BETTER HEALTH FOR PEOPLE, BRIGHTER FUTURE FOR THE WORLD 39th ANNUAL J.P. MORGAN HEALTHCARE CONFERENCE JANUARY 11, 2021 Better Health, Brighter Future IMPORTANT NOTICE For the purposes of this notice, "presentation" means this document, any oral presentation, any question and answer session and any written or oral material discussed or distributed by Takeda Pharmaceutical Company Limited ("Takeda") regarding this presentation. This presentation (including any oral briefing and any question-and-answer in conn ...

Takeda Pharmaceutical Co Ltd (NYSE:TAK) Q2 2021 Earnings Conference Call October 29, 2020 5:30 AM ET Company Participants Christopher O'Reilly - IR Christophe Weber - President, CEO & Representative Director Andrew Plump - President, Research & Development and Director Constantine Saroukos - CFO & Director Julie Kim - President, Plasma-Derived Therapies Business Unit Conference Call Participants Fumiyoshi Sakai - Crédit Suisse Hidemaru Yamaguchi - Citigroup Kazuaki Hashiguchi - Daiwa Securities Shinichiro M ...

COMMITTED TO BRINGING BETTER HEALTH AND A BRIGHTER FUTURE TO PEOPLE WORLDWIDE FY2020 Q2 Earnings Announcement October 29, 2020 Better Health, Brighter Future IMPORTANT NOTICE 1 For the purposes of this notice, "presentation" means this document, any oral presentation, any question and answer session and any written or oral material discussed or distributed by Takeda Pharmaceutical Company Limited ("Takeda") regarding this presentation. This presentation (including any oral briefing and any question-and-answ ...

PART I [Key Information](index=6&type=section&id=Item%203.%20Key%20Information) This section presents Takeda's key financial data for five fiscal years, highlighting changes post-Shire acquisition and outlining business, operational, financial, and ADS risks [Selected Financial Data](index=6&type=section&id=3.A%20Selected%20financial%20data) Takeda's FY2016-FY2020 financial data shows significant revenue and asset growth post-Shire acquisition, with FY2020 profits impacted by related costs Selected Financial Data (FY2016-FY2020) | Indicator | 2016 | 2017 | 2018 | 2019 | 2020 | | :--- | :--- | :--- | :--- | :--- | :--- | | **Revenue** | ¥1,807.4B | ¥1,732.1B | ¥1,770.5B | ¥2,097.2B | ¥3,291.2B | | **Operating profit** | ¥130.8B | ¥155.9B | ¥241.8B | ¥237.7B | ¥100.4B | | **Net profit attributable to owners** | ¥80.2B | ¥114.9B | ¥186.9B | ¥135.2B | ¥44.2B | | **Basic earnings per share** | ¥102.26 | ¥147.15 | ¥239.35 | ¥140.61 | ¥28.41 | | **Annual cash dividends per share** | ¥180.00 | ¥180.00 | ¥180.00 | ¥180.00 | ¥180.00 | | **Total assets** | ¥3,824.1B | ¥4,346.8B | ¥4,106.5B | ¥13,792.8B | ¥12,821.1B | | **Total liabilities** | ¥1,812.9B | ¥2,397.8B | ¥2,089.1B | ¥8,606.8B | ¥8,093.6B | | **Total equity** | ¥2,011.2B | ¥1,949.0B | ¥2,017.4B | ¥5,186.0B | ¥4,727.5B | - The consolidated financial statements for the fiscal year ended March 31, 2019, include Shire's results from January 8, 2019, to March 31, 2019, marking a **significant change in the company's financial scale**[27](index=27&type=chunk) [Risk Factors](index=7&type=section&id=3.D%20Risk%20factors) Key risks include Shire integration challenges, substantial debt, R&D failures, pricing pressures, patent expirations, COVID-19 impacts, and various operational and financial risks - Failure to realize anticipated benefits from the Shire acquisition, coupled with significant integration costs and substantial debt, poses a **primary risk**. Consolidated bonds and loans stood at **¥5,093.3 billion** as of March 31, 2020[35](index=35&type=chunk)[40](index=40&type=chunk) - The expiration or loss of patent protection for key products could lead to **significant competition** from generics. Products facing this risk include **VELCADE**, **VYVANSE** (patents expiring in 2023), and **ENTYVIO** (regulatory exclusivity loss starting 2024 in the EU)[62](index=62&type=chunk)[64](index=64&type=chunk)[65](index=65&type=chunk) - The COVID-19 pandemic may **negatively affect business** through reduced operations, decreased product demand, delays in clinical