Q4 2024 Takeda Pharmaceutical Co Ltd Earnings Call
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Sean George: Sean George CEO, Christophe Weber Chief.
Speaker Change: Jesus Financial officer, not for the top Milano.
Speaker Change: R&D President Andrew Plump beauty doesn't ounce acetate the vacuum us.
Speaker Change: I thought just to give up on what you call market. They only months. So do they want how'd you meant I told my maths kristof over to you.
Speaker Change: Thank you, Chris and thank you everyone for joining us today.
Speaker Change: If we go to the first slide is our fiscal year 'twenty 'twenty four performance was driven by a combination of factors.
Speaker Change: Second generic impact from violence, <unk> strong momentum in our growth on launch product portfolio, which more than offset the generic impact on Roe.
Speaker Change: Robust opex control, which helped grow our core operating profit margin.
Speaker Change: We also demonstrated the potential of our pipeline with accelerated progress in late stage programs.
Speaker Change: Looking at our financial results fiscal year 24 core revenue grew two 8% at constant exchange rates driven by our growth on those products, which grew 14, 7%.
Speaker Change: This portfolio of products now accounts for 48% of <unk> total core revenue.
Speaker Change: Our core operating profit for the full year was $1 2 billion representing growth of four 9% at constant exchange rates.
Speaker Change: Core EPS fell slightly short of our greatest guidance due mainly to higher than anticipated tax expense.
Speaker Change: Core operating profit margin was 25, 4%.
Speaker Change: This was more than two percentage points above our original expectation and represented growth of 65 basis points compared with the previous fiscal year at 270 basis points, if we exclude <unk> impact.
Speaker Change: Significant opex savings, resulting from our multiyear efficiency programs were an important driver of operating profit.
Speaker Change: And margin growth.
Speaker Change: I mean, I know, we provide an update on the efficiency program in his presentation.
Speaker Change: In addition, we continue to progress our late stage pipeline in fiscal year 'twenty for supporting our future growth. We now have six phase III programs underway across our core therapeutic areas.
Speaker Change: In March we readout positive on highly promising top line results from our phase III studio Crisp ethyol.
Speaker Change: And pretty soon you have Iraq, a rare form of blood cancer.
Speaker Change: During fiscal year 2024, we also completed phase three enrollment for <unk> and <unk> in narcolepsy type one.
Speaker Change: Our on track for data readout in this year, we started filing date in fiscal year, 'twenty five and 'twenty six.
Speaker Change: We are excited by the opportunities in our pipeline. This differentiated product has the potential to transform the lives of patients in each of our therapeutic focus areas.
Speaker Change: Turning to slide five.
Speaker Change: We achieved strong performance across our growth on launch product portfolio <unk>.
Speaker Change: This slide transforming treatment now account for 48% of our revenue and achieve double digit revenue growth of 14, 7% at constant exchange rate.
Speaker Change: Zero and immunoglobulin continued their strong growth at 19% and 12%, respectively and newly launched products for Zyklon, a dimer at impressive uptake exceeding revenue expectation.
Speaker Change: Yeah. So continues its excellent launch trajectory with strong demand in both endemic and travel market.
Although in television revenue performance has been below our expectation in fiscal year 'twenty 'twenty four we are still growing above market and growth momentum is building with the expansion of the <unk> opinion.
Speaker Change: The reason for this underperformance in the U S is that we underestimated the challenge associated with the changing U S access landscape.
Speaker Change: The opinions of new formulation without the extra cost of our peers, but easing of different insurance plan compared to the IV formulation, which has been covered for the past 10 years.
Speaker Change: It has taken longer than expected to gain easy access for patients and we are therefore still working to improve reimbursement and authorization pathways for patients.
Speaker Change: On the other hand, prescriber and patient feedback on the opinion has been extremely positive, which once access become seamless will bode well for the future of the pain and <unk>.
Speaker Change: We expect continued to maintain its market share leadership and grow faster than the market, even as treatment option in the IBD market are increasing.
Speaker Change: We are of course, leveraging what we have learned from this expense as we prepare for new pipeline launches.
I've been growth in fiscal year 'twenty four was impacted by planned upgrade to manufacturing operation as well as lower demand in China.
Speaker Change: But we anticipate a return to the growth trajectory of high single digit in fiscal year 2005.
Speaker Change: We expect overall this growth in those product portfolio to support revenue and profit resilience through the final year of substantial violence erosion in fiscal year 'twenty five and continue to drive our growth agenda through the end of the decade.
Speaker Change: Turning to slide six.
Speaker Change: I will discuss our position within the recently evolving tariff landscape.
Speaker Change: Note that our fiscal year 'twenty five guidance does not include potential tariff impact on pharmaceutical products.
Speaker Change: This is because while the situation remains dynamic.
Speaker Change: Based on what we know today, we believe that our likely pattern should exposure to U S and China tariff is limited.
Speaker Change: Tariff exposure is determined by how much total revenue come from imports manufacturing site location and country of origin and transfer pricing policy.
Speaker Change: This map illustrates Takeda internal global manufacturing footprint.
Speaker Change: We have 20 manufacturing site that suppliers are U S, which are shown in bold on the map seven.
Speaker Change: Seven of these sites are located in doing at this stage there was the us and Europe, Japan and Singapore.
Speaker Change: Our strategy contract manufacturers, which we useful about 20% of our production are distributed across the U S Europe, and Japan, and approximately 70% of our global Cmos cost ease with U S based Cmos.
Speaker Change: Our own manufacturing facility in China supports only our business in China.
Speaker Change: You can see from the map that we have historically invested significantly in the U S and our investments are not limited to manufacturing. We also have a vast network of Biolife plasma donation center as well as the majority of our R&D spend and functions located in the U S.
Note that based on our current strategy alone. We currently plan to invest about 30 billion U S. Dollar in the next five years in the U S.
Speaker Change: This reflects the fact that the U S is the world's leading market for biopharmaceutical innovation focused company like decade up and I hope that will continue.
Speaker Change: To roughly quantify the scope of our business of our U S business subject to potential tariffs.
Speaker Change: Please note that while approximately 50% of total revenue.
Speaker Change: Is from the U S Saar custom value of import into the U S is only about 8% to 10% of our total U S revenue.
Speaker Change: Of note our largest product by revenue in the U S and <unk> is 100% U S country of origin.
Speaker Change: The custom value a few S origin product that we shipped to China is at about 12% to 15% of our China revenue, but one China is a very important.
Speaker Change: Business.
Speaker Change: Overall business. It is growing rapidly China revenue today is still a significantly smaller percentage of overall company revenue at approximately 4%.
Speaker Change: We continue to monitor the global tariff situation closely until more is known it would be difficult to predict the total impact with certainty, but like all global company. We are looking across our global supply chain and taking mitigation measure for imports it may be subject to potential <unk>.
Speaker Change: This impact.
Speaker Change: Turning to the next slide.
Speaker Change: We are excited for the future unexpected 25 to be a pivotal year for <unk>.
Speaker Change: As we advance our late stage pipeline and prepare for new launches.
Speaker Change: Key milestones already includes very positive top line results for the phase III studio <unk> died.
Speaker Change: He will introduce the topline results later, but the efficacy was at the high end of what we had been hoping for with a tolerable safety profile.
Speaker Change: This reinforces our optimism about peak revenue potential of $1 2 billion that we introduced at our R&D day last year.
Speaker Change: In 2025, we will review one year safety and durability of response data prior to submitting is very promising therapy for FDA review.
Speaker Change: During fiscal year 2004, we also completed phase three enrollment for <unk> and <unk>, which are on track for data readout. This year.
Speaker Change: <unk> is on track to be a first in class Orexin agonist to address the underlying origin deficiency that causes narcolepsy pipeline.
Speaker Change: It has the potential to deliver a new era of care with transformative outcomes for people living with narcolepsy type one.
Speaker Change: Phase III recruitment completed well ahead of projection and data readout is expected in the first half of fiscal year 'twenty five.
Speaker Change: This could be a two to 3 billion peak revenue product in narcolepsy type one.
Speaker Change: <unk> is a highly selective overall Q2 inhibitor and could offer a great treatment option for patients with psoriasis, psoriatic arthritis, and other immune related inflammatory disease.
