武田（4502） – Presentation: Better health for people, Brighter future for the world

Better health for people, Brighter future for the world40th Annual J.P. Morgan Healthcare ConferenceChristophe WeberPresident & CEOJanuary 10th, 2022Important NoticeFor the purposes of this notice, “presentation” 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 presentation. This presentation (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 presentation. 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 presentation 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 presentation, “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.The product names appearing in this document are trademarks or registered trademarks owned by Takeda, or their respective owners.Forward-Looking StatementsThis presentation and any materials distributed in connection with this presentation 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. Without limitation, forward-looking statements often include words such as “targets”, “plans”, “believes”, “hopes”, “continues”, “expects”, “aims”, “intends”, “ensures”, “will”, “may”, “should”, “would”, “could” “anticipates”, “estimates”, “projects” or similar expressions or the negative thereof. These forward-looking statements are based on assumptions about many important factors, including the following, which could cause actual results to differ materially from those expressed or implied by the forward-looking statements: the economic circumstances surrounding Takeda’s global business, including general economic conditions in Japan and the United States; competitive pressures and developments; changes to applicable laws and regulations, including global health care reforms; challenges inherent in new product development, including uncertainty of clinical success and decisions of regulatory authorities and the timing thereof; uncertainty of commercial success for new and existing products; manufacturing difficulties or delays; fluctuations in interest and currency exchange rates; claims or concerns regarding the safety or efficacy of marketed products or product candidates; the impact of health crises, like the novel coronavirus pandemic, on Takeda and its customers and suppliers, including foreign governments in countries in which Takeda operates, or on other facets of its business; the timing and impact of post-merger integration efforts with acquired companies; the ability to divest assets that are not core to Takeda’s operations and the timing of any such divestment(s); and other factors identified in Takeda’s most recent Annual Report on Form 20-F and Takeda’s other reports filed with the U.S. Securities and Exchange Commission, available on Takeda’s website at: https://www.takeda.com/investors/sec-filings/ or at www.sec.gov. Takeda does not undertake to update any of the forward-looking statements contained in this presentation or any other forward-looking statements it may make, except as required by law or stock exchange rule. Past performance is not an indicator of future results and the results or statements of Takeda in this presentation may not be indicative of, and are not an estimate, forecast, guarantee or projection of Takeda’s future results.Financial Information and Certain Non-IFRS Financial MeasuresTakeda’s financial statements are prepared in accordance with International Financial Reporting Standards (“IFRS”). This presentation and materials distributed in connection with this presentation include certain financial measures not presented in accordance with International Financial Reporting Standards (“IFRS”), such as Underlying Revenue, Core Operating Profit, Underlying Core Operating Profit, Core Net Profit, Underlying Core EPS, Net Debt, EBITDA, Adjusted EBITDA and Free Cash Flow. Takeda’s management evaluates results and makes operating and investment decisions using both IFRS and non-IFRS measures included in this presentation. 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 definitions and reconciliations of non-IFRS financial measures to their most directly comparable IFRS measures, which are on slides 21-28.This presentation 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.Medical information23A Global, Values-based Biopharmaceutical CompanyTOKYOTakeda Global HQGREATERBOSTONAREAGlobal Hub13%EMERGING MARKETS21%EUROPE & CANADA18%JAPAN18%OTHER13%NEURO-SCIENCE13%ONCOL OGYFY2020 GLOBAL REVENUEAPPROX.29BN USD*49%U.S.5 KEY BUSINESS AREAS(% OF FY2020 REVENUE)24%GI19%RARE DISEASES13%PL ASMA-DERIVED THERAPIESSITES31 MANUFACTURING 3880C OUNTRIES& 4 R EGIONSTO P EMPLOYER® INA S O F J A N U A R Y 2 0 2 1SITES3 RESEARCH $4.7PR ESENCE: APPROX. INR &D IN VESTMENT APPROX.C OUNTRIES & R EGIONSB N PL ANNED FOR FY21*4*Convenience translation of reported JPY figures into USD calculated at 110.6 JPY/USDExecuting to deliver topline acceleration, competitive margins & strong cash flowUNDERLYING REVENUE GROWTH 1UNDERLYING CORE O.P. MARGIN 1Mid-single digit+2.2%30.2%~30%28.9%FY2019FY2020FY2019FY2020FY2021 (guidance)• Competitive Underlying Core Operating Profit1 margins• Accelerating topline growth with 14 Global Brands and New Product Launches• Highly innovative pipeline to support long-term growth outlook• Strong cash flow supporting deleveraging, targeting “low 2s” Net Debt / Adj. EBITDA2 by FY2023• Well-established