Healthcare equity analyst - emerging & dev mkts, daaimon

Avien Pillay

Healthcare equity analyst - emerging & dev mkts

daaimon

daaimon is an independent research company focusing on healthcare and consumer sectors across developed and emerging markets. We produce insightful research which challenges conventional thinking. In particular, we look for new ideas by testing consensus forecasts and markets expectations.

Equity Bottom-Up

<ul>
<li>Given the high number of pipeline dropouts, and the potentially disappointing $6 bn psoriasis drug acquisition, we question Takeda’s recent investment track record.</li>
<li>A big restructuring, high expectations from new/recently launched drug portfolio, and punchy company guidance reduces the probability of upside surprises.</li>
<li>Unless you are limited from investing outside Japan and you want exposure to an innovative pharma company, we believe that there are better and cheaper options elsewhere.</li>
</ul>


Given the high number of pipeline dropouts, and the potentially disappointing $6 bn psoriasis drug acquisition, we question Takeda’s recent investment track record.
A big restructuring, high expectations from new/recently launched drug portfolio, and punchy company guidance reduces the probability of upside surprises.
Unless you are limited from investing outside Japan and you want exposure to an innovative pharma company, we believe that there are better and cheaper options elsewhere.


Equity Analyst, LightStream Research

Shifara Samsudeen, ACMA, CGMA

Equity Analyst

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

<ul>
<li>Takeda’s 2QFY03/2024 revenues increased 4.1% YoY beating consensus estimates by 6%. However, Takeda reported an operating loss of ¥49.3bn for the quarter due to impairment losses.</li>
<li>As we expected, recent setback in some of Takeda’s clinical trials have led to write-downs and triggered a downward revision to full-year profit guidance.</li>
<li>There has been excessive price reaction to these setbacks, however, Takeda continues to progress with its pipeline development with some newly launched drugs showing great potential.</li>
</ul>


Takeda’s 2QFY03/2024 revenues increased 4.1% YoY beating consensus estimates by 6%. However, Takeda reported an operating loss of ¥49.3bn for the quarter due to impairment losses.
As we expected, recent setback in some of Takeda’s clinical trials have led to write-downs and triggered a downward revision to full-year profit guidance.
There has been excessive price reaction to these setbacks, however, Takeda continues to progress with its pipeline development with some newly launched drugs showing great potential.


Takeda: Guidance Lowered Due to Setbacks in Clinical Trials but Pipeline Development Continues

<ul>
<li>
<a href="https://www.smartkarma.com/entities/takeda-pharmaceutical-co-ltd" target="_blank" data-smartkarma-citation="entities:11747:1" rel="noopener">Takeda Pharmaceutical (4502 JP)</a> reported 1QFY03/2024 results today. Revenue increased 8.9% YoY to ¥1,058.6bn (vs consensus ¥989.8bn) while OP increased 12.0% YoY to ¥168.6bn (vs consensus ¥123.5bn).</li>
<li>The topline growth was driven by growth &amp; launch products which accounted for 40% of total revenues, and increased 16.2% YoY during the quarter at constant exchange rates.</li>
<li>Takeda is expecting 7-8 key regulatory decisions during the current fiscal year and we expect dengue vaccine and other new launches to help offset revenue loss from upcoming patent expiry.</li>
</ul>



Takeda Pharmaceutical (4502 JP) reported 1QFY03/2024 results today. Revenue increased 8.9% YoY to ¥1,058.6bn (vs consensus ¥989.8bn) while OP increased 12.0% YoY to ¥168.6bn (vs consensus ¥123.5bn).
The topline growth was driven by growth &amp; launch products which accounted for 40% of total revenues, and increased 16.2% YoY during the quarter at constant exchange rates.
Takeda is expecting 7-8 key regulatory decisions during the current fiscal year and we expect dengue vaccine and other new launches to help offset revenue loss from upcoming patent expiry.


Takeda: Earnings Beat Driven by Key Drugs and Dengue Vaccine Seeing Positive Momentum

Global Healthcare Analyst

Tina Banerjee

<ul>
<li>
<a href="https://www.smartkarma.com/entities/sumitomo-dainippon-pharma-co" target="_blank" data-smartkarma-citation="entities:1935:1" rel="noopener">Sumitomo Dainippon Pharma Co (4506 JP)</a>'s flagship drug Latuda will loss patent protection in the U.S. in 2023. Latuda is already seeing revenue erosion.  </li>
<li>Sumitomo is expected to reap the benefit of new products launched in the U.S. market in 2020 and 2021. These are expected to gradually become next growth drivers.  </li>
<li>The company has a rich pipeline and targets to launch at least two new drugs in the U.S. in next two years.  </li>
</ul>



Sumitomo Dainippon Pharma Co (4506 JP)'s flagship drug Latuda will loss patent protection in the U.S. in 2023. Latuda is already seeing revenue erosion.  
Sumitomo is expected to reap the benefit of new products launched in the U.S. market in 2020 and 2021. These are expected to gradually become next growth drivers.  
The company has a rich pipeline and targets to launch at least two new drugs in the U.S. in next two years.  


