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8/10/2019 Annual Report - Takeda
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TAKEDA
A N N U A L R E P O R T 1999Year ended Ma rch 31, 1999
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Years ended March 31, 1999 and 1998
Thousands of
Millions of yen U .S . dolla rs (Note)
1999 1998 1999
For the years ended March 31:Net sa les ....................................................................................................... 844,643 841,816 $ 6,980,521
P ercenta ge increa se ................................................................................... 0.3% 0.4%Net income.................................................................................................... 91,755 81,610 758,306
P ercenta ge increase .................................................................................. 12.4% 14.3%Resea rch a nd d evelopment costs ................................................................. 77,487 79,039 640,388Capital investments..................................................................................... 29,241 34,091 241,661Depreciation and amortization.................................................................... 32,651 32,763 269,843
Per sha re amounts (Yen a nd U .S. dol lars)(See Note 11 to the consolida ted fina ncial sta tements):Net income.................................................................................................. 103.52 92.97 $0.86Ca sh dividends ........................................................................................... 29.00 21.25 0.24
At March 31:Tota l a ssets ................................................................................................... 1,326,999 1,296,202 $10,966,934Sh a reholders equit y .................................................................................... 907,373 829,381 7,498,950
Num ber of employees................................................................................... 15,776 16,443Note: The U.S. dollar am ounts in this report represent tra nslat ions of J apa nese yen, for convenience only, at t he rat e of 121=U S$1, the approximate
exchan ge rat e at March 31, 1999.
NET SALES
( Billion)
99989796950
400
600
800
1,000
200
NET INCOME
( Billion)
99989796950
40
60
80
100
20
RETURN ON EQUITY
(%)
99989796950
8
9
10
11
7
R&D COSTS
( Billion)
99989796950
40
60
80
100
20
Takeda Chemical Industr ies, Ltd. and Consolidated Subsidiaries
Financial Highlights
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Takedas medium-term management
plan is now in its fifth year. Is the plan
proceeding on schedule?
Amid intense global competition, weve
continued to move forward with our
medium-term management plan, which
covers fiscal 1995 to fiscal 2000, to generate
international growth as an R&D-driven
pharmaceutical company. Since Takedabegan implementing the plan, both sales
and profi ts have increased thanks to the
solid performance of our pharmaceutical
business overseas.
However, overseas pharmaceutical
companies, particularly the leading U.S.manufacturers, have achieved robust
growth in the rapidly expanding U.S.
market, and the gap between Takeda and
these companies has been widening.
Moreover, the speed and scale of changes in
our operating environment have exceeded
the projections we made at the time the
plan was devised. These changes include the
prolonged recession in Japan, economic
turmoil in Asia, and increasingly stringent
government policies to contain healthcare
costs in Japan and other countries. To
respond to these conditions, we have
implemented a stronger revised medium-
term plan for fiscal years 1998 to 2000 with
the objective of creating a structure that will
allow Takeda to make rapid strides toward
becoming an international enterprise by the
end of fiscal 2000.
What issues are included in the revised
plan?
The two main themes are strengthening
growth strategies in our pharmaceutical
business in global markets and promotingthe independence of our non-
pharmaceutical businesses. Through
focused investment of management
resources in our pharmaceutical business,
2
An Interview with the President
Kun i o Ta k eda, President
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we will further strengthen and promote the
growth of this business, centered oninternationally strategic products. In non-
pharmaceutical businesses, as part of our
emphasis on cultivating high-value-added
businesses and selectively allocating
corporate assets, we are reexamining low-
potential businesses and creating an
operating structure centered on high-value-
added core businesses to make non-
pharmaceutical businesses truly
independent.
What are some specific ways in which
Takeda will strengthen growth
strategies in its pharmaceutical
business?
Although weve achieved good
performance overseas up to now, a large
part of that is attributable to the rapid
growth of TAP Holdings Inc., a U.S. affiliate
accounted for by the equity method. So we
have to bui ld on that momentum by
establishing further international bases. We
have already established two holding
companies Takeda America Holdings,
Inc. in the United States and Takeda EuropeHoldings Ltd. in Europe and we also
added a second U.S. marketing company,
Takeda Pharmaceuticals America, Inc.
In August 1999, Takeda Pharmaceuticals
America launched the antidiabetic agent
pioglitazone hydrochloride (brand name:Actos). With once-daily dosing, Actoshas
demonstrated its benefi ts in significantly
improving glycemic control in Type 2
diabetes. In addition, clinical data show that
Actoshas a beneficial impact on lipids,
lowering plasma triglycerides and raising
levels of HDL the so-called good
cholesterol. Unlike other antidiabetic
agents, moreover,Actosdoes not raise levels
of LDL cholesterol. With these
characteristics,Actosshould help to further
boost Takedas presence in the U.S.
pharmaceutical market.
What about the domestic market?
Although the Japanese pharmaceutical
market has been shrinking, Takeda has
increased its market share by focusing on
treatments for lifestyle-related diseases
including hypercholesterolemia,
hypertension and diabetes. In May 1999, we
launched cerivastatin sodium, an HMG-
CoA reductase inhibitor, under the brand
nameCertaas a treatment for
hypercholesterolemia.Certa, originallysynthesized by Bayer AG of Germany, is a
competitive inhibitor of the enzyme HMG-
CoA reductase that has proven effective in
lowering serum cholesterol.
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In June 1999 we launched candesartan
cilexeti l, an angiotensin I I receptorantagonist, under the brand nameBlopress.
This product selectively binds to
angiotensin II AT1 receptors and thereby
suppresses the action of angiotensin I I to
provide long-lasting and assured
hypotensive action with once-daily dosing.
In addition, an application for pioglitazone
hydrochloride, an agent for the treatment of
diabetes mellitus, has been filed.
Please expand upon Takedas R&D
strategy for its pharmaceutical
business.
Takeda is focusing on six core areas:
diabetes, cardiovascular diseases, central
nervous system disorders, bone and joint
diseases, allergic diseases and infectious
diseases. We have already achieved a
number of successes in these areas. Themost recent is Actos, which we launched in
the U.S. market. In the competitive
thiazolidinedione class,Actoswas approved
for use both as a monotherapy and in
combination with insulin, sulfonylureas or
metformin.
Furthermore, we have implemented our
Marketing-Production-Development-
Research (MPDR) strategy to bring the
results of our research to the market more
quickly. This strategy helps us set
parameters in areas such as product
originali ty, market need, continuity of
therapeutic area strategies, profitability and
investment risk, and then prioritize R&D
accordingly. Thus we are better able to
allocate resources to projects most likely to
4
G L O B A L O P E R A T I O N S
U.S.A.
Takeda AmericaHoldings, Inc.
Takeda EuropeHoldings Ltd.
Production
Takeda America Research &Development Center Inc.
TAP Holdings Inc.
Takeda PharmaceuticalsAmerica, Inc.
Takeda Europe Research &Development Centre Ltd.
(U.K.)
Laboratoires Takeda(France)
Takeda Pharma GmbH(Germany)
Takeda Italia FarmaceuticiS.p.A.
Takeda UK Limited
EUROPE
Takeda Ireland Ltd.
(This illustration shows Takedas pharmaceutical operations outside Japan)
ASIA
Tianjin Takeda Pharmaceuticals Co., Ltd. (China)Takeda IMC Chemical Ltd. (Hong Kong)Takeda Chemical Industries (Taiwan), Ltd.Boie-Takeda Chemicals, Inc. (Philippines)Takeda (Thailand), Ltd.P.T. Takeda Indonesia
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generate solid
earnings andincrease the
speed of R&D.
To ensure a
pipeline full of
high-potential
products, we are aggressively promoting
licensing deals and research collaborations
in addition to strengthening and
accelerating our own research.
What is Takedas strategy for its group
of companies?
Given the intense competition with U.S.
and European pharmaceutical companies,
we must take full advantage of the
capabilities of the Takeda Group. We are
therefore restructuring the Takeda Group
portfolio and establishing the management
framework necessary to support a strategy
that maximizes group strengths.
Specifically, we are evaluating the
positioning and responsibilities of each
subsidiary and affiliate in l ight of our group
strategy and the changes in our operating
environment to determine which should bestrengthened, liquidated or consolidated.
Measures to reinforce our core businesses
and raise management efficiency will
include a sweeping restructuring of group
companies and alliances with other
companies.
What fundamental principles provide
the framework for Takedas continuinggrowth?
Takeda carries out all business activities
on the basis of our corporate philosophy:
contr ibuting to better health and quali ty of
li fe for people throughout the world. This
philosophy guides us in creating
pharmaceuticals that meet the expectations
of patients and healthcare professionals,and we strive to help people by delivering
our products to global markets ever more
quickly.
In addition to an objective management
system for executives and a performance
evaluation system for divisions, we are also
implementing various reforms to fairly
reward employees who produce results.
These include phasing in a merit-based pay
system that is aimed at making Takeda an
attractive company where employees feel a
sense of challenge and satisfaction.