dividend policy and announced first share buyback program since 2008FY2021(guidance)4.7xNET DEBT / ADJ. EBITDA 23.8×3.2x+2.2%Mar 2019Mar 2020Mar 202151.2.Please refer to slide 18 for definition, and 21-23 for reconciliationPlease refer to slide 20 for definition, and 24-28 for reconciliation14 Global Brands drive mid-term growth expectations14 GLOBAL BRANDS FY2020 REVENUE ~$11 BILLIONFY2021 UNDERLYING GROWTH FORECAST: +14-16% 14 Global Brands revenue+14-16%+16%~$11BFY2019FY2020FY2021(forecast)34%38%~45%14 Global Brandsas % totalcore revenue26Graphs are illustrative1. USD amounts provided for reference calculated at 110.6 JPY/USD2. Percentage of sales are based on Core revenue; FY2021 adjusted to remove JPY 133.0B from sale of Japan diabetes portfolio recorded in revenue. Year-on-year growth rates are Underlying revenue (please refer to slide 18 for definition of Core and Underlying) Revising our base case assumption on Entyvio biosimilars: no longer expecting launch upon anticipated data exclusivity expiry timing20222023202420252026202720282029203020312032Anticipated expiry of data exclusivity May 2024EU1May 2026U.STakeda has granted patents that cover various aspects of Entyvio, including formulation, dosing regimens and process for manufacturing. These patents are expected to expire in 2032 in the U.S.• Our previous base case assumption for biosimilar entry timing was based on data exclusivity timing• Any biosimilar that seeks to launch prior to 2032 would need to address potential infringement and/or the validity of all relevant patentsPotential scenario in the U.S. should patents be challenged in biosimilar litigation2Biosimilar clinical trials expected to take 3-4+ yearsRegulatory review(~1 year)• No evidence of biosimilar clinical trials to datePre-litigationprocessIn general, biosimilar litigation Inproceedings in the U.S. may take 3-5 years• In the U.S., the biosimilar litigation process is triggered by FDA acceptance of a relevant aBLAClinical development timelineLegal proceedings71.2.Potential extension to May 2025 with pouchitis indication. On December 17, 2021, the CHMP granted a positive opinion for Entyvio as a treatment for active chronic pouchitis.Assumes a biosimilar entering clinical studies in January 2022. In the U.S., the biosimilar litigation process is triggered by FDA acceptance of a relevant aBLA; litigation in other jurisdictions may occur earlier.Two new product launches in 2021 in areas of high unmet needFIRST AND ONLY APPROVED ORAL THERAPY TO TARGET EGFR EXON20 INSERTION+ NSCLCPOTENTIAL TO REDEFINE SUCCESS IN POST-TRANSPLANT CMV INFECTIONApproved U.S. September 2021Approved U.S. November 20218Mid-term growth expected to be driven by 14 Global Brands,more than offsetting Loss of Exclusivity headwindsNEW LAUNCHESOTHERSVYVANSEVELCADE AZILVA~$4.5B~$9B14 GLOBALBRANDSDivested assetsSTRONG INCREMENTAL REVENUE GROWTH POTENTIAL TO FY2025• 14 Global Brands expected to deliver incremental revenue more than double mid-term LOE headwinds from Vyvanse, Velcade & Azilva••Further upside from new product launches such as Exkivity & Livtencitymore than offsetting decline of other in-line products (e.g. hemophilia)Focus on delivering competitive Underlying Core Operating Profit1margin in low-to-mid thirties %• No Entyvio biosimilar launches expected in any major markets during this timeframeFY2020 revenueFY2025 revenueGraphs are illustrative“New Launches” refers to New Molecular Entities launched after April 1, 2021. All revenue numbers are adjusted for development and regulatory risk. Actual future net sales achieved by our commercialized products and pipelines will be different, perhaps materially so, as there is a range of possible outcomes from clinical development, driven by a number of variables, including safety, efficacy and product labelling. In addition, if a product is approved, the effect of commercial factors including the patient population, the competitive environment, pricing and reimbursement is also uncertain.1.Please refer to slide 18 for definition9Positioned to deliver topline growth out to FY2030 and beyondINNOVATIVE PIPELINE TO DELIVER VALUE• Highly innovative pipeline of ~40 clinical stage assets•In-house research engine to drive future innovation• Further enriching the pipeline through partnerships and targeted, strategic bolt-on acquisitionsIN-LINE PORTFOLIO OUTLOOK FY2025-2030• Continued growth of multiple Global Brands (e.g. IG and Takhzyro) expected to offset main U.S. LOEs of Trintellix (2026) & Ninlaro (2029)• Hemophilia portfolio decline levels off• Any Entyvio biosimilar that seeks to launch prior to 2032 would need to address potential infringement and/or the validity of any relevant patentsFY2025 revenue10Patient-centric and Science-first Innovative R&D EngineR&D STRATEGYINNOVATIVE BIOPHARMAPLASMA-DERIVED THERAPIESVACCINESONCOLOGYRARE GENETICS & HEMATOLOGYNEUROSCIENCEGASTROENTEROLOGY(GI)INNOVATIVE PIPELINE• ~40 NMEs in clinical stage development• Diverse modality base• Approx. 