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2012-2014 Mid-Range Plan - Continuing the “Transformation into a New Takeda” that promises Sustainable Growth -



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May 11, 2012

Takeda Pharmaceutical Company Limited

2012-2014 Mid-Range Plan
- Continuing the “Transformation into a New Takeda” that promises Sustainable Growth -

Osaka, Japan, May 11, 2012 – Takeda Pharmaceutical Company Limited (“Takeda”, “the Company”) is implementing the “Transformation into a new Takeda,” guided by its corporate Vision of achieving Growth through Innovation and Culture, in order to realize a new start as a truly global pharmaceutical company.

As part of this initiative, in fiscal year 2011 Takeda acquired Nycomed A/S (“Nycomed”), a Swiss company headquartered in Zurich. This acquisition has strengthened the Company's business infrastructure throughout Europe, and expanded its sales channels into high-growth emerging markets. Then, at the beginning of fiscal year 2012, Takeda announced its decision to strengthen its U.S. presence through the acquisition of URL Pharma. These acquisitions have enabled the Company to achieve a business base balanced across Japan, the U.S., Europe and emerging markets.

In addition, several new drugs that will contribute to growth over the mid to long-term have been approved in various regions, and many high potential pipeline drugs that are expected to drive future growth have proceeded to their final development stages.

Under the new 2012-2014 Mid-Range Plan, Takeda will continue to execute strategies based on the corporate Vision to return to a trajectory of sustainable growth starting from fiscal 2012, the year of market entry of generic versions of the type-2 diabetes treatment Actos. Specifically, Takeda will invest further in growth-driving emerging markets to expand sales and profits, and will work to maximize the value of its products and pipelines around the world. In developed markets, Takeda will ensure the launch and early penetration of various new products in order to maintain its position at the top of the industry in Japan, while enlarging its presence in Europe and the U.S.

Takeda is committed to maintaining a sound financial base and implementing growth strategies that are fitting of a truly global enterprise. To this end, the Company will continue to invest in the research and development that is vital for future growth in a bold effort to discover innovative new drugs, while simultaneously focusing on strengthening cash management and reducing costs.

Even as Takeda continues to transform its business structure in the process of full-scale globalization, its management is still founded on the more than 230-year old unbroken tradition of “Takeda-ism” (Integrity = Fairness, Honesty and Perseverance). Guided by this corporate philosophy, management at Takeda is committed to upholding laws and regulations, respecting the environment, and practicing CSR.

Takeda will continue to promote its business and realize its mission of striving towards better health for patients worldwide through leading innovation in medicine.

An overview of the 2012-2014 Mid-Range Plan follows.


1. Financial Targets for the 2012-2014 Mid-Range Plan a) b)

Billion yen
Fiscal 2011
(Results)
Fiscal 2012
(Targets)
Fiscal 2013
(Targets)
Fiscal 2014
(Targets)
Net sales 1,508.9 1,550.0 1,630.0 1,700.0
R&D expenses 281.9 310.0 305.0 310.0
Operating income 265.0 160.0 225.0 240.0
Operating income
excl. extraordinary factors c)
414.5 305.0 355.0 360.0
Net income 124.2 155.0 150.0 120.0
EPS 157 yen 196 yen 190 yen 152 yen
EPS
excl. extraordinary income/loss and
other extraordinary factors c)
314 yen 241 yen 291 yen 285 yen
EBITDA d)
422.6 345.0 410.0 420.0

  • Notes:
  • a) The exchange rate assumptions for fiscal 2012 onward are 1US$=80 yen and 1 euro=105 yen.
  • b) The above financial targets include profit and loss impact of acquisition of URL Pharma by Takeda, which both parties entered into a definitive agreement in April 2012. Financial impact for the fiscal 2012 is estimated at approximately 44.0 billion yen in net sales and 5.0 billion yen in operating income. However, the estimated amount based on the business combination accounting standards may change as the final amount will be settled through the audit by our independent auditor within one year from the acquisition date.
  • c) Extraordinary factors: amortization of intangible assets and goodwill resulting from corporate acquisition/integration, an increase in COGS related to inventory step-up due to revaluation to fair value and refund relating to transfer pricing (an extraordinary factor of refund is limited to only EPS).
  • d) EBITDA: excluding extraordinary income and loss (calculation method: ordinary income + extraordinary factors in operating income [excl. an increase in COGS related to inventory step-up] + depreciation + interest paid).

