9. Takeda

Takeda HQ
A top priority that threaded Takeda’s 2019 was deleveraging through selloffs—and its rare disease franchise wasn't helping. (Takeda)

Takeda
2019 revenue:
JPY 3,236.7 billion ($29.88 billion)
2018 revenue: JPY 1,781.0 billion ($16.44 billion)
Headquarters: Tokyo, Japan

This is the first time Takeda—or any Asian pharma—has ranked on our top revenue list, thanks to its $59 billion Shire buyout, which officially closed on Jan. 8, 2019.

To pull off that acquisition, Takeda took on a huge debt load mainly in the form of a $30.85 billion bridge loan, the largest raised in Asia. That humongous financing and its potential risk to the health of the company was one reason some Takeda shareholders opposed the deal, and it also led Moody’s to downgrade the company in late 2018.

That means a top priority that threaded through Takeda’s 2019 was deleveraging—and it made significant progress on that score.

Innovative medicines across gastroenterology, rare diseases, oncology, neuroscience and plasma-derived therapies have been identified as focus areas at post-Shire Takeda. CEO Christophe Weber quickly set a divestment goal of $10 billion, targeting non-core assets outside of those areas.

First up, it sold Shire’s dry eye med Xiidra to Novartis for up to $5.3 billion. The drug generated sales of about $400 million in 2018. For Takeda, Xiidra was an outlier in its business; but for Novartis, it strengthened the Swiss pharma’s ophthalmology medicine franchise led by its Roche-partnered macular degeneration therapy Lucentis.

Geographically, the company sold some prescription and over-the-counter drugs in Russia and other commonwealth states to Stada for $660 million in the biggest transaction in the German generics maker’s history. It also axed about 30 drugs in the Middle East and Africa to Swiss company Acino International for more than $200 million, as well as 18 products in Latin America to Brazil’s Hypera Pharma for $825 million. However, a $400 million deal for offloading the TachoSil surgical patch to Johnson & Johnson’s Ethicon was recently derailed by the Federal Trade Commission.

RELATED: Takeda nets $940M from sales of U.S. HQ to Horizon, Latin American brands to Hypera

The company also made adjustments outside its drug portfolio. After putting its birthplace headquarters in Osaka up for sale in 2018, Takeda moved its U.S. base late last year from the Chicago suburbs to the Boston region to join up with Shire’s. The old 70-acre campus in Deerfield, Illinois, recently sold to Horizon Therapeutics for $115 million. Takeda is also looking to divest a nearly new Shire biologics plant in Ireland.

Thanks to those selloffs, Takeda’s debt-lowering initiative moved faster than expected. As of December, the company’s net debt/EBITDA ratio had decreased to 4.1x, down from about 4.8x after the acquisition. There’s still a ways to go before the company can reach its goal of 2.0x; Takeda is targeting sometime between 2022 to 2024.

In contrast to its corporate status among the world’s top 10 pharmas by sales, Takeda’s portfolio lacks star products, especially after blood cancer stalwart Velcade went off patent. The drug had been holding its own—relatively speaking—in the first few months of generic competition, but in the three months ended in December, the company suddenly saw revenue drop nearly a quarter to JPY 27.2 billion ($250 million). Takeda attributed the sharp decline to lower royalty income after generic entry in Europe.

RELATED: Takeda's Ninlaro swings and misses in newly diagnosed myeloma

Meanwhile, Velcade follow-up Ninlaro has been posting double-digit sales growth, but that's no match to Johnson & Johnson’s Darzalex. Both drugs nabbed their first approvals in November 2015, but Darzalex is now way ahead sales-wise, with a 2019 haul of $3.0 billion. So far during Takeda’s fiscal 2019, Ninlaro has posted sales of JPY 18.3 billion, JPY 20.0 billion and JPY 19.8 billion each quarter until December, showing signs of slowing down.

Takeda also suffered some setbacks. In early 2019, the company withdrew an application for Ninlaro’s use as a maintenance therapy in post-transplant patients after the FDA requested data on how long the med can extend patients’ lives. It did announce a phase 3 win, in which Ninlaro outperformed placebo at keeping cancer at bay as a “switch” maintenance therapy for multiple myeloma patients not treated with stem cell transplantation. But again, it doesn’t yet have overall survival data.

In June, Takeda capped a phase 3 trial pairing Ninlaro with dexamethasone in systemic light-chain amyloidosis after an interim analysis found the combo was no better than standard chemo. Most recently, the company's bid to expand into newly diagnosed multiple myeloma was hit with a trial failure among patients ineligible for stem cell transplant.

At least inflammatory bowel disease med Entyvio is still on a fast growth trajectory. During the three quarters ended in December, its sales jumped 31% year over year, hitting JPY 263.5 billion ($2.43 billion). However, an application to introduce a more convenient subcutaneous formulation of Entyvio was recently rejected by the FDA. Takeda has said the setback was unrelated to its clinical data.

RELATED: Takeda unveils profit surprise on Shire integration—and no U.S. Natpara supply till 2021

There’s an obvious drag on Takeda’s top line: its rare disease business, or more specifically, hemophilia. In fact, rare disease is the only one of its five focus areas where Takeda recorded an underlying revenue decline in 2019. No thanks to Roche’s fast-growing antibody drug Hemlibra, sales of legacy Shire’s factor VIII booster Advate plummeted 26% in the three months ended in December to JPY 39.9 billion.

Competitive pressure on the hemophilia franchise was a key argument raised by opponents of the Shire deal. But according to CFO Costa Saroukos at a conference call in February, the 14% nine-month rare hematology sales dip was “still in line with our expectations.”

Also in the rare disease circle, Takeda voluntarily recalled hypoparathyroidism drug Natpara in the U.S. last September due to the possibility that rubber particles in the cartridge could get into the drug. Saroukos said the company was expecting a delay in resuming supply. “As a result, we no longer expect to record any U.S. Natpara revenue in fiscal year 2020,” he told investors. Before the recall, Natpara picked up JPY 7.1 billion in U.S. sales in Takeda’s first quarter by June.

Overall, Takeda’s total revenue in calendar year 2019 reached JPY 3,236.7 billion ($29.88 billion). In the three quarters in its fiscal 2019, it registered an underlying pro-forma revenue decrease of 1.2%.

9. Takeda