Speaker Change: Currently we are conducting phase III trial. So yeah. There is some strategic arthritis first losing folks psoriatic arthritis, starting in March this year.
Speaker Change: We are looking forward to sharing the top line results of our phase III trial of <unk>. Later this year, followed by a regulatory submission in fiscal year <unk>.
Speaker Change: Shifting to our financial outlook for 'twenty five fiscal year 'twenty five we expect broadly flat revenue core operating profit and core EPS at constant exchange rate.
Speaker Change: Our revenue outlook reflects continued momentum in our growth and launch products offsetting the carryover of vyvanse declining to fiscal year 2025.
Speaker Change: This should be the final year of significant impact from Vyvanse generics.
Speaker Change: Our profit guidance reflects anticipated gain from our efficiency program as well as increased investments in R&D that on technology and new launch preparation for our late stage pipeline program.
Speaker Change: Finally in line with our progressive dividend policy I am pleased to announce a third dividend increased to 200 yen per share.
Speaker Change: With that I will turn the call over to <unk> to review, our financial performance and guidance in more detail.
Milan: Thank you Chris off Hi, everyone. This is Milan offer without speaking.
Milan: So slide 10 summarizes our financial results for FY 2024.
Milan: Our reported revenue was $4 five eight trillion yen with growth of seven 5% versus prior year.
Milan: Quantity of you, which includes our small adjustments related to divestiture of I cannot tell about JV in Japan.
Milan: Seven 4% at actual FX or two 8% at CER.
Milan: Constant exchange rate.
Milan: Core operating profit or core op.
Milan: 116 premium again.
The increase of 10, 2% at actual FX or four 9% at CER.
Our core operating profit margin was 25, 4% improving versus prior year. Despite gross margin pressure from violence loss of exclusivity.
Milan: This reflects opex discipline through an enterprise wide program.
Milan: Reported operating profit was $342 6 billion yen, which grew 60%.
Milan: Core EPS and reported EPS was 491 yen and 60 ATM respectively.
Milan: With both impacted by higher tax expenses compared to the prior year.
Milan: Operating cash flow was over one trillion yen and adjusted free cash flow was 769 billion yen.
Milan: Our strong cash flow performance reflected core op growth.
Milan: Our cash taxes, and less business development spend compared to the prior year.
Milan: Slide 11 shows our performance versus management guidance.
We upgraded our guidance twice during the fiscal year to reflect the product momentum, including violence and Opex management through our extensive program.
Milan: Compared to our latest guidance from our Q3 call revenue delivered as planned and cooperating profit was at the high end of our guidance due to continued opex efficiency.
Milan: Quite a b S.
Milan: While ahead of our original guidance.
Milan: It's slightly below our latest guidance, mainly because of a higher than anticipate tax expenses.
Milan: This is due to several factors, including an increase in the U S International tax provision and the lower than anticipated R&D tax credits.
Milan: Slide 12.
Milan: Last year, we initiated an enterprise wide program to try these cafes across organization.
Milan: Its execution has been fully on track and we have captured approximately 200 billion yen in annualized savings to date.
Milan: About 65% of savings are from compensation and benefits with the 3000 positions impacted to date approximately.
Milan: As well as further efforts to optimize organizational agility.
Milan: About 20% of the savings came from procurement initiatives across our value chain.
Milan: Remaining 15% is from other areas such as the rationalization of activities across.
Randy: Hello, Randy.
Speaker Change: Savings in facilities and equipment with site optimizations, including the San Diego are we satisfied.
Speaker Change: Restructuring cost for the ear or $128 to 1 billion yen slightly below our forecast of 140 billion yen.
Speaker Change: This efficiency program enabled us to reduce opex spend in FY 'twenty, four and frees up resources to advance our pipeline prepare for new product launches and further build our digital technology capabilities.
Speaker Change: From a science 13, I'll explain more about the <unk> growth dynamics in FY 'twenty four.
Speaker Change: First revenue.
Speaker Change: Our growth and launch products, which grew 14, 7%.
Speaker Change: More than offset the loss of exclusivity impact mainly from buybacks.
Speaker Change: They were all XR in the U S and <unk> in Japan.
Speaker Change: Net a positive growth in other brands such as Capex.
Speaker Change: Alex ADCETRIS and Iclusig also contributed to two 8% revenue growth at CER.
Speaker Change: On actual FX basis yen depreciation gave additional revenue lift by 195 billion yen.
Speaker Change: Finally, this year, we recognized $1 7 billion yen of deferred revenue related to the divestiture of packet at Teva JV in Japan.
Speaker Change: This is non core income that we adjust out of our core revenue results.
Speaker Change: Slide 14 shows the year on year bridge for cooperating profit.
Speaker Change: Gross profit slightly increased with momentum across our portfolio offsetting the impact of a high margin product such as items.
Speaker Change: Moving to Opex, you can see that we have already realized savings from the efficiency program in FY 'twenty four gross savings of approximately 150 billion yen.
Speaker Change: We are directing those savings towards investments in our late stage pipeline, new product launch preparations and offsetting inflationary increases.
Speaker Change: Overall coffee grew by four 9% at CER or 10, 2%, including the benefit from FX.
Speaker Change: Next reporting operating profit yes.
Speaker Change: In addition to call peak growth the 60% increase was due to lower impairment cost and net benefit in other operating income and expenses and then FX.
Speaker Change: Next is our cash flow analysis on slide 16.
Speaker Change: Free cash flow was 769 million yen, reflecting strong operation operating cash flow of over one trillion yen approximately <unk> 50 billion yen of Capex and $57 6 billion yen or proceeds from the sale of the package that Teva JV.
Speaker Change: This exceeded our forecast of 550 to 650 billion yen due to lower capex and cash taxes on top of higher corporate profit.
Speaker Change: Our free cash flow comfortably cover our dividend and interest payments with excess cash towards debt pay down and share buyback.
Speaker Change: This chart reflects at $51 9 billion yen of buybacks completed by the end of March.
Speaker Change: In April we also finished the rest of the 100 billion yen buyback announced at Q3 earnings.
Speaker Change: Slide 17 shows our change in adjusted net debt.
Speaker Change: Our strong cash flow performance on EBITDA growth led to an improved leverage ratio of two eight times as of March 2025.
Speaker Change: Next our latest debt maturity ladder.
Speaker Change: In quarter, four we prepaid $313 5 billion yen and $1.5 billion of syndicated loans using a combination of cash on hand.
Speaker Change: <unk>, Paypal and short term loans.
Speaker Change: We plan to refinance short term funding with leverage neutral debt this fiscal year.
Speaker Change: Our debt profile remains very manageable with 100% of our debt at fixed rates with a weighted average of approximately 2% interest rate.
Speaker Change: Moving to our outlook for fiscal 2025 our.
Speaker Change: Our management guidance at CER is for broadly flat core revenue with a 525 expected to be the final year of significant finance generic headwind.
We also expect core op.
Speaker Change: In our core EPS to be broadly flat year on year.
Speaker Change: Reflecting savings from our efficiency program.
Speaker Change: And the investment ahead of a new launches from the late stage pipeline.
Speaker Change: Our free cash flow outlook is stable at 752 850 billion yen.
Speaker Change: And in line with our progressive dividend policy, we plan to increase the annual dividend to 200 yen per share.
Speaker Change: Please note that our forecast for FY 2025 does not reflect the potential impact of tariffs on pharmaceutical products by the U S or other countries.
Speaker Change: We continue to monitor the situation and will update our forecast.
Speaker Change: If and when appropriate.
Speaker Change: Hi, about Christophe explain earlier.
Speaker Change: Based on our current assumptions, we believe our likely potential exposure to U S and China tariff is limited.
Speaker Change: Slide 20 shows more detail on our FY 'twenty five revenue forecast.
Speaker Change: We expect to continue the momentum from our growth and launch products, which should exceed 50% of total revenue this fiscal year.
Speaker Change: The growth of these products should more than offset the carryover impact from biomass and other loss of exclusivity.
Speaker Change: Our revenue guidance also takes into consideration Medicare part D redesign and 340 <unk> expansion in the U S.
Speaker Change: Slide 21 further explains our outlook for FY 'twenty five Colby.