trials, and disruptions to the supply chain, particularly a **temporary decline in plasma collections**[78](index=78&type=chunk)[80](index=80&type=chunk) - A significant portion of global sales is concentrated among a few wholesale distributors. In FY2020, AmerisourceBergen Corporation and McKesson Corporation each accounted for **over 10% of Takeda's total revenue**, posing **credit and pricing pressure risks**[109](index=109&type=chunk) - The company carries **significant goodwill (¥4,012.5 billion)** and **intangible assets (¥4,171.4 billion)** as of March 31, 2020, primarily from acquisitions. Failure to achieve anticipated benefits could lead to **substantial impairment charges**[122](index=122&type=chunk) [Information on the Company](index=22&type=section&id=Item%204.%20Information%20on%20the%20Company) This section details Takeda's transformation into a global R&D-driven biopharmaceutical company, emphasizing the Shire acquisition, strategic focus on five key business areas, principal products, R&D pipeline, and intellectual property [History and Development of the Company](index=22&type=section&id=4.A%20History%20and%20development%20of%20the%20company) Founded in 1781, Takeda evolved into a global R&D-driven biopharmaceutical company, with the 2019 Shire acquisition significantly expanding its U.S. presence and portfolio, alongside active non-core asset divestment for deleveraging - The acquisition of Shire in January 2019 was a **transformative event**, creating a **global biopharmaceutical leader** with a **strengthened U.S. presence** and **enhanced positions** in GI, neuroscience, rare diseases, and Plasma-Derived Therapies (PDT)[147](index=147&type=chunk) - Takeda is **actively divesting non-core businesses and assets** to **accelerate deleveraging** following the Shire acquisition[148](index=148&type=chunk) Capital Expenditures (Excluding Acquisitions) | Fiscal Year | Capital Expenditures (JPY) | | :--- | :--- | | 2018 | 124.1 billion | | 2019 | 244.6 billion | | 2020 | 246.3 billion | [Business Overview](index=23&type=section&id=4.B%20Business%20overview) Takeda's business focuses on five key areas—GI, Rare Diseases, PDT, Oncology, and Neuroscience—comprising 78.6% of FY2020 revenue, with a strategy to leverage global brands, advance R&D, and optimize financial strength - The company's commercial efforts are focused on **five key business areas**: Gastroenterology (GI), Rare Diseases, Plasma-Derived Therapies (PDT), Oncology, and Neuroscience. These areas accounted for **78.6% of total revenue** in the fiscal year ended March 31, 2020[154](index=154&type=chunk) Revenue of Principal Products (FY2020) | Product | Therapeutic Area | Revenue (JPY) | | :--- | :--- | :--- | | ENTYVIO | GI | 347.2 billion | | VYVANSE | Neuroscience | 274.1 billion | | NINLARO | Oncology | 77.6 billion | | TAKECAB | GI | 72.7 billion | | TRINTELLIX | Neuroscience | 70.7 billion | | TAKHZYRO | Rare Diseases | 68.3 billion | - Takeda is developing "**CoVIg-19**", a **potential hyperimmune globulin therapy** for COVID-19, as part of the **CoVIg-19 Plasma Alliance**, demonstrating its commitment to addressing the pandemic[167](index=167&type=chunk)[168](index=168&type=chunk) - The **R&D pipeline is focused on Oncology, Rare Diseases, Neuroscience, and GI**. Key late-stage assets include **pevonedistat** for leukemia, **maribavir** for CMV infection in transplant patients, and **TAK-721** for eosinophilic esophagitis[174](index=174&type=chunk)[181](index=181&type=chunk)[184](index=184&type=chunk)[196](index=196&type=chunk) Key Product Patent/Regulatory Data Protection Expiry Dates | Product | Territory | Expiry Date | | :--- | :--- | :--- | | ENTYVIO | US (RDP) | May 2026 | | ENTYVIO | EU (RDP) | May 2024 | | VYVANSE | US (Patent) | February 2023 | | VYVANSE | EU (Patent) | June 2024 | | NINLARO | US (Patent) | November 2029 | | NINLARO | EU (Patent) | November 2031 | [Operating and Financial Review and Prospects](index=51&type=section&id=Item%205.