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Actos Drives H1 Sales, as Takeda Raises Forecast

Published: 11/6/2006
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Japanese drug leader Takeda today gave a boost to the domestic industry by unexpectedly raising its recurring profit forecasts by 11%, to ¥540 billion (US$4.6 billion), following a strong first-half sales performance by its oral diabetes Actos (pioglitazone) franchise, which grew by 45% year-on-year (y/y) to ¥161.4 billion.

Global Insight Perspective

 

Significance

Total sales at Takeda were up by 7.1%, almost entirely due to its global products and overseas revenues, while domestic Japanese sales actually fell by 2%.

Implications

The high single-digit sales growth absorbed increases in the selling, general and administrative (SGA) and R&D cost base (up by 6% and 17% respectively), leading to total operating income growth of 10%, to ¥236 billion. Operating margins stand at a comparatively healthy 37%.

Outlook

The second quarter was tough on Takeda, as it announced several pipeline disappointments in a year that has seen five Phase II/III pipeline terminations (TAK-715, TAK-654, TAK-128, TCV-116 and BNP-7787) and another approvable letter for joint venture TAP’s gout drug feboxustat. While forecasts have risen, we expect further licensing activities in the second half to fill emerging—and worrying—gaps in the country's pipeline.

Takeda's Faltering Lead

Japanese industry leader Takeda today announced its interim results for fiscal year (FY) 2006/07, covering the two quarters ending 30 September; it will make a presentation tomorrow. While overall top and bottom-line results are comparatively favourable, they disguise significant unrest at the healthcare giant. Sales rose by 7.1% to ¥642.4 billion (US$5.4 billion), driven largely by the prescription (Rx) drugs segment, which gained 12% on the year, and accounts for 87% of total sales. Domestic Japanese sales actually fell by 1.9%, to ¥331 billion, making up 51% of total sales; if current trends continue, the domestic market will account for less than half of total sales by this time next year. North American sales were particularly strong, gaining 28% to ¥206 billion.

Takeda: Selected Results, H1 2006/07

 

¥ Bil.

% Change, Y/Y

Sales

642.4

7.1

Pharmaceuticals

591.9

11.6

Ethical drugs

561.9

12.2

Consumer Healthcare

30.0

2.1

Japan

330.6

-1.9

North America

206.3

28.1

Europe

93.7

1.9

Others

11.9

20.8

Royalties

25.8

9.7

Cost of Sales

139.0

-1.8

Selling, General and Administrative (SGA)*

171

6.3

R&D

96.2

16.9

R&D as % of Sales*

15.0

-

Operating Income*

236.2

9.7

Operating Margins*

36.8

-

Net Income

159.1

-12.2

Source: Takeda/Global Insight
*Global Insight calculations

The arrival of four new drugs in Takeda’s portfolio—Rozerem (ramelteon), Amitizia (lubiprostone; stomach), Competact (pioglitazone/metformin; diabetes) and Duetact (pioglitazone/sulfonylurea; diabetes)—and the commencement of direct-to-consumer (DTC) advertising for one of these (Rozerem) is pushing up the cost base somewhat, with SGA spend gaining 6.3% during the first half. R&D expenditure rose by 17%, to equate to 15% of sales, as the pipeline now includes Phase II hypertension candidate TAK-491 and newly in-licensed Hematide (AF-37702; anaemia). Overall operating income was up by 10% to ¥236.2 billion.

Takeda: Product Sales, H1 2006/07

 

¥ Bil.

% Change, Y/Y

Global Products

Leuplin

62.4

0.3

Prevacid

76.6

-11.0

Blopress/Atacand

100.5

8.2

Actos

161.1

44.7

Domestic Sales

Blopress

63.2

4.9

Leuplin

32.2

2.8

Basen

28.4

-13.6

Takepron

28.3

5.0

Actos

16.0

46.4

Benet

8.5

9.6

Isovorin

6.9

15.0

Seltouch

6.6

-8.9

Pansoporin

5.7

-12.5

Glovenin

4.3

1.8

Leucovorin Tablet 25

0.8

17.8

Dasen

3.7

-1.0

Firstcin

3.5

-6.8

Rheumatrex

3.5

4.7

Calslot

3.2

-17.2

New Products

Rozerem

3.8

n/a

Amitizia

1.5

n/a

Source: Takeda

On the product front, Actos continues to stand out, with growth in the 44-52% range across all of its markets (Japan, the Americas, Europe and Asia); North American sales reached ¥133.2 billion. Meanwhile, Blopress/Atacand (candesartan; hypertension) is slowing down somewhat, although overseas growth was still up by 15% to ¥37.6 billion, and Japanese growth reached 5%, to ¥63.2 billion. The company's oncology and gastric ulcer portfolios continue to stall, with Leuplin (leuprorelin) down by 1.7% in the United States, to ¥38.4 billion, and Prevacid (lansoprazole) falling by 21% to ¥19.5 billion in Europe. Total sales of Leuplin and Prevacid showed negligible growth of 0.7% (to ¥91.4 billion) and 1.9% (to ¥196.8 billion) respectively. Domestically, the company was hit by the April 2006 price cuts, which particularly targeted diabetes drug Basen (voglibose); this treatment faced a 14% price cut, and underwent a corresponding 14% reduction in sales, to ¥28.4 billion.

Outlook and Implications

Takeda needs to move quickly out of the downward trajectory that has so far darkened the company’s outlook in FY2006/07, due largely to the frequency of its pipeline setbacks. Coupled with impending patent expirations (Prevacid and Blopress in 2009, Actos in 2011), Takeda may need to look into restructuring its base. A purchase of TAP (the company's joint venture (JV) with Abbott (U.S.)) may be on the cards once more, but Takeda has previously refused to be rushed into any acquisition, and it seems set on ensuring that the right price is paid for the JV.

Actos, and its new combination products Competact and Duetact, remains the company's guiding light, and its share of the prescription market has grown from 45% in December 2005 to 49.5% in August 2006. The release of CHICAGO and PERISCOPE studies this year is likely to further enhance its clinical competitiveness. In the pipeline, we expect few data to emerge in the near term, and the nearest milestones will be Phase II results for TAK-428 (diabetic neuropathy) and TAK-536 (azilsartan; hypertension), in early-2007. The main candidates to look out for remain fast-tracked severe sepsis drug TAK-242 (Phase III in Japan, the United States and Europe), Prevacid follow-up TAK-390MR (Phase III in the United States) and Phase II anaemia candidate Hematide. We still consider Takeda’s in-licensed DPP-IV inhibitor SYR-322 to be a low potential earner, due to the congested market in this segment.

Takeda: Forecasts, FY2006/07

 

¥ Bil.

% Change, Y/Y

Sales

1,300

7.2

Net Income

310

1.0

Source: Takeda

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