Speaker Change: Most profit is expected to improve slightly while opex should see a modest increase versus prior year.
Speaker Change: We will continue to invest in R&D and data and technology and the FY 'twenty five we expect a meaningful uptick in launching investment for the late stage pipeline.
Speaker Change: Due to the acceleration of development timelines, we now expect our risks are tied of that Braxton and deficit you need to all be filed in the U S. In FY 'twenty five to 'twenty six.
Speaker Change: EBITA accommodative with savings generated by the efficiency program.
Speaker Change: Slide 22, expand our reported operating profit growth.
Speaker Change: Our reported operating profit forecast benefits from lower amortization expenses, mainly due to the conclusion of the biomass amortization in January 2026, lower.
Speaker Change: Lower restructuring expenses and lower impairment cost assumption.
Speaker Change: Turning to my final slide page 23.
Speaker Change: The principal of our capital allocation policy remains unchanged.
Speaker Change: We remain committed to investment investing in growth drivers.
Speaker Change: And delivering attractive returns to shareholders through a progressive dividend policy.
Speaker Change: Share buybacks when appropriate.
Meanwhile.
<unk> file a target to reach two times adjusted net debt to adjusted EBITDA.
Speaker Change: We finished the fiscal 2024 at two eight times.
Speaker Change: And we aim to further improve that leverage ratio going forward.
Speaker Change: Thank you and I'll now hand over to Andy for updates on the pipeline.
Speaker Change: Thank you very much Milano and Hello to everyone on today's call to go to the next slide please.
Speaker Change: 2024 was a very successful year for our R&D organization as Christophe has already highlighted we entered 2025 with strong late stage pipeline momentum.
Speaker Change: As you can see on the left of this slide we also had significant events in 2024 for our growth and launch products delivering on several geographic expansions, including approvals for Entyvio sub Q in the U S for Crohn's disease for exactly in the EU and Japan for metastatic colorectal cancer.
Speaker Change: <unk> and <unk> in the EU for congenital TTP.
Speaker Change: We also continued to execute on our global expansion strategy for key Dania with approvals in Vietnam, Israel and Switzerland.
Speaker Change: And Merrill Lynch that our regional development program for Japan achieved approval for the treatment of pruritus associated with cholestasis in both <unk> syndrome, and progressive familial intrahepatic cholestasis now moving to the right hand side of this slide you can see that our late stage pipeline is advancing.
Rapidly with important data readouts coming this year and here are a few examples of major milestones achieved in the past fiscal year 2024.
Speaker Change: Our highly selective oral <unk> allosteric inhibitors as a sitting in completed enrollment in two phase III psoriasis trials approximately seven months ahead of plan with a readout anticipated towards the end of 2025.
Speaker Change: Over Braxton, our lead Orexin two receptor agonist generated positive phase <unk> data in narcolepsy type one that was presented at the sleep 2024 conference.
Speaker Change: Two phase III trials of over Braxton and not <unk>.
Speaker Change: Let's see type one were initiated and completed enrollment in fiscal year 2024, we look forward to data Readouts. This summer.
Speaker Change: Our next generation oral Orexin agonist tax III 60 has also been accelerated having initiated phase III studies in narcolepsy types, two and idiopathic hypersomnia.
Speaker Change: We presented compelling proof of concept data for our anti CD 38 antibody mesic get them App in Iga nephropathy at the American Society of Nephrology kidney week meeting this past October and we plan to initiate phase III development this year.
Speaker Change: In oncology, we in license a reader set an active an inhibitor from Cara therapeutics for the treatment of anemia associated low and intermediate risk myelodysplastic syndrome, or Mds and myelofibrosis.
Speaker Change: Phase III data in Mds was presented at the American Society of Hematology annual meeting in December 2024, and the Phase III development program is underway and.
Speaker Change: As Christoph mentioned in March Takeda, and our partner protagonist Therapeutics announced very impressive phase III data for Rus per tied a first in class synthetic have cited in magnetic being developed for the treatment of <unk>.
Speaker Change: This entire sequence of positive phase III and phase II Readouts combined with new strategic partnerships closely aligned with our therapeutic area strategies.
Speaker Change: <unk>, our strong pipeline progression into fiscal year 2025 next slide. Please train 25 is indeed, a pivotal year for our pipeline.
Speaker Change: For our six new molecular entity late stage programs three we'll have pivotal readouts this year Rockford hide other Braxton and dazzle Sydney.
Speaker Change: And we're off to a strong start thanks to the positive phase III results in March from the verify study for rest of the tide will review the topline data from this 32 week study in the following slides.
Speaker Change: Next we have over Braxton, our phase III program for over Brexit and includes two global pivotal studies in narcolepsy type, one which enrolled approximately 10 months ahead of plan.
Speaker Change: Top line data is anticipated in the summer and we plan to share the full of a Brexit and data at an upcoming medical conference and target regulatory filing this year.
Speaker Change: And finally, we have <unk> sitting there in the first half of fiscal year 2025, we will initiate a head to head trial of <unk> sitting in for Steve <unk> sitting there had been psoriasis, they will generate data helping to further demonstrate differentiation and support our commercial launch.
Speaker Change: Top line data from <unk>, two pivotal phase III trials latitude 3001, and 300 to.
Speaker Change: Are expected in the second half of this fiscal year.
Speaker Change: The restaurant type 32 lead topline results were positive achieving high statistical significance and has been accepted for presentation in early June and ask those minor recessions, Let's review the data that has been shared so far.
Speaker Change: Hindsight EMEA Vera is a hematologic cancer characterized by excessive red blood cell production.
Speaker Change: Primary treatment goal in highly step polycythemia Vera is to keep them adequate below 45% why because higher levels are associated with increased rates, a major thrombosis and potential deaths from cardiovascular events.
Speaker Change: Rockford tied more than doubled clinical response rates in the phase III verify study significantly reduced in the primary endpoint of phlebotomy eligibility when compared to placebo plus standard of care.
Speaker Change: All all key secondary endpoints met significant signet statistical significance, including a threefold reduction in the proportion of <unk> treated patients requiring flat phlebotomy as well as improvements in hematocrit control. Additionally.
Speaker Change: Additionally, and very importantly, patient reported outcomes via the promised the key question here and the myelofibrosis symptom assessment form demonstrated improved quality of life.
Speaker Change: These data represent the most consistent and broad demonstration of patient reported outcomes in PV patients.
Speaker Change: This is an interesting data point throughout the entire 32 week period.
Speaker Change: 73% of respiratory <unk> treated patients received zero phlebotomy is versus just 22% on placebo plus standard of care, 73% versus 22%.
Speaker Change: <unk>. Additionally, was generally well tolerated with overall adverse event events in serious event rates comparable between the two treatment arms arms. The most common events were injection site reactions for rest of our tight most of which were mild to moderate in intensity and very importantly, there is no <unk>.
Speaker Change: Evidence of an increased risk of secondary cancers, and the rest are tied versus placebo treated patients.
Speaker Change: These results across a range of patients treated with <unk> therapy therapeutic phlebotomy, where the majority of patients in this study phlebotomy plus side, a reductive therapy are truly transformative to get them a hosted an investor call on Sunday evening June 1st at seven P. M. Eastern time from <unk>, We hope that you can do.
Speaker Change: Wayne.
Speaker Change: Now, let's shift to the importance of disciplined decision, making and the connection to pipeline advancement.
Speaker Change: We continue to make data driven decisions to main focus maintained focus on our most promising pipeline programs as shown in the bottom half of this slide.
Speaker Change: These decisions allow us to pivot resources and rapidly advanced development of our six late stage programs the.
Speaker Change: The deliberate and thoughtful approach we have taken over the last few years has resulted indicators most robust late stage pipeline in our modern history and is a testament to the successful transformation of our R&D organization.
Speaker Change: Six programs in our late stage pipeline has the potential to deliver transformative benefits to patients while contributing to Takeda as long term growth. We've previously reviewed the major 2025 events for Russ for tide over <unk> and as a citizen Ed and now I'd like to highlight some expansion opportunities we are pursuing across.
Speaker Change: These six programs.