Sumitomo Dainippon Pharma Co (4506 JP): New Launches Ensure Post-Latuda Growth Trajectory

<ul>
<li>
<a href="https://www.smartkarma.com/entities/otsuka-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:12292:1" rel="noopener">Otsuka Holdings (4578 JP)</a> announced FDA acceptance of indication expansion filing for Rexulti for the treatment of post-traumatic stress disorder. The FDA action date is February 8, 2025.</li>
<li>Due to impairment loss associated with termination of a pipeline asset, the company has reduced operating and net profit guidance for 1H24. However, 1H24 revenue guidance has been raised.</li>
<li>2028 revenue is expected to reach ¥2.5T, an increase of ¥480B from 2023 results, that too after absorbing the negative impact of ~¥310B for loss of exclusivity of core drugs.</li>
</ul>



Otsuka Holdings (4578 JP) announced FDA acceptance of indication expansion filing for Rexulti for the treatment of post-traumatic stress disorder. The FDA action date is February 8, 2025.
Due to impairment loss associated with termination of a pipeline asset, the company has reduced operating and net profit guidance for 1H24. However, 1H24 revenue guidance has been raised.
2028 revenue is expected to reach ¥2.5T, an increase of ¥480B from 2023 results, that too after absorbing the negative impact of ~¥310B for loss of exclusivity of core drugs.


Otsuka Holdings (4578 JP): Label Expansion of Rexulti; 1H24 Guidance Revision; New Mid-Term Plan

Japan

Astellas Pharma Inc. is a pharmaceutical company committed to the therapeutic fields of Urology, Immunology including Transplantation and Infectious Diseases, Oncology, Neuroscience and DM Complications and Metabolic Diseases. With over 17,000 global employees, Astellas researches, develops, manufactures, and promotes its prescription drugs through subsidiaries in the US, Europe, and Asia

Otsuka Holdings Co Ltd is a pharmaceutical company. The Company manufactures, sells, imports and exports pharmaceuticals, clinical testing, and medical equipment for intractable diseases.

Takeda Pharmaceutical Company Limited is engaged in research and development, manufacturing, sales and marketing, and import and export of pharmaceutical drugs. The Company focuses on the core therapeutic areas of oncology, gastrointestinal, and central nervous system disease.

Daiichi Sankyo Co, Ltd is a holding company established through merger of Sankyo and Daiichi pharmaceutical. The Group manufactures pharmaceuticals for human/veterinary use and medical tools and equipment. It also researches and promotes products through related companies throughout the world. The Group also produces food, food additives, livestock feeds, and agrochemicals.

ONO PHARMACEUTICAL CO., LTD. manufactures and sells pharmaceuticals.  The Company mainly researches and develops prescription drugs.

Kyowa Hakko Kirin Co.,Ltd. develops, manufactures, and markets pharmaceuticals. The Company's products include a protein produced by genetic recombination technology, an anti-anemia agent that attaches new sugar chains through partial modification of the amino acid sequence of human erythropoietin (EPO), and a glycoprotein, human erythropoietin.

Shionogi & Company Ltd., is a pharmaceutical company. The Company develops prescription & over-the-counter drugs and diagnostics.

Eisai Co., Ltd. produces prescription drugs and medical equipment and sells mainly to sales agents and subsidiaries.  Through its subsidiary, Sanko Junyaku, the Company produces and sells diagnostic drugs.  Eisai also markets its products through related companies in the US, Europe, and Asia.  The Company also manufactures and sells foods, livestock feeds, chemical, and agrochemicals.

ROHTO PHARMACEUTICAL CO., LTD. manufactures and markets pharmaceuticals and cosmetics products.  The Company's products include eyewash, bath soaps, gastrointestinal medicine, and hand cream.  Rohto Pharmaceutical also has a license agreement with its subsidiary, Mentholatum (US) to sell their brand products.  The Company also manufactures contact lenses and health foods.

SANTEN PHARMACEUTICAL CO., LTD. produces and sells ophthalmic medicine.  The Company manufactures a variety of products including eye drops and ointments. Santen Pharmaceutical also imports lenses and tools and equipment used by optometrists and produces anti-rheumatic drugs.

Sun Pharmaceutical Industries Limited manufactures and markets pharmaceuticals for domestic and international distribution. The Company's pharmaceutical portfolio includes drugs in the areas of diabetes, cardiology, neurology, psychiatry and  gastroenterology.

Cipla Limited manufactures and sells pharmaceutical and personal care products. The Company offers active pharmaceutical ingredients, and formulations in therapeutic areas, such as allergy, analgesic, anti malarial, anti-infectives, cardiology, dermatology and cosmeceuticals, diabetology, gastroenterology, steroids, iron chelators, nutritional products.

Cadila Healthcare Ltd. manufactures, and markets healthcare solutions ranging from formulations, active pharmaceutical ingredients, vaccines, diagnostics, health and dietetic foods, animal healthcare to cosmeceuticals.  The Company's products are available in tablets, capsules, injections, liquids, dry syrups, powders, granules, and ointments.

