FORM 6-K

U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Report of Foreign Private Issuer

Pursuant to Rule 13a-16 or 15d-16 of

the Securities Exchange Act of 1934

Commission File Number: 001-38757

For the month of May 2019

TAKEDA PHARMACEUTICAL COMPANY LIMITED

(Translation of registrant’s name into English)

1-1, Nihonbashi-Honcho 2-Chome

Chuo-ku, Tokyo 103-8668

Japan

(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.

Form 20-F  ☒            Form 40-F  ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):  ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):  ☐

Information furnished on this form:

EXHIBIT

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

				Better Health, Brighter Future

News Release

May 14, 2019

Takeda Reports FY2018 Full Year Results and Issues FY2019 Guidance

FY2018 Full Year Results

Legacy Takeda Underlying Revenue +5.3%; Consolidated reported revenue +18.5%

Legacy Takeda Underlying Core Earnings margin expanded +540 basis points

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Innovative R&D engine delivered important pipeline milestones

Disposing non-core assets to generate cash and focus the business

Christophe Weber, President and Chief Executive Officer of Takeda, commented:

“Fiscal 2018 was an important year in the history of Takeda as we completed the acquisition of Shire to create a competitive, values-based, R&D-driven global biopharmaceutical leader. I am delighted to say that throughout the year, while we have focused on planning and executing the integration, we have also maintained strong business momentum, as demonstrated by our excellent financial results.

The integration of Shire is progressing as planned, aligned with Takeda’s values and culture. We have also identified opportunities to realize greater cost synergies, and already have made progress on our divestment strategy for non-core assets.

Looking ahead, I believe we have a strong and resilient foundation for the future growth of the business. We are focused on our five key business areas of GI, Rare Diseases, Plasma-Derived Therapies, Oncology and Neuroscience, and our revenue over the medium term will be driven by a balanced portfolio including 14 global brands. Our innovative pipeline is also delivering, as shown by the 15 clinical stage-ups over the past year, and we are committed to executing towards our margin expansion and deleveraging targets.

With our business area focus, R&D engine, and financial strength, Takeda is well positioned to deliver long-term value to patients and our shareholders.”

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FY2018 Consolidated Reported Results (April - March)

FY2018 Legacy Takeda Reported Results (April - March)

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FY2019 Full Year Guidance

FY2019 Management Guidance: Business momentum expected to largely offset significant Loss of Exclusivity headwinds

Note: FY2019 Management Guidance does not take into consideration the recently announced divestitures of XIIDRA and TACHOSIL. However, Takeda does not expect these divestitures to have a meaningful impact on its management guidance.

Costa Saroukos, Chief Financial Officer of Takeda, stated:

“Our guidance for fiscal year 2019 reflects a significant impact from Loss of Exclusivity, without which the top-line would be growing by ~6-7 percentage points, driven by continued volume expansion of key products such as ENTYVIO, TAKHZYRO, NINLARO, and our Immunoglobulin franchise. We expect our Underlying Core Earnings margin to reach the mid-twenties in fiscal 2019, and we are targeting Underlying Core Earnings margin in the mid-thirties in the medium term, driven by continued Opex efficiencies and relentless execution against our cost synergy targets. After closing the Shire acquisition we conducted a deep-dive, bottoms-up review of the synergy opportunities, and I am pleased to say we are raising our cost synergy target from $1.4 billion to approximately $2 billion in annual recurring savings by the end of fiscal 2021.

In addition to margin improvement, we also are committed to rapid deleveraging towards our target net debt / adjusted EBITDA ratio of 2.0x in 3 to 5 years. This will be driven by strong cash flow, and accelerated deleverage from our divestitures such as the recently announced agreements to sell XIIDRA and TACHOSIL. In addition, we will continue to make focused investments in the business to support our growth drivers, and intend to maintain our well-established dividend policy of 180 yen per share annually.

Takeda has delivered against its commitments in FY2018, as exemplified in our superb margin improvement and cash generation, and we are committed to delivering against our future targets to drive significant returns for our shareholders.”

FY2019 Forecast: Expecting strong increase in core earnings of +92.2%, with Net Profit excluding deal-related costs and the impact of purchase accounting growing at +17.7%

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For more details on Takeda’s FY2018 results and other financial information, please visit https://www.takeda.com/investors/reports/

About Takeda Pharmaceutical Company Limited

Takeda Pharmaceutical Company Limited (TSE:4502/NYSE:TAK) is a global, values-based, R&D-driven biopharmaceutical leader headquartered in Japan, committed to bringing Better Health and a Brighter Future to patients by translating science into highly-innovative medicines. Takeda focuses its R&D efforts on four therapeutic areas: Oncology, Gastroenterology (GI), Rare Diseases and Neuroscience. We also make targeted R&D investments in Plasma-Derived Therapies and Vaccines. We are focusing on developing highly innovative medicines that contribute to making a difference in people’s lives by advancing the frontier of new treatment options and leveraging our enhanced collaborative R&D engine and capabilities to create a robust, modality-diverse pipeline. Our employees are committed to improving quality of life for patients and to working with our partners in health care in approximately 80 countries and regions.

For more information, visit https://www.takeda.com

Contacts

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Important Notice

For the purposes of this notice, “press release” means this document, any oral presentation, any question and answer session and any written or oral material discussed or distributed by Takeda Pharmaceutical Company Limited (“Takeda”) regarding this release. This press release (including any oral briefing and any question-and-answer in connection with it) is not intended to, and does not constitute, represent or form part of any offer, invitation or solicitation of any offer to purchase, otherwise acquire, subscribe for, exchange, sell or otherwise dispose of, any securities or the solicitation of any vote or approval in any jurisdiction. No shares or other securities are being offered to the public by means of this press release. No offering of securities shall be made in the United States except pursuant to registration under the U.S. Securities Act of 1933, as amended, or an exemption therefrom. This press release is being given (together with any further information which may be provided to the recipient) on the condition that it is for use by the recipient for information purposes only (and not for the evaluation of any investment, acquisition, disposal or any other transaction). Any failure to comply with these restrictions may constitute a violation of applicable securities laws.