Speaker Change: Indication expansions are being explored <unk> NIM with important phase two readouts in 2026 for Crohn's disease, and ulcerative colitis and in addition, a phase II study exploring <unk> sit in its potential to treat vitiligo will start in 2025.
Speaker Change: Our <unk> proof of concept study in myelofibrosis readout over the next year and additional expansion opportunities are under consideration.
Speaker Change: I'm happy to report that the physicians are in phase III program is enrolling well and we are on track for data readout and finally as planned.
Speaker Change: As I highlighted earlier fiscal year 2025 is a pivotal year for Takeda as late stage pipeline. In addition to the three phase III Readouts expected in 2025, we look forward to continuing our strong late stage development trajectory with the potential to file five additional indication.
Speaker Change: From this late stage program over the next few years I am excited to share updates with you as we progress throughout the year. Thank you very much and I will now turn it back to you Christophe.
Christophe: Thank you Andy and including overall, we are very pleased with what we are achieving in fiscal year 2004.
In the challenging failure, when we are facing significant generic impact we continue to deliver on our financial commitments progress our pipeline and create value for our shareholders.
Christophe: Momentum of our current growth and launched product portfolio will continue to drive our growth through the remainder of the decade, the payout during which we face only limiter generic exposure until the early the early 2013.
Christophe: We are accelerating late stage therapies with potential to generate significant value, including the three new molecular entities with phase III data readout already completed are expected by the end of 2025.
Christophe: We shared with you today and.
Christophe: And we continue to transform the company across our value chain by leveraging that technology and AI.
Christophe: Cash flows should publish investment and asset specific business development to further enhance long term value and deliver attractive shareholder return.
Christophe: With this strategy, we are laying a strong foundation for <unk> long term growth on the next chapter in our story.
Christophe: In closing, we navigate the opportunities and challenge our hedged from a position of strength of a position of potential with strong core values and our vision to discover and deliver life transforming treatment guided by our commitment to patient or people on the planet.
Christophe: These values would get us well in these fast moving and challenging environment and generate long term value for stakeholders. Thank you.
Christophe: Yeah.
Christophe: Okay.
So does it mean that pharmacodynamic gosh, it's mono or state or more in March.
Christophe: It's always a pleasure Mustang Christoph Milano and any quiet U S business unit President Judy can move DDT business unit President Jay It is about our total global oncology business unit President They don't tell us that'd be the demo San Castelli and loss costs.
Christophe: <unk> small will keep on Ocado zoom and of course, you bolt on that or should I say cross site.
Christophe: The homegrown <unk> Goss ankle side, it's obviously, you've got a lot in your home with a small he thought that keep a good.
Frank: This is Frank as it did a couple of angles that live in one state at key day today to the Colorado CIT on Oak NGO demo kits cordis now.
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Speaker Change: Oh, Hi, Guaymas. Thank you very much for this year I won't sit here how about two questions. The first question is regarding our company guidance, especially as our two products.
Speaker Change: For the other two parts about Entyvio sales growth, 9% C O basis I'd also a viva.
Speaker Change: <unk> was down by 30%.
For full year.
Speaker Change: Can you give me some upside the upside and downside risk for this one which was the Oh one of the two products, which is going in a different direction compared to your guide us on the last fiscal year that was the first question.
Speaker Change: The second question is have you got in Oba Preston.
Speaker Change: Hum.
Speaker Change: Some of the measuring about summer data readout.
It's my understanding was around June.
Speaker Change: I may have misunderstood but.
Can you call. It Oh, Okay, you called pharma that are you a top line results timing of Bon ton.
Speaker Change: A six nine for the phase III, which is the summer.
Speaker Change: And how what's the what does a conference you are referring to after.
Speaker Change: Our summer for the data.
Speaker Change: Thank you.
Speaker Change: Thank you Yamaguchi San so the first question on specific outlook for Entyvio and Vyvanse Julie.
Speaker Change: Julie can comment on that and the second question around specific timing of the Brexit and data Andy could you. Please comment on that please.
Speaker Change: Thank you Yamaguchi San for the question, so I'll take them in reverse order <unk> yeah.
Speaker Change: So with five and as you can see we are expecting further erosion of vyvanse in the U S. At this point, we have 15 generics on the market in the U S and we anticipate that the supply challenges that we saw in the first half of last fiscal year, we would not see those.
Speaker Change: Sure can supply challenges.
Speaker Change: This upcoming fiscal year, so we expect to see erosion.
Speaker Change: To occur more smoothly.
Speaker Change: And then it happened last year. So that is why we are guiding towards the decrease in <unk>, primarily driven by the the U S situation. We will also start seeing.
Speaker Change: Some by then.
Generics in other geographies, but much much smaller compared to the U S.
Speaker Change: Then when it comes to Entyvio in the U S. We expect to see continued above market growth for Entyvio also driven by Entyvio pen further.
Speaker Change: Kris access across the continuum for Entyvio pen, we continue to see as you've heard from Christophe during her presentation.
Speaker Change: <unk> pull through from patients and quarter over quarter, we are adding approximately 1000, new Penn writers each quarter.
Speaker Change: And our other geographies outside of the U S. We continue to see strong growth and.
Speaker Change: Particularly in our European and.
Speaker Change: Geography, and we expect that to continue.
Speaker Change: Thank you.
Speaker Change: Mmk.
Speaker Change: Yes, good evening.
Speaker Change: Alright, you and a follow up.
Andy: Alright. Thank you. Please go ahead, okay. Okay. This is Andy and I have a big smile at them a good reason because of course.
Speaker Change: When you say summer that includes June.
Speaker Change: Okay, but just to be fair I suspect that the data we're not going to come in the early part of June based on just the timing of the trial. So we've just said some are just to give us some room to ensure that we're coming out with that.
Speaker Change: The clearest topline results are.
Speaker Change: We've been moving very quickly with this program and are and we continue to drive every step of the process as rapidly as possible that will include not just the topline disclosure, but also presentations at scientific Congress.
Speaker Change: So we will do that as quickly as we can and we're reluctant at this point to declare which Congress because obviously, we need to have an abstract accepted and so until that's happened we won't say that but of course, there are a relatively limited number of important sleep meetings.
Speaker Change: Probably figure it out by just by just looking at those communities that exist and then the last comment I'll make along these lines just to ensure that expectations are set appropriately. There. There are essentially three parts that will constitute the.
Speaker Change: The filing for <unk> in type one narcolepsy, one will be of course. These two pivotal phase III studies. The second will be the safety database that predominantly will come from the long term extension study from our phase <unk> study that we presented last year and then the third would be our CMC package.
Speaker Change: So right now we haven't declared precisely when our filing dates and when our expected approval dates will be but those are the three pieces that will define.
Speaker Change: <unk>.
Speaker Change: Okay. Thank you for summer thank you.
Speaker Change: How do you have those I must stop.
Speaker Change: So tomorrow Morgan Stanley Muraoka San.
Speaker Change: And I was wondering I should months.
Speaker Change: I think the total diameter motor.
Speaker Change: And then but how could this.
Speaker Change: Uh huh.
Speaker Change: This net gain a.
Speaker Change: Again, My began you can guide us and didn't know about at year end.
Not so and so if I state that it's in I would assume that's about hardcore no hutchins opine, a little bit of a jug consolidated Codell Congo, most of you know.
Speaker Change: It goes to cure joke, let's just say indicative in the hotel, though are there, but that's in Doha, a neat.
Speaker Change: <unk> cannot will come by the way they shop.
Speaker Change: So does that each moment.
Speaker Change: At the moment.
Speaker Change: The dot com, they've got let me know how national Taco day, Chris to hook up.
Speaker Change: America, Hong Kong <unk> BD on total not all sheet or shut the only H score at the cigar Codell well.
Speaker Change: Medical dental against since our Europe could I sooner do you Cook.
Speaker Change: So who download.
Speaker Change: They show up.
Speaker Change: Kunal.
Speaker Change: Yes, Toshi Gov.
Speaker Change: Is it kind of keeps that auto cash on me not unlike with an old quick cleanup costs. So therefore, the orkin eight or nine o'clock, we'll see it takes us to deal with this.
Speaker Change: Thank you <unk>. So the first question on the dividend a wife for yen and if there is an upgrade to guidance is there any room to increase that further I'd like to ask Melano to answer that question and then the second on terrorists.