Finally, we are committed to earning the
understanding and trust of shareholders
through timely disclosure of appropriate,
extensive and clear information on
operations and management.
August 1999
Kunio Takeda
President
An Interview with the President
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The following are some of the Pharmaceutical Discovery Research Divisions recent
accomplishments. Discovery of a new anti-HIV drug candidate (CCR5 antagonist)
Discovery of a prolactin-releasing peptide
Discovery of Apelin, a new ligand for an HIV infection-related receptor
Discovery of a gene for LLPL, a newly discovered enzyme related to atherosclerosis
Development of a new manufacturing process for human growth hormone
Pharmaceutical Research Division
The Pharmaceutical Research Division focuses on keeping Takedas pipeline stocked with new
drug candidates for global use by speeding up pharmaceutical research.
The Pharmaceutical Research Division conducts research into the synthesis, drug action and
pharmacology of investigational medicines for the core disease areas of diabetes, cardiovascular
diseases, central nervous system disorders, bone and joint diseases, allergic diseases and
infectious diseases.
In the area of drug synthesis research, the utilization of advances in molecular pharmacology
and molecular physiology is becoming increasingly important. For example, our researchers
continuously try to uncover the seeds of breakthrough pharmaceuticals through detailed study
of the structure and active relationships of compounds such as enzyme inhibitors and receptor
antagonists. Moreover, in addit ion to analyzing compounds and conducting structural analysis,
researchers employ advanced technology for molecular design, automatic synthesis andautomatic screening of new active substances.
Currently the Pharmaceutical Research Division is focusing on the following.
Establishing an efficient system for pharmaceutical research to accelerate priori tyresearch themes and advancethem to the next stage
Evaluating safety at an earl ierstage of research to increase theprobability of creatingsuccessful new drugcandidates
Enhancing Takedas pipeline bypromoting in-l icensingactivities and researchcollaborations.
The Pharmaceutical Research Division contributes to the creation of new pharmaceuticals by
using automated machines to synthesize novel compounds and derivatives.
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The progress of the International Conference on Harmonisation (ICH) is enabling the use of
essentially the same clinical data in Japan, Europe and the United States. In response, Takeda has
established the Global Development Committee to create global development plans and coordinate
our tripartite development strategy. Based on Takedas MPDR strategy, which links research,
development, production and marketing, the committee adds value through its activities at every
stage, from product development to post-marketing, in accordance with the needs of the marketing
and sales divisions in the above three regions.
Since launching its fi rst international strategic product, leuprolide acetate, in the United States in
1985, Takeda has increased this products potential by implementing a global rollout and adding
new indications and formulations. In 1991, we launched lansoprazole in France and subsequently
With progress of the ICH, Takeda America Research & Development Center Inc. has increased in
importance as a vital component of Takedas global development strategy.
Global Development Speeds Products to Market
Takedas tr ipar t i te development organi zation is centered around the
Pharmaceut ical Development D ivi sion in Japan; Takeda Ameri ca Research &
Development Center Inc. and the Development Division of TAP Holdings Inc., a
joint vent ure wi th Abbott Laborator ies, in the Uni ted States; and Takeda Europe
Research &Development Centre Ltd. in the Uni ted Ki ngdom. Together these bases
conduct effi cient development operat ions, focusing on the swi ft launch of new
products in the global marketplace. At the same time, they help to maximi ze added
value through clini cal development and post-marketing sur vei l lance.
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Takeda Europe Research & Development Centre Ltd. in London, where the European Agency for the
Evaluation of Medicinal Products is based, has contributed to development efficiency.
have expanded the number of countries in which it is marketed and added new indications.
Applications for the use of this product in the treatment of reflux esophagitis (maintenancetherapy) and eradication of Heli cobacter pyloriare currently being reviewed by the Ministry of
Health and Welfare in Japan. Candesartan cilexetil, a drug for the treatment of hypertension
marketed in Europe, the United States and Japan, is now in Phase III for the indication of
congestive heart failure. Each of these products is marketed in countries around the world.
Our new international strategic product is AD-4833 (pioglitazone hydrochloride), an agent for
the treatment of diabetes mellitus. This drug is a member of a new class of antidiabetic agents that
resulted from Takedas many years of research on diabetes. With one dose daily, AD-4833 reduces
insulin resistance in patients suffering from Type 2 (non-insulin-dependent) diabetes. New Drug
Applications were filed in Japan in December 1996, in the United States in January 1999, and in
Europe in March 1999. The U.S. Food and Drug Administration granted AD-4833 priori ty review
status and approved it in July 1999. AD-4833 was launched in August 1999 in the United States
under the brand name Actos.
Besides AD-4833, development is focusing on new treatments in the fields of diabetes,
cardiovascular diseases, central nervous system disorders, bone and joint diseases, allergic diseases
and infectious diseases. For example, TAK-778-SR, a treatment for bone fractures resulting from
osteoporosis, is now in Phase I in Japan. TAK-661, a substitute for steroid treatment in bronchial
asthma and atopic dermatitis, is in Phase II in Japan and Phase I in Europe. We are endeavoring to
rapidly develop and deliver to the global marketplace candidate compounds that have been selected
for both innovativeness and marketabil ity.
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Overview of Product StatusProduct Description Indication / Formulation Country (Brand Name) Status
Ca ndesa r t a n Angiot ensin I I H ypert ension J a pa n (Blopress) La unched
cilexet il recept or a nt a gonist U .S . (Atacand) La unched
(TCV-116) U .K. (Amias) La unched
Germany (Blopress) Launched
Other European countries Launched
Congest ive hea rt fa ilure J a pa n & Europe P hase III
U .S . P hase III
P revent ion of rest enosis J a pa n P ha se II
following P TCA
D ia bet ic nephropa t hy a nd J a pa n P ha se II
glomerular nephrit is
(TCV-116C) Combination of H ypert ension E urope Approved 6/98
TCV-116 a nd a diuret ic U .S . P hase III
Leuprolide acetat e Luteinizing hormone-releasing Prosta te cancer , J apan (Leuplin) La unched
(TAP -144S R) hormone (LH -RH ) a na log endomet r iosis, U .S . (Lupron Depot) La uncheduterine fibroids Europe (Enantone, others) Launched
Asia (Enantone, ot hers) La unched
Over 60 count ries La unched
C en t ra l p re coci ou s p ub er t y J a p a n, U . S ., F r a n ce , L a u nch ed
Germany & I ta ly
Breast cancer J apan , Germany , Launched
Ita ly & Fra nce
K it -t ype once-mont hly G erma ny, U .S . & La unched
inject a ble formula t ion J apa n
Three-month sust ained-relea se U .S ., U .K ., G erma ny, La unched
inject a ble formula tion Fra nce & I t a ly
J a pa n P ha se II
Four-mont h sust a ined-relea se U .S . La unched
injectable formulation
Kit-type t hree-month susta ined- U .S . La unched
release injectable formulation
Kit-type four-month sustained- U .S . La unched
release injectable formulation
La nsopra zole P rot on pump inhibit or Reflux esophagitis, peptic ulcers J a p a n (Takepron) La unched
(AG-1749) and Zoll inger-Ell ison syndrome U.S. (Prevacid) La unched
Fra nce (Ogast) La unched
I ta ly (Lansox) La unched
Germany (Agopton) La unched
Over 90 count ries La unched
Ma int ena nce t hera py a ft er U .S ., U .K ., Fra nce, La unched
ulcer hea ling G erma ny & I t a ly
Ma int ena nce t hera py for J a pa n Filed 1/99
reflux esophagitis
Era dicat ion of U.S. , U.K. , Italy , Launched
H eli cobacter pylori France & Germany
J a pa n Filed 2/99
G a st r it is J a pa n P ha se II
D yspepsia U .S . P ha se III
U .K. La unched
G erma ny Filed 1/99
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Product Description Indication / Formulation Country (Brand Name) Status
L a ns opr az ole IV P r ot on pu mp in hib it or Postoperat ive invasive stress J a pa n Filed 7/96
(AG -1749 IV) (I nject able for mula tion) U pper ga st roint est ina l J apa n P hase III
bleeding
Ma jor st ress exer t ed by J a pa n P ha se II
operation or external st imulus
P ioglit a zone Insulin sensit ivit y enha ncer Dia bet es mellit us J apa n (Actos) F iled 12/96
hydr ochloride (monothera py an d combina tion
(AD-4833) w it h sulfonylurea s)
Dia bet es mellit us U .S . (Actos) La unched
(monotherapy and combination
w it h in su lin , su lfon ylu rea s E ur ope (Actos) F iled 3/99
or metformin)
Combination with Basen J a pa n P ha se III
Combination with insulin
Voglibose Disa ccha rida se inhibit or D ia bet es mellit us J a pa n (Basen) La unched(AO-128) U .S . P ha se III
E urope Filed 3/98
I mpa ir ed glu cose t olera nce J a pa n Pha se II
Sera t roda st Thromboxa ne A2 B ronchia l a st hma J a pa n (Bronica) La unched
(AA-2414) recept or a n t a gonist
Cefozopra n B roa d spect rum B a ct eria l in fect ion J a pa n (Firstcin) La unched
hy dr ochlor id e in ject able cepha losporin
(S CE -2787) P edia t ric use a nd meningit is J a pa n (Firstcin) La unched
Ceriva st a t in sodium H MG -CoA reduct a se H ypercholest erolemia J apa n (Certa) La unched
(B AY w 6228) inhibit or [J oin t development
wi th B ayer Yakuhin]
TAK -147 Acet ylcholinest era se inhibit or D ement ia of Alzheimers t ype J a pa n P ha se III
Risedrona t e B one resorpt ion inhibit or Ost eoporosis J a pa n P ha se III
(NE -58095) [J oint development
wit h Ajinomoto]
TNP -470 Ant i-a ngiogenesis a gent Ma ligna nt t umor U .S . P ha se II
TAK -603 Disea se-modifying Rheuma t oid a rt hrit is J a pa n , U .S . & E urope P ha se II
ant i-rheumat ic drug
Idebenone B ra in energy-met a bolism Dement ia of Alzheimers t ype G erma ny Filed 6/96
(C V-2619) enha ncer I t a ly & Sw it zerla nd Filed 2/97
Aust ria F iled 8/96
U.S . P ha se II/III
TAK -751S Verot oxin a dsorbent H emolyt ic uremic syndrome J apa n P ha se II
(HUS) [Licensed from Synsorb]
M or ph in e h y dr o- H ig h c on t en t /con ce nt r a t ion Severe pain due t o ca ncers J a pa n P ha se III
chloride (MH-200) prepa ra t ion [J oint development ]
TAK -661 E osinophil chemot a xis Bronchia l as thma a nd J a pa n P ha se II
inhibitor atopic derma t it is E urope P ha se I
MKC-231 Choline upta ke enhancer Dement ia of Alzheimers type J apan Ph ase II
[J oint development
with Mitsubishi]
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In 1998, TAP continued its strong performance and achieved net sales that exceeded $2 billion.