Jiangsu Hengrui Medicine Co., Ltd. develops, manufactures, and markets a variety of medicines and medicine packing materials. The Company's products include anti-tumor medicines, pain-killers, anti-infection medicines, aluminum foil, and other related products.

Zhangzhou Pientzehuang Pharmaceutical Co., Ltd. manufactures and markets Chinese traditional medicines, including Pientzehuang, Pientzehuang capsules, Pientzehuang lozenge, cough syrup, and other related products.

Zhangzhou Pientzehuang Pharmaceutical Co., Ltd. (600436 CH)

Zhangzhou Pientzehuang Pharmaceutical Co., Ltd.

Dr. Reddy's Laboratories Limited provides a complete range of pharmaceutical services. The Company manufactures bulk drugs and formulations including verapamil and cephalexin. The Company also manufactures and exports molecules such as norfloxacin, ciprofloxacin, and varieties of semi-synthetic penicillin. The Company markets its products in India and around the world.

UCB SA is a biopharmaceutical company. The Company specializes in the treatment of central nervous system disorders and inflammatory diseases. UCB operates worldwide.

Merck KGaA is a global pharmaceutical and chemicals company. The Company researches drugs in the areas oncology and neurodegenerative as well as autoimmune and inflammatory diseases. Also, it markets cardiovascular, fertility, endocrinology, and over-the-counter products as well as products for flat screens and the pharmaceutical, food, cosmetics, packaging, and coatings.

Hansoh Pharmaceutical Group Company Limited operates as a pharmaceutical company. The Company manufactures and sells anti-infectives, anti-neoplastic agents, diabetes drugs, and other products. Hansoh Pharmaceutical Group markets its products throughout China.

Teva Pharmaceutical Industries Limited operates as a pharmaceutical company. The Company develops, manufactures, and markets generic and branded human pharmaceuticals, as well as active pharmaceutical ingredients. Teva Pharmaceutical Industries serves customers worldwide.

Takeda Pharmaceutical Co Ltd focuses on the Research & Development, Manufacturing, Sales and Marketing and Import/Export of Pharmaceutical Drugs. The Company focuses on the following core therapeutic areas: Cardiovascular & Metabolic, Oncology, Central Nervous System, Respiratory & Immunology, General Medicine (Gastrointestinal & Genitourinary) and Vaccine.

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Takeda Pharmaceutical (4502 JP)

Takeda (4502 JP)– Avoid

A potentially disappointing $6bn acquisition, high pipeline dropout, and limited probability of upside surprises sums up our analysis of expensive...

Avien Pillay

Takeda: Guidance Lowered Due to Setbacks in Clinical Trials but Pipeline Development Continues

As we have highlighted, Takeda continues to make good progress with its development pipeline where the company has received FDA approval for...

Shifara Samsudeen, ACMA, CGMA

Takeda: Earnings Beat Driven by Key Drugs and Dengue Vaccine Seeing Positive Momentum

Takeda's 1QFY24 earnings beat consensus driven by growth & launch products. Newly launched dengue vaccine has started generating revenues with new...

Shifara Samsudeen, ACMA, CGMA

Sumitomo Dainippon Pharma Co (4506 JP): New Launches Ensure Post-Latuda Growth Trajectory

Sumitomo is on right track to alleviate patent cliff through new launches in the U.S. The company’s three new U.S. products have potential for...

Tina Banerjee

Otsuka Holdings (4578 JP): Label Expansion of Rexulti; 1H24 Guidance Revision; New Mid-Term Plan

Otsuka's top selling drug Rxulti is expected to get FDA approval for a new indication in early 2025. The company has reduced profit guidance for...

Tina Banerjee

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Takeda (4502 JP)– Avoid

A potentially disappointing $6bn acquisition, high pipeline dropout, and limited probability of upside surprises sums up our analysis of expensive...

Avien Pillay

Takeda: Guidance Lowered Due to Setbacks in Clinical Trials but Pipeline Development Continues

As we have highlighted, Takeda continues to make good progress with its development pipeline where the company has received FDA approval for...

Shifara Samsudeen, ACMA, CGMA

Takeda: Earnings Beat Driven by Key Drugs and Dengue Vaccine Seeing Positive Momentum

Takeda's 1QFY24 earnings beat consensus driven by growth & launch products. Newly launched dengue vaccine has started generating revenues with new...

Shifara Samsudeen, ACMA, CGMA

Sumitomo Dainippon Pharma Co (4506 JP): New Launches Ensure Post-Latuda Growth Trajectory

Sumitomo is on right track to alleviate patent cliff through new launches in the U.S. The company’s three new U.S. products have potential for...

Tina Banerjee

Otsuka Holdings (4578 JP): Label Expansion of Rexulti; 1H24 Guidance Revision; New Mid-Term Plan

​Otsuka's top selling drug Rxulti is expected to get FDA approval for a new indication in early 2025. The company has reduced profit guidance for...

Tina Banerjee

Otsuka's top selling drug Rxulti is expected to get FDA approval for a new indication in early 2025. The company has reduced profit guidance for...