%20Operating%20and%20Financial%20Review%20and%20Prospects) This section analyzes Takeda's financial condition and operations, detailing the significant impact of the Shire acquisition on FY2020 revenue, costs, and profitability, alongside liquidity, capital resources, and debt reduction efforts [Operating Results](index=51&type=section&id=5.A%20Operating%20results) FY2020 revenue increased by 56.9% to ¥3,291.2 billion due to Shire's portfolio, but operating profit decreased by 57.8% to ¥100.4 billion, and net profit fell 67.2% to ¥44.3 billion, driven by significant acquisition-related costs FY2020 vs. FY2019 Financial Performance | Metric | FY2019 | FY2020 | Change (Amount) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | **Revenue** | ¥2,097.2B | ¥3,291.2B | +¥1,194.0B | +56.9% | | **Operating Profit** | ¥237.7B | ¥100.4B | -¥137.3B | -57.8% | | **Net Profit for the year** | ¥135.1B | ¥44.3B | -¥90.8B | -67.2% | - The increase in Cost of Sales was primarily driven by the inclusion of a full year of Shire's results and a **¥125.7 billion increase** in **non-cash charges** from the unwind of the fair value step-up on acquired inventory[348](index=348&type=chunk) - Amortization and impairment losses on intangible assets **increased by 155.0% to ¥455.4 billion**, mainly due to a **¥250.6 billion increase** in amortization related to assets from the Shire acquisition[351](index=351&type=chunk) - Restructuring expenses **increased by ¥98.1 billion to ¥181.0 billion**, largely due to **Shire integration costs**, including an impairment charge for a manufacturing facility in Ireland[353](index=353&type=chunk) - The company recognized a **non-cash deferred tax benefit of ¥94.6 billion** due to tax reform in Switzerland, contributing to a **total income tax benefit of ¥105.0 billion** for FY2020[358](index=358&type=chunk) [Liquidity and Capital Resources](index=64&type=section&id=5.B%20Liquidity%20and%20capital%20resources) Takeda's liquidity is strong, with net cash from operating activities increasing to ¥669.8 billion in FY2020, supporting debt reduction from ¥5,751.0 billion to ¥5,093.3 billion, while maintaining a ¥180 per share dividend policy Consolidated Cash Flows (FY2019 vs. FY2020) | Cash Flow Item | FY2019 | FY2020 | | :--- | :--- | :--- | | **Net cash from operating activities** | ¥328.5B | ¥669.8B | | **Net cash from (used in) investing activities** | -¥2,835.7B | ¥292.1B | | **Net cash from (used in) financing activities** | ¥2,946.2B | -¥1,005.2B | - The increase in operating cash flow was driven by **strong operational performance** and the add-back of **significant non-cash expenses** related to the Shire acquisition, such as depreciation, amortization, and impairment losses[386](index=386&type=chunk) - Net cash from investing activities **turned positive** in FY2020, primarily due to the absence of the large cash outflow for the Shire acquisition seen in FY2019 and proceeds of **¥375.5 billion** from the sale of XIIDRA[389](index=389&type=chunk) - Net cash used in financing activities was **¥1,005.2 billion**, reflecting **significant debt repayment of ¥701.1 billion** and **dividend payments of ¥282.7 billion**[380](index=380&type=chunk)[390](index=390&type=chunk)[400](index=400&type=chunk) - Total bonds and loans **decreased to ¥5,093.3 billion** as of March 31, 2020, **from ¥5,751.0 billion** a year prior, demonstrating **progress in deleveraging**[397](index=397&type=chunk) [Tabular Disclosure of Contractual Obligations](index=67&type=section&id=5.F%20Tabular%20disclosure%20of%20contractual%20obligations) As of March 31, 2020, Takeda's total contractual obligations were ¥6,296.2 billion, primarily bonds and loans, with ¥768.7 billion due within one year Contractual Obligations as of March 31, 2020 | Obligation Type | Total (JPY billions) | Within one year | 1-3 years | 3-5 years | More than 5 years | | :--- | :--- | :--- | :--- | :--- | :--- | | **Bonds and loans** | 5,712.4 | 689.5 | 1,201.7 | 1,770.2 | 2,051.0 | | **Lease liabilities** | 545.7 | 41.1 | 73.7 | 59.2 | 371.7 | | **Purchase obligations** | 30.2 | 30.2 | — | — | — | | **Defined benefit contributions** | 7.9 | 7.9 | — | — | — | | **Total** | **6,296.2** | **768.7** | **1,275.4** | **1,829.4** | **2,422.7** | [Directors, Senior Management and Employees](index=68&type=section&id=Item%206.