TAP is now the seventeenth largest U.S. pharmaceutical company in terms of sales, and expects to
continue moving up the ranks as it fosters current products and introduces new ones.Net sales of the ulcer treatment Prevacid(lansoprazole), TAPs leading product, nearly doubled to
$1.3 bil lion in 1998. One of the reasons for this outstanding growth is the expansion of the drugs
range of uses. In 1998, TAP received approval from the U.S. Food and Drug Administration (FDA)
for Prevaciddelayed-release capsules for the short-term treatment of symptomatic gastroesophageal
reflux disease (GERD), as well as new administration options that allow patients who cannot
swallow a capsule to sprinklePrevacidon soft food or into juice. In addit ion, TAP introduced 10-
and 14-day regimens of Prevpac, a new and convenient package for three medications used to treat
Heli cobacter pyloriinfection in patients with duodenal ulcers. The package, which contains
Prevacid, Biaxin(clarithromycin) and Trimox(amoxicillin capsules), provides a simplified, more
convenient regimen for eradicatingH. pylori.
The National Sales Meeting at TAP Holdings Inc. boosts sales force effectiveness and morale by
gathering U.S. medical representatives (MRs) together to review the past years performance and
determine strategic directions for the year ahead.
Expanding Participation in Markets Worldwide
Takeda markets i ts ethical dr ugs through a global marketing organi zat ion
spanni ng Japan, the Uni ted States, Europe and Asia. In the United States, the
worlds lar gest and fastest-growing pharmaceut ical market, Takedas marketing
organi zati on includes TAP Holdings Inc. (a joint venture wi th Abbott Laboratori es),
and the whol ly owned subsidiary, Takeda Pharmaceut icals America, Inc.
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Lupron Depot(leuprolide acetate for depot suspension), TAPs synthetic hormone indicated for
the palliative treatment of advanced prostate cancer, endometriosis, anemia caused by uterinefibroids, and precocious puberty, posted solid sales growth in 1998. It continues to maintain i ts
dominant position in most of these markets.
In addition to these successful current products, TAP has an active pipeline. In June 1999, TAP
filed a New Drug Application with the FDA for Uprima(apomorphine), an oral treatment for male
erecti le dysfunction. Takeda and Abbott Laboratories will jointly develop and co-market
apomorphine in countries outside the United States and Canada. TAP also plans to file an
application for an adult formulation of the antibiotic Spectracef(cefditoren pivoxil) in 1999.
TAPs research and development teams are focusing on developing a range of promising new
compounds for use in medical fields such as urology, gynecology and oncology, and are also
pursuing additional indications for current products. TAPs aggressive in-licensing efforts will
continue to fuel the companys pipeline.
Building on i ts momentum in the United States, in May 1998 Takeda established its second U.S.
marketing company, Takeda Pharmaceuticals America, Inc. This company launched piogli tazone
hydrochloride, an antidiabetic agent, under the brand name Actos in August 1999 after Takeda
America Research & Development Center Inc. received FDA approval for it in July 1999. A
treatment for lowering blood glucose levels that resulted from Takedas many years of research on
diabetes mellitus, Actosis an insulin sensitizer for patients with Type 2 (non-insulin-dependent)
diabetes. Takeda Pharmaceuticals America has built a sales force of more than 500 MRs to launch
Actos. Takeda Pharmaceuticals Americas MRs have undergone extensive education on diabetes
Takeda Pharmaceuticals America, Inc. recruited and trained more than 500 MRs in preparation for the
launch of the companys first product, the new pharmaceutical Actos.
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mellitus and Actosto ensure the successful launch of this product. The company has also
established a marketing organization, distr ibution capabili ties and other key business functions tofully support the U.S. commercialization of Actosand future products.Actoswill be co-promoted
with Eli Lilly and Company, a leader in the U.S. diabetes treatment market.
In Europe, subsidiary Laboratoires Takeda in France, affiliate Takeda Pharma GmbH in Germany
and subsidiary Takeda Italia Farmaceutici S.p.A. in I taly have been increasing sales of original
Takeda products each year, including the prostate cancer treatment leuprolide (brand name:
Enantone), ulcer treatment lansoprazole (brand names: Ogast, Agopton, Lansox), and hypertension
treatment candesartan cilexetil (brand names: Kenzen, Blopress). In addition, in April 1997 we
established the U.K. subsidiary Takeda UK Limited, which is co-promoting candesartan cilexetil
with AstraZeneca PLC in the United Kingdom under the brand name Amias.
In Japan, Takedas Pharmaceutical Marketing Division, which is responsible for ethical drug
marketing, has been making steady progress in strengthening Takedas market posit ion in the
treatment of lifestyle-related diseases. Hypercholesterolemia, hypertension and diabetes are
representative lifestyle-related diseases that are intricately related to the onset of arteriosclerosis.
They show a high incidence of complications and exhibit increased synergism with arteriosclerosis
as well. In May 1999, the Division launched the HMG-CoA reductase inhibitor cerivastatin sodium
Takeda Pharma GmbH ensures solid coverage of the crucial German market, where Takedas strategies
include expanding market penetration for Blopress.
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under the brand nameCertaas a treatment for hypercholesterolemia. In June 1999, the Division
also launched the angiotensin II receptor antagonist candesartan cilexetil under the brand nameBlopressfor treatment of hypertension. Now being marketed in Europe and the United States,
Blopressis an ideal drug because in addition to its hypotensive action, it has an organ protective
effect and rarely causes coughing, which is a common adverse reaction with ACE inhibitors used to
treat hypertension. Moreover, we fi led an application for AD-4833 (pioglitazone hydrochloride), an
agent for the treatment of diabetes mellitus. To ensure the acceptance of our products by specialists
shortly after they are launched, we implement systematic promotions such as launch meetings,
meetings for opinion leaders and medical conferences.
Takeda is conducting regional launch meetings for Blopressin Japan.
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Takedas Production BasesTakeda produces pharmaceuticals at three domestic plants the Hikari Plant, Osaka Plant and
Shonan Plant. In Asia, the Company has plants in China, Taiwan, Thailand and Indonesia. In
October 1997, we acquired a
plant in Ireland and established it
as a local manufacturing
subsidiary, Takeda Ireland Ltd.,
our first pharmaceutical plant in
Europe. Takeda Ireland
manufactures lansoprazole
capsules, candesartan cilexetil
tablets, pioglitazone
hydrochloride tablets and other
new products for the European
and U.S. markets. It also
manufactures drugs for clinical
trials of candidate compounds
under development.
The Pharmaceutical Production
Division manages the entire process from the chemical and pharmaceutical development researchstage through the production stage. This division works to minimize total production costs by
analyzing domestic and overseas demand, cost and risk.