Speaker Change: Christoph mentioned 30 billion of investment in the U S. Over the next five years could you. Please explain a little more in detail what that refers to.
Christophe: Christophe if you could take that second question.
Christophe: Oh perfect.
Arthur: On August Arthur with Amazon up with other with IMS and hydro Nikon stay while the snap on or Mercado extra Creek I assume you must cater to more on arm, a progressive dividend policy or tie your stead.
Christophe: Taking you out about core EPS, we reported EPS like a free cash flow I mean that got up.
Christophe: This equipment is in massive them on all Coca Cola and encompass Smith on or Hutchins, Ohio State no matter of Hawaii.
Christophe: With the normal payout ratio got micro LNG pattern for Greg or Mark Doak, either meet the more effective competitive with a seizure knee and more effective.
Christophe: Who knew Honda C.
Christophe: So a borderless ne and our reported EPS in the Hawker Congo, and all amortization again, so Oklahoma did montakaya critical dynamic on the market at the moment against and other hyperkinetic aircraft that they sit in the airplane you up at night.
Christophe: Okay, so not a remote and a horrible taking costs there are some unknowns.
Christophe: Joanne not all hypothesis Theta that key title the method.
Christophe: Commvault, although you're basically there is a heightened casino up unethical it almost like a Mustang <unk> reported EPS. So they cross mapped pretty cash cash flows and our data, but it's not on one Oh my gosh.
Christophe: <unk> now got out and lighter sheet committed cytokine.
Christophe: Over to Christophe.
Christophe: Thank you Markus thanks for your questions.
As you you know understood we have a very significant presence in the U S. And this is why we have.
Actually.
Christophe: But as I'm sure you have low exposure to tariffs, we have a massive manufacturing new network in the U S. We have a very significant presence when it comes to R&D for example, and so when.
Christophe: I said that we will invest 30 billion in the next five years. This is not new we did is to maintain this <unk> zones, which is to continue to develop the company.
Christophe: This is to make sure that our manufacturing site.
Christophe: <unk> up to the best.
Christophe: Efficiency and productivity.
Speaker Change: Our R&D is such a building kudo R&D spent in the U S. So this is not new the new change of strategy, but just to illustrate that as a global pharmaceutical company. We have a very strong presence in the U S, which is by far today to a country, which is <unk>.
Christophe: Important for developing those.
Christophe: Pharmaceutical innovation is also a country very important to reward innovation as well in terms of its market.
Christophe: Thank you.
Speaker Change: I know those as I got those ironmaster sorted washed smaller Jefferies know Stephen Barker.
Christophe: I just want to nine months.
Steve Barker: Yes, Thanks, Steve Barker from Jefferies. The first question for Andy.
Christophe: Regarding <unk>.
Speaker Change: Vessel sits the NIM.
Speaker Change: Could you please explain your decision to choose.
Speaker Change: It's illegal as the next indication for development.
Speaker Change: With reference to the unmet need the competitive environment and Mechanistically why a <unk> two inhibitor.
Speaker Change: <unk> succeeded in this indication.
Speaker Change: And my second question is for Julie Kim who might like to congratulate him on being chosen to become the next CEO.
Speaker Change: Suited.
Tell us something about what.
Speaker Change: You expect to be able to bring to this role.
Speaker Change: Thank you.
Speaker Change: I see.
Speaker Change: Good morning, Good evening, it's Andy So the question about our indication expansion strategy for its as I said have been way why did a while ago. So when we when we brought the program and we were committed to the four core indications that are now that now we have great momentum behind psoriasis, Psoriatic arthritis, ulcerative colitis and Crohn's disease.
Speaker Change: We undertook a very extensive effort.
Speaker Change: Our combined effort, obviously between the R&D organization, our commercial organization looking for.
Speaker Change: Indications that would make most sense in the mechanism as it is.
Speaker Change: As a ubiquitous.
Speaker Change: Ubiquitous signaling molecule involved in many different inflammatory pathways with very strong human genetic set point too many potential indications and so we established a rubric by which we have built their decision tree of folks. So one is where do we think that we have the greatest likelihood of scientific success.
Speaker Change: Yes.
Speaker Change: Two how long and how costly is development and then three unmet medical need and commercial opportunity and so when we went when we shifted to that funnel. We went from literally dozens of very exciting and potentially scientifically interesting indications to a handful of potential indications.
Speaker Change: A few have risen to the top I don't think we'll stop it did a legal by the way I think that there'll be more to come and we will share with those with you later.
Speaker Change: <unk> shifted to the top because.
Speaker Change: A there's very strong scientific rationale both the genetics of this overall pathway.
Speaker Change: Our role in vitiligo that we know that interferon signaling for example is involved in driving the skin lesions in vitiligo and take two is a prime.
Speaker Change: Mediator interferon signaling it is.
Speaker Change: Actually it's fairly heavily disease across the world, It's highly unmet in terms of medical need and it's the kind of disease, where because there isn't there aren't existing therapies I think we don't realize the amount of lifestyle and health.
Speaker Change: The devastation that comes from this disease. So we think that the upside opportunity is quite is quite high of course, we have the depth and shape. This is this is a proof of concept would it be a dose ranging proof of concept study that women's without of course demonstrate benefits, but we're quite excited about the possibility.
Speaker Change: And thank you for your kind comments.
Speaker Change: Truly an honor to the incoming CEO for Takeda and I will share with you a couple of comments, but obviously as it still quite a bit of time away I won't provide any details until next year. So first and foremost as a member of the executive team.
Speaker Change: I've been involved in all the strategy discussion to date until this is not going to be a situation, where there will be a massive overturning of the existing strategy. My intent is to honor the legacy of <unk>.
Speaker Change: Data and the legacy debt and Christophe will be leaving behind next year, but also looking to the future and taking the time to listen to stakeholders internal external to understand what they would like to see from Takeda and incorporate that into what I will share.
Speaker Change: Next year as a direction forward for the company.
Speaker Change: So I guess stay tuned and you'll hear more from me next year.
Speaker Change: Thanks, Julien congratulations and thanks very much Andy.
Steve Barker: Okay. Thank you Steve for your question.
Steve Barker: Okay I'd like to move on to the next question. Please from deep PD Cowen Mike Nodal Kovich. Please on mute and ask your question.
Speaker Change: Hi, Mike we can't hear you.
Speaker Change: Okay.
Mike can you are you on mute.
Speaker Change: Yes can you hear me, yes, Okay. We got you Okay apologies sorry for that thank you for the questions I have two one relates to the <unk> potential launch.
Speaker Change: I imagine there are only so many prescribers when it comes to narcolepsy and the advantages of Orexin replacement should recommend themselves. So my question is whether this could be one of the most successful drug launches in recent history, assuming phase III replicates, what we saw on phase two should we expect over correct since it.
Speaker Change: Take off like a shot and if not then why not and then my second question relates to GATX. It looks like timing of generic entry is still unknown and you are forecasting a healthy number for fiscal 2025, how durable do you think this revenue could be.
Speaker Change: Thank you.
Thank you Mike So the first question John on the thoughts on the <unk> launch trajectory and then second question on durability as GATX. So Julian could you take both of those questions. Please.
Julian: Thank you Mike for those questions and like before I will take them in reverse order. So yes, you have noticed that we.
Julian: We do expect competition still but it is delayed and this is an area where we do believe beyond the actual medicine itself. There is a lot of support needed for this patient population and so a significant amount of issuer services support is critical to supporting.
Julian: The treatment experience and so we do expect that <unk> will not have the typical erosion curve at one generic counts as well as from competition.
Julian: We do expect there to be.
Julian: Longer lasting and revenue stream from <unk> in terms of other Braxton I would look at this in a couple of different ways. One we still have a diagnostic challenge for Narcoleptic type one so there will be an effort around appropriate diagnosis of narcolepsy.
Type one because our president will be indicated in type one and current therapy or indicated in type one type two and in I H. The first aspect is the diagnosis of narcolepsy type one, but as you point out.
Julian: Hopefully phase III replicating the type of data that we saw in phase two we do expect there to be.