The companies in which Takeda directly and indirectly owns investments are separate entities. In this press release, “Takeda” is sometimes used for convenience where references are made to Takeda and its subsidiaries in general. Likewise, the words “we”, “us” and “our” are also used to refer to subsidiaries in general or to those who work for them. These expressions are also used where no useful purpose is served by identifying the particular company or companies.

Forward-Looking Statements

This press release and any materials distributed in connection with this press release may contain forward-looking statements, beliefs or opinions regarding Takeda’s future business, future position and results of operations, including estimates, forecasts, targets and plans for Takeda. In particular, this press release contains forecasts and management estimates related to the financial and operational performance of Takeda, including statements regarding forecasts for Revenue, Operating profit, Adjusted EBITDA, Profit before income taxes, Net profit attributable to owners of Takeda, Basic earnings per share, Amortization and impairment and other income/expense, Underlying Revenue, Underlying Core Earnings margin, Underlying Core EPS and Net Debt. Without limitation, forward looking statements often include the words such as “targets”, “plans”, “believes”, “hopes”, “continues”, “expects”, “aims”, “intends”, “will”, “may”, “should”, “would”, “could” “anticipates”, “estimates”, “projects” or words or terms of similar substance or the negative thereof. Any forward-looking statements in this document are based on the current assumptions and beliefs of Takeda in light of the information currently available to it. Such forward-looking statements do not represent any guarantee by Takeda or its management of future performance and involve known and unknown risks, uncertainties and other factors, including but not limited to: the economic circumstances surrounding Takeda’s business, including general economic conditions in Japan, the United States and worldwide; competitive pressures and developments; applicable laws and regulations; the success of or failure of product development programs; decisions of regulatory authorities and the timing thereof; changes in exchange rates; claims or concerns regarding the safety or efficacy of marketed products or products candidates; and post-merger integration with acquired companies, any of which may cause Takeda’s actual results, performance, achievements or financial position to be materially different from any future results, performance, achievements or financial position expressed or implied by such forward-looking statements. For more information on these and other factors which may affect Takeda’s results, performance, achievements, or financial position, see “Item 3. Key Information – D. Risk Factors” in Takeda’s Registration Statement on Form 20-F filed with the U.S. Securities and Exchange Commission, available on Takeda’s website at: https://www.takeda.com/investors/reports/sec-filings/ or at www.sec.gov. Neither Takeda nor its management gives any assurances that the expectations expressed in these forward-looking statements will turn out to be correct, and actual results, performance or achievements could materially differ from expectations. Persons receiving this press release should not place undue reliance on forward looking statements. Takeda undertakes no obligation to update any of the forward-looking statements contained in this press release or any other forward-looking statements it may make. Past performance is not an indicator of future results and the results of Takeda in this press release may not be indicative of, and are not an estimate, forecast or projection of Takeda’s future results.

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Certain Non-IFRS Financial Measures

This press release and materials distributed in connection with this press release include certain IFRS financial measures not presented in accordance with International Financial Reporting Standards (“IFRS”), such as Underlying Revenue, Core Earnings, Underlying Core Earnings, Core Net Profit, Underlying Core Net Profit, Underlying Core EPS, Net Debt, EBITDA, Adjusted EBITDA and Operating Free Cash Flow. Takeda’s management evaluates results and makes operating and investment decisions using both IFRS and non-IFRS measures included in this press release. These non-IFRS measures exclude certain income, cost and cash flow items which are included in, or are calculated differently from, the most closely comparable measures presented in accordance with IFRS. By including these non-IFRS measures, management intends to provide investors with additional information to further analyze Takeda’s performance, core results and underlying trends. Takeda’s non-IFRS measures are not prepared in accordance with IFRS and such non-IFRS measures should be considered a supplement to, and not a substitute for, measures prepared in accordance with IFRS (which we sometimes refer to as “reported” measures). Investors are encouraged to review the reconciliation of non-IFRS financial measures to their most directly comparable IFRS measures.

Further information on certain of Takeda’s Non-IFRS measures is posted on Takeda’s investor relations website at https://www.takeda.com/investors/reports/quarterly-announcements/quarterly-announcements-2018/

Medical information

This press release contains information about products that may not be available in all countries, or may be available under different trademarks, for different indications, in different dosages, or in different strengths. Nothing contained herein should be considered a solicitation, promotion or advertisement for any prescription drugs including the ones under development.

Financial information

Takeda’s financial statements are prepared in accordance with International Financial Reporting Standards (“IFRS”). The financial statements of Shire plc (“Shire”) are presented in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”). Therefore, the respective financial information of Takeda and Shire are not directly comparable.

The Shire acquisition closed on January 8, 2019, and our consolidated results for the fiscal year ended March 31, 2019 include Shire’s results from January 8, 2019 to March 31, 2019. References to “Legacy Takeda” businesses are to our businesses held prior to our acquisition of Shire. References to “Legacy Shire” businesses are to those businesses acquired through the Shire acquisition.

Furthermore, this presentation refers to Takeda’s Adjusted EBITDA and Shire’s Non-GAAP EBITDA. Takeda’s Adjusted EBITDA is not a measure presented in accordance with IFRS, and Shire’s Non-GAAP EBITDA is not a measure presented in accordance with U.S. GAAP. The most closely comparable measure presented in accordance with IFRS (for Takeda) is net profit for the year and in accordance with U.S. GAAP (for Shire) is net income. Please see slides 58 and 74 for a further description of Takeda’s Adjusted EBITDA and Shire’s Non-GAAP EBITDA and a reconciliation to the respective most closely comparable measures presented in accordance with IFRS and U.S. GAAP. Takeda’s Adjusted EBITDA and Shire’s Non-GAAP EBITDA are not directly comparable, because (1) Takeda’s results are based on IFRS and Shire’s results are based on U.S. GAAP and (2) Takeda’s Adjusted EBITDA and Shire’s Non-GAAP EBITDA are defined differently.