50% of pipeline has Orphan Drug Designation or Orphan potential in at least one indicationROBUST PARTNERSHIP MODEL• Takeda’s labs are designed to access innovation wherever it originates•Investments in novel mechanisms and capabilities for a sustainable futureCELL THERAPYGENE THERAPYDATA SCIENCES11Our pipeline is modality diverse with transformative potentialDEMONSTRATED PIPELINE GROWTH AND DIVERSIFICATIONCONTINUED INVESTMENT IN NEW MODALITIES34 of 38 assets added after FY2015* 100%4 assets active today7 assets externalized16 assets terminated / on holdSmall MoleculesVaccinesPeptides and OligosCell and Gene TherapyOther Biologic271944381444313FY2015TodayCLINICAL-STAGE NMEsOther Biologics include:•Fusion proteins• Monoclonal antibodies•Therapeutic proteins• Microbiome• Oncolytic viruses32%13%31%24%FY2020PRECLINICAL PIPELINE (Lead Optimization to IND)12NMEs counted on the asset (rather than indication) level. Today’s count does not include assets removed from pipeline in FY2021 (pevonedistat, TAK-831). FY2015 count taken at end of fiscal year. *Of the 38 assets in today’s pipeline, 4 were in development in FY2015 (soticlestat, TAK-653, TAK-003, mezagitamab).Our highly innovative pipeline is starting to deliver valuePOTENTIAL APPROVALFY23FY24FY25 and BeyondCLINICAL-STAGE NMEsWAVE 22EXKIVITY31L NSCLC with EGFR exon 20 insertion mutationLIVTENCITY31L CMV infect. in HSCT•TAK-755cTTP•soticlestatDS•soticlestatLGSWAVE 11FY22FY21••EXKIVITY32L NSCLC with EGFR exon 20 insertion mutation••LIVTENCITY3R/R CMV infect. in transplantTAK-6094Hunter CNS (IT)•Eohilia5EoEReceived CRLTAK-003Dengue VaccineTAK-019NovavaxCOVID-19 Vaccine (JP)COVID-19 VaccineModerna Intramuscular Injection (JP)ONCOLOGYRARE GENETICS & HEMATOLOGYNEUROSCIENCEGASTRO-ENTEROLOGYVACCINESmodakafusp alfa R/R MMsubasumstatMultiple cancersTAK-007CD19+ hematologic malignanciesTAK-605Multiple cancersTAK-676Solid tumorsTAK-102Multiple cancersTAK-186EGFR Solid TumorTAK-940CD19+ hematologic malignanciesTAK-611 MLD (IT)pabinafusp alfa6Hunter SyndromemezagitamabMG, ITPTAK-607Complications of prematurityTAK-6538Inadequate resp. in MDDTAK-0418Anhedonia in MDDTAK-341Parkinson’s Disease TAK-071Parkinson’s Disease TAK-755iTTP, SCD•orexin 2R-agTAK-861/9947NT1, NT2, IH, Otherorexin 2R-agTAK-925Hospital setting•TAK-999AATD Liver DiseaseTAK-906GastroparesisTAK-426Zika VaccineTAK-951Nausea & vomitingTAK-105Nausea & vomiting •TAK-101Celiac DiseaseTAK-954POGDTAK-510Nausea & vomiting TAK-062Celiac DiseasesibofimlocCrohn’s Disease (post-op and ileitis)TAK-039Hepatic encephalopathy•U.S. Breakthrough and/or Fast Track Designations•China Breakthrough and/or Japan SAKIGAKE DesignationOrphan potential in at least one indication APPROVEDReceived Complete Response Letter1.2.3.4.5.Potential approval dates depend on data read-outs; some WAVE 1 target approval dates assume accelerated approvalCertain WAVE 2 programs may be accelerated into WAVE 1 depending on future data read outsEXKIVITY (brand) – mobocertinib (generic), LIVTENCITY (brand) – maribavir (generic)Filing of TAK-609 is subject to feedback from regulatory agencies on the ongoing extension trial and may changeTakeda has received a Complete Response Letter (CRL) from the FDA, and no longer expects approval in FY2021. Takeda is assessing the details of the CRL 136. Partnership with JCR Pharmaceuticals7. TAK-994 timeline under evaluation 8. Partnership with Neurocrine BiosciencesTakeda’s Fiscal Year ends March 31 of the following year; e.g.,“FY21” refers to the twelve-month period ending March 31, 2022.All timelines are approximate estimates of January 10, 2022. For glossary of disease abbreviations please refer to appendix.Pipeline assets expected to be in pivotal trials by end of FY2022 have significant peak sales potentialPTRS Adjustment > 1 T yen1(~$10B)> 500 Bn yen(~$5B)Unadjusted Peak SalesPTRSAdjusted 2EVAWidevehcACOP 1EVAWTAK-999Ph2 POCAATD LiverPivotal StartAATD Liverpabinafusp alfamodakafusp alfaPivotal Start Hunter SyndromePh1/2 POCR/R MM (mono)Pivotal Start R/R MM (mono)Potential ApprovalAATD LiverPotential ApprovalHunter SyndromePotential ApprovalR/R MM (mono)Ph2 POCR/R MM (combo)Potential Approval MLD (IT)TAK-611soticlestatTAK-755TAK-003TAK-019LIVTENCITYEXKIVITYPivotal Start DS, LGSPh2 POCiTTPPotential Approval COVID Vaccine (JP)Approved R/R CMV USApproved2L NSCLC USPotential Approval DS, LGSPotential Approval cTTPPotential Approval2 Dengue Vaccine EUPotential ApprovalDengue Vaccine USPivotal Start iTTPPh2 POCSCDPotential Approval iTTPPotential Approval R/R CMV EU Potential Approval CMV 1L US; R/R CNPotential Approval R/R CMV JP Potential Approval 2L NSCLC EU/CNPotential Approval 1L NSCLCFY21FY22FY23FY24FY25-27Proof-of -conceptPivotal study startPotential approvalApproved14PTRS: Probability of Technical and Regulatory Success. For glossary of disease abbreviations please refer to appendix.1.Aggregate total of peak sales potential of the assets shown on this slide. Peak sales will be realized in different years depending on the asset. Includes revenue from additional indications which are pre-POC. Includes potential revenue from regions for which Takeda has yet to execute option agreements for commercialization rights. Eohilia and TAK-609 excluded due to uncertain timelines.EU approval is expected to be referenced by many endemic countries for local approval2.Of the ~30 Wave 2 assets in clinical trials, several high-potential programs are expected to have Proof-of-Concept readouts over the next two fiscal years TAK-925IV orexinTAK-007Ph2 POCPost-opPh2 POC CD19+ Hematological malignanciesSELECTWAVE 2with POCFY22-23TAK-861 / 9941oral orexinTAK-861Ph2 POC NT1subasumstatFirst Ph2 