Environmental ProtectionTakeda implemented the Responsible Care program in 1995 based on its Basic Principles on the
Environment. Objectives of the program include reducing the volume of industrial waste treated
off-site, reducing the amount of emissions of priori ty control chemical substances, and promoting
energy conservation. Other focuses are conducting environmental audits for domestic plants and
Tsukuba research laboratories, promoting resource conservation and recycling, pursuing
development of environment-friendly products, and establishing occupational safety and health
management systems.
In December 1998, the Hikari and Tokuyama plants obtained the ISO 14001 certification for their
environmental management systems. The Hikari Plant is Takedas main plant, manufacturing
mainly bulk pharmaceuticals, vi tamins and agrochemicals. The Tokuyama Plant produces chemical
products, including polyether polyols, polyester polyols, unsaturated polyester resins and succinic
acid. Takeda will continue promoting acquisition of the ISO 14001 certification at its other plants.
Global, Efficient, EnvironmentallySound Production
16
Takeda Ireland Ltd., Takedas first European production base,
produces drug products to keep up with our expanding sales in
Europe and the United States.
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PHARMACEUTICALS
(Ethical Drugs)
In fiscal 1998, the Takeda Group
focused its core Pharmaceutical
business on discovering and
developing original new drugs for
global use, while also working to
expand its marketing bases in the
United States and Europe. These
efforts fur ther advanced our mission
to be an R&D-driven international
company. Takedas sales of
pharmaceuticals, including OTC
drugs, increased 2.9 percent year-on-
year to 597.5 billion (US$4,938
million).
In May 1998, we established the
wholly owned subsidiary Takeda
Pharmaceuticals America, Inc., as
our second marketing base in the
United States, the worlds largest
market for pharmaceuticals. This
move creates an organization to
conduct marketing activities for
Actos(piogli tazone hydrochloride),
an antidiabetic drug developed by
Takeda. Furthermore, in March
1998, we established Takeda Europe
Holdings Ltd., a holding company
for our pharmaceutical business in
Europe, and in September we
established Takeda Europe Research
& Development Centre Ltd. in
London, where the European Agency
for the Evaluation of Medicinal
Products is located.
Reviewing Takedas main
products, leuprolide acetate
(marketed as Leuplinin Japan,
Lupron Depotin the United States
andEnantoneand other names in
Europe), a treatment for prostate
cancer, endometriosis, uterine
fibroids, breast cancer and central
precocious puberty, is sold in more
than 60 countries. We have steadily
developed new formulations for
leuprolide acetate in markets around
the world. Following the original
1 Month Depot, a dual chamber pre-
fi lled syringe (DPS) launched in
1995, an injectable three-month
formulation, 3 Month Depot, was
launched in 1996, and 4 Month
Depot was launched in the United
States in July 1997. As a result,
leuprolide acetate contributed
strongly to overseas sales in fiscal
1998.
Sales are also expanding steadily
in Japan, where leuprolide acetate
contributes to effective patient
Skilled MRs from
Laboratoires Takeda in
France give physicians
detailed explanationsof new products,
playing a key role in
Takedas strategy of
strengthening its
operations in France.
1
Review of Operations
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treatments in a wide range of
therapeutic categories.
Launched in Japan in December
1992 as a treatment for peptic ulcers
and reflux esophagitis, lansoprazole
(marketed under the brand names
Takepronin Japan,Prevacidin the
United States, andOgast, Agopton
and others in Europe) has become
the leading proton pump inhibitor
because of its superior efficacy.
Following its introduction in major
European countries, lansoprazole
was launched in the United States inJune 1995. Backed by favorable
evaluations from healthcare facilities,
lansoprazole achieved rapid market
penetration, and further increased
its contr ibution to results in fiscal
1998. It is now sold in more than 90
countries. New indications are being
added to the product profile,
including maintenance therapy
following healing of erosive
esophagitis and duodenal
ulcers, eradication of
Heli cobacter pylor iand
symptomatic
gastroesophageal reflux
diseases.
In December 1997,
Takeda launched a
promising new product,
candesartan cilexetil, a
novel angiotensin I I
receptor antagonist
(AIIRA) for the
treatment of essential hypertension,
under the brand namesBlopressin
Germany andAmiasin the U.K.
Takeda originally discovered this
compound, the first non-peptide
AIIRA in the world. Its ini tial launch
was followed by introductions in
major countries including France,
Italy and the United States in 1998.
In 1999, candesartan cilexetil has
been launched asBlopressin some
Asian countries including Japan, and
it is now marketed in 28 countries
worldwide.In Japan, National Health
Insurance (NHI) drug prices were
significantly reduced for the third
consecutive year in fiscal 1998. In
addition, the pharmaceutical market
has been affected by increased
patient copayments resulting from
revision of the NHI Law in
September 1997. Consequently, the
market in fiscal 1998 was virtually
flat compared with the previous
fiscal year. Starting from fiscal 1999,
the fiscal policy for health insurance
will become more stringent in
response to the declining birth rate
and aging of the population in
Japan. Given the urgent issues raised
recently by healthcare cost
containment measures and the
impact of health insurance reforms,
we must be prepared for an even
more severe operating environment.
However, the graying of Japanese
society is expected to increase theneed for pharmaceuticals, and the
pharmaceutical industry has
excellent potential. The market will
increasingly favor drugs that are
primary medical treatments and
offer clear beneficial effects, as well
as those that match the needs created
by the aging society and changing
lifestyles. Takeda has always focused
on research and development of
MRs at sales offices regularly attend practice study conferences to support the smooth market penetrationof new pharmaceuticals.
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pharmaceuticals that offer
characteristics required by healthcare
facil ities and on building their
market presence.
One example is Leuplin, a
prostate cancer treatment for which
we have added a succession of new
indications, including endometriosis,
central precocious puberty, uterine
fibroids and breast cancer. Sales have
expanded steadily, and we expect
Leuplinto make an even larger
contribution to results in the future.
Basen, a disaccharidase inhibitor,was launched in 1994 as a diabetes
treatment with a novel mechanism
of action. It has become the first
choice of many physicians in treating
diabetes.
The addition of planned new
indications for the ulcer treatment
Takepronshould contribute to
further growth in sales of this
product.
In fiscal 1999, the hyper-
cholesterolemia treatmentCerta
(BAY w 6228), an HMG-CoA
reductase inhibitor, and Blopress, an
angiotensin II receptor antagonist
that provides a novel method for
treating hypertension, have already
been launched. We also plan to
launch the insulin sensitivity
enhancer AD-4833, for which we are
awaiting manufacturing approval.
Because these products have more
concentrated activity, we expect
them to gain a large share of the
market in their respective
therapeutic categories. Furthermore,
we will take advantage of the launch
of these drugs to educate patients
and the general public on the cause,
prevention, treatment and
complications of lifestyle-related
diseases, further boosting Takedas
domestic market presence.
Outside Japan, despite intensified
competition accompanying the
reorganization of the industry and
the advancement of policies tocontain healthcare costs, markets for
pharmaceutical products grew
steadily in fiscal 1998. The efforts of
TAP Holdings Inc., a U.S. affiliate
accounted for by the equity method,
to generate sales of lansoprazole in
the United States contributed to net
sales of US$2,062 million and net
income of US$532 mill ion for the
company. Lansoprazole sold strongly
in Europe as well, while sales of
leuprolide acetate, in the face of
strong competition, increased over
the previous fiscal year, a result of
leuprolide acetates precise response
to market needs. Moreover, as
mentioned earlier, the hypertension
treatment candesartan cilexetil was
launched in France in September
and in Italy in October 1998.
In August 1999, the antidiabetic
agentActos(pioglitazone
hydrochloride) was launched in the
United States. We expect to expand
sales of this product in other
overseas markets as well. In addition,
we are steadily carrying out
development activities for
apomorphine, a treatment for
erectile dysfunction. TAP Holdings
Inc. has submitted a New Drug
Application with the U.S. Food and
Drug Administration for
apomorphine under the brand name
Uprima.
To further develop its
pharmaceutical business, Takedakeeps its pipeline full by efficiently
allocating management resources
toward selected therapeutic
categories and focused development
themes. A key to success in this effort
is our MPDR strategy that
emphasizes cooperation and
collaboration among marketing,
production, development and
research divisions, as well as our
framework for speedily resolving
cross-divisional issues. We will
continue strengthening our MPDR
strategy to promote effective
interdivisional cooperation in order
to maximize the benefits from each
divisions efforts. Employing this
original business structure, we will
advance our global strategy and
further promote Takedas position as
an R&D-driven international
company.
1
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CONSUMERHEALTHCARE(OTC Drugs)
In the domestic
OTC drug market in
fiscal 1998, the lack of
any foreseeable
recovery in consumer
spending, coupled with
unfavorable summer
weather, led to a large
decrease in sales of
health maintenance
products. However,
demand for remedies
for colds, constipation
and athletes foot was favorable. As a
result, sales of the Consumer
Healthcare business declined slightly
compared with fiscal 1997.
Sales ofAlinamin EX, part of the
Alinaminline of vitamin B1
derivative tablets, expanded steadily.