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FY2018 REPORTED RESULTS IN DETAIL FY2017 FY2018 FY2018 LEGACY TAKEDA LEGACY TAKEDA*1 (A) SHIRE ACQUISITION RELATED COSTS*2 (B) LEGACY SHIRE*3 (C) PURCHASE ACCOUNTING IMPACT (D) CONSOLIDATED TOTAL (A)+(B)+(C)+(D) Revenue 1,770.5 1,788.0 +17.5 +1.0%—309.2—2,097.2 +326.7 +18.5% Cost of sales -495.9 -476.4 +19.6 +3.9%—-101.6 -81.7 -659.7 -163.8 -33.0% Gross Profit 1,274.6 1,311.7 +37.1 +2.9%—207.6 -81.7 1,437.5 +162.9 +12.8% % of revenue 72.0% 73.4% +1.4pp—67.1%—68.5% -3.4pp SG&A expenses -628.1 -594.7 +33.4 +5.3% -23.8 -98.5 -0.6 -717.6 -89.5 -14.2% R&D expenses -325.4 -323.7 +1.7 +0.5% -1.6 -43.0—-368.3 -42.9 -13.2% Amortization of intangible assets -126.1 -95.4 +30.7 +24.3%—0.0 -99.2 -194.7 -68.6 -54.4% Impairment losses on intangible assets 4.0 -8.7 -12.7 — -0.0—-8.7 -12.7—Other operating income 169.4 161.2 -8.2 -4.8%—-1.4—159.9 -9.5 -5.6% Other operating expenses -126.6 -38.6 +88.0 +69.5% -59.6 -4.9—-103.2 +23.4 +18.5% Operating profit 241.8 411.8 +170.0 +70.3% -85.0 59.8 -181.6 205.0 -36.8 -15.2% % of revenue 13.7% 23.0% +9.4pp—19.3%—9.8% -3.9pp Finance income 39.5 16.6 -22.9 -57.9%—-0.0 0.2 16.8 -22.7 -57.4% Finance expenses -31.9 -27.1 +4.8 +15.1% -41.3 -10.6 -4.2 -83.3 -51.4 -160.9% Equity income/loss -32.2 -43.9 -11.7 -36.4%—0.3—-43.6 -11.4 -35.5% Profit before tax 217.2 357.4 +140.2 +64.5% -126.3 49.4 -185.6 94.9 -122.3 -56.3% Net profit 186.9 312.9 +126.0 +67.4% -100.2 38.1 -141.7 109.1 -77.8 -41.6% EPS (yen)*4 239 yen 399 yen +159 yen +66.6% ——113 yen -126 yen -52.6% Core Earnings 322.5 393.3 +70.8 +21.9%—66.0—459.3 +136.8 +42.4% Core Earnings Margin 18.2% 22.0% +3.8pp—21.4%—21.9% +3.7pp USD/JPY 111 yen 111 yen -0 yen -0.4% 111 yen -0 yen -0.4% EUR/JPY 129 yen 129 yen -1 yen -0.4% 129 yen -1 yen -0.4% (BN YEN) VS. PY VS. PY FY2018 *1. Excludes Legacy Shire financials (from January 8, 2019 to March 31, 2019), costs incurred by Legacy Takeda and Legacy Shire related to the acquisition, and financial impact from purchase accounting *2. Costs incurred by Legacy Takeda and Legacy Shire related to the acquisition *3. Legacy Shire financials (from January 8, 2019, to March 31, 2019) excluding acquisition related costs *4. Number of shares used for FY2018 EPS calculation: Legacy Takeda 784,477,109 shares (as of Jan 7, 2019, the day before the completion of the Shire acquisition) and consolidated total 961,476,993 shares (April 2018 – March 2019 average)

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FY2019 FORECAST Note: This FY2019 Reported Forecast does not take into consideration the recently announced divestitures of XIIDRA and TACHOSIL, but Takeda does not expect these divestitures to have a material impact. The FY2019 Reported Forecast will be updated at a later date to reflect these divestitures once a reliable estimate of their impact can be made, which will depend upon the exact timing of transaction close. FY2018 Actual FY2019 Forecast Revenue 2,097.2 3,300.0 +1,202.8 +57.4% 2,097.2 3,300.0 +1,202.8 +57.4% R&D expenses -368.3 -491.0 -122.7 -33.3% -366.7 -491.0 -124.3 -33.9% Amortization & impairment -203.4 -659.0 -455.6 -224.0% -104.1 -220.0 -115.9 -111.3% Other operating income 159.9 9.0 -150.9 -94.4% 159.9 9.0 -150.9 -94.4% Other operating expenses -103.2 -172.0 -68.8 -66.7% -43.5 -18.0 +25.5 +58.6% Operating profit 205.0 -193.0 -398.0—471.5 654.0 +182.5 +38.7% Profit before tax 94.9 -369.0 -463.9—406.8 581.0 +174.2 +42.8% Net profit 109.1 -383.0 -492.1—351.0 413.0 +62.0 +17.7% EPS (yen) 113 yen -246 yen -360 yen—365 yen 266 yen -99 yen -27.2% Core Earnings 459.3 883.0 +423.7 +92.2% 459.3 883.0 +423.7 +92.2% USD/JPY 111 yen 111 yen -0 yen EUR/JPY 129 yen 124 yen -5 yen (Bn yen) FY2019 Forecast FY2018 Actual vs. PY Excl. Shire acquisition vs. PY related costs and purchase accounting impact Shire acquisition related costs FY2018 FY2019 SG&A and R&D expenses—acquisition costs, etc. -25.3—Other operating expenses—integration costs -59.6 -154.0 Financial expenses—Bridge loan fees, interests, etc. -41.3 -87.0 Profit Before Tax impact -126.3 -241.0 Purchase accounting impact (major items) Cost of sales—unwinding of inventories step-up -82.2 -253.0 Amortization of intangible assets—Shire acquisition -99.2 -439.0 Other non-cash items Amortization of intangible assets—Legacy Takeda -95.4 -99.0 Impairment -8.7 -121.0