POCHeme and/or Solid TumorsAdditional Ph2 POC Heme and/or Solid TumorsmezagitamabPh2 POCMGFY22Ph2 POCITPFY23Additional WAVE 2PartnershipsResearch EngineFY24 and beyond151. TAK-994 timeline under evaluation For glossary of disease abbreviations please refer to appendix.Positioned for growth over the mid- and long-termand committed to delivering shareholder valueEXECUTING ON OUR GROWTH STRATEGY• Executing to deliver topline acceleration, competitive margins and strong cash flowMID-TERM GROWTH DRIVEN BY 14 GLOBAL BRANDS• 14 Global Brands expected to more than offset Loss of Exclusivity headwinds to FY2025• Focus on delivering competitiveUnderlying Core Operating Profit1 margin in low-to-mid thirties %INNOVATIVE PIPELINE TO DELIVER LONG-TERM GROWTH• Highly innovative pipeline of ~40 clinical • In-house research engine to drive future stage assetsinnovation• Further enriching the pipeline through partnerships and targeted, strategic bolt-on acquisitions161.Please refer to slide 18 for definitionAPPENDIXDEFINITION OF CORE AND UNDERLYING GROWTHTakeda uses the concept of Underlying Growth for internal planning and performance evaluation purposes.Core Revenue represents revenue adjusted to exclude significant items unrelated to Takeda’s core operations. Core Operating Profit represents net profit adjusted to exclude income tax expenses, the share of profit or loss of investments accounted for using the equity method, finance expenses and income, other operating expenses and income, amortization and impairment losses on acquired intangible assets and other items unrelated to Takeda’s core operations, such as non-recurring items, purchase accounting effects and transaction related costs.Core EPS represents net profit adjusted to exclude the impact of items excluded in the calculation of Core Operating Profit, and other non-operating items (e.g. amongst other items, fair value adjustments and the imputed financial charge related to contingent consideration) that are unusual, non-recurring in nature or unrelated to Takeda’s ongoing operations and the tax effect of each of the adjustments, divided by the average outstanding shares (excluding treasury shares) of the reporting periods presented.Underlying Growth compares two periods (fiscal 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 using a full year plan rate and exclude 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 Growth”, “Underlying Core Operating Profit Growth”, and “Underlying Core EPS Growth” as key financial metrics.Underlying Revenue represents revenue on a constant currency basis and excluding non-recurring items and the impact of divestitures that occurred during the reporting periods presented.Underlying Core Operating Profit represents Core Operating Profit (as defined to the right) on a constant currency basis and further adjusted to exclude the impacts of divestitures that occurred during the reporting periods presented.Underlying Core EPS represents net profit based on a constant currency basis, adjusted to exclude the impact of divestitures and items excluded in the calculation of Core EPS (as defined to the right), divided by the outstanding shares (excluding treasury shares) as of the end of the comparative period.18DEFINITION OF FREE CASH FLOWWe present Free Cash Flow because we believe that this measure is useful to investors as similar measures of liquidity are frequently used by securities analysts, investors and other interested parties in the evaluation of companies in our industry. Free Cash Flow is also used by our management to evaluate our liquidity and our cash flows, particularly as they relate to our ability to meet our liquidity requirements and to support our capital allocation policies. We also believe that Free Cash Flow is helpful to investors in understanding how our strategic divestitures of non-core businesses and of portions of our investment portfolio contribute to the cash flows and liquidity available to us.We define Free Cash Flow as cash flows from operating activities, excluding acquisition of property, plant and equipment, intangible assets and investments, and any other cash that is not available to Takeda’s immediate or general business use, and including proceeds from sales of property, plant, sales and redemption of investments and businesses, net of cash and cash equivalents divested. The usefulness of Free Cash Flow to investors has significant limitations including, but not limited to, (i) it may not be comparable to similarly titled measures used by other companies, including those in our industry, (ii) it does not reflect the effect of our current and future contractual and other commitments requiring the use or allocation of capital and (iii) the inclusion of proceeds from sales and redemption of investments and the proceeds from sales of business, net of cash and cash equivalents divested, although they reflect the execution of our current strategy of divesting non-core assets, do not reflect cash received from our core ongoing operations. Free Cash Flow should not be considered in isolation and is not, and should not be viewed as, a substitute for cash flows from operating activities or any other measure of liquidity presented in accordance with IFRS. The most directly comparable measure under IFRS for Free Cash Flow is net cash from