Takeda Announces FY2023 Full Year Results and FY2024 Outlook, Affirming Commitment to Late-Stage Pipeline Development and Core Operating Profit Margin Expansion

Takeda (TOKYO:4502/NYSE:TAK) today announced financial results for fiscal year 2023 (period ended March 31, 2024), delivering its Management Guidance for Core Operating Profit and exceeding its Management Guidance for Revenue and Core EPS performance at CER, in a year of significant loss-of-exclusivity impact.

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 U.S. FDA in FY2023, Takeda's performance demonstrates the potential of our pipeline and our ability to bring our innovative medicines to patients. In an otherwise challenging year, our Core financial results reinforce my confidence in our resilience and our ability to navigate the short-term impact of generic competition to return to sustainable revenue and profit growth beginning in FY2025.

"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 188 yen per share to 196 yen per share.

"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 50% of our total revenue and helping to offset remaining impact from generic competition. With no further significant loss of exclusivity impact expected from FY2025 until the early 2030s, we remain focused on returning to sustainable revenue and profit growth from FY2025 onwards and are confident in our long-term growth trajectory."

*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 (up 15% from FY22). This increase represents strong progress towards achieving its aspiration to have 50% 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 Japan, we are guided by our commitment to patients, our people and the planet. Our employees in approximately 80 countries and regions are driven by our purpose and are grounded in the values that have defined us for more than two centuries. For more information, visit www.takeda.com.

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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
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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.