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SUMMARY OF FINANCIAL STATEMENTS [IFRS] (CONSOLIDATED)

Financial Results for the Fiscal Year Ended March 31, 2019

May 14, 2019

Scheduled date of annual general meeting of shareholders: June 27, 2019

Scheduled date of securities report submission: June 27, 2019

Scheduled date of dividend payment commencement: June 28, 2019

Supplementary materials for the financial statements: Yes

Presentation to explain for the financial statements: Yes

(Million JPY, rounded to the nearest million)

(Reference) Share of profit (loss) on investments accounted for using the equity method:

Fiscal 2018        (43,627) million JPY             Fiscal 2017         (32,199) million JPY

(Note) (1) Consolidated Operating Results and (3) Consolidated Cash Flows include Shire results from January 8 to March 31, 2019.

Fiscal 2019 Management Guidance (Excluding any impact of divestitures)

Additional Information

(Reference) Summary of Unconsolidated Results

Summary of Unconsolidated Results for Fiscal 2018 (April 1, 2018 – March 31, 2019)

Takeda Pharmaceutical Company Limited (4502)

Consolidated Financial Statements for Fiscal 2018

Attachment Index

[Appendix]

  1 Revenue by Region

  2 Prescription Drugs Revenue by Region

  3 Major Legacy Takeda Product Sales in Each Region

  4 Revenue by Business Area

  5 Product Sales Analysis

  6 Product Forecasts

  7 Exchange Rate

  8 CAPEX, Depreciation, Amortization and Impairment Losses

  9 Financial Indicators

10 Consolidated Financials - Reconciliation from Reported to Core - FY2018 & FY2017

11 Legacy Takeda - Reconciliation from Reported to Core/Underlying Core - FY2018 & FY2017

12 Reconciliation from net profit to EBITDA / Adjusted EBITDA

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Takeda Pharmaceutical Company Limited (4502)

Consolidated Financial Statements for Fiscal 2018

1. Financial Highlights for the Year Ended March 31, 2019

(1) Business Performance

(i) Business Overview

We are a global, values-based, R&D-driven, biopharmaceutical company with an innovative portfolio, engaged primarily in the research, development, production and marketing of pharmaceutical products. We have a geographically diversified global business base operating in approximately 80 countries, and our prescription drugs are marketed in approximately 100 countries, which are recognized brands in major countries worldwide.

We have grown both organically and through acquisition, completing multiple transactions that have brought growth to our areas of therapeutic, geographic, and pipeline focus; especially through the acquisition of Shire plc (“Shire”) in January 2019 for 6.2 trillion JPY. The acquisition of Shire strengthened our presence in GI and neuroscience, while providing us with a leading position in rare diseases and plasma derived therapies. It also enhanced our R&D engine creating a highly complementary, robust, modality-diverse pipeline. Commercially, the acquisition significantly strengthened our presence in the United States.

We are focused on four core therapeutic areas of oncology, gastroenterology, rare diseases, neuroscience along with targeted R&D investments in plasma-derived therapies and vaccines.

Our business and results of operations are impacted by many factors, including acquisitions and divestitures, changes in the global pharmaceutical industry, and other economic conditions. Examples of these factors include, but are not limited to:

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Takeda Pharmaceutical Company Limited (4502)

Consolidated Financial Statements for Fiscal 2018

(ii) Consolidated Financial Results (April 1 to March 31, 2019)

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Takeda Pharmaceutical Company Limited (4502)

Consolidated Financial Statements for Fiscal 2018

Fiscal Year Ended March 31, 2019 compared with the Fiscal Year Ended March 31, 2018

The consolidated financial results for the fiscal year ended March 31, 2019 include the impact of acquisition of Shire and Shire operations for the period from January 8 to March 31, 2019, which significantly impacted on our results of operation. The following summarizes the impact on our results of operations in the year end March 31, 2019 and on the change in our results between years.

Billion JPY except for percentages

Revenue. Revenue increased 326.7 billion JPY, or 18.5%, to 2,097.2 billion JPY for the fiscal year ended March 31, 2019, including 309.2 billion JPY resulting from the Shire Acquisition.

The remaining increase of 17.5 billion JPY, or 1.0%, results from the continued expansion from three business areas (Gastroenterology, Oncology, and Neuroscience), which was partially offset by the divestitures and the unfavorable impact of foreign currency movements. Change in revenue in the three core business areas was primarily attributable to the following products:

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Takeda Pharmaceutical Company Limited (4502)

Consolidated Financial Statements for Fiscal 2018

Sales of TAKECAB (for acid-related diseases) were 58.2 billion JPY in the fiscal year ended March 31, 2019, an increase of 9.8 billion JPY, or 20.1%, versus the previous year. The increase was driven by the expansion of new prescriptions in the Japanese market due to TAKECAB’s efficacy in reflux esophagitis and the prevention of recurrence of gastric ulcers during low-dose aspirin administration.

The decrease in revenue resulting from divestitures was primarily due to a 18.7 billion JPY decrease resulting from sale of seven long-listed products in Japan to Teva Takeda Yakuhin Ltd. in May 2017, 11.6 billion JPY decrease from the disposition of Guangdong Techpool Bio-Pharma Co in May 2018, and a decrease of 11.0 billion JPY from terminating Takeda’s co-promotion and distribution of Xeljanz in Japan in March 2018.