operating activities.19DEFINITION OF EBITDA/ADJUSTED EBITDA AND NET DEBTEBITDA and Adjusted EBITDAWe present EBITDA and Adjusted EBITDA because we believe that these measures are useful to investors as they are frequently used by securities analysts, investors and other interested parties in the evaluation of companies in our industry. We further believe that Adjusted EBITDA is helpful to investors in identifying trends in its business that could otherwise be obscured by certain items unrelated to ongoing operations because they are highly variable, difficult to predict, may substantially impact our results of operations and may limit the ability to evaluate our performance from one period to another on a consistent basis.EBITDA and Adjusted EBITDA should not be considered in isolation or construed as alternatives to operating income, net profit for the year or any other measure of performance presented in accordance with IFRS. These non-IFRS measures may not be comparable to similarly-titled measures presented by other companies.The usefulness of EBITDA and Adjusted EBITDA to investors has limitations including, but not limited to, (i) they may not be comparable to similarly titled measures used by other companies, including those in our industry, (ii) they exclude financial information and events, such as the effects of an acquisition or amortization of intangible assets, that some may consider important in evaluating our performance, value or prospects for the future, (iii) they exclude items or types of items that may continue to occur from period to period in the future and (iv) they may not exclude all items which investors may consider to be unrelated to our long-term operations, such as the results of businesses divested during a period. These non-IFRS measures are not, and should not be viewed as, substitutes for IFRS reported net income (loss). We encourage investors to review our historical financial statements in their entirety and caution investors to IFRS measures as the primary means of evaluating our performance, value and prospects for the future, and EBITDA and AdjustedEBITDA as supplemental measures.We define EBITDA as net profit before income tax expenses, depreciation and amortization and net interest expense. We define Adjusted EBITDA as EBITDA further adjusted to exclude impairment losses, other operating expenses and income (excluding depreciation and amortization), finance expenses and income (excluding net interest expense), our share of loss from investments accounted for under the equity method and other items that management believes are unrelated to our core operations such as purchase accounting effects and transaction related costs.The most closely comparable measure presented in accordance with IFRS is net profit for the year. Please refer to slides 25 and 28 for a reconciliation to the respective most closely comparable measures presented in accordance with IFRS.Net DebtWe present Net Debt because we believe that it is useful to investors in that our management uses it to monitor and evaluate our indebtedness, net of cash and cash equivalents, and, in conjunction with Adjusted EBITDA, to monitor our leverage. We also believe that similar measures of indebtedness are frequently used by securities analysts, investors and other interested parties in the evaluation of companies in our industry. We define Net Debt first by calculating the sum of the current and non-current portions of bonds and loans as shown on our consolidated statement of financial position, which is then adjusted to reflect (i) the use of prior 12-month average exchange rates for non-JPY debt outstanding at the beginning of the period and the use of relevant spot rates for new non-JPY debt incurred and existing non-JPY debt redeemed during the reporting period, which reflects the methodology our management uses to monitor our leverage, and (ii) a 50% equity credit applied to our aggregate principal amount of 500.0 billion hybrid (subordinated) bonds issued in June 2019 by S&P Global Rating Japan in recognition of the equity-like features of those bonds pursuant to such agency’s ratings methodology. From this figure, we deduct cash and cash equivalents, excluding cash that is not available to Takeda’s immediate or general business use, to calculate Net Debt.The usefulness of Net Debt to investors has significant limitations including, but not limited to, (i) it may not be comparable to similarly titled measures used by other companies, including those in our industry, (ii) it does not reflect the amounts of interest payments to be paid on our indebtedness, (iii) it does not reflect any restrictions on our ability to prepay or redeem any of our indebtedness, (iv) it does not reflect any fees, costs or other expenses that we may incur in converting cash equivalents to cash, in converting cash from one currency into another or in moving cash within our consolidated group, (v) it applies to gross debt an adjustment for average foreign exchange rates which, although consistent with our financing agreements, does not reflect the actual rates at which we would be able to convert one currency into another and (vi) it reflects an equity credit due to the fact that the amounts of our subordinated bonds, although we believe it to be reasonable, do not affect the status of those instruments as indebtedness. Net Debt should not be considered in isolation and are not, and should not be viewed as, a substitute for bonds and loans or any other measure of indebtedness presented in accordance with IFRS. The most directly comparable measures under IFRS for Net Debt is bonds and loans. Please refer to slides 24, 26 and 27 for reconciliations to this measure.20FY2020 RECONCILIATION FROM REPORTED REVENUE TO UNDERLYING REVENUEFY2019FY2020vs. PY3,291.23,197.8-93.4(BN JPY)RevenueFx effects*1Divestitures*2XIIDRARegional portfolioTACHOSILOthersUnderlying Revenue Growth*1 FX adjustment applies plan rate to both periods.