.	Key Consolidated Financial Data	2
2.	Business Overview	2
II. Operating and Financial Review	3
1.	Risk Factors	3
2.	Analysis on Business Performance, Financial Position and Cash Flows	3
3.	Material Contracts	19
III. Information on the Company	20
1.	Information on the Company's Shares	20
2.	Members of the Board of Directors	21
IV. Financial Information	22
1.	Condensed Interim Consolidated Financial Statements	23
2.	Others	43
B. Information on Guarantors of the Company	44

Table of Contents
[Cover]
[Document Filed]	Quarterly Securities Report
[Applicable Law]	Article 24-4-7, paragraph 1 of the Financial Instruments and Exchange Act of Japan
[Filed with]	Director, Kanto Local Finance Bureau
[Filing Date]	February 7, 2023
[Fiscal period]	The third quarter of 146th Business Term
	(from October 1, 2022 to December 31, 2022)
[Company Name]	Takeda Pharmaceutical Company Limited
[Title and Name of Representative]	Christophe Weber, Representative Director, President & Chief Executive Officer
[Address of Head Office]	1-1, Doshomachi 4-chome,Chuo-ku, Osaka
	(The above address is the registered head office location and the ordinary business
	operations are conducted at the "Nearest Place of Contact")
[Telephone Number]	Not applicable
[Name of Contact Person]	Not applicable
[Nearest Place of Contact]	1-1,Nihonbashi-Honcho2-chome,Chuo-ku, Tokyo
	(Global Headquarters)
[Telephone Number]	[phone] (Main telephone number)
[Name of Contact Person]	Norimasa Takeda, Chief Accounting Officer & Corporate Controller, Global Finance
[Place for public inspection]	Takeda Pharmaceutical Company Limited (Global Headquarters)
	(1-1, Nihonbashi Honcho 2-chome,Chuo-ku, Tokyo)
	Tokyo Stock Exchange, Inc.
	(2-1, Nihonbashi Kabutocho, Chuo-ku, Tokyo)
	Nagoya Stock Exchange, Inc.
	(8-20, Sakae 3-chome,Naka-ku, Nagoya)
	Fukuoka Stock Exchange
	(14-2, Tenjin 2-chome,Chuo-ku, Fukuoka)
	Sapporo Stock Exchange
	(14-1, Minamiichijonishi 5-chome,Chuo-ku, Sapporo)

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Table of Contents

A. Company Information

I. Overview of Takeda

1. Key Consolidated Financial Data

		JPY (millions), unless otherwise indicated
		Nine-month period		Nine-month period		For the year ended
		ended December 31,		ended December 31,		March 31,
Term		2021		2022		2022
Revenue	2,695,717	3,071,322	3,569,006
<> period ended December 31>	901,294	1,096,551
Profit before tax	356,618	327,175	302,571
Net profit for the period	241,541	285,903	230,166
Net profit attributable to owners of the Company	241,417	285,883	230,059
<> period ended December 31>	57,770	119,127
Total comprehensive income for the period	459,044	750,209	824,427
Total equity	5,331,822	6,176,498	5,683,523
Total assets	12,698,519	13,504,705	13,178,018
Basic earnings per share (JPY)	154.09	184.32	147.14
<> period ended December 31>	36.91	76.63
Diluted earnings per share (JPY)	153.03	182.65	145.87
Ratio of equity attributable to owners of the Company to
total assets (%)	42.0	45.7	43.1
Net cash from (used in) operating activities	747,521	683,463	1,123,105
Net cash from (used in) investing activities	(172,487)	(168,610)	(198,125)
Net cash from (used in) financing activities	(826,465)	(702,548)	(1,070,265)
Cash and cash equivalents at the end of the period	724,341	685,141	849,695

(Note 1) All amounts shown are rounded to the nearest million JPY.

(Note 2) The key consolidated financial data for the nine-month period ended December 31, 2021 and 2022 are based on the condensed interim consolidated financial statements prepared in accordance with IAS 34.