Shire contributed 309.2 billion JPY to our revenue from the date of acquisition. As part of the integration, this included the application of Takeda’s distribution channel policies to Shire’s portfolio, and a one-time effect resulted in significantly lower days-on-hand of commercial product at wholesalers. Days-on-hand in commercial stock was decreased significantly across various products. The sales were primarily from the following products:

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Takeda Pharmaceutical Company Limited (4502)

Consolidated Financial Statements for Fiscal 2018

We generated revenue from sales in the following geographies:

Billion JPY except for percentages

Cost of Sales. Cost of Sales increased 163.8 billion JPY, or 33.0%, to 659.7 billion JPY for the fiscal year ended March 31, 2019. This includes 101.6 billion JPY related to the sale of Shire products and the impact of purchase price allocation of a 81.7 billion JPY mainly due to non-cash charge from the unwinding of the fair value step up on the inventory from the Shire Acquisition. This increase was offset by a decrease in remaining Cost of Sales 19.6 billion JPY, or 3.9%, primarily due to a more favorable product mix.

Selling, General and Administrative (SG&A) expenses. SG&A expenses increased 89.5 billion JPY, or 14.2%, to 717.6 billion JPY for the fiscal year ended March 31, 2019, primarily due to acquisition of Shire’s operations in our results of 98.5 billion JPY and related acquisition costs of 23.8 billion JPY. This increase was partially offset by a decrease of remaining SG&A expenses of 33.4 billion JPY due to a favorable impact of the Global Opex Initiative as well as lower long-term share-based incentive payments to management.

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Takeda Pharmaceutical Company Limited (4502)

Consolidated Financial Statements for Fiscal 2018

Research and Development (R&D) expenses. R&D expenses increased 42.9 billion JPY, or 13.2%, to 368.3 billion JPY, primarily resulting from the acquisition of Shire. The remainder of our R&D expenses remained steady compared to the previous year.

Amortization and Impairment Losses on Intangible Assets Associated with Products. Amortization and Impairment Losses on Intangible Assets Associated with Products increased by 81.2 billion JPY, or 66.5%, to 203.4 billion JPY for the fiscal year ended March 31, 2019. This represents an increase of 99.2 billion JPY related to amortization of intangible assets recorded in the Shire Acquisition and a 22.6 billion reversal of the COLCRYS impairment recorded in the previous year. This increase was offset by lower amortization expense of 36.7 billion JPY, which related to the VELCADE intangible asset fully amortized within the previous year.

Other Operating Income. Other Operating Income decreased 9.5 billion JPY, or 5.6%, to 159.9 billion JPY for the fiscal year ended March 31, 2019. The decrease was primarily due to the net impact of a 106.3 billion JPY gain on the sale of Wako Pure Chemical Industries, Ltd. recorded in the previous year, whereas we recorded a 50.3 billion gain on sale of Property, Plant & Equipment and Investment Property including Takeda’s old headquarter building in Tokyo as well as a 38.2 billion JPY gain on sale of shares of the subsidiary, to which respective real estate businesses were transferred in the current year.

Other Operating Expenses. Other Operating Expenses decreased 23.4 billion JPY, or 18.5%, to 103.2 billion JPY for the fiscal year ended March 31, 2019, which was a decrease of 88.0 billion JPY partially offset by 59.6 billion JPY of Shire integration costs. The decrease was primarily due to a decrease of 22.8 billion JPY in restructuring expense, and other costs incurred in the prior year that did not reoccur in the current fiscal year such as a 41.5 billion JPY loss on the liquidation of a foreign subsidiary.

Operating Profit. As a result of the above factors, Operating Profit decreased by 36.8 billion JPY, or 15.2%, to 205.0 billion JPY for the fiscal year ended March 31, 2019.

Net Financial Income / (Expense). Net Financial Expense was a 66.4 billion JPY in the current year, an increase of 74.1 billion JPY compared to the previous year, which includes 41.3 billion JPY mainly related to interest on borrowings used to partially fund the Shire Acquisition. The remaining increase is primarily due to the exclusion of a 30.4 billion JPY gain from the adoption of a new accounting standard related to accounting for equity securities that was recorded in the prior year.

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Takeda Pharmaceutical Company Limited (4502)

Consolidated Financial Statements for Fiscal 2018

Shares of Loss of Associates Accounted for Using the Equity Method. Shares of Loss of Associates Accounted for Using the Equity Method were 43.6 billion JPY, an increase of 11.4 billion JPY from the previous year. This primarily relates to Takeda’s share of an impairment charge recognized by Teva Takeda Pharma Ltd. Teva Takeda Pharma Ltd. operates a business of long-listed products and generics, and conducted a revaluation of its assets in response to changes in the business environment.

Income Tax expenses. Income Tax Expenses decreased 44.6 billion JPY, or -146.3% from 30.5 billion JPY for the fiscal year ended March 31, 2018 to tax benefit of 14.1 billion JPY for the fiscal year ended March 31, 2019. This decrease was mainly due to tax benefit of 58.7 billion JPY from the Shire acquisition. Excluding the Shire acquisition impact, the remaining Income Tax Expenses increased 14.1 billion JPY mainly due to an increase in Profit Before Tax, as well as the impacts from the enactment of the Tax Cuts and Jobs Act (Tax Reform) in the U.S. in the previous year. These factors were partially offset by capital loss related to restructuring of subsidiaries in the current year.

Net Profit for the Year. Net Profit for the Year decreased 77.7 billion JPY, or 41.6%, to 109.0 billion JPY for the fiscal year ended March 31, 2019.

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Takeda Pharmaceutical Company Limited (4502)

Consolidated Financial Statements for Fiscal 2018

(iii) Underlying Growth (April 1, 2018 to March 31, 2019)

Takeda uses the concept of “Underlying Growth” for internal planning and performance evaluation purposes. For the year ended March 31, 2019, the impact of Shire acquisition has been excluded from our Underlying measures to allow comparison to prior year Underlying measures.