Significant demand for over correct given the type of efficacy, we hope to see now that being said, we will have to make sure that we have all of the programs in place to ensure smooth access.
Julian: In this in this space and there is a lot of.
Julian: Uh huh.
Julian: Standard therapy that are much cheaper that we will have to work through from an access standpoint, but fundamentally we are really excited about the opportunity to launch of a Brexit in the U S will be the first market to launch and we're looking forward to it.
Julian: Okay. Thank you very much.
Julian: So to do a <unk> or more in months.
Speaker Change: So it's more Nomura Shaw can not matsubara Fairmont.
Julian: And I'm, just wondering that I touched.
Speaker Change: So what I was looking at lots of vertical most of them asked squamous initial hike guaymas hurdles that must be.
Julian: E tail and a nice you must've, especially male content and treat an undisputable.
Julian: Okay.
Julian: Okay.
All critical machines or the industrial gone up among the scalable.
Julian: Consequently, the kimono at muscle Shoals.
Julian: Then they got to be on dish keto more pingleton debates with the competition comes from <unk> <unk> to Autodesk more on who can show kind of what are the equity of cocoa did each synchronized growth.
Julian: Ingles kiosk critical so must be show motto mortgage.
Mortgage mosquitoes local distributor among dispute amongst <unk> CRT D. I put on my end up putting more sysco com.
Speaker Change: Okay. So the first question.
Speaker Change: To Christoph around tariffs do you have any specific commentary around the location of our intellectual property and then the second question on Entyvio Pan.
Speaker Change: Around the reimbursement challenges that Christophe referred to in the call. When do we expect an uptick in reimbursement and how do we see usage being used in the second line given the competitive landscape I'd like Julie to answer that second question. Please.
Speaker Change: Yeah. Thank you mentioned there are some parts of your question I think it's a very relevant question.
Speaker Change: You define the potential tariff impact.
Speaker Change: Based on your manufacturing.
Speaker Change: Manufacturing network you have seen that it's located mainly in U S and Europe, Japan, but also you are right to where are you.
Speaker Change: It Couldnt make IP is located.
Speaker Change: And in our case, it's mainly located in the U S.
Speaker Change: And in Japan.
Speaker Change: We have never.
Speaker Change: Overall, Tim is our economic IP in low tax location, where you need also to have a manufacturing site in order to leverage that we have done it but we have not done it very very significantly. That's also why our tax rate to use.
Speaker Change: In the in the low twenties and not in the mid teens for example, like some was a companies.
Speaker Change: But she is today, helping us in a way to have a little we're on.
<unk> tariff exposure.
Speaker Change: Oh, sorry, I had started talking forgotten to take myself off mute and your question. Thank you my thoughts on in terms of Entyvio, and where we are with reimbursement and whether or not we're targeting second line I believe.
Speaker Change: But the other part of your question so for Entyvio.
We really target first line usage because of that the profile of Entyvio and it's got selective and its safety and efficacy.
Speaker Change: Our track record and so really our focus is on making sure that Entyvio is the first choice when moving to advanced therapy in IBD, particularly in U C. But also in C D and in regards to pen again here. This is where we do see patient.
Speaker Change: Two are.
Speaker Change: Coming on to advance therapy for the first time that there is a strong preference for moving to pen and it is about making sure that at the local level. We worked through all of the details to make sure that their smooth experience and transition for the patient and so quarter over quarter as I mentioned in response.
Speaker Change: To an earlier question, we are seeing an increase in the number of subscribers that we are seeing and we also had very positive feedback in terms of the patients who do go on to Japan.
Speaker Change: And if they have a strong preference for it. So we do expect this to continue to increase and we are still targeting our overall objective of having 50 50 split in terms of IV and <unk> or <unk>.
Speaker Change: Thank you.
Speaker Change: Yeah.
Speaker Change: Rather than with it.
Speaker Change: As I must stop solid though.
Speaker Change: Smaller JP Morgan not walk out somewhat.
Speaker Change: Crosscutting Cmos.
I don't say mass.
Speaker Change: I have two question left of it.
Speaker Change: Most favorite nation, Boise and U S. So there has been discussion around drug price reductions and a most favored nation for the U S is such a question like with any for Medicare and Medicaid.
Speaker Change: Have you assessed the potential impact of <unk> on your USPS.
Speaker Change: That survey and then we have the final question was saying is can it all whole scored thought to conquer guide us know are ready to go.
Speaker Change: Production at Cobre, Panama, Takahe English Summer Festival Si.
Speaker Change: He already to know Qiagen nailing it sort of into the fourth quarter talk conquerable kick off the day.
Speaker Change: I think they recognize this.
Speaker Change: Okay.
Speaker Change: Thank you walk out with some so the first question on potential impact of most favorite nation. Julie can answer about that and then the second question on the gross margin improvement to Melano. Please.
Speaker Change: Yeah.
Speaker Change: Thank you account for the question on M. S N or most favored nation as you have probably seen is a very dynamic time here in the U S. And this is a significant topic of discussion with the pharma or which met this week and also met.
Speaker Change: Last week as well.
Speaker Change: This is an area that.
Speaker Change: Well when you think about Amazon as a concept.
Speaker Change: It is a very challenging concept to apply in the U S. Because the health care system here is fundamentally different than the health care system, where.
Speaker Change: The pricing is being hold comment that basically it is a price control being applied in the U S setting when the U S health care system is not and.
Speaker Change: Set up for that and there are structural differences and particularly when you look at things like at the middleman with TVN.
Speaker Change: And with other programs such as 340 B. So overall from an industry perspective is M S N or applied within the Medicaid setting.
Speaker Change: Which of course centric, Australia to $3 48 that would be an industry impact over 10 years of up to one trillion dollars.
Speaker Change: And so it will fundamentally be a significant challenge for the overall industry at Takeda included and so when you look at what the U S. Government is trying to do we think that there are better ways to encourage at manufacturing investment in the U S R&D investment.
Speaker Change: In the U S and to support continued innovation through the <unk>.
Speaker Change: The pharmaceutical industry in America, and so M S N.
Speaker Change: Not be the appropriate way to do it and it would be a significantly a challenging situation for the whole industry, including us to manage.
Speaker Change: No.
Speaker Change: Okay.
Speaker Change: Christopher.
Speaker Change: With Michael with Amazon Echo already through the cost David Smith must blue diode Costa knowledge as they completed a strip mall.
Speaker Change: And all through you all kind of a snap a diamond foods, Ala Canary or seasonality, what the kitchen remodel.
Speaker Change: I don't think you cannot take a kick on Rms.
Speaker Change: They have a home keep a home care if I knew who you all know or dialysis Johan can see demo hormone dorion or cake works on the Apple <unk> I hope I still thought all diaphone caught a mandatory subsequent this net.
Speaker Change: You'll remember in <unk> <unk>, I think when I talk out Hawkeye applicable costs.
Speaker Change: Before we start I think Omar you must've been accused for the money for Q4, the credit of the key attacked constantly medical calendar for scrap, but the key to kind of hang Paul Mccartney didn't come off she got my saying Q4, no or the six are still us switch automatically correlate so say under beside my forecast for guidance was already know or talking to you.
Speaker Change: You hinted imitate what message.
Speaker Change: Glendora Securities net.
Speaker Change: Sure.
Speaker Change: And although gross margin, although currency deval absolute low point about Oklahoma flu is folks who are undertaking.
Speaker Change: So it's less likelihood of no.
Speaker Change: Macarthur in August net if I when I talk <unk> mono give a hawkeye type of Paul Knight with as they start to move up in a hurry on all our growth and launch products provide more people with net of items not my role in all of septal, they're subclinical facing mix no already in phase III impact.
Speaker Change: The Nols are neutral.
Speaker Change: Before that I find easier Jong <unk>, yoon and money market or stuff.
Speaker Change: No because I know this is a great archrock, our pro forma cases packaged coffee in the WOMAC or Amazon and southern.
Speaker Change: Got an economical for debt and equity.
And if you're going to embark on these units Mcarthur key lake either no or Baxalta stake how can a company.
Speaker Change: Yeah.
Speaker Change: Thank you calculate my study are both Ams. Thank you so much.
