Takeda Pharmaceutical Co - ADR

Strong 1H FY26 execution; core profitability broadly resilient (but EPS slightly down): - Core revenue: ~JPY 2.4T, -1% at CER (actual +8.4% vs prior year driven largely by FX). - Core operating profit: JPY 710.6B, +0.7% at CER (actual +11.2%). Management attributes the profit resilience to transformation savings funding launch/R&D investments. - Core EPS: JPY 308, -1.2% at CER. Reported EPS: JPY 193, +169% YoY (actual FX basis), helped by lower amortization/impairment and a very low tax rate in 1H likely to normalize in 2H. - Cash flow: Operating cash flow JPY 431.9B; adjusted free cash flow JPY 325.7B (lower YoY due to trade receivables factoring reduction and a payment tied to Protagonist opting out of MIMRYLO co-commercialization).

FY26 guidance maintained for revenue decline, but profit/EPS raised (FX-driven): - Revenue outlook: maintained low single-digit % decline at CER (product-by-product changes include lower albumin forecast, higher VYVANSE and TRINTELLIX, and expectation of immunoglobulin rebound in 2H). - Core operating profit & core EPS guidance: raised, mainly due to transaction FX benefits; underlying business described as “very much in line” with initial expectations. - Key forecast lift: management raised revenue by ~JPY 60B and core operating profit by ~JPY 30B, attributed primarily to FX rate assumptions.

Launch momentum is the biggest upside theme (3 “Horizon 1” growth launches): - ORZEYFUL (narcolepsy type 1): launched in Japan & China (Oct 15); US launch expected early November after DEA scheduling. Market focus: already-diagnosed patients; company emphasized specialty pharmacy readiness and education. - MIMRYLO (polycythemia vera): FDA approval Aug 28, commercially available shortly thereafter. Positioning: first-in-class hepcidin mimetic (once weekly SC) targeting durable hematocrit control; NCCN Category 1 for low- and high-risk PV. Management acknowledged reimbursement/access can take time, but said launch execution and HCP/patient enthusiasm are strong (no numbers yet). - Zasocitinib (plaque psoriasis): FDA accepted under priority review; EMA accepted too. Company expects potential US launch in 4Q FY26 if approved.