Underlying Growth compares two periods (quarters or years) of financial results under a common basis and is used by management to assess the business. These financial results are calculated on a constant currency basis and excludes the impacts of divestitures and other amounts that are unusual, non-recurring items or unrelated to our ongoing operations. Although these are not measures defined by IFRS, Takeda believes Underlying Growth is useful to investors as it provides a consistent measure of our performance.

Takeda uses “Underlying Revenue ⁽¹⁾ Growth”, “Underlying Core Earnings ⁽²⁾ Growth”, and “Underlying Core EPS ⁽³⁾ Growth” as key financial metrics.

In this period, the underlying revenue excludes the impact of the sale of 7 long-listed products in Japan to Teva Takeda Yakuhin Ltd. which is a subsidiary of Teva Takeda Pharma Ltd. and the impact of the divestitures of Multilab Indústria e Comércio de Produtos Farmacêuticos Ltda. and Guangdong Techpool Bio-Pharma Co., Ltd.

In this period, divestitures include the impact of the sale of 7 long-listed products in Japan to Teva Takeda Yakuhin Ltd., and the impact of the divestitures of Multilab Indústria e Comércio de Produtos Farmacêuticos Ltda. and Guangdong Techpool Bio-Pharma Co., Ltd.

In this period, the other non-operating significant items that are excluded in calculating Underlying Core EPS include the financial costs such as incremental interest costs from loans payable related to the Shire acquisition in addition to fair value adjustments and the imputed financial charge related to contingent consideration.

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Takeda Pharmaceutical Company Limited (4502)

Consolidated Financial Statements for Fiscal 2018

Underlying Revenue. Legacy Takeda Underlying Revenue growth was +5.3% compared to the same period of the previous year, driven by the strong performance of Takeda’s Growth Drivers and more specifically products such as ENTYVIO (for ulcerative colitis and Crohn’s disease) +34.8%, NINLARO (for multiple myeloma) +36.1%, ICLUSIG (for leukemia) +24.6%, TAKECAB (for acid-related diseases) +20.1% and TRINTELLIX (for major depressive disorder) +19.4%. The Underlying Revenue of Takeda’s Growth Drivers grew by +11.1%, which is 63.3% of total revenue.

Underlying Core Earnings. Legacy Takeda Underlying Core Earnings growth was +38.7%, reflecting strong Underlying Revenue growth and the positive impact of the Global Opex Initiative (4). Underlying Cost of Sales as a percentage of sales improved by +1.4pp driven by a more favorable sales mix. Underlying Operating Expenses as a percentage of sales improved by +3.9pp driven by the impact of the Global Opex Initiative. The combination of the above factors led to an improvement in the Core Earnings Margin by 5.4pp to 22.3%.

Underlying Core EPS. Legacy Takeda Underlying Core EPS growth was +29.0% compared to the same period of the previous year reflecting strong Underlying Core Earnings growth of +38.7%.

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Takeda Pharmaceutical Company Limited (4502)

Consolidated Financial Statements for Fiscal 2018

(2) Consolidated Financial Position

Assets. Total Assets as of March 31, 2019 were 13,872.3 billion JPY, reflecting an increase of 9,765.9 billion JPY compared to the previous fiscal year-end. Goodwill and Intangible Assets increased by 3,132.2 billion JPY and 3,846.1 billion JPY, respectively, mainly due to the Shire acquisition.

Liabilities. Total Liabilities as of March 31, 2019 were 8,708.7 billion JPY, reflecting an increase of 6,619.7 billion JPY compared to the previous fiscal year-end. Bonds and Loans increased by 4,765.3 billion JPY to 5,751.0 billion JPY (Note) mainly due to an issuance of bonds and execution of loans to finance funds for the Shire acquisition. In addition, Deferred Tax Liabilities also increased by 776.3 billion JPY to 867.1 billion JPY due to the Shire acquisition.

Bonds:

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Takeda Pharmaceutical Company Limited (4502)

Consolidated Financial Statements for Fiscal 2018

Loans:

Equity. Total Equity as of March 31, 2019 was 5,163.6 billion JPY, an increase of 3,146.2 billion JPY compared to the previous fiscal year-end. Share Capital and Share Premium increased by 1,565.7 billion JPY and 1,559.5 billion JPY, respectively, as a result of the issuance of shares 3,131.3 billion JPY due to the acquisition of Shire.

(3) Consolidated Cash Flow

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Takeda Pharmaceutical Company Limited (4502)

Consolidated Financial Statements for Fiscal 2018

Net cash from operating activities decreased by 49.4 billion JPY from 377.9 billion JPY in the fiscal year ended March 31, 2018 to 328.5 billion JPY in the fiscal year ended March 31, 2019, mainly due to the effect of a lower net profit of 77.7 billion JPY and the impact of certain unfavorable other adjustments including lower income tax expenses of 44.6 billion JPY primarily driven by a non-cash tax benefit on the impact of purchase accounting of the Shire acquisition and a loss on liquidation of foreign operations of 41.5 billion JPY recorded in the previous year. These effects were partially offset by increase in depreciation and amortization of 90.3 billion JPY mainly from intangible assets associated with product recorded in the acquisition of Shire as well as favorable effect of other adjustments including an increase in net financial expense driven by 66.4 billion JPY recorded in association with the acquisition of Shire.

Net cash used in investing activities was 2,835.7billion JPY for the fiscal year ended March 31, 2019, compared to 93.3 billion JPY in the fiscal year ended March 31, 2018. This increase was mainly due to net of cash consideration of 2,891.9 billion JPY for the acquisition of Shire.

Net cash from financing activities was 2,946.2 billion JPY for the fiscal year ended March 31, 2019, compared to net cash used in financing activities of 326.2 billion JPY in the fiscal year ended March 31, 2018. This was the result of an increase of short-term loans of 367.3 billion JPY and proceeds from bonds and long-term loans of 2,795.9 billion JPY mainly for the acquisition of Shire.

