Takeda Pharmaceutical Co - ADR

Q1 FY26 headline performance: “on track” but modest decline at CER - Revenue JPY 1.22T: +10.2% actual FX, but -0.5% at constant exchange rates (CER) (in-line with expectations). - Core operating profit JPY 358.9B: +11.5% actual FX, but -0.5% at CER (reflects launch/pipeline investment partially offset by transformation savings). - Core EPS JPY 154: -11.8% at CER, largely due to favorable tax in prior year (so not an underlying demand collapse). - Reported EPS JPY 72 (lower than core; impacted by amortization and restructuring, plus other items).

Full-year financial guidance unchanged; cash flow softer for specific reasons - Company maintained FY26 outlook unchanged from May. - Free cash flow guidance: still targeting JPY 650B–750B for FY26. - Cash flow headwinds in Q1: operating cash flow lower due to working capital (trade receivables factoring program). - Adjusted free cash flow impact: USD 200M payment to Protagonist after Protagonist’s April opt-out of rusfertide co-promotion (now Takeda has exclusive global rights).

Gross margin / cost dynamics: mostly one-off small effect; transformation savings not yet “fully captured” - Gross margin improvement vs prior year was cited as ~+1.4 points, driven mainly by PDT contribution, plus transactional FX (e.g., euro strength vs USD affecting cost of goods). - Divestiture/technology transfer milestone income was described as small in Q1 and negligible for the full year (so not expected to persist as a tailwind). - Transformation program savings are on track, but many initiatives implemented late in the quarter, so Q1 captured savings were limited (implies margin trajectory may improve later).