*2 Major adjustments are as follow;-2.8%+3.0pp+2.1pp+0.3pp+1.2pp+0.1pp+0.4pp+ 2.2%•••••••Net sales of XIIDRA, a treatment for dry eye disease, the divestiture of which was completed in July 2019, are excluded from FY2019.Revenue of select over-the-counter and non-core products in a number of Near East, Middle East and Africa countries, is excluded from FY2019 as the divestiture was completed in March 2020.Revenue of select over-the-counter and non-core products in Russia, Georgia, and a number of countries from within the Commonwealth of Independent States, is excluded from FY2019 as the divestiture was completed in March 2020.Revenue of select over-the-counter and non-core products in Asia Pacific, is excluded from both FY2020 and FY2019 , as the divestiture was completed in November 2020.Revenue of select non-core products predominantly in Europe, is excluded from both FY2020 and FY2019, as the divestiture was completed in December 2020.Revenue of select over-the-counter and non-core products in Latin America, is excluded from both FY2020 and FY2019, as the divestiture was completed in January 2021.Net sales from TACHOSIL, a surgical patch, are excluded from both FY2020 and FY2019, as the divestiture was completed in January 2021.21FY2020 RECONCILIATION FROM REPORTED TO CORE/UNDERLYING CORE(BN JPY)REPORTEDREPORTED TO CORE ADJUSTMENTSAmortization &impairment ofintangibleassetsOtheroperating income/expenseShireintegrationcostsShirepurchaseaccountingadjustmentsTeva JVrelatedaccountingadjustmentsTCHCdivestiture*Swiss TaxReformOthersRevenueCost of salesGross ProfitSG&A expensesR&D expensesAmortization of intangible assetsImpairment losses on intangible assetsOther operating incomeOther operating expensesOperating profitMarginFinancial income/expensesEquity income/lossProfit before taxTax expenseNon-controlling interestsNet profitEPS (yen)Number of shares (millions)223,197.8-994.32,203.5-875.7-455.8-405.3-16.6318.0-258.9509.3-143.10.1366.29.9-0.2376.02411,56215.9 %85.816.6102.4102.4-25.676.881.281.2-0.30.0319.51.9-0.378.179.6-116.9107.2-9.7-9.78.1-1.6-60.2-1.5-139.5340.2-1.5-139.57.912.987.5-18.6353.2-88.716.615.1-4.6-139.569.0264.510.5-139.5CORE TOUNDERLYING CORE ADJ.FXDivestituresUNDERLYINGGROWTH+2.2 %CORE3,197.8-906.92,290.9-872.6-450.4————967.930.3%-126.33.5845.1-189.4-0.2655.54201,5626.26.21.45.773.687.0-4.0-13.169.8-70.0-0.2199.5-47.0152.5-47.0-18.33.6-0.390.4-20.3-0.070.246-70.121.0-49.2-49.212.8-36.4-2387.1-49.2+13.0 %30.2 %**+24.6 %1,558* On March 31, 2021, Takeda completed the sale of Takeda Consumer Healthcare Company Limited (“TCHC”), a wholly-owned subsidiary of Takeda primarily focused on the consumer healthcare market in Japan, to The Blackstone Group Inc.** Underlying Core Operating Profit Margin.FY2019 RECONCILIATION FROM REPORTED TO CORE/UNDERLYING CORE(BN YEN)REPORTEDAmortization &impairment ofintangibleassetsOtheroperatingincome/expenseShireacquisitionrelatedcostsShirepurchaseaccountingadjustmentsSwiss TaxReformTeva JVrelatedaccountingadjustmentsREPORTED TO CORE ADJUSTMENTSCORE TOUNDERLYING CORE ADJ.COREUNDERLYINGCOREOthersFXDivestituresAmortization of intangible assetsImpairment losses on intangible assets-43.3 RevenueCost of salesGross ProfitSG&A expensesR&D expensesOther operating incomeOther operating expensesOperating profit MarginFinancial income/expensesEquity income/lossProfit before taxTax expenseNon-controlling interestsNet profitEPS (yen)Number of shares (millions)3,291.2 -1,089.8 2,201.4 -964.7 -492.4 -412.1 60.2 -248.7 100.4 3.1%-137.2 -24.0 -0.0 44.2 28 1,557 3,291.2 102.4 -30.5 -890.3 -27.9 5.0 2,400.9 74.4 -25.5 -956.8 -29.0 -481.9 -8.9 199.5 199.5 2.4 0.1 325.1 5.5 10.4 87.0 43.3 130.3 -46.0 113.3 67.3 135.4 151.2 527.1 -14.2 -14.2 32.2 18.0 -5.5 – – – – -0.0 7.1 14.4 -20.1 -135.7 5.3 962.2 29.2%36.5 -25.5 28.9%8.2 -0.0 -60.8 130.3 67.3 158.3 541.6 -20.1 834.7 41.8 -25.5 105.0 -31.7 -10.8 -29.2 -98.2 -94.6 -67.5 -232.4 -10.0 5.9 98.7 56.5 129.1 443.4 -94.6 12.5 -87.6 602.2 31.8 -19.6 387 21 -13 395 1,557 1,555 23FY2020 NET DEBT/ADJUSTED EBITDANET DEBT/ADJUSTED EBITDA RATIONET INCREASE (DECREASE) IN CASH(BN JPY)FY2020(BN JPY)FY2019FY2020vs. PY+341.2 +50.9%Cash and cash equivalents*1Book value debt on the balance sheetHybrid bond 50% equity creditFX adjustment*2Gross debt*3Net cash (debt)790.7-4,635.4250.0165.2-4,220.2-3,429.4Net cash from operating activitiesAcquisition of PP&EProceeds from sales of PP&EAcquisition of intangible assetsAcquisition of investmentsRepayment of long-term loansProceeds from issuance of bondsInterest paidDividends paidOthersProceeds from sales and redemption of investments Acquisition of business, net of cash and cash equivalents acquiredProceeds from sales of business, net of cash and cash equivalents divestedNet increase (decrease) in short-term loans and commercial papers669.8-127.112.6-90.6-7.649.4-4.9461.5-351.2-137.4496.2-563.6-127.2-282.6-40.6-43.31,010.9-111.246.5-125.3-12.674.6—530.4-149.0-792.51,179.5-859.2-107.3-283.4-85.3316.1Net debt/Adjusted EBITDA ratio3.2 xRepayment of bondsAdjusted EBITDA1,083.5Net increase (decrease) in cash+359.4 －*1 Includes short-term investments which mature or become due within one year from the reporting date and excludes deposits restricted to certain vaccines operations.