In June 1999, we launched New
Alinamin A, which contains more
vitamins B6 and B12 than the current
Alinamin A. This product wi ll add
further strength to theAlinaminline.
Sales ofAlinaminhealth tonics
declined from the previous year
because of weakness in this market
segment. Following the easing of
regulations in March 1999, three
products includingAlinamin Vwere
reclassified as non-pharmaceutical
products, allowing them to be sold at
retail stores other than pharmacies.
By expanding sales channels, we
expect to increase sales of these
products in fiscal 1999.
Despite many competing
products, TakedasBenzabrand,
which includes the cold remedy
Benza Block, achieved a large sales
increase over the previous fiscal year.
Contributing to this gain were the
January 1999 launch of Benza Block
Cough Syrup, an antitussive/
expectorant, and the February 1999
launch of Benza AL, a remedy for
allergic rhinitis.
Takeda will fur ther develop the
Consumer Healthcare business based
on the goal of contributing to better
health and quality of life. In fiscal
1999, we will strengthen this
business by aggressively developing
and launching a steady stream of
new products while continuing our
efforts to earn the trust of
consumers. We will also work to
maintain solid relationships of trust
with retailers and wholesalers.
BULK VITAMIN & FOOD
Takedas Bulk Vitamin and Food
business is engaged primarily in the
manufacture and marketing of bulk
vitamins and food additives. We
contribute to healthier life and better
food culture through our
involvement in the health
supplements, food, beverage and
livestock feed markets.
With a broad lineup of bulk
vitamin products that includes
vitamin C as well as vitamins B1, B2,
B6, folic acid and others, Takeda is
one of the worlds leading
manufacturers of water-soluble
vitamins. Bulk vitamins are highly
Preparations for the launch of New Alinamin A were based on an
action plan that was ideally tailored to implement the marketing
strategy for this brand.
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international products used in a
wide range of applications. Takeda is
therefore aggressively developing this
business overseas through its
subsidiaries in the United States,
Europe and Asia.
In the food additive business,
Takeda manufactures and sells a
variety of products such as flavor
enhancers and food texture
improvers. These includeRibotide, a
ribonucleotide flavor enhancer
originally developed by Takeda. Our
full product lineup and superior
quality assurance system have earned
us a high level of reliance among our
customers.
Results for fiscal 1998 were
affected by intense price competition
worldwide in addition to the
prolonged economic slump in Japan.
Consequently, net sales declined
from the previous fiscal year to 78.3
billion (US$647 million). A
continued decline in prices and
lower sales volume led to decreased
sales of vitamin C the main
product of the bulk vitamin business
although this decline was partially
offset by the beneficial effects of the
weaker yen. Despite unfavorable
market conditions, Takeda
maintained market share and sales
volume in the food additive business
thanks to relatively firm demand.
However, a sudden and sharp price
erosion of Ribotideresulted in
decreased food additive sales
revenue.
In fiscal 1999, though we foresee
keener competition in the industry,
we will work to strengthen our
competitive edge by pursuing better
efficiency in our production, sales
and research activities.
CHEMICAL PRODUCTS
The mission of Takedas Chemical
Products business is to contribute to
greater convenience in peoples lives
by supplying advanced polymer
materials based on our technological
strengths.
Main products include
intermediate materials for industrial
use such as polyurethane (PU)
resins, adhesives, toluene
diisocyanate (TDI), polyethers,
unsaturated polyester resins and
compounds, organic acids andsynthetic latexes.
Chemical Products segment sales,
which include sales of the Life-
Environment business, declined 6.0
percent year-on-year to 110.5
billion (US$913 million), due to the
prolonged economic recession in
Japan. Exports of TDI and sales ofadhesives increased, but depressed
building and construction activity in
Japan decreased sales of PU resins
for coating and unsaturated
polyester resins and compounds
mainly used in the housing industry.
In fiscal 1999, the Chemical
Products business will directcontinous efforts toward sales
expansion, R&D and production
efficiency. We will work to expand
sales of highly profitable products
including PU resins and adhesives.
Our research is focused on
developing eco-friendly newTakeda participates in such events as Food Ingredients Europe, held
in Frankfurt, Germany in November 1998.
2
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products such as water-based resins,
PVC replacement materials, CFC-
free PU rigid foam systems and
recycling technologies. We plan to
launch new PU dispersions, foodpackaging adhesives without
purported endocrine disrupters, and
reactive hot melt adhesives. We will
also carry out capacity expansions of
and cost reductions for TDI and
maleic anhydride.
One of our strategies is to
strengthen our overseas activities.We are targeting a higher market
share for food packaging adhesives
in China and ASEAN countries and
starting their sales in Europe and the
United States. Expansion in the
export of TDI and synthetic latex for
gloves is also targeted.
AGRO(Plant Protection and Animal
Health Products)
Takedas Agro business is
aggressively working to
expand sales in its two
main product areas: plant
protection products and
animal health products.
Core plant protection
products include
insecticides such asPadan,
Bancoland Bestguard;
fungicides such asValidacin
andBlasin; and rice
herbicides such asAward,
Batl, Sheriff,Crush, The
One, and Longet. All of
these are proprietary products of
Takeda. In fiscal 1998, overseas sales
increased sharply
despite the economic
turmoil in Asia,
backed by higher
sales ofPadanand
Validacinand the
full- fledged start of
exports of the wheat
herbicide
sulfosulfuron. In
Japan, however, sales
were strongly
impacted by the
reduction of rice
fields, which is
decreasing the scale
of the domestic
agriculture industry.
The result was a moderate decline in
total sales of plant protection
products.
The animal health products
segment covers a broad range of
markets from veterinary medicines
to feed additives and drugs for
fisheries. Fiscal 1998 sales decreased
because of a rise in imports of
livestock products and greater
competi tion in the market for pet-
related products.
In the plant protection business,
Takeda plans to expand sales of
sulfosulfuron in major advanced
countries. We will also continue
developing world markets for TI-
435, an insecticide with a broad
spectrum of activity against
agricultural pests at low application
The Agricultural Research Laboratory screens plant protection
products for effectiveness at its greenhouses while working to
create breakthrough products.
22
Takedas maleic anhydride plant has introduced the
latest technology to detoxify exhaust gas.
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rates.
With the need for
increased food production to
support the expanding world
population, continued
growth is foreseen in the
global market for both plant
protection and animal health
products. Takeda is well
prepared to meet global
market demand with a
research organization that is
steadily creating the seeds of
new products.
LIFE-
ENVIRONMENT
Takedas Life-Environment
business is dedicated to contributing
to the improvement of peoples lives
and the environment with products
such as activated carbon and
preservatives for wood care and
industrial use as well as
environment-related products. The
core mission of this business is to
solve environmental problems and
create comfortable living
environments in fields such as water,
air and housing.
In fiscal 1998, sales of activated
carbon for water puri fication
expanded. Sales ofXyladecor, which
is used for preservation and
beautification of wood, also
increased, particularly at consumer-
oriented home centers. However,
Takeda discontinued sales of several
products, including boron products.
As a result, Life-Environment sales
decreased slightly from the previous
fiscal year.
In the field of activated carbon,
we are focusing on strengthening
sales of highly functional, high-
value-added products such as
molecular sieving carbon; sales of
environment-related products such
as carbon for dioxin removal; and
marketing of exports in overseas
markets. In November 1998, Takeda
increased its ownership in Davao
Central Chemical Corporation, a
manufacturer of activated carbon
from coconut shells in the
Philippines, from 35 percent to 80
percent, making the company a
consolidated subsidiary.
In the field of wood preservatives,
Takeda is working toward the
development and
speedy market launch
of safer, easy-to-use
and environmentally
sound products for
such applications as
water-based paints and
ant-repellent systems
with minimal
environmental impact.
In addition, as new
housing starts are
forecast to remain
stagnant, we will focus
on cultivating new
sales routes to target
general users. Demand from this
sector has been increasing since fiscal
1998, reflecting steady growth in the
populari ty of gardening and do-i t-
yourself projects.
In environment-related fields, we
will promote faster development of
products that contribute to clean
environments. In fiscal 1998, we
launched two pollutant test kits,
which measure the concentration of
surfactants in water with a high
degree of sensitivity. New product
introductions planned for fiscal 1999
include additional pollutant test kits
and adsorbents to remove and
reclaim defined ions such as
fluorides or phosphates in sewage or
drainage water.
2
The Life-Environment Research Laboratory carries out a wide range
of research to improve the environment, including the development of
activated carbon technologies for eliminating offensive odors at thefacility.
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Yuzuru TakagiGeneral ManagerPlanning & Coordination
Corporate Planning Department
Ken MatsumotoGeneral ManagerGeneral Affairs & Personnel Department
Osamu Nishimura, Ph.D.General ManagerPharmaceutical Discovery Research
Division
Yasuhiro Sumino, Ph.D.General ManagerPharmaceutical Research Division
Yasuhiko Hamanaka, M.D., Ph.D.General ManagerPharmaceuti cal Development Division
Kiyoshi Kitazawa, Ph.D.General ManagerStrategic Development Department
Pharmaceuti cal Development Division
Shuji HiguchiManaging DirectorTakeda Europe Research and
Development Centre Ltd.