2. Business Overview

There has been no significant change in our business and our group companies for the nine-month period ended December 31, 2022.

As of December 31, 2022, Takeda consisted of 216 entities comprised of 197 consolidated subsidiaries (including partnerships), 18 associates accounted for using the equity method, and Takeda Pharmaceutical Company Limited.

Change in the major group companies for the nine-month period ended December 31, 2022 was as follows:

During the three-month period ended September 30, 2022, Takeda deconsolidated Baxalta GmbH due to the merger into Takeda Pharmaceuticals International AG, a consolidated subsidiary.

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Table of Contents

II. Operating and Financial Review

1. Risk Factors
   There were no risk factors identified for the nine-month period ended December 31, 2022 as well as no significant changes in the risk factors compared to what we reported in our Annual Securities Report for the year ended March 31, 2022 which was filed in Japan.
   This is based on our assessment as of the filing date of this Quarterly Securities Report (February 7, 2023).
2. Analysis on Business Performance, Financial Position and Cash Flows

(1) Consolidated Financial Results (April 1 to December 31, 2022)

Billion JPY or percentage

	FY2021		FY2022		Change versus the same period of the previous fiscal year
	Q3YTD		Q3YTD			Actual % Change CER % Change*1
Revenue	2,695.7		3,071.3		375.6	13.9 %	(0.7)%
Cost of sales	(798.5)	(934.3)	(135.8)	17.0	%	3.4 %
Selling, general and administrative expenses	(662.9)	(742.5)	(79.6)	12.0	%	(2.2)%
Research and development expenses	(382.5)	(472.4)	(89.9)	23.5 %	4.9 %
Amortization and impairment losses on intangible	(323.6)	(409.2)	(85.6)	26.4	%	5.4 %
assets associated with products
Other operating income	34.3	16.7	(17.6)	(51.3)%	(54.4)%
Other operating expenses	(100.0)	(127.6)	(27.6)	27.6	%	8.6 %
Operating profit	462.5		401.9		(60.5)	(13.1)%	(20.3)%
Finance income and (expenses), net	(100.6)	(71.6)	29.0	(28.8)%	(31.6)%
Share of loss of investments accounted for using	(5.3)	(3.1)	2.1	(40.4)%	(58.1)%
the equity method
Profit before tax	356.6		327.2		(29.4)	(8.3)%	(16.5)%
Income tax expenses	(115.1)	(41.3)	73.8	(64.1)%	(61.3)%
Net profit for the period	241.5		285.9		44.4	18.4 %	4.8 %

*1 Please refer to (ii) Core Results (April 1 to December 31, 2022), Definition of Core financial measures and Constant Exchange Rate change, for the definition.

Revenue. Revenue for the nine-month period ended December 31, 2022 was 3,071.3 billion JPY, an increase of 375.6 billion JPY, or 13.9% (CER % change: -0.7%), compared to the same period of the previous fiscal year. The increase is primarily attributable to growth from business momentum and favorable foreign exchange rates, offsetting the decrease of revenue in the current period due to the sale of a portfolio of diabetes products in Japan to Teijin Pharma Limited for 133.0 billion JPY, which was recorded as revenue in the same period of the previous fiscal year.

Revenue of our core therapeutic areas (i.e. Gastroenterology ("GI"), Rare Diseases, Plasma-Derived Therapies ("PDT") Immunology, Oncology, and Neuroscience) increased by 522.1 billion JPY, or 23.6%, compared to the same period of the previous fiscal year, to 2,735.6 billion JPY. Each of our core therapeutic areas, except Oncology, contributed to positive revenue growth due to growth from business momentum and favorable foreign exchange rates. Generic erosion and intensified competition impacted certain Oncology products in the current period.

Revenue outside of our core therapeutic areas significantly decreased by 146.5 billion JPY, or 30.4%, compared to the same period of the previous fiscal year to 335.7 billion JPY, largely due to the aforementioned non-recurring 133.0 billion JPY selling price of the diabetes portfolio in Japan, which was recorded as revenue in the same period of the previous fiscal year.

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