2. Vision

Takeda’s vision is to embody global pharmaceutical leadership through innovation, culture and growth, guided by an unwavering commitment to significantly improve the lives of patients.

  • Innovation based on bold leadership in science and medicine resulting in the discovery, development and delivery of high-quality, differentiated products focused on patient needs.
  • • A culture based on good corporate citizenship that empowers employees through collaboration, inclusion, trust and timely decision making.
  • • Sustainable growth in corporate value by leveraging core therapeutic areas, and an industry-leading pipeline and product portfolio.

3. Strategies for Implementing the Vision

• Innovation

Build a competitive R&D pipeline in core therapeutic areas and ensure market approvals
Takeda will endeavor to create innovative new drugs that contribute to disease prevention and fundamental cures. The Company will target the core therapeutic areas where there are urgent unmet medical needs and where it can maximize its existing R&D knowledge and infrastructure. These areas are “Cardiovascular & Metabolic,” “Oncology,” “Central Nervous System,” “Respiratory & Immunology,” and “General Medicine (Gastrointestinal and Genitourinary).” Takeda will strengthen its foundational drug discovery research in these areas by flexibly incorporating “open innovation”: links between external research organizations and its global in-house research network based on Drug Discovery Units. In addition, Takeda is committed to the global expansion of its vaccine business, an area in which there are particularly high social needs in emerging countries. Further, Takeda will build a competitive portfolio through aggressive in-licensing and by promoting life-cycle management. At the same time, the Company will ensure new drug approvals of compounds in late-stage development by strengthening its global pharmaceutical affairs functions and understanding the requirements of regulatory bodies in various countries.
Improve R&D productivity
Takeda will use the POC&C* model to rigorously discern which pipeline drugs will be competitive in the market over the medium to long term, allowing it to prioritize the concentration of management resources and focus on the most promising developments. By maximizing the value of these pipelines, Takeda will improve its R&D productivity.
* POC&C: Proof of Concept & Competitiveness

• Culture
Takeda will strive to create a corporate culture and workplace environment that fosters enthusiasm among employees, by recruiting and developing outstanding human resources and promoting employee diversity. In management, the Company will enforce compliance globally, while giving due consideration to the environment and CSR as a good corporate citizen, including providing ongoing support for the recovery of areas affected by the Great East Japan Earthquake, and healthcare support for developing countries.

• Growth

Achieve Steady Growth in Emerging Markets
Takeda will achieve sales growth that exceeds market growth in emerging markets through the sales expansion of legacy Nycomed products. In Russia/CIS, Latin America and China, Takeda will strengthen its business to ensure these markets become mid to long-term growth drivers, actively investing in securing talented human resources and preparing for the launch of new products.
Achieve Early Market Penetration of New Products and Business Structure Transformation in Japan, the U.S. and Europe
Takeda will maximize sales-based synergies by steadily launching Takeda products and pipelines utilizing the new sales infrastructure obtained through the Nycomed acquisition, while also realizing cost-based synergies.

4. Policies on Financial Position and Shareholder Returns

Takeda will continue to make investments towards sustainable growth for the future, including an annual R&D investment of around 300 billion yen, and further product and pipeline acquisitions. On the other hand, Takeda will strive to maintain and enhance its sound financial position by stepping up efforts to steadily repay debt based on funding plans and strengthen cash management by streamlining the balance sheet.

Takeda’s policy on shareholder returns is to maintain a dividend per share of ¥180 throughout the fiscal 2012-2013 period. From fiscal 2014, Takeda will pursue implementation of a steady distribution of profits with emphasis on shareholder returns.


For further details, please refer to the materials on the 2012-2014 Mid-Range Plan, which are posted on the Takeda website:

http://www.takeda.com/investor-information/presentations-events/index_2576.html


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