Takeda's 2023: Overcoming Challenges and Embracing Change

Takeda's fiscal year 2023 business report highlights significant financial developments for the company. Despite seeing a year-over-year revenue increase of 5.9%, reaching 4,263.8 billion yen, Takeda's net profit experienced a sharp decline of 54.6%, settling at 144.1 billion yen. Several key factors contributed to this profit drop, including the loss of market exclusivity for Azilva, a drug for hypertension, and Vyvanse, which treats ADHD and binge eating disorder. Additionally, the unsuccessful development of Alofisel, a stem cell therapy for Crohn's disease, and Exkivity, a tyrosine kinase inhibitor for lung cancer, further impacted the company's profitability.

In response to these financial challenges, Takeda has unveiled a corporate restructuring plan aimed at enhancing profitability in the forthcoming years. The restructuring is expected to incur a one-time cost of 140 billion yen (around $9 billion) in 2024. According to Takeda, this restructuring will include measures such as employee optimization, cost reductions, and adjustments to their product pipeline. The primary objective is to improve the core profit margin by 1% to 2.5% annually, ultimately achieving a 30% profit margin.

As part of its pipeline adjustments, Takeda has decided to discontinue 18 products, including several cancer treatments. These discontinued products include Exkivity for lung cancer, TAK-981 (a cancer therapy), TAK-007 (a cell therapy), TAK-573 (targeting multiple myeloma and solid tumors), TAK-102/TAK-103 (focused on solid tumors), and TAK-940 (for multiple myeloma).

To address the gaps left by these discontinuations, Takeda plans to introduce high-quality products. One such acquisition target is Orserdulatinib, a third-generation oral BCR-ABL tyrosine kinase inhibitor that is already approved in China. Orserdulatinib is used to treat chronic myeloid leukemia with the T315I mutation and patients who are resistant and/or intolerant to first- and second-generation TKIs. According to a report by Asieris Pharmaceuticals, Orserdulatinib has already achieved cumulative sales exceeding 300 million RMB. Its sales have seen significant growth since being included in medical insurance coverage, which highlights its substantial market potential.

In contrast, AbbVie is focusing its acquisition strategy on its strengths in the immunology sector. Humira, once the top-selling drug globally, has lost its dominant status to Merck's Keytruda (pembrolizumab) due to patent expiration and the emergence of biosimilar competition. Analysts suggest that pharmaceutical companies need to adapt their strategies to address the rise of new leading medications and the challenges posed by impending patent expirations.

The acquisition of biotech companies to bolster product pipelines has become a prevalent strategy among multinational pharmaceutical firms. These companies ensure their acquisitions align with their strategic objectives by conducting thorough assessments of biotech companies' pipeline assets and innovation value. Analysts emphasize that for large multinational pharmaceutical firms, acquiring external innovation through mergers and licensing agreements is as crucial as internal research and development (R&D). Approximately one-third of global innovative drug revenue is generated from internal R&D, while two-thirds result from mergers and collaborations. Some companies have an even higher reliance on external innovation, with figures reaching 60% to 70%.

Since 2023, innovative products from China have increasingly appeared in transactions involving multinational pharmaceutical companies. This trend suggests that domestic Chinese pharmaceutical companies and their products are gradually gaining international recognition, which is seen as a positive development.