R&D Investor Day 2020

December 8, 2020

Views of the Group "Thinking of Takeda's Bright Future" (TTBF) on the R&D Overview Presentation by the Management

We will discuss the success or failure of the Shire integration in terms of the following three figures assumed by Takeda.

1. Revenue of ¥5 trillion in 2030

2.  Decline in core product sales of $4.5 billion by 2024

3. Global product add-on (sales increase) $8 billion

Regarding the sales revenue target of 5 trillion yen in 10 years, in the best case scenario (100% success probability), the total contribution of the R&D pipeline of 1.5 trillion yen is less than 400 billion yen ($3.4 billion) for the former Shire products, which is only 200 billion yen, even if the success probability is 50%. On the other hand, of the $4.5 billion (480 billion yen) sales decline that Takeda expects in 5 years, more than 2/3 (330 billion yen) is expected to come from Shire products.

Furthermore, of the 11 products whose patents will expire in the U.S. by 2024, 10 (total sales of 430 billion yen in FY2019) are Shire products. Given this situation, it can be inferred that the Shire acquisition will not contribute to Takeda's announced sales forecast through 2030.

Takeda's expectation of "more than $8 billion from 12 global brands" in five years (FY2024) is unlikely to be realized, but even in this figure, the contribution from the former Shire products is expected to be less than 1/3 of the total, or $2.6 billion (¥280 billion).

Thus, when we analyze Takeda's projected product sales figures, we cannot help but wonder if the Shire acquisition is not necessarily contributing to Takeda's future growth, or if Takeda is overestimating the results of the Shire acquisition.

Whether or not the decrease in existing product sales will be limited to $4.5 billion, as Takeda has assumed, and the reality of an additional $8 billion from global brands, which Takeda claims will exceed this amount, must also be questioned. In order to break out of its current predicament and to envision what Takeda will look like in 10 years' time, it is imperative that the company formulate a new new product strategy.

The reason for the exercise of shareholder proposal rights

May 28th, 2020

We, the group TTBF, has decided to recommend a candidate for outside director and exercise shareholder proposal rights. Our purpose is to contribute to strengthening corporate governance at Takeda Pharmaceuticals. 

Meeting with retail shareholders

November 28

A meeting was held in Tokyo for retail shareholders who signed up for previous meetings a week before. 

TTBF message before EGM

November 21

Our Group has engaged securities analysts, attorneys and consultants to assist our efforts to analyze the proposed acquisition, and to gauge the future risks, which we think are immense. We have shared this information with the public on our website. Twice now we have communicated our concerns to the company in the form of open questions, inviting them to respond, but their response has effectively been zero. We shared our questions with the media, and in the incisive coverage that resulted, our Group's views have frequently been quoted as expressions of opposition to the proposed deal. We have held meetings with investors in New York and London, urging them to vote "no" on the company's proposal.

In the course of this process, some members of the founding Takeda family have offered us support, and some have even joined the ranks of our Group. Kunio Takeda, former CEO and chairman of the company, and the last member of the founding family to run the company, expressed his opposition to the acquisition in an article published in the Financial Times on November 16. Other individual investors, both in Japan and in other countries, have mounted their own sincere efforts, and we now estimate about 15% of Takeda shareholders will vote against the deal. With the support we have received from the founding family, other former Takeda employees, and ordinary shareholders, we now think we can boost that figure to 25%. We think it will be difficult, however, to reach the threshold of one-third (34%) of shareholders we need to block the merger.

We call upon all Takeda shareholders, not just former employees, to do something about this. Individual investors make up 25% of the total. Even if "no" votes fail to reach one-third of the total, the company's motion may fail if shareholders with conflicts of interest – which are over 20% of the votes – refrain from voting. 

Takeda Refusal to Disclose Information Based on Non-Existent "U.K. Rules" 

November 21

At the annual general meeting of shareholders in late June, in response to a question about ordinary investors' concerns about the impact of M&A on earnings, executives of Takeda Pharmaceutical said, "due to U.K. rules, we cannot disclose earnings outlooks for the new company between the time of the offer and the closing." Here, "U.K. rules" refers to the Takeover Code overseen by the U.K. Takeover Panel. 

The Group Thinking about Takeda's Bright Future (TTBF), reported to the Takeover Panel that Takeda violated the rule by disclosing a negative EPS outlook for the first time just prior to the extraordinary general meeting (EGM) of shareholders.

The response we received was: 

"The Code does not prevent parties from providing additional information during the course of an offer if the information provided complies with the Code. In this instance, the EPS guidance given is not in breach of the Code and therefore Takeda are permitted to disclose it.”

In other words, the "U.K. rules" that Takeda has cited as its reason for refusing to disclose information have not existed.

The Third Open Letter sent to Mr. Weber

November 21

The Group Thinking About Takeda's Bright Future (TTBF) sent an Open Letter to Mr. Weber on November 20. This is the third open letter and includes all the questions in previous letters that have not been answered as well as new questions as below:

[Question 7] 

Is it true that the U.K. Takeover Code or other regulations prevented you from disclosing your plans for repaying the debt and to make projections of EPS post acquisition ?

[Question 8] 

To date, your company has declined to respond to our questions, saying that in the interest of fairness it would be inappropriate to respond to questions from individual shareholders (minority interests). Based on the first principle in Chapter One of the Corporate Governance Code, please reconsider your refusal to respond?

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Publication of Circular and Convocation Notice to December 5 Extraordinary General Meeting of Shareholders

November 12

We are surprised at this sudden decision, which comes even before approval has been received from the European Commission. Only three weeks are left for the opposition campaign run by the group Thinking about Takeda's Bright Future. This is not enough time to allow the Group to exercise its right to present a shareholder proposal. Management's precipitous action, without regard for appearances, make it seem as though the merger with Shire is their sole purpose. We think they are certainly in violation of the spirit of the Corporate Governance Code.

In this circular, Takeda has made its first public statement of how it thinks the merger will affect reported earnings per share (EPS):  

"It is expected that this acquisition will increase the company's earnings per share within 3 years of the completion of this acquisition."

The company previously said U.K. rules prevented it from making such statements, but this circular makes it appear such explanations were untrue. In the past, Takeda said the merger would boost EPS in the first fiscal year. We now believe it felt compelled to issue the new guidance to fend off possible litigation should earnings decline in 2019 and 2020.

Takeda's Responses to Our Questions

November 7

On October 1, we sent an open letter to Takeda, publicly posted, with a list of 4 questions, to which we received a de facto ”Refuse to Reply” from the company. The Group Thinking about Takeda’s Bright Future (TTBF), submitted the original list of questions once again, and added 2 more questions. 

While declining to respond to our questions, the company revised previous statements that, in fact, takes into account TTBF’s query. This is reflected in the press release dated October 31, in announcing its fiscal 2Q results, under the caption “aiming to be a leading global company in bio pharmaceuticals R&D, which is grounded in core management strategy (page 12)”. 

Heretofore, the company has only explained that “earnings per share will increase significantly in the first fiscal year after the merger”. But in the recent announcement, it has changed to 

“earnings per share will increase on a de facto basis within a year after the merger, and EPS in financial terms will increase within 3 fiscal years”.