Takeda Pharmaceutical Company Limited (NYSE:TAK) disclosed its financial outcomes for the third quarter of fiscal 2025, revealing adjusted net profit of 235 billion Japanese yen, or roughly $1.53 billion. While the earnings per American Depositary Share (EPADS) stood at 47 cents, this figure fell short of analyst expectations, which had anticipated 55 cents. Nonetheless, measured in yen, earnings per share increased by 12.4% year-over-year, or 5.4% on a constant exchange rate (CER) basis, reaching 149 yen.
The company’s total revenues for the quarter reached $7.60 billion (1.192 trillion yen), underperforming relative to consensus estimates of $8.53 billion. On a reported basis, sales rose 4.2%, but at constant currency, they declined marginally by 0.6%. The revenue contraction primarily reflected a dip in the Neuroscience segment, attributable to ongoing erosion from generic entrants impacting Vyvanse, Takeda’s attention deficit hyperactivity disorder (ADHD) treatment.
Segment analysis revealed that Neuroscience sales decreased significantly, falling 23.6% to 108.4 billion yen. Conversely, Takeda experienced nearly a doubling in vaccine sales, which climbed to 23.3 billion yen. The oncology portfolio demonstrated resilience, with cancer drug sales increasing by 3.8% to 148.8 billion yen.
Sales within the gastrointestinal segment advanced by 12.1% to 385.8 billion yen, benefiting from sustained demand. The rare diseases category posted a modest 1.9% increase, totaling 194.0 billion yen in revenue. Additionally, the plasma-derived therapies (PDT) segment grew by 9.9%, generating sales of 273.1 billion yen during the quarter.
Takeda’s core operating profit experienced solid growth, rising 16.1% year-over-year (or 10.1% at CER) to reach 332.4 billion yen. The company attributed this improvement to disciplined cost management and efforts to enhance overall operational efficiency amidst challenging market conditions.
Chief Financial Officer Milano Furuta commented on the results, stating, "While we manage the impact of Vyvanse generics, we are implementing disciplined cost management and improving operational efficiency and therefore expect to achieve the previously disclosed management guidance for core operating profit." This statement underscores Takeda's commitment to navigating product lifecycle challenges while sustaining profitability through internal controls.
Fiscal 2025 Outlook Adjustments
Looking ahead, Takeda revised its management guidance primarily due to anticipated effects from Vyvanse’s generic competition. The pharmaceutical firm now expects core sales to decline by a low single-digit percentage for fiscal 2025, a slight adjustment from the earlier forecast which expected sales to remain broadly flat.
Despite this moderation in sales, Takeda raised its profit outlook, signaling confidence in the efficacy of its cost containment measures and the benefit of foreign exchange tailwinds. The company reiterated expectations for a low-single-digit decline in both core operating profit and earnings per share.
Concretely, Takeda amended its fiscal 2025 core revenue guidance upward from 4.50 trillion yen to 4.53 trillion yen. Concurrently, the core operating profit forecast increased from 1.13 trillion yen to 1.15 trillion yen, while core earnings per share guidance was raised from 479 yen to 486 yen.
In the regulatory landscape, Takeda noted the selection of 15 high-cost prescription drugs by the U.S. Centers for Medicare & Medicaid Services (CMS) for the third cycle of the Medicare Drug Price Negotiation Program. This cycle marks the first inclusion of medications reimbursed under Medicare Part B. Takeda’s Entyvio (vedolizumab), indicated for severe ulcerative colitis and Crohn’s disease, is among the selected drugs, potentially influencing future pricing considerations.
Market Response
Following the earnings release, Takeda Pharmaceutical Company shares edged up 0.36%, trading at $16.75 during premarket sessions on Thursday. The stock remains close to its 52-week high of $16.93, indicating steady investor confidence amid evolving financial guidance.
Key Points
- Takeda reported adjusted net profit of 235 billion yen ($1.53 billion) for Q3 fiscal 2025, with EPS in yen rising 12.4% despite missing dollar-based analyst EPS estimates.
- Total quarterly sales of $7.60 billion missed consensus estimates, primarily due to a 23.6% decline in Neuroscience revenue caused by generic Vyvanse competition.
- Other segments showed growth, including vaccines (almost doubling), cancer therapies (+3.8%), gastrointestinal products (+12.1%), rare diseases (+1.9%), and plasma-derived therapies (+9.9%).
- Core operating profit increased 16.1% to 332.4 billion yen, driven by stringent cost controls and efficiency improvements.
Risks and Uncertainties
- The generic competition for Vyvanse continues to exert downward pressure on Neuroscience revenues, posing ongoing sales challenges.
- The inclusion of Takeda’s Entyvio in CMS’s Medicare Drug Price Negotiation Program could impact future reimbursement levels and revenue generation.
- Currency fluctuations remain a variable, although current foreign exchange trends have been favorable and are factored into updated guidance.
- Broader market and regulatory conditions could affect Takeda’s ability to sustain cost discipline and operational efficiencies to meet profit targets.