(4) Outlook for Fiscal 2019

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Takeda Pharmaceutical Company Limited (4502)

Consolidated Financial Statements for Fiscal 2018

This FY2019 Reported Forecast does not take into consideration the divestitures of XIIDRA (lifitegrast ophthalmic solution) 5% product and TACHOSIL Fibrin Sealant Patch, which were announced on May 9, 2019. At present, Takeda does not expect these divestitures to have a material impact on its FY2019 Reported Forecast. The FY2019 Reported Forecast will be updated at a later date to reflect these divestitures once a reliable estimate of their impact can be made, which will depend upon the exact timing of transaction close.

[Revenue]

Takeda expects revenue to be 3,300.0 billion JPY, an increase of 1,202.8 billion JPY or +57.4% from the prior year, because post-close of the Shire acquisition FY2019 will be the first year its business will be consolidated for the whole year. Of the five key business areas, we expect continued growth from the key legacy Takeda growth products such as ENTYVIO and TAKECAB in Gastroenterology, NINLARO and ADCETRIS in Oncology, TRINTELLIX in Neuroscience. In the Rare Disease business area, expanded by the Shire acquisition, TAKHZYRO, ADYNOVATE, NATPARA, as well as GAMMAGARD and FLEXBUMIN from Plasma Derived Therapies will contribute to increased revenue. However, multiple products including VELCADE are expected to be affected by competitive entrants into the market as well as loss of exclusivity. Also, as part of the integration process of Shire, a temporary decline in revenue is expected from legacy Shire products due to the continued effort of improving days-on-hand of commercial product at wholesalers.

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Takeda Pharmaceutical Company Limited (4502)

Consolidated Financial Statements for Fiscal 2018

[Operating Profit]

Operating Profit is expected to be a loss of 193.0 billion JPY, a decline of 398.0 billion JPY versus the prior year. Integration costs of 154.0 billion JPY, an increase of 69.0 billion JPY versus the prior year, are expected for FY2019 as part of the Shire acquisition related costs. Also, the effect of purchase accounting due to the Shire acquisition will negatively impact Operating Profit by 693.0 billion JPY, an increase of 511.4 billion JPY versus the prior year, which will include cost of sales related to the unwind of inventory fair value adjustment of 253.0 billion JPY and 439.0 billion JPY amortization of intangible assets for FY2019.

When excluding the effects of these one-time costs and non-cash costs, Operating Profit is expected to be 654.0 billion JPY, an increase of 182.5 billion JPY or +38.7%. Moreover, no gains from the sale of real estate / real estate operations are expected in FY2019 (legacy Takeda had 88.6 billion JPY in the prior year). Also, for impairment losses of intangible assets, a 121.0 billion JPY estimate based on the intangible asset balance increased by the Shire acquisition calculated with the probability from past impairment losses is included, but currently no evidence of impairment is recognized for a specific product or pipeline.

[Profit Before Tax]

Profit Before Tax is expected to be a loss of 369.0 billion JPY, a decrease of 463.9 billion JPY versus the prior year. Shire acquisition related costs will reduce Profit Before Tax by 114.7 billion JPY from FY2019. In addition to the 69.0 billion JPY decline in Operating Profit, an 87.0 billion JPY interest expense is expected from the new debt incurred in relation to the financing for the Shire acquisition, and so finance expenses increase 45.7 billion JPY versus the prior year. Also, the effect of purchase accounting for the Shire acquisition will increase 523.4 billion JPY in FY2019 including finance expenses forecasted to increase 10.8 billion JPY to 15.0 billion JPY.

When excluding these effects, Profit Before Taxes increase 174.2 billion JPY or +42.8% versus prior year to 581.0 billion JPY.

[Net profit for the year (attributable to owners of the Company)]

Net profit for the year (attributable to owners of the Company) is expected to be a loss of 383.0 billion JPY, a decrease of 492.1 billion JPY.

When excluding the effects of the Shire acquisition related costs and the Purchase Price Allocation for the Shire acquisition, Net profit for the year (attributable to owners of the Company) is 413.0 billion JPY, an increase of 62.0 billion JPY or +17.7%.

The number of shares used to calculate EPS is the average number of shares throughout the period (excluding treasury shares) of 961,476,993 shares for FY2018, and the 2018 fiscal year end outstanding shares (excluding treasury shares) of 1,554,780,063 for FY2019. On January 8, 2019, Takeda issued 770,303,013 ordinary shares as part of the consideration for the Shire acquisition.

[Core Earnings]

Core Earnings (before adjusting for the impact of foreign exchange rates and divestitures) is expected to be 883.0 billion JPY, an increase of 423.7 billion JPY or +92.2% versus prior year. This significant increase is due to the full year Shire contribution. Also, Core Earnings margin is forecasted to improve 4.9pp to be 26.8% due to the integration of Shire with its high margins, realization of further cost synergies, as well as further improvement of operating expense efficiency with the progress of the Global Opex Initiative.

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Takeda Pharmaceutical Company Limited (4502)

Consolidated Financial Statements for Fiscal 2018

[Major assumptions used in preparing the FY2019 forecast]

Management Guidance (Excluding any impact of divestitures)

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Takeda Pharmaceutical Company Limited (4502)

Consolidated Financial Statements for Fiscal 2018

This Management Guidance does not take in consideration the divestitures of XIIDRA (lifitegrast ophthalmic solution) 5% product and TACHOSIL Fibrin Sealant Patch, which were announced on May 9, 2019. At present, Takeda does not expect these divestitures to have a meaningful impact on its FY2019 Management Guidance.

Momentum of key growth products in our five key business areas will largely offset loss of exclusivity of VELCADE* and other products. Also, with Shire contributing for the whole year, realization of cost synergies, as well as further improvement of operating expense efficiency, Underlying Core EPS is forecasted to be 350 -370 yen.