%20Directors%2C%20Senior%20Management%20and%20Employees) This section details Takeda's leadership, compensation, and governance, including Board members, executive team, CEO compensation of ¥2,073 million in FY2020, and the global workforce of 47,495 employees [Compensation](index=75&type=section&id=6.B%20Compensation) For FY2020, key internal directors' compensation is detailed, with CEO Christophe Weber receiving ¥2,073 million, and total share-based compensation expense for the company reaching ¥30.0 billion Internal Director Compensation (FY2020) | Name (Position) | Total Compensation (JPY millions) | | :--- | :--- | | Christophe Weber (CEO) | 2,073 | | Andrew S. Plump (President, R&D) | 1,046 | | Costa Saroukos (CFO) | 664 | | Masato Iwasaki (President, Japan Pharma) | 297 | - Total share-based compensation expense recorded in the consolidated statements of profit or loss was **¥30.0 billion** for the fiscal year ended March 31, 2020, an **increase from ¥18.8 billion** in the prior year[438](index=438&type=chunk) [Employees](index=78&type=section&id=6.D%20Employees) As of March 31, 2020, Takeda's global workforce totaled 47,495 employees, with 6,509 in Japan and 40,986 outside Japan Employee Headcount as of March 31, 2020 | Region | Number of Employees | | :--- | :--- | | Japan | 6,509 | | Outside Japan | 40,986 | | **Total** | **47,495** | [Major Shareholders and Related Party Transactions](index=80&type=section&id=Item%207.%20Major%20Shareholders%20and%20Related%20Party%20Transactions) As of March 31, 2020, Takeda's largest shareholder was The Master Trust Bank of Japan (7.98%), with no single controlling entity, and significant related party transactions primarily with Teva Takeda Pharma Ltd Principal Shareholders as of March 31, 2020 | Shareholder | Percentage of Issued Shares | | :--- | :--- | | The Master Trust Bank of Japan, Ltd. (Trust account) | 7.98% | | The Bank Of New York Mellon (ADS Depositary) | 5.39% | | Japan Trustee Services Bank, Ltd. (Trust account) | 5.15% | - As of March 31, 2020, there were **308 record holders** with U.S. addresses, representing **approximately 22%** of outstanding common stock[458](index=458&type=chunk) - The company's main related party transactions are with its affiliate, **Teva Takeda Pharma Ltd.**, totaling **¥5.9 billion** for the fiscal year ended March 31, 2020[461](index=461&type=chunk) [Financial Information](index=80&type=section&id=Item%208.%20Financial%20Information) This section references audited consolidated financial statements and details Takeda's dividend policy, which aims to return capital to shareholders through an annual dividend of ¥180.00 per share - Takeda's dividend policy is a **key tool for returning capital** to shareholders, with a stated intention to maintain an **annual dividend of ¥180.00 per share**, paid as interim and year-end dividends of ¥90.00 each[380](index=380&type=chunk)[465](index=465&type=chunk) Dividends Paid (Per Share) | Fiscal Year | Interim Dividend (JPY) | Year-End Dividend (JPY) | Total Annual Dividend (JPY) | | :--- | :--- | :--- | :--- | | FY2018 | 90.00 | 90.00 | 180.00 | | FY2019 | 90.00 | 90.00 | 180.00 | | FY2020 | 90.00 | 90.00 | 180.00 | [Additional Information](index=82&type=section&id=Item%2010.%20Additional%20Information) This section provides supplementary corporate information, including articles of association, material contracts related to Shire acquisition financing and a tax agreement with Baxter, and a summary of U.S. and Japanese tax consequences for shareholders - Material contracts primarily relate to the **financing of the Shire acquisition**, including a **Term Loan Credit Agreement**, **Senior Notes**, and a loan from the **Japan Bank for International Cooperation (JBIC)**[529](index=529&type=chunk)[530](index=530&type=chunk) - Takeda assumed a letter agreement with Baxter International Inc. from the Shire acquisition, which includes