Takeda forecasts first sales drop in 2 decades

Takeda Pharmaceutical Co., Asia's biggest drugmaker, forecast its first sales drop in two decades because of a stronger yen.

Sales may fall 2.5 percent to 1.5 trillion yen ($15 billion) in the year ending March 2010, Osaka, Japan-based Takeda said today. The company has operations in Deerfield. That would be the first decline since revenue slipped 0.4 percent in the year ended March 1991. Analysts projected 1.55 trillion yen, according to the median of 16 estimates compiled by Bloomberg in the past three months.

Takeda forecast the stronger Japanese currency will damp revenue overseas even as new products offset an anticipated decline in sales for its Prevacid heart-burn pill. Drugmakers worldwide will generate $70 billion less in sales this year than previously estimated as growth slows and currency fluctuations hurt overseas sales, researcher IMS Health Inc. said on April 22.

"The sales forecast looks severe," Kenji Masuzoe, an analyst at Deutsche Bank AG with a "hold" rating on Takeda, said by telephone from Tokyo today. The company needs more products, such as its new diabetes drug under review, to strengthen its business, he said.

Takeda projected net income will rise 20 percent to 280 billion yen this fiscal year, while operating profit, or sales minus the cost of goods sold and administrative expenses, will gain 29 percent to 395 billion yen.

Profit last year was hurt by research-related costs as part of the $8.9 billion takeover of Cambridge, Massachusetts-based Millennium Pharmaceuticals Inc. and the splitting of a U.S. joint venture with Abbott Laboratories, Takeda said.

Strategy Change

Takeda will switch its strategy to focus on quality rather than develop a large number of drugs, President Yasuchika Hasegawa said.

"We focused too much on the quantity and speed of research and development, which didn't necessarily bring results to us," Hasegawa said at a briefing in Tokyo. "We are changing our strategy and now seek more quality."

Takeda rose 3 percent to close at 3,800 yen on the Tokyo Stock Exchange, while the benchmark Nikkei 225 Stock Average gained 0.2 percent. The stock dropped 18 percent this year, compared with the 19 percent loss for Pfizer Inc., the world's largest drugmaker, and the 7.9 percent decline for the MSCI World Health-Care Index of 119 companies.

Higher Dividend

The company said it will pay a second-half dividend of 92 yen per share for an annual total of 180 yen, 7.1 percent more than last fiscal year.

The stronger yen will cut 57 billion yen from revenue this year, Takeda said. The company assumes the U.S. currency will average 95 yen in the 12 months ending March 2010 and the euro 120 yen. The dollar currently trades at about 98.6 yen and the euro 134.2 yen.

North America accounts for 37 percent of sales at Takeda and Japan 54 percent. The company derives 9 percent of sales from Europe and Asia combined.

Global sales of Actos, which generated 25 percent of revenue last fiscal year, will increase between 1 percent and 5 percent overseas and 20 percent in Japan in the current 12-month period, Takeda said.

The drugmaker expects Prevacid sales to fall to 80 percent of last year's level on competition from generic versions after the patent for the heart-burn drug expires, Masato Iwasaki, head of Takeda's product planning division, said at a briefing in Tokyo, without giving a specific figure. Takeda this year began selling Kapidex, the successor to Prevacid, whose patent will expire in the U.S. in November.

Alogliptin Delay

Hasegawa, 62, faces a further delay to sell alogliptin, a successor to Actos, because of new rules applied by the U.S. Food and Drug Administration.

The FDA asked Takeda for additional data based on the new rules made in December, a year after the company submitted its application, the drugmaker said on March 6. Takeda is waiting for a decision by the FDA on the sale of the alogliptin drug, Hasegawa said.

The medicine may not be ready for sale before Actos loses patent protection in January 2011, analysts including Philip Hall of Tokyo at KBC Securities said.