*2 FX adjustment refers to change from month-end rate to average rate used for non-JPY debt calculation, to match with adjusted EBITDA calculation.*3 Bonds and loans of current and non-current liabilities. 250Bn yen reduction in debt due to 500Bn yen hybrid bond issuance in June 2019, given that the hybrid bond qualifies for 50% equity credit for leverage purposes. Includes cash and non cash adjustments to debt book-value. Non cash adjustments include changes dues to debt amortization and FX impact.24FY2020 NET PROFIT TO ADJUSTED EBITDA BRIDGE(BN JPY)Net profitIncome tax expensesDepreciation and amortizationInterest expense, netEBITDAImpairment lossesNon-core expense related to COVID-19Other adjustments:Acquisition costs related to ShireOther costs*2EBITDA from divested products*3Adjusted EBITDAOther operating expense (income), net, excluding depreciation and amortization and other miscellaneous expenses (non-cash item)Finance expense (income), net, excluding interest income and expense, netShare of loss on investments accounted for under the equity methodImpact on profit related to fair value step up of inventory in Shire acquisitionFY2019LTM*1FY2020LTM*1vs. PY376.2+331.9 +749.3% 1,054.9+394.2 +59.7% 44.3-105.0583.6137.8660.7101.9124.1-0.624.0—191.05.337.9-18.4-9.9559.7129.025.5-74.514.1-0.114.079.41.936.1-67.81,125.91,083.5-42.4-3.8%*1 LTM represents Last Twelve Months (FY2019: April 2019 – March 2020, FY2020: April 2020 – March 2021).*2 Includes adjustments for non-cash equity-based compensation expense and non-recurring wind-down costs related to pipeline de-prioritization after Shire acquisition.*3 Represents adjustments for EBITDA from divested products which are removed as part of LTM Adjusted EBITDA.25FY2019 NET DEBT/ADJUSTED EBITDANET DEBT/ADJUSTED EBITDA RATIONET INCREASE (DECREASE) IN CASH(BN YEN)FY2019(BN YEN)FY2018FY2019vs. PY+341.3+103.9%Cash and cash equivalents*1Book value debt on the balance sheet　Hybrid bond 50% equity credit　FX adjustment*2Gross debt*3Net cash (debt)637.6-5,093.3250.0-28.3-4,871.6-4,234.0 Net cash from operating activities Acquisition of PP&E Proceeds from sales of PP&E Acquisition of intangible assets Acquisition of investments Proceeds from sales and redemption of investments Acquisition of business, net of cash and cash equivalents acquired Proceeds from sales of business, net of cash and cash equivalents divested Proceeds from withdrawal of restricted deposit Net increase (decrease) in short-term loansNet debt/Adjusted EBITDA ratio3.8 x Proceeds from long-term loans Repayment of long-term loans　Proceeds from issuance of bonds　Repayment of bonds　Interest paid　Dividends paid OthersNet increase (decrease) in cashAdjusted EBITDA1,125.9-482.4－1. Includes short-term investments which mature or become due within one year from the reporting date.2. FX adjustment refers to change from month-end rate to average rate used for non-JPY debt calculation, to match with adjusted EBITDA calculation.3. Bonds and loans of current and non-current liabilities. 250Bn yen reduction in debt due to 500Bn yen hybrid bond issuance in June 2019, given that the hybrid bond qualifies for 50% equity credit for leverage purposes. Includes cash and non cash adjustments to debt book-value. Non-cash adjustments include changes dues to debt amortization and FX impact.328.5-77.750.7-56.4-17.165.0-2,958.785.171.8367.31,215.5-1,580.4–34.9-143.0-37.7439.0669.8-127.112.6-90.6-7.649.4-4.9461.5–351.2–137.4496.2-563.6-127.2-282.6-40.6-43.326FY2018 NET DEBT/ADJUSTED EBITDA Repayment of long term loans and bonds Bridge and term loan facilities, etc. – Shire acquisition Net of cash consideration – Shire acquisition Proceeds from long-term loans and issuance of bonds – Shire acquisition(Bn yen)Operating Free Cash Flow Sale of Wako shares Sale of Techpool and Multilab shares Sale of other shareholdings*1 Real estate disposals*1 Payment into restricted deposit of TiGenix Dividend OthersNet increase (decrease) in cash(Bn yen)Cash and cash equivalents*2Debt*3Net cash (debt)Gross debt/Adjusted EBITDA ratioNet debt/Adjusted EBITDA ratioNet debt/Pro-forma Adjusted EBITDA ratioAdjusted EBITDA*4Pro-forma Adjusted EBITDA*4FY2018194.4vs. PY-48.5-20.0%FY2017242.984.540.639.3-71.8-141.9-140.0—–78.6-24.9294.5-985.7-691.12.6 x1.8 x377.727.565.0108.3-143.0—-19.5-2,891.93,295.9-229.2407.610.7 x9.4 x4.7 x536.41,077.7+432.5－FY2017FY2018vs. PY702.1+407.6+138.4%-5,751.0-5,048.9-4,765.3-483.5%-4,357.7-630.5%+8.1+7.6+158.7+42.0%27*1 FY2018 disposal objective: ~110 Bn yen in total *2 Includes short-term investments which mature or become due within one year from the reporting date *3 Bonds and loans of current and non-current liabilities 4 Please see slide 28 for details.FY2018-2019 NET PROFIT TO ADJUSTED EBITDA