Speaker Change: And we'll calzone I just wanted to add one more comment to your question rather than leaving it hanging out as I did both the pharma board as well as individual company Takeda included are putting in significant efforts too.
Speaker Change: Work with the Congress in terms of making sure Amazon is not our policy that is included in the reconciliation package. There are other pay force that pharma as an industry believed would meet the needs of.
Speaker Change: The government now request here.
Speaker Change: At this point.
Speaker Change: We will continue to support.
Speaker Change: Other policy beyond MSN as it's a way to control either pricing.
Speaker Change: And or provide a pay for in terms of the pill penalty six which is what started this initial conversation. Thank you.
Speaker Change: Thank you. Thank you very much for accent Axa and set up very well. Thank you.
Speaker Change: Okay.
Speaker Change: Thank you <unk>.
Okay moving on to the next question I'd like to take the next question from Tony ran at Macquarie. Tony Please on mute and ask your questions.
Okay.
Speaker Change: Hello can you hear me.
Tony: Yes, Tony we hear you okay perfect yeah. Thank you for the opportunity.
Speaker Change: Yeah.
Christoph: The first one is for Christoph on.
Christoph: Going back to going back to the possible impact of tariffs on last final six I think I heard you, saying that the customers.
Christoph: <unk>.
Christoph: In the U S. When you compare to customer value to the U S revenue it's about.
Christoph: You go to slide number six 8% or so.
Christoph: This.
Christoph: 8% to 10% feels a little bit.
Christoph: Lower than I would have anticipated obviously, you guys do not disclose gross profit margin by region, but but at the company level that's about roughly.
Christoph: 65%, which implies about 35% seal ges as a percentage to revenue.
Christoph: And there was also a question about the IP, which relates to transfer pricing. So could you help me understand.
Christoph: How can I juxtapose CLG as <unk>.
Christoph: Transfer price and customers with Allianz.
Christoph: So that's a key.
Christoph: <unk> for us for slide number six.
Christoph: Another question is that.
Speaker Change: Is that in your 2025 guidance.
Speaker Change: You budgeted roughly a 130, they only in more of a negative impact from Medicare part D redesign and B.
Speaker Change: <unk> 40, B drug price program.
Speaker Change: This is a pretty big number so I just want to see what other drugs that are affected.
Speaker Change: And if you could just briefly explain mechanistically, how how I arrived.
That deal 130 billing companies and that'll be great. Yes. Thank you.
Speaker Change: Yeah.
Tony: Thank you Tony So the first question.
Speaker Change: Two are on tariffs and our customers value.
Speaker Change: Impact so Christophe can start that answer and the second question on impact from part D and 340, B to Julie, but perhaps melano could also jump in to add any comments as well.
Speaker Change: Christoph.
Christoph: Thank you Tony.
Christoph: This is exactly why we wanted to disclose this analysis to you guys. So that you don't make it wrong assumptions.
Speaker Change: 50% of our total revenues in the U S.
Christoph: The value of imports.
Christoph: From Europe, Japan, and Singapore, because this is where we can only import drugs.
Speaker Change: From is 8% to 10% of the total U S revenue why 8% to 10% because one there are many drugs that we manufacture in the U S Souza Amit.
Speaker Change: As I excluded the shoe like from any of important tariffs warranty who is a good example on television is.
Speaker Change: Our manufacturing is in the U S saw on television is not subject to tariffs for example, so you need to exclude all the prototypes which are.
Speaker Change: Which are a manufacturer.
Speaker Change: In the U S. That's the first thing and then after that you need to.
Consider all type of transfer price that existed from.
Speaker Change: Europe too.
Speaker Change: Two to the U S. For example.
Speaker Change: And as we mentioned.
Speaker Change: Our IP, mainly he's located in U S and Japan. So we we don't have.
Speaker Change: There are significant optimization of our tax through a transfer price. So that's why we wanted to share with you is so simple math because you do if you want to sort of modernize what could be.
Speaker Change: If you backed up we will just see how things are evolving for example, if you take U S. You take 50% do you think the revenue U S unique supply by 8% to 10% and you multiply that by on average tariff, let's say if it is Europe or Japan, I think that's how you kind of on deck with a number of them.
Speaker Change: Sami in China in China.
Speaker Change: The value of imports from the U S.
Speaker Change: Is 10 to 12 to 10% to 12% to 15%, Hawaii, because many product that we have.
Speaker Change: Export to China.
Speaker Change: China imports come from Japan.
Speaker Change: From Europe, and not from U S. So I think this is very important to have this number to sort of scope what could be the tariff impact on this is why we believe that we have.
Speaker Change: We do have potential exposure was quite limited.
Tony: Hi, Tony.
Tony: Try to address the question around Medicare part D redesign and 340 P. And then neither melano can jump in to talk about the total impact on the company financial picture I think that was the other part of your question. So for Medicare part D. Redesign. So this is.
Tony: One of three areas within the inflation reduction act that impacted the pharmaceutical sector and so for Medicare part D. Just as a quick refresher for everyone. There was a significant shift of the governments responsibility.
Tony: Over to payers and manufacturers so that piece it comes over to the manufacturers on the Medicare side. This is something you are now seeing the full year impact or in our FY 'twenty five numbers as that went into effect in January of this year. So that's what you are seeing falling to $3 40.
Tony: <unk> is a program whose initial intent was to help provide support a relief I would say for hospitals that are taking care of uninsured patients in the U S. And this has expanded from the initial roughly 100 hospitals.
Tony: Over 2000 hospitals that now use this program and it has turned into a markup program, where the hospitals received the medicine at a very discounted rate and then they mark it up.
Tony: And keep the different this program is growing exponentially it is our largest and fastest growing.
Tony: Government program.
Tony: Of its kind and so this is having a significant impact on our ongoing revenues at 340 <unk> program continues to expand.
Tony: Those are the drivers of those two different components. One is the full year impact of the Medicare part D. We designed for the first time in the second is the growth of the 340 B program in the U S.
Speaker Change: So Tony.
Tony: If I, if I add a little bit as Julie explained this both.
Tony: 340, B expansion and.
Part D redesign it.
Tony: Working in a way to increase the manufacturers pharma companies contribution or in the in the form of a rebate.
Tony: So the this.
Tony: This will increase the rebate.
Tony: For the for the revenue, which are kind of realizing through the Medicare part D and 340 B. So the expansion of this to two channels or the incremental rebate for the through the party is.
Tony: It's going to basically increasing the rebase.
Tony: The net.
Tony: In the U S revenue.
Tony: The impact that we are protecting if we compare the versus FY 'twenty four it's going to be the most thousand sorry, 130 billion yen impact.
Tony: Almost like incremental gross to net.
Tony: Rebates in the U S business.
Tony: That's that's how how the mechanistically or in the impact to our financials.
Tony: I just wanted to add one commentary for four tariff impact Christoph explained.
Tony: So.
Tony: Even even if you do the math this impact is a potential impact of the kind of annualize. These factor. So the the amount you get by multiplying these factors would be the potential exposure to tariffs and then actual maybe financial impact even if.
Tony: The tariff is applied to the order or the non U S controller origin products, the financial impact will be more or less our sorry less.
Tony: Because of the first the timing and then also we have some inventory in the on the hands and then we have some mitigation measurements to manage the inventory and the supply chain study. Please don't translate directly to this debt amount you calculate today potentially FY 'twenty five in this.
Tony: Is going to be the potential annualized impact if the tariff becomes.
Tony: Applied to.
Tony: Two older non U S.
Tony: Controversy and products.
Speaker Change: Yeah. Thank you Christoph Gootee and Milano just a quick follow up on the on the <unk>.
Speaker Change: 130 billion yen impact gross to net.
Speaker Change: Is this number heavily concentrated on a few drugs or is that a fairly widely dispersed.
Speaker Change: It's across across our products.
Speaker Change: Okay very good thank you very much.
Speaker Change: Okay, great. Thank you Tony So then moving on to the next question. So I'd like to invite the next question from Goldman Sachs, who weighed Assam, where the Sun. Please on mute and ask your question.
Speaker Change: What are the monarch and the way that it was already muscle called him when he came on the muscle.
