Asia Healthcare Analyst, Pathology Associates Limited

Dion Stéfan Büchner M.D., FCAP

Asia Healthcare Analyst

Pathology Associates Limited

Equity Bottom-Up

<p>We initiate coverage on Takeda Pharmaceutical with a neutral rating and a DCF based target price of ¥ 5,200. We expect the Entyvio, Ninlaro and Trintellix trio to bring about much required stability to the topline as the sales of long listed majors (~20% of sales in FY15) decline and Velcade (9% of sales in FY15) goes off-patent in Nov-17. The recently announced acquisition of Ariad Pharma should further help consolidate revenue drivers in the form of Iclusig (ponatinib) and brigatinib. We look forward to innovative strategies by the new management to accumulate growth drivers that can potentially put Takeda back on a growth path. Meanwhile, commitment to the annual dividend of ¥180 will support the share price.</p>

We initiate coverage on Takeda Pharmaceutical with a neutral rating and a DCF based target price of ¥ 5,200. We expect the Entyvio, Ninlaro and Trintellix trio to bring about much required stability to the topline as the sales of long listed majors (~20% of sales in FY15) decline and Velcade (9% of sales in FY15) goes off-patent in Nov-17. The recently announced acquisition of Ariad Pharma should further help consolidate revenue drivers in the form of Iclusig (ponatinib) and brigatinib. We look forward to innovative strategies by the new management to accumulate growth drivers that can potentially put Takeda back on a growth path. Meanwhile, commitment to the annual dividend of ¥180 will support the share price.

Takeda Pharmaceuticals - Initiating Coverage - In Pursuit of Growth Drivers