Mikihiko Obayashi, Ph.D.PresidentTakeda America Research and
Development Center Inc.
Makoto YamaokaGeneral ManagerMarketing Administration Department
Pharmaceutical Marketing Division
Katsumi NozawaGeneral ManagerEthical Products Marketing Management
DepartmentPharmaceutical Marketing Division
Naohide MuroPresidentConsumer Healthcare Company
Hiroshi Uchiyama
PresidentVitamin & Food Company
Yoshiro NamazuPresidentAgro Company
Atsuo Kobayashi, Ph.D.PresidentLife-Environment Company
Hiroshi Akimoto, Ph.D.General ManagerIntellectual Property Department
(as of J un e 29, 1999)
CHAIRMAN
Masahiko Fujino, Ph.D.
PRESIDENT
Kunio Takeda
SENIOR MANAGING DIRECTORS
Koichi Yanashita
Hideyuki Nagasawa
MANAGING DIRECTORSNobuto Nakamura, M.D., Ph.D.
Mitsuo Yashiro
DIRECTORS
Hiroshi Nagasaki
Hisayoshi Okazaki, Ph.D.General ManagerPharmaceutical Business
Development Department
Ken-ichi NishinoPresidentChemical Products Company
Teruji Ono
General ManagerLegal Department
Shozo NakamuraGeneral ManagerPharmaceutical Production Division
Nobutaka SuzukiGeneral ManagerPharmaceutical Marketing Division
Toshiyuki ArakiGeneral ManagerFinance & Accounting Department
Yoshihiro NaraiGeneral ManagerCorporate Planning Department
Yasuchika HasegawaGeneral ManagerPharmaceutical International
Division
FULL-TIME CORPORATE
AUDITOR
Kunio Ueshima
CORPORATE AUDITORS
Masao Ariyasu
Kiyoshi Taura
Naoaki Yoshii
Board of Directors, Auditors and Corporate Officers
Left to right: Ko i ch i Yanash i t a , Senior
M anagin g Di rector; Kun i o Ta k eda ,
President; Masah i ko Fu j i no , Ph .D .,
Chairman; and H i d ey u k i N aga sawa ,
Seni or Man aging Di rector
CORPORATE OFFICERS
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FINANCIAL REVIEW
Net Sales Breakdown( Billion)
0
150
300
450
600
750
900
9998979695
Pharmaceut icalsBulk Vitamin & FoodChemical ProductsAgro Products an d Others
0
50
100
150
200
0
5
10
15
20
9998979695
Overseas S alesPercentage of Net Sales
2
Consolidated Sales and IncomeThe business environment surrounding the Takeda
Group grew more severe during fiscal 1998, the yearended March 31, 1999, due to the effects of global creditinstability and the Asian economic crisis. In the pharma-ceutical industry, Takedas principal business, a successionof large-scale mergers and acquisitions, especially bymajor companies in Europe and the United States, com-bined with borderless markets to usher in an era ofintense competition.
Amid these trends, the Takeda Group, which aims to bean R&D-driven international enterprise, is developing itsglobal operations and drawing on the strengths of eachgroup company to improve consolidated financial resultsand raise the value of the Company.
During fiscal 1998, Takeda continued to make rapidstrides in i ts global business. We established our own
marketing company in the United States and filed a NewDrug Application for diabetes treatment AD-4833(pioglitazone hydrochloride) in Europe and the UnitedStates.
The tough business environment in Japan continuedduring fiscal 1998 with no sign of economic recovery.Overseas, however, market conditions for ethical drugswere favorable, particularly in the United States.As a result, both net sales and income increased comparedwith the previous fiscal year.
Net sales increased 0.3 percent to 844.6 billion(US$6,980 million) as increased sales of ethical drugs in
overseas markets offset a decrease in domestic sales. Netsales to customers outside Japan totaled 175.2 bil lion(US$1,448 million), a year-on-year increase of 29.1percent, and accounted for 20.7 percent of total net sales,an increase of 4.6 percentage points from fiscal 1997.
In income categories, operating income increased 7.0percent to 142.2 billion (US$1,175 million), reflectingTakedas success in expanding sales of high-value-addedproducts and other factors. U.S. affi liate TAP HoldingsInc., accounted for by the equity method, achievedgrowth in sales of the proton pump inhibitor lansoprazole(U.S. brand name: Prevacid), an international strategic
product, which contributed strongly to a 9.3 percentincrease in income before income taxes and minorityinterests to 182.1 billion (US$1,505 million). As a result,net income increased 12.4 percent to 91.7 billion(US$758 mill ion).
Net income per share was 103.52 (US$0.86), 10.55higher than in the prior fiscal year. Furthermore, returnon shareholders equity increased to 10.6 percent from10.3 percent. Takeda increased cash dividends per share to29.00 (US$0.24) from 21.25 in fiscal 1997.
Segment Information
The Companys operations, as explained in Note 12 of
Overseas Sales( Billion; %)
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Net Income and Net Income per Share( Billion; )
0
20
40
60
80
100
0
20
40
60
80
100
9998979695
Net In come
Net Income per Sh are
0
200
400
600
800
1,000
1,400
1,200
9998979695
26
Total Assets
( Billion)
the Notes to Consolidated Financial Statements, areclassified into four business segments: Pharmaceuticals,Bulk Vitamin and Food, Chemical Products and Other.
PharmaceuticalsIn keeping with its goal of being an R&D-driven
international enterprise, Takeda focused efforts in i tspharmaceutical business on creating and developing
original new drugs for the global market. At the sametime, the Company moved quickly to expand i ts market-ing bases in the United States and Europe.
In the United States, the worlds largest market forpharmaceuticals, we established our second marketingbase, Takeda Pharmaceuticals America, Inc., in May 1998.In Europe, we established Takeda Europe Research &Development Centre Ltd. in September 1998 in theUnited Kingdom, where regulatory affairs for theEuropean pharmaceutical market are centered.
In January 1999 in the United States, and in March1999 in Europe, we fi led a New Drug Application for
diabetes treatment AD-4833 (pioglitazone hydrochlo-ride). AD-4833, our newest international strategic prod-uct, was launched in August 1999 under the brand nameActosin the United States.
Following introductions in the United States andEurope, in June 1999 we began sales of hypertensiontreatment Blopressin Japan.
In Japan, where policies to contain healthcare costsmake market expansion difficult, Takeda successfullyexpanded sales of core products such as Leuplin, aluteinizing hormone-releasing hormone (LH-RH) analog,and Basen, a disaccharidase inhibitor for preventingpostprandial hyperglycemia in diabetes mellitus.However, factors such as the withdrawal from the marketof Avan, a brain-energy metabolism enhancer, resulted ina decrease in domestic pharmaceutical sales.
Outside Japan, sales of lansoprazole (brand name:Prevacid) in the United States contributed strongly tooverseas results.
Total net sales of the Pharmaceuticals business there-fore increased 2.9 percent, to 597.5 billion (US$4,938million), and operating income from this businessincreased 8.2 percent to 132.7 billion (US$1,097 mil-lion). The Pharmaceuticals business thus increased itsweighting in the overall business of the Takeda Group.
Bulk Vitamin and FoodIn April 1998, the U.S. manufacturing and marketing
subsidiaries merged to bolster earnings potential in theNorth American market. However, pr ice declines forvitamin C and Ribotideled to a decrease of 5.4 percent inBulk Vitamin and Food business sales to 78.3 billion(US$647 mill ion).
Although the Bulk Vitamin and Food business postedan operating loss of 0.6 billion (US$5 million), thisrepresented an improvement of 0.4 bil lion over the priorfiscal year, in part due to better performance at subsidiaryTakeda Food Products, Ltd.
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Shareholders Equity & ROE
( Billion; %)
0
150
300
450
600
750
900
0
2
4
6
8
10
12
9998979695
Shareholders EquityROE (Return on Equity)
2
Chemical ProductsThe Chemical Products business, which includes the
Life-Environment business, further developed i tsoverseas presence in fiscal 1998 with the acquisition ofactivated carbon manufacturer Davao Central ChemicalCorporation in the Philippines. However, the economicslump in Japan reduced demand related to housing andautomobiles. Consequently, sales in the Chemical
Products business declined 6.0 percent to 110.5 billion(US$913 million), and operating income fell 13.4percent to 6.8 bill ion (US$56 million).
Other BusinessesIn the Agro business, sales of agricultural chemicals
and animal health products decreased due to weakdomestic demand. As a result, net sales of otherbusinesses decreased 4.2 percent to 58.2 billion(US$481 million), and operating income dropped 8.1percent to 3.2 billion (US$26 million).