BRIDGE(BN JPY)Net profit for the yearIncome tax expensesInterest expense, netEBITDAImpairment lossesDepreciation and amortizationFY2018FY2019135.1-7.5247.741.6416.910.1-58.624.943.644.3-105.0583.6137.8660.7101.9124.1-0.624.0Other operating expense (income), net, excluding depreciation and amortizationFinance expense (income), net, excluding interest income and expense, netShare of loss on investments accounted for under the equity methodOther adjustments: Impact on profit related to fair value step up of inventory in Shire acquisition74.2191.0 Acquisition costs related to Shire Other costs*1Adjusted EBITDALegacy Shire’s Non-GAAP EBITDA*2Pro-forma Adjusted EBITDA*31. FY2019 includes adjustments for non-cash equity based compensation expense and EBITDA of divested products.2. Subtracted Legacy Shire’s Jan – Mar 2018 (3 months) Non GAAP EBITDA from Legacy Shire’s Jan – Dec 2018 (12 months) Non GAAP EBITDA and converted to JPY with 1,125.91,077.7541.3536.419.523.8N/AN/A1.65.3average exchange rate of 110.8 JPY/USD (Apr – Dec 2018).3. 12-month Apr 2018 – Mar 2019 combined Adjusted EBITDA of Takeda and Legacy Shire.Note: Takeda’s Adjusted EBITDA and Legacy Shire’s Non-GAAP EBITDA are not directly comparable, because (1) Takeda’s results are based on IFRS and Legacy Shire’s results are based on U.S. GAAP and (2) Takeda’s Adjusted EBITDA and Legacy Shire’s Non-GAAP EBITDA are defined differently.28congenital thrombotic thrombocytopenic purpuraIndolent non-Hodgkin’s lymphomaD-amino acid oxidasedevelopmental and epileptic encephalopathiesdiffuse large B-cell lymphomaimmune thrombotic thrombocytopenic purpurapotassium competitive acid blockerPh+ ALLPhiladelphia chromosome-positive acute lymphoblastic leukemiaLB AMLlow-blast acute myeloid leukemiapost-operative gastrointestinal dysfunction GLOSSARY OF ABBREVIATIONSRegional Abbreviations:CN: China; EU: Europe; JP: Japan; US: United States of Americacomplex regional pain syndromecutaneous T-cell lymphomaα1-antitrypsin deficiencyAlzheimer’s diseaseantibody drug conjugateattention deficit hyperactivity disorderacquired hemophilia Aanaplastic lymphoma kinaseanaplastic large-cell lymphomaacute myeloid leukemiaautologous stem cell transplantacid-related diseasesAdvanced Vial Accessblood brain barrierbiologics license applicationbradykinin mediated angioedemabreakthrough therapy designationBruton’s tyrosine kinasebudesonide oral suspensionchimeric antigen receptor-TCrohn’s diseasecongenital hemophilia A with inhibitorsCommittee for Medicinal Products for Human Usecognitive impairment associated with schizophreniachronic inflammatory demyelinating polyradiculoneuropathychronic lymphocytic leukemiachronic myeloid leukemiachronic myelomonocytic leukemiacytomegaloviruscerebrospinal fluidcentral nervous systemcomplex perianal fistulascomplete response letterAATDADADCADHDAHAALKALCLAMLASCTARDAVABBBBLABMABTDBTKBOSCAR-TCDCHAWICHMPCIASCIDPCLLCMLCMMLCMVCSFCNSCPFCRL29CRPSCTCLcTTPDAAODEEDLBCLDSDUDxEDSEE HEE MEFIEGFREMAEOEESCCFDAFLFSIGCCGERDGIGnRHGUGvHDHAEH2HHCCHemAHER2HLHSCTIBDDravet syndromeduodenal ulcerdiagnosisexcessive daytime sleepinesserosive esophagitis healingerosive esophagitis maintenanceenteral feeding intoleranceepidermal growth factor receptorEuropean Medicines Agencyeosinophilic esophagitisesophageal squamous-cell carcinoma the U.S. Food & Drug Administrationfront linefirst subject inguanylyl cyclase C gastroesophageal reflux diseasegastrointestinalgonadotropin-releasing hormonegastric ulcergraft versus host diseasehereditary angioedemahead-to-headhepatocellular carcinomahemophilia AIHINDiNHLI/OiTTPIViPSCL-ASALBDLSDLCMLGSmAbMAOBMDDMGMLDMMNAENDNDANegNERDNHLNKNMENMPANSCLCNSCTNSidiopathic hypersomniainvestigational new drugimmuno-oncologyintravenousinduced pluripotent stem cellslow dose aspirinLewy body dementialysosomal storage disorderlifecycle managementLennox-Gastaut syndromemonoclonal antibodymonoamine oxidase Bmajor depressive disordermyasthenia gravismetachromatic leukodystrophymultiple myelomaNEDD8 activating enzymenewly diagnosednew drug applicationNegativenon-erosive reflux diseasenon-Hodgkin’s lymphomanatural killernew molecular entitynon-small cell lung cancernon stem cell transplantnegative symptomshuman epidermal growth factor receptor 2Hodgkin lymphomaHR MDShigher-risk myelodysplastic syndromeshematopoietic stem cell transplantinflammatory bowel diseaseNT1 or 2narcolepsy Type 1 or 2ORRoverall response rateNational Medical Products AdministrationOSAPARPPASPBSPCABPIDPKPOCPOGDPOIPTCLPTHR/RRCCRTKSBSSCSCDSCTSCZSID SLEsqSTINGSUMOTESDTKITRDUCvWDobstructive sleep apneapoly (ADP-ribose) polymeraseprior approval supplementphosphate buffered salineprimary immunodeficiencypharmacokineticsproof of conceptpost-operative ileusperipheral T-cell lymphomaparathyroid hormonerelapsed/refractoryrenal cell cancerreceptor tyrosine kinaseshort bowel syndromesubcutaneous formulationsickle cell diseasestem cell transplantschizophreniasecondary immunodeficiencysystemic lupus erythematosussquamousstimulator of interferon genes small ubiquitin-related modifier treatment emergent sexual dysfunctiontyrosine kinase inhibitortreatment resistNMPAant depressionulcerative colitisvon Willebrand diseasesALCLsystemic anaplastic large cell lymphoma© 2022 Takeda Pharmaceutical Company Limited. 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