Speaker Change: Similar on the <unk> hopefully cannibalization you think you will see data located about the way muscle initially on Endo Mountain and Dorky do I escape when Youre talking about the more he muscle invasive and will hopefully youll goodbye until the month on record.
Speaker Change: Or are they the organic coffees, you Sudhakar Modesto program in Lachine joke with you still got Mcdonnell quarters, coupled with the retail auto there or fan amenity too. So again, let me toss you've already mustered up by Davita located about the only muscle.
And you can never call the margin, let me Dosimetry Davis.
Speaker Change: Corn kidneys are born and little kick off when you eat the Bobbi Brown slowed yoga and more a lot with it all by the local theaters all Dino look another way muscle all day margin know all about tomorrow thoughtful timing right. It's a good idea now to go through it but wondering if he does it fit the combustor issue.
Speaker Change: Scott put up with them with all my at all in the cobalt uncle, who might be acquired or do you keep it sounds you're passing through that you would get there.
Speaker Change: Equal to usual care and you don't know timing with Ikea cluttered already Sito city located butter muscle.
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: Thank you for those questions. So the first on the outlook for the R&D budget and the second on our margin outlook. So melano can answer both of those questions Melano.
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Speaker Change: I spoke to I know you kind of think of that more digitally.
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Speaker Change: They are defining anomalies for perhaps within the European O F Q1.
Speaker Change: You must have a score there when you get the fundamental much the knee the economy on our prioritization and a program in our prioritization tunnel debt.
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Speaker Change: <unk> been in Castilla and <unk> since you brought up the quarters, coupled with a more or do you see some of some of that economy, it's not showing that management at all uneasy on enbridge. Thank you Guy have secured the key on our side of it because I think central Europe, you'll have the muscle.
Speaker Change: Gone Endo, Nicola and Hong Kong.
Speaker Change: Usually when ethanol a guy to answer them all optimistic thoughts.
Speaker Change: On a comparable.
Speaker Change: I have noticed netback cutoff grew kind of coming up.
Speaker Change: Currently I think you got to know us and are created equal cake or new Rms.
Speaker Change: An unusually warm and fit in all this is a key Macquarie couple of them all on <unk>, but based upon the new Xeon and Bonnie on the quarters, coupled with the name of carryover no pro forma are you must love it but another non parka and offset blocks the effect you're free.
Speaker Change: He kind of like that.
Speaker Change: So they got on <unk>.
Speaker Change: Q1 thing here, how do you on <unk> or the other <unk> net <unk> per sample equator.
Speaker Change: Our ultimate profit.
Speaker Change: Or where you order it needs to come on all macewen as a key aggregate data type of marketing muscle.
Speaker Change: On a margin of this net <unk> carbon feed give us cost each name idea I joke yoga.
Speaker Change: Carbinol subtle.
Speaker Change: We seek to buy out Oklahoma mechanical you can do within the same on all he could Scott regarding MOSFET, <unk> and Endo ramaphosa more kind of where you're at today, it's actually start up the coker snap so they got us in our bylaws no mono on the tank side.
Speaker Change: Air Jordan is unusual Fernando need to the pushup authenticated Paul Yucatan. So like I said, you have a more honest, it's an add on or small kind of ethanol with morning by domestic at the mall traffic at a pricing uplift saga.
Speaker Change: Youll get more integral method, Haryana and I'll take them all on a absolute dollar cost of capital.
Speaker Change: We're talking I don't know how to commodity audit exciting in cost inflation that you're seeing or cycles of physical Dyson.
Speaker Change: <unk> on our <unk>, thereby demo I can ask more debt, but when you actually thought it was.
Speaker Change: Sure with the effect of you, who know Optima, Hello, and I can imagine you have this net accounting finance tax.
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Speaker Change: They don't want all the cargo cycle between become active.
Speaker Change: So nobody's got the overlay muscle ataxaphasia cardiac muscle.
Speaker Change: I think that goes I must stop.
Speaker Change: Figure out you'd be at the show and not Sakai San Martin.
I'm, just wondering like Tushar months.
Sakai: Hi, This is sakai from UBS, so two questions there.
Speaker Change: Hi, <unk> to ask your PDP business, how much of business at today's strong PRT in the U S.
Speaker Change: Then when you count the impact of the tariff did.
Speaker Change: Did you collect those equipment.
Speaker Change: Correction equipment other machinery tools that you are surprised us import from outside of Japan.
Speaker Change: Apart from outside from the U S. That's first question.
The second question is for <unk>.
Speaker Change: Right.
Speaker Change: Grandson as always.
Speaker Change: Looking at page 26, I'm, sorry, if I missed.
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Speaker Change: Head to head do ground.
Speaker Change: Try out ahead of the Ddos.
Speaker Change: Second half FY 'twenty five.
Speaker Change: No I saw the J&J participating.
Speaker Change: They've got very good.
Speaker Change: I think that was <unk> 23.
Speaker Change: So.
Speaker Change: New program right.
Speaker Change: And they are writing head to head with Injectables. This is oil.
Speaker Change: Therefore.
Speaker Change: Change the dropdown strategy here.
Speaker Change: Okay.
Speaker Change: Going forward, that's my second question.
Speaker Change: Thank you Sakai San so the first question on PDT geographic footprint and how we thought of that in the tariff impact so perhaps giles.
Speaker Change: Buy it with an overview of the geographic impact and then Melano can follow up with any specifics on the tariffs and then the second question on John's assist nib head to head and future development strategy, Andy can take that question.
Speaker Change: Thank you <unk>.
Speaker Change: For the question about 60% of our.
Speaker Change: Pvt revenues.
Speaker Change: U S domestic sales.
And with regards to your question pertaining to the.
Speaker Change: The source, we have equipment ex U S and impact from tariffs we continue to evaluate.
Speaker Change: That.
Speaker Change: And we feel confident that we can manage the continued supply of equipment to the U S.
Speaker Change: And our current understanding of the tariffs that have been already announced thank you.
Speaker Change: Okay.
Speaker Change: Okay, perhaps to Andy to answer the.
Speaker Change: Question.
Andy: And so guys. Thank you very much for the question. So since since we brought as I sit and have been we've been keen to we believe for many reasons. It is truly a best in class <unk> inhibitor based on activity based on its once daily dosing with full 24 hour coverage.
Andy: Against take two and of course based on the data that we've seen so far in two of our phase <unk> studies and so we've been keen to demonstrate in a head to head study into against to grab a sit and it did in fact, we do have the best.
Andy: <unk> inhibitor and we're keen to start that study and as we've mentioned previously the.
Andy: The two the two phase III studies in psoriasis will read out later this year. We are in the process of correcting a very substantive safety database to support the filing.
Andy: We're preparing for our or manufacturing for a commercial launch all of that will be the basis of our filing.
Andy: Duke Comparator study head to head study will not be a part of the initial package. Our goal is for that to come out at the time of launch to support our overall messaging and differentiation package.
Speaker Change: I'd like to hand, it over to you Julia maybe you could talk a bit about the access considerations in the competitive landscape.
Julia: Sure. Thank you for the question around the head to head. So first as Andy said, we do believe that it is important to have the head to head with do credit to be able to demonstrate the differentiated profile.
Julia: Within the TIK two state that as you pointed out there at the J&J compound is also.
Julia: Looking at head to head in a different type of head to head, we do believe that having.
Julia: Two strong efficacious oral will be a benefit to growing the oral segment within the psoriasis treatment landscape and so we will continue to address and look at the different ways.
Julia: Ways of differentiating and it does have such net so that we can best support it at launch.
Julia: Okay. So J&J compound <unk> six sorry, I missed that.
Julia: Just to confirm I mean everything in budget right just everything just gets budget to hit.
Julia: Head to head going forward.
Julia: That's correct.
Julia: Alright, Thank you very much.
Speaker Change: I think that those I must stop Hello, Amanda wishes Monday, you'll pay an orgy of money much diner dash to Europe or should also state tax title ammonia much.
Speaker Change: Quarter on what you must stay home. It's nowhere then I'll shoot you also state the Rocky Mountain Dew Honda Toyota We spoke I see no cargo songwriter Lucky My step Mceldowney, Arigato, which I must stop calling with democracy on although it goes all your SKU on a guy Hitachi much.
Speaker Change: Okay.