Financial Position and LiquidityAs of March 31, 1999, total assets were 1,326.9 bil-lion (US$10,966 million), an increase of 2.4 percentfrom a year earlier resulting primarily from an increasein marketable securities and investment securities. Totalliabilities, the sum of current and long-term liabil it ies,decreased 11.1 percent to 389.7 billion (US$3,221million) as conversion into shares of an issue of 1.9percent unsecured convertible bonds due in 1998reduced the current portion of long-term debt and
income taxes payable decreased.Higher retained earnings resulted in a 9.4 percent
increase in shareholders equity to 907.3 billion(US$7,498 million), which accounted for 68.4 percent oftotal assets, compared to 64.0 percent at March 31,1998. Shareholders equity per share increased 76.79from a year earlier to 1,020.35 (US$8.43).
Net cash provided by operating activities decreased
4.0 bil lion to 104.9 bil lion (US$867 mill ion). Thisdecrease in cash flow occurred despite increased netincome as accrued expenses and income taxes payabledecreased.
Net cash used in investing activities increased 96.6billion from the previous fiscal year to 169.3 billion(US$1,399 million). This was due mainly to an increasein purchases of marketable securities.
Net cash used in financing activities increased 3.2bill ion to 22.8 bil lion (US$189 million), primari lybecause of the increase in cash dividends paid for thefiscal year.
Cash and cash equivalents at the end of the yeardecreased 85.9 billion to 313.7 billion (US$2,593mill ion) from a year earlier.
Takeda will continue working to improve results anddeploy capital efficiently in order to maintain a soundfinancial structure.
Year 2000 (Y2K) IssueTakeda recognizes the Y2K issue as a critical
management concern, and has charged a director withresponsibili ty for ensuring that Takeda and i ts groupcompanies deal wi th it effectively. To prevent a materialadverse impact caused by external entities such assuppliers on its business operations, the Company isalso working to ensure their Y2K readiness.Remediation and replacement of information systemsand equipment have been progressing according to plan,with remediation and replacement of all critical systemsscheduled for completion in September 1999. TheCompany has also prepared a comprehensivecontingency plan detailing responses to foreseeablerisks. Expenses related to Y2K remediation are notexpected to have a material impact on the operations orresults of the Takeda Group.
Legal ProceedingsThe Companys 100-percent-owned subsidiary,
Takeda Vitamin & Food USA, Inc. (TVFU), whichmanufactures and sells vitamin bulks in the U.S.A.,submitted the documents regarding its vitamin businessto the U.S. Department of Justice according to certainsubpoena issued in May 1998.
The Company and TVFU are among co-defendantswith other companies in class-action law suits broughtin the U.S.A. by plaintiffs claiming that they suffereddamages from an alleged conspiracy of price fixing andmarket allocations in the worldwide vitamins market.
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ELEVEN-YEAR SUMMARY OF SELECTED FINANCIAL DATA
28
1999 1998 1997 1996
For the years ended March 31:
Net sa les ............................................................................. 844,643 841,816 838,824 801,341
Operating income............................................................... 142,220 132,952 127,350 112,707Income before income ta xes and minori ty interests . . .. . .. . 182,142 166,649 147,985 125,787
In come ta xes....................................................................... 89,019 83,368 75,094 64,837
Minor ity int erest s .............................................................. 1,368 1,671 1,508 1,106
Net income.......................................................................... 91,755 81,610 71,383 59,844
Capital investments........................................................... 29,241 34,091 30,741 30,358
Depreciat ion a nd a mortiza tion.. . . . .. . . . .. . . .. . . . .. . . . .. . . . .. . . .. . . . .. . . 32,651 32,763 31,473 33,255
Resea rch a nd development costs . . . . .. . . .. . . . .. . . .. . . . .. . . . .. . . . .. . . .. . 77,487 79,039 71,754 68,006
P er share am ounts (Yen an d U.S. dollars)
(See Note 11 to consolida ted fina ncial st a tement s):
Net in come ...................................................................... 103.52 92.97 81.52 68.35
Cash dividends................................................................ 29.00 21.25 17.25 15.00
At March 31:
Cu rr ent a sset s .................................................................... 913,263 877,808 826,288 787,615
P roperty, pla nt a nd eq uipment .. . . .. . . . .. . . .. . . . .. . . .. . . . .. . . . .. . . . .. . . 224,229 232,092 229,400 231,532
Invest ment s a nd other a ssets . . . . .. . . . .. . . .. . . . .. . . .. . . . .. . . . .. . . . .. . . .. . 189,507 186,302 165,087 153,086
Tota l a sset s......................................................................... 1,326,999 1,296,202 1,220,775 1,172,233
Cu rr ent lia bilit ies .............................................................. 280,058 324,735 292,873 299,032
Long -ter m lia bilit ies .......................................................... 109,705 113,920 144,198 147,825
Minor ity int erest s .............................................................. 29,863 28,166 26,565 25,467
Sh a reh olders equ ity .......................................................... 907,373 829,381 757,139 699,909
Num ber of sha reh olders .................................................... 54,059 59,008 71,172 81,278
Num ber of employees ......................................................... 15,776 16,443 16,586 17,258
Notes: 1. The U.S . dollar a mounts in th is report represent tra nsla tions of Ja panese yen, for convenience only, at the ra te of 121= US $1, the approximat eexchan ge rat e at March 31, 1999.
2. In the year ended March 31, 1995, 35 previously unconsolidated subsidiaries accounted for by the equity method were consolidated. As a result, thenumber of consolidated subsidiaries t otaled 47 and 24 companies were a ccounted for by t he equity m ethod.
Years ended March 31
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Thousands of
Millions of yen U .S . dolla rs (Not e 1)
1995 1994 1993 1992 1991 1990 1989 1999
771,667 727,845 720,140 709,686 691,409 697,915 689,381 $ 6,980,521
95,285 88,434 76,675 67,963 70,297 78,145 87,931 1,175,372107,145 103,210 93,029 85,727 104,998 92,767 97,297 1,505,306
54,424 54,520 43,827 50,603 58,902 54,849 57,173 735,694
1,291 1,064 1,168 1,288 1,607 1,057 1,270 11,306
51,430 47,626 48,034 33,836 44,489 36,861 38,854 758,306
36,337 42,965 37,953 39,627 45,726 38,179 29,032 241,661
29,768 27,922 27,508 26,199 23,718 21,185 17,805 269,843
67,159 62,934 62,277 59,742 53,388 51,163 45,336 640,388
58.74 54.43 54.98 38.74 50.98 42.28 44.77 $0.8614.00 13.00 12.00 12.00 12.00 10.00 10.00 0.24
721,814 693,837 662,777 641,275 645,414 659,782 621,447 $ 7,547,628
241,506 210,236 196,441 188,145 182,200 163,221 123,343 1,853,132
147,428 148,350 147,427 149,134 135,385 129,854 141,846 1,566,174
1,110,748 1,052,423 1,006,645 978,554 962,999 952,857 886,636 10,966,934
275,636 271,498 249,853 261,689 273,902 304,478 277,677 2,314,529
157,323 145,657 158,628 158,081 155,422 151,436 147,296 906,653
24,666 21,407 20,508 19,484 18,342 16,846 12,606 246,802
653,123 613,861 577,656 539,300 515,333 480,097 449,057 7,498,950
87,897 89,384 88,446 89,349 87,329 82,282 72,873
17,580 15,792 15,781 15,497 15,210 15,137 13,675
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Thousands of
Millions of yen U .S . dolla rs (Not e 1)
LIABILITIES AND SHAREHOLDERS EQUITY 1999 1998 1999
Current liabilities:
B a nk loa ns (Note 5)................................................................................. 9,361 9,509 $ 77,364
Current portion of long-term debt (Note 5)............................................ 2,119 24,077 17,512
Notes and a ccounts paya ble
Tra de notes ........................................................................................... 11,277 12,373 93,198
Tra de account s ..................................................................................... 80,154 78,287 662,430
Due t o unconsolida ted subsid ia ries a nd a ffiliat es.. . . .. . . . .. . . . .. . . .. . . . .. . . . .. 21,603 20,101 178,537
Tota l ....................................................................................... 113,034 110,761 934,165
Accrued expenses .................................................................................... 68,464 76,014 565,818
In come ta xes pa ya ble .............................................................................. 38,698 54,902 319,818
Ot her curr ent lia bilit ies .......................................................................... 48,382 49,472 399,852Total current liabilities........................................... 280,058 324,735 2,314,529
Long-term liabilities:
Long -ter m debt (Note 5).......................................................................... 9,858 10,896 81,471
Ret irem ent benefit s (Note 6) .................................................................. 93,961 96,909 776,537
Reserve for SMON compensation (Note 7)............................................. 5,886 6,115 48,645
Total long-term liabilities....................................... 109,705 113,920 906,653
Minority interests .................................................................................. 29,863 28,166 246,802
Commitments and contingencies (Note 13)
Shareholders equity (Notes 8 a nd 14):
Common st ock aut horized, 2,400,000,000 sha res;
issued and outsta nding sha res with par va lue of 50 per share:
Ma rch 31, 1999 889,272,395 sha res
Ma rch 31, 1998 878,991,506 sha res................................................. 63,540 52,468 525,124
Additi ona l pa id-in capit a l ....................................................................... 49,637 38,578 410,223
Lega l reser ve ........................................................................................... 14,250 12,804 117,769
Ret a ined ea rn ing s ................................................................................... 779,946 725,531 6,445,834
Total shareholders equity ..................................... 907,373 829,381 7,498,950