[Forward looking statement]

All forecasts in this document are based on information currently available to management, and do not represent a promise or guarantee to achieve these forecasts. Various uncertain factors could cause actual results to differ, such as changes in the business environment and fluctuations in foreign exchange rates. Should any significant event occur which requires the forecast to be revised, the Company will disclose it in a timely manner.

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Takeda Pharmaceutical Company Limited (4502)

Consolidated Financial Statements for Fiscal 2018

(5) Capital Allocation Policy and Dividends for Fiscal 2018 and 2019

(i) Capital Allocation Policy

Takeda’s priorities for capital allocation are as follows:

De-leverage rapidly

Invest in growth drivers

Shareholder returns

(ii) Dividend

Takeda is strongly committed to shareholder returns with the dividend as a key component.

[Fiscal 2018] 180 yen per share

Year-end dividend per share: 90 yen

Together with the interim dividend of 90 yen per share, the annual dividend will be 180 yen per share.

[Fiscal 2019 guidance] 180 yen per share

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Takeda Pharmaceutical Company Limited (4502)

Consolidated Financial Statements for Fiscal 2018

2. Management Policy

This discussion and analysis contains forward-looking statements based on the current assumptions as of the fiscal year ended March 31, 2019.

(1) Basic Management Policy

Takeda’s stated mission is to “strive towards Better Health and Brighter Future for people worldwide through leading innovation in medicine.” Our culture is based on the achievement of this mission by acting with Integrity, Fairness, Honesty, and Perseverance and prioritizing the Patient (putting the patient at the center), Trust (building trust with society), Reputation (reinforcing our reputation), and Business (developing the business).

(2) Mid- to Long-Term Business Strategy and Issues to Be Addressed

Over the past four years, Takeda has been on a transformation journey, focused on becoming an agile, research and development (R&D) driven, global biopharmaceutical company that is well positioned to deliver innovative medicines and transformative care to patients around the world. Takeda has continued to strengthen its reputation through its products and innovation, while remaining true to its values.

Takeda has a strong track record of cross-border merger and acquisition activities and post-acquisition integration, including the acquisition of TiGenix NV in 2018, ARIAD Pharmaceuticals in 2017, Nycomed in 2011 and Millennium Pharmaceuticals in 2008.

Most recently, in January 2019, we completed our acquisition of Shire plc. With the acquisition of Shire, we have taken the next major step in our transformation into a global, values-based, R&D driven biopharmaceutical company, with an attractive geographic footprint. The Shire acquisition strengthens Takeda’s presence in gastroenterology (GI) and neuroscience, which are two of its three core therapeutic areas, and provides leading positions in rare diseases and plasma-derived therapies. It also creates a highly complementary, robust, modality-diverse pipeline and a strengthened R&D engine focused on innovation. The Shire acquisition delivers compelling financial benefits for the combined group, enhancing Takeda’s cash flow profile, with management committed to delivering substantial synergies and generating returns for shareholders.

Takeda’s management team is experienced and diverse and has a proven track record of executing complex business integrations and large-scale transformations. Takeda is dedicated to carrying out integration efforts in a manner consistent with Takeda’s core values.

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Takeda Pharmaceutical Company Limited (4502)

Consolidated Financial Statements for Fiscal 2018

The following three clear strategic priorities are set to drive sustainable mid- to long-term growth of Takeda.

Focus on five key business areas: GI, rare diseases, plasma-derived therapies, oncology, and neuroscience.

Strengthen the R&D engine based on the therapeutic area focus, a leading partnership model, and patient-centric, science-driven culture of innovation. In particular, we focus our research and development efforts on our four key therapeutic areas: Oncology, GI, rare diseases, neuroscience, plus plasma derived therapies and vaccines, and we continue to transform our research and development structure. In order to deliver values in areas of high unmet medical needs, we strive to progress our pipelines with the focus on innovative medicines.

Takeda’s financial strength involves a focus on driving margin expansion in mid-to long-term and generating cash flow to invest in the business, de-leverage and return cash to shareholders. We also continue selected disposal of non-core assets to generate cash in order to accelerate the pace of deleveraging.

The acquisition of Shire has expanded our geographic footprint, especially in the United States, an important and innovation-driven market. We have organized our operations into four regions: United States, Japan, Europe & Canada, and a Growth and Emerging Market region comprising China, Latin America, Middle East, Asia Pacific, Russia and the Commonwealth of Independent States in order to manage the execution of our strategy in each region. The execution of our integration plan is underway and we expect the integration will have relatively minimal disruption on the business and our pipeline due to the strong strategic and geographic fit of the two companies. Throughout our integration we will continue to follow our three guiding principles: (i) Patient-Centric (developing more innovative medicines supported by services and support capabilities), (ii) Agile & Simple (minimizing complexity and empowering local leaders to make local decisions), and (iii) Lean & Focused (concentrating our efforts on the five key business areas).

3. Basic Approach to the Selection of Accounting Standards

Takeda has been applying International Financial Reporting Standards (IFRS) from the fiscal year ending March 31, 2014 (fiscal year 2013) with the aim of improving the comparison of financial information with pharmaceutical companies in the U.S. and Europe, increase financing options, and allowing Takeda to unify accounting procedures across the group.

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Takeda Pharmaceutical Company Limited (4502)

Consolidated Financial Statements for Fiscal 2018

4. Consolidated Financial Statements [IFRS] and Major Notes

(1) Consolidated Statement of Operations

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Takeda Pharmaceutical Company Limited (4502)

Consolidated Financial Statements for Fiscal 2018

(3) Consolidated Statement of Financial Position

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Takeda Pharmaceutical Company Limited (4502)

Consolidated Financial Statements for Fiscal 2018

(4) Consolidated Statement of Changes in Equity

Fiscal 2017 (From April 1, 2017 to March 31, 2018)