an **indemnity against certain tax-related losses** if the merger of Baxalta and Shire causes the prior spin-off of Baxalta by Baxter to fail to qualify as tax-free[75](index=75&type=chunk)[533](index=533&type=chunk)[534](index=534&type=chunk) - For U.S. holders, dividends are generally expected to be **qualified dividend income**, taxable at **preferential rates**. The Japanese withholding tax, typically **10%** for U.S. portfolio investors under the tax treaty, is generally **creditable against U.S. federal income tax liability**[562](index=562&type=chunk)[565](index=565&type=chunk)[583](index=583&type=chunk) [Controls and Procedures](index=98&type=section&id=Item%2015.%20Controls%20and%20Procedures) Takeda's management, including CEO and CFO, concluded that disclosure controls and internal control over financial reporting were effective as of March 31, 2020, with KPMG AZSA LLC issuing an unqualified opinion - Management concluded that as of March 31, 2020, the company's disclosure controls and procedures were **effective**[607](index=607&type=chunk) - Management assessed internal control over financial reporting as **effective** as of March 31, 2020, based on the COSO framework. This assessment was audited by KPMG AZSA LLC, which provided an **unqualified opinion**[608](index=608&type=chunk)[609](index=609&type=chunk) PART III [Financial Statements](index=102&type=section&id=Item%2018.%20Financial%20Statements) This section presents Takeda's audited consolidated financial statements for FY2018-FY2020, prepared under IFRS, including the Independent Auditor's Report highlighting critical audit matters such as U.S. rebate provisions and Shire acquisition intangible asset valuation Consolidated Statement of Profit or Loss (Year Ended March 31) | (JPY billions) | 2018 | 2019 | 2020 | | :--- | :--- | :--- | :--- | | **Revenue** | 1,770.5 | 2,097.2 | 3,291.2 | | **Operating profit** | 241.8 | 237.7 | 100.4 | | **Profit (loss) before tax** | 217.2 | 127.6 | (60.8) | | **Net profit for the year** | 186.7 | 135.1 | 44.3 | Consolidated Statement of Financial Position (As of March 31) | (JPY billions) | 2019 | 2020 | | :--- | :--- | :--- | | **Total assets** | 13,792.8 | 12,821.1 | | *Goodwill* | *4,240.3* | *4,012.5* | | *Intangible assets* | *4,751.2* | *4,171.4* | | **Total liabilities** | 8,606.8 | 8,093.6 | | *Bonds and loans* | *5,751.0* | *5,093.3* | | **Total equity** | 5,186.0 | 4,727.5 | Consolidated Statement of Cash Flows (Year Ended March 31) | (JPY billions) | 2018 | 2019 | 2020 | | :--- | :--- | :--- | :--- | | **Net cash from operating activities** | 377.9 | 328.5 | 669.8 | | **Net cash from (used in) investing activities** | (93.3) | (2,835.7) | 292.1 | | **Net cash from (used in) financing activities** | (326.2) | 2,946.2 | (1,005.2) | - The independent auditor, KPMG AZSA LLC, identified **two critical audit matters**: 1) the evaluation of provisions for U.S. Medicaid, Medicare, and commercial managed care rebates due to the **high degree of subjective judgment** required, and 2) the evaluation of the **acquisition-date fair value of intangible assets** from the Shire acquisition, particularly the future sales forecast assumptions[663](index=663&type=chunk)[667](index=667&type=chunk) - The purchase price allocation for the Shire acquisition was completed in FY2020, resulting in a **retrospective adjustment** to the provisional amounts from FY2019. The final fair value of intangible assets was adjusted to **¥3,769.1 billion** from a provisional **¥3,899.3 billion**, and goodwill was adjusted to **¥3,165.5 billion** from a provisional **¥3,087.4 billion**[1046](index=1046&type=chunk)[1048](index=1048&type=chunk)

As filed with the Securities and Exchange Commission on June 27, 2019 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ___________________________________________________________ FORM 20-F ___________________________________________________________ ☐ REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934 OR ý ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended March 31, 2019 OR ☐ TRANS ...