TOTAL ....................................................................................................... 1,326,999 1,296,202 $10,966,934
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CONSOLIDATED STATEMENTS OF INCOME
32
Thousands of
Millions of yen U .S . dolla rs (Not e 1)
1999 1998 1997 1999
Net sales (Notes 3 a nd 12)........................................................... 844,643 841,816 838,824 $6,980,521
Operating costs and expenses (Note 12):
Cost of sa les (Note 3).................................................................. 435,787 443,292 449,228 3,601,546
Selling, genera l a nd a dminist ra tive (Note 9).. .. . . . .. . . . .. . . . .. . . .. . . . .. 266,636 265,572 262,246 2,203,603
Tota l .......................................................................... 702,423 708,864 711,474 5,805,149
Operating income (Note 12)...................................................... 142,220 132,952 127,350 1,175,372
Other income (expenses):
Int erest a nd dividend income ... . .. . . .. . . . .. . . . .. . . . .. . . .. . . . .. . . .. . . . .. . . . .. . . . . 8,603 6,677 5,783 71,099
In ter est expen se.......................................................................... (1,059) (1,808) (2,257) (8,752)
Eq uity in ear nings of unconsolidated
subsidia ries a nd a ffiliat es .. . .. . . . .. . . . .. . . . .. . . .. . . . .. . . .. . . . .. . . . .. . . . .. . . .. . . . . 35,981 24,193 17,270 297,364G a in on sale of investment in a n a ffiliat e .. . . .. . . . .. . . .. . . . .. . . . .. . . . .. . . . 4,833
Loss on sales and disposals of property,
plan t a nd equipment .. . . .. . . .. . . . .. . . .. . . . .. . . . .. . . . .. . . .. . . . .. . . .. . . . .. . . . .. . . . .. . . (332) (666) (37) (2,744)
Exchange gains (losses).............................................................. (734) 1,328 968 (6,066)
Ot her net ................................................................................ (2,537) (860) (1,092) (20,967)
Tota l .......................................................................... 39,922 33,697 20,635 329,934
Income before income taxes and minority interests......... 182,142 166,649 147,985 1,505,306
Income taxes (Note 10):
Cu rr ent ........................................................................................ 78,014 93,088 78,219 644,744
Defer red ...................................................................................... 11,005 (9,720) (3,125) 90,950
Tota l .......................................................................... 89,019 83,368 75,094 735,694
Income before minority interests.......................................... 93,123 83,281 72,891 769,612
Minority interests...................................................................... 1,368 1,671 1,508 11,306
Net income................................................................................... 91,755 81, 610 71, 383 $ 758,306
Yen U .S. dolla rs (Not e 1)
Amounts per common share (Note 11):
Net income .................................................................................. 103.52 92.97 81.52 $0.86
Ca sh d ividends a pplica ble to t he yea r .. . . .. . . . .. . . . .. . . . .. . . .. . . . .. . . .. . . . .. 29.00 21.25 17.25 0.24
See notes to consolidated financial sta tements.
Year s ended Ma rch 31, 1999, 1998 and 1997
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CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY
3
Thousands of
Millions of yen U .S . dolla rs (Not e 1)
1999 1998 1997 1999
Common stock:
B a la nce, beginn ing of yea r ......................................................... 52,468 48, 948 48, 942 $ 433,620
Sh a res issued upon convers ion of debt ...................................... 11,072 3,520 6 91,504
B a la nce, end of yea r ................................................................... 63,540 52, 468 48, 948 $ 525,124
Additional paid-in capital:
B a la nce, beginn ing of yea r ......................................................... 38,578 35, 063 35, 057 $ 318,826
In crea se due to conversion of debt ............................................. 11,059 3,515 6 91,397
B a la nce, end of yea r ................................................................... 49,637 38, 578 35, 063 $ 410,223
Legal reserve:
B a la nce, beginn ing of yea r ......................................................... 12,804 12, 235 12, 235 $ 105,818
Tra nsfer from r eta ined ea rnin gs . . . . .. . . .. . . . .. . . .. . . . .. . . . .. . . . .. . . .. . . . .. . . . 1,446 569 11,951B a la nce, end of yea r ................................................................... 14,250 12, 804 12, 235 $ 117,769
Retained earnings:
B a la nce, beginn ing of yea r ......................................................... 725,531 660,893 603,675 $5,996,124
Net income .................................................................................. 91,755 81,610 71,383 758,306
Cash dividends paid; 24.75 ($0.20) 1999,
18.25 1998 a nd 15.75 1997 (per sh a re)........ ........ ....... (21,885) (16,001) (13,792) (180,868)
B onuses to dir ectors a nd corporat e a uditors .. . .. . . . .. . . . .. . . . .. . . .. . . . .. (239) (402) (373) (1,975)
Tra nsf er to lega l reser ve ............................................................ (1,446) (569) (11,951)
Effect on beginning reta ined earnings of cha nging from
the equit y meth od to the cost met hod of a ccounting fora n investm ent in a cert a in former affilia te . . . . .. . . .. . . . .. . . .. . . . .. . . . . (13,770) (113,802)
B a la nce, end of yea r ................................................................... 779,946 725,531 660,893 $6,445,834
See notes to consolidated financial sta tements.
Year s ended Ma rch 31, 1999, 1998 and 1997
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CONSOLIDATED STATEMENTS OF CASH FLOWS
34
Thousands of
Millions of yen U .S . dolla rs (Not e 1)
1999 1998 1997 1999
Operating activities:Net income ............................................................................................................................ 91,755 81, 610 71, 383 $ 758,306Adjustment s to reconcile net income to net ca sh provided by operat ing a ctivities:
Depreciation an d amortiza tion ........................................................................................ 32,651 32,763 31,473 269,843Loss on sales an d disposals of property, plant and equipment...................................... 332 666 37 2,744Pr ovision for deferred income ta xes ................................................................................ 11,005 (9,720) (3,125) 90,950Undist ributed earnings of unconsolidated subsidiaries and affiliat es .......................... (7,998) (16,370) (16, 252) (66,099)Ga in on sale of investment in an affiliat e ....................................................................... (4,833) Cha nges in assets a nd liabilities, net of effects from consolidating
a former affiliat e (Note 2):Decrease in notes an d accounts receivable ............................................................ 4,676 18,312 10,350 38,645Decrease (increase) in inventories........................................................................... (718) (4,643) 802 (5,934)Decrease (increase) in other current assets ............................................................ (384) 342 1,458 (3,174)Decrease (increase) in other assets ......................................................................... (4,853) (13) 3,553 (40,107)Increase (decrease) in notes a nd a ccounts pa yable ................................................ 2,273 (6,784) 2,140 18,785Increase (decrease) in accrued expenses ................................................................. (7,550) 3,593 5,527 (62,397)Increase (decrease) in income t axes paya ble .......................................................... (16,204) 12,042 (111) (133,917)Increase (decrease) in other current liabilities....................................................... 1,043 1,839 (13,175) 8,620Decrease in liability for retirement benefits........................................................... (2,948) (892) (1,079) (24,364)Increase in minority interests.................................................................................. 1,697 1,167 1,098 14,025Other ......................................................................................................................... 202 (98) (21) 1,669
Net cash provided by operating activities........................................... 104,979 108,981 94,058 867,595
Investing activities:P ayment for purcha ses of property, plant and equipment................................................. (28,932) (33,936) (31, 745) (239,107)P roceeds from sales of property, plant and equipment ...................................................... 1,085 89 2,492 8,967P ayment for purchases of investment securities ................................................................ (8,652) (337) (3,540) (71,504)P roceeds from sale of invest ment in a n a ffiliate................................................................. 5,488 P roceeds from sales of investm ent securities...................................................................... 1,199 1,350 911 9,909Decrease (increase) in investments in a nd ad vances to
unconsolidated subsidiaries a nd affiliat es ........................................................................ 184 (78) 17 1,521Net increase in mar ketable securities ................................................................................. (134,187) (40,191) (13, 175) (1,108,984)Cash paid for acquiring a majority interest in a former affiliate,net of cash a nd cash equivalent s from consolidating t his subsidiary .............................. (5,078)
Net cash used in investing activities..................................................... (169,303) (72,693) (45, 040) (1,399,198)
Financing activities:Redemption of bonds ............................................................................................................ (215) (500) (600) (1,777)P roceeds fr om issuance of long-term debt ........................................................................... 2,256 2,708 1,995 18,645
Repayment of long-term debt ..............................................................