In response to rapidly declining profits and the downfall of ADHD drug Vyvanse, Takeda is planning to throw 140 billion Japanese yen ($899 million) toward a company-wide restructuring campaign.
The company saw its operating profit plummet 56.4% last fiscal year to 214 billion Japanese yen ($1.4 billion).
Now, with the overhaul in the works and 2024 marking the last year of “significant" generic headwinds for Vyvanse, Takeda said it expects to bring total profit to 225 billion yen ($1.4 billion) this fiscal year, which ends in March 2025.
If all goes to plan, the multi-year reorganization program will drive the drugmaker’s core operating profit margin above 30%. To get there, Takeda plans to prioritize "organizational agility," procurement savings and tech efficiencies, the company said in its full-year earnings presentation (PDF).
To achieve “organizational simplicity,” Takeda will “reduce layers” and “refine operating models,” the company added.
"This will require difficult choices when it comes to prioritization, including making some changes to roles over time, but we’re confident that this focus will enable us to create more long-term value for our patients, the global health care system and society," a company spokesperson said in an emailed statement.
The changes will "look different across individual teams and will be phased according to unique business needs and country requirements," the spokesperson added.
In addition to driving profitability, the plan is designed to allow Takeda to put resources behind the company's late-stage pipeline and its most promising products.
Takeda hopes to help offset the Vyvanse competition by investing in growth drivers and new product launches, which together should account for some 50% of the company's revenue, Takeda said.
Still, the company is projecting a modest 2% growth rate for its current fiscal year. That compares with a nearly 6% revenue increase during Takeda's 2023 fiscal year.
“We remain focused on returning to sustainable revenue and profit growth from FY2025 onwards and are confident in our long-term growth trajectory,” chief financial officer Milano Furuta noted in a release.
Vyvanse sales fell 14% to 423 trillion yen ($2.7 billion) after generics started swarming the market in August. The company previously called the impact "slightly milder" than expected as supply constraints initially hampered generic sales.
Takeda’s most lucrative sector last year was its GI franchise, driven by ulcerative colitis and Crohn’s disease med Entyvio. Sales of the med hit 800 billion yen ($5.1 billion).
The company is building on the momentum by “maximizing the potential of our inflammatory bowel disease (IBD) franchise around Entyvio,” it said in a filing (PDF), including by pursuing expansions into new indications such as active chronic pouchitis.