Takeda plans $900M restructuring as Vyvanse generics emerge

Japanese pharmaceutical giant Takeda is setting ambitious targets to reverse its recent financial downturn. The company aims to boost its operating profit to 225 billion yen ($1.4 billion) for the current fiscal year, ending in March 2025. This target follows a significant drop in operating profit by 56.4% to 214 billion yen ($1.4 billion) last fiscal year, largely due to the competitive pressures on its ADHD drug Vyvanse.

To combat the decline, Takeda plans to implement a comprehensive restructuring campaign, investing 140 billion yen ($899 million). The restructuring aims to enhance the company's operational efficiency and profitability. The plan involves reducing organizational layers, refining operational models, and making difficult prioritization choices. According to a company spokesperson, while these changes may affect roles over time, they are essential for creating long-term value for patients and the global healthcare system.

The restructuring is not a one-size-fits-all approach; it will be tailored to meet the unique needs of different teams and countries. The primary goals include achieving organizational simplicity, enhancing procurement savings, and leveraging technological efficiencies. If successful, Takeda expects its core operating profit margin to surpass 30%.

In addition to the internal restructuring, Takeda aims to channel resources into its late-stage pipeline and most promising products. By focusing on growth drivers and new product launches, the company hopes to mitigate the impact of Vyvanse's declining sales. Currently, Takeda projects a modest 2% growth rate for this fiscal year, a slowdown compared to the nearly 6% revenue increase in the previous fiscal year.

Chief Financial Officer Milano Furuta expressed confidence in the company's long-term growth potential, targeting sustainable revenue and profit growth from FY2025 onwards. The company is keen on offsetting the losses from Vyvanse, whose sales plummeted by 14% to 423 trillion yen ($2.7 billion) after generic versions flooded the market in August. Initially, supply constraints held back the generics, but the impact has been somewhat milder than expected.

Takeda's gastrointestinal (GI) franchise remains a strong performer, particularly driven by the success of its ulcerative colitis and Crohn's disease medication, Entyvio. Sales of Entyvio reached 800 billion yen ($5.1 billion) last year. The company is keen to build on this momentum by maximizing the potential of its inflammatory bowel disease (IBD) franchise. This includes exploring new indications such as active chronic pouchitis for Entyvio.

Overall, Takeda's multi-year reorganization aims to position the company for long-term success, focusing on operational efficiency, strategic investments, and maintaining a robust pipeline. While the road ahead involves challenging decisions and adjustments, Takeda is committed to navigating these changes to ensure sustained growth and value creation.