Good day everyone. Welcome to the Conference Call of Takeda Pharmaceutical Company Limited. During the presentation from the company, all the telephone lines are placed for listening mode only. A question-and-answer session will be held after the presentation. Now we start the conference. Mr. O'Reilly, please go ahead.
Thank you very much for your participation in the conference call for the financial results for fiscal year 2020 of Takeda Pharmaceutical Company Limited. My name is Christopher O'Reilly, Global Head of Investor Relations. Before starting, I'd like to remind everyone that we will be discussing forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those discussed today. The factors that could cause our actual results to differ materially are discussed in the most recent Form 20-F and in our other SEC filings. Please also refer to the important notice on page two of the presentation. Please let me introduce today's presenters and the panel. Christophe Weber, President and CEO. Costa Saroukos, Chief Financial Officer. Andrew Plump, President of R&D. Milano Furuta, President of the Japan Pharma Business Unit. Julie Kim, President of the PDT Business Unit.
First, I would like to start with a presentation by Christophe, followed by Andy and Costa. After that, we will have a question-and-answer session. Now we start the presentations. Please have the presentation materials to hand.
Thank you, Chris. Hello, everyone. It's a great pleasure to share with you our 2020 result and 2021 outlook. Considering the pandemic context, I could not be more proud of the way Takeda managed the situation in fiscal year 2020. On top of that, we are at a very interesting inflection point for 2021 and for the future. It's really my great pleasure to present with you this result and this outlook. If you go to slide number four, it's just a reminder that our vision is to discover and deliver life-transforming treatments, guided by our commitment to patients, we innovate for patients. We have an access strategy in the 80 countries where we operate for the patients. Our commitment to our employees, we have 50,000 employees across the world.
Of course, our priority in fiscal year 2020 has been to ensure the safety of our employees while at the same time maintaining our operations, and we did that. That's really reflected in our result. Of course, protecting our planet is also our priority. Remember that in 2020, for the first time, we achieved carbon neutrality, which is a very important milestone towards our zero carbon emission in the future. At the same time, we embrace data, digital, AI, machine learning, all technology which allow us to be more agile, more efficient. Certainly, we have seen a big inflection point here as well within the company, across our entire value chain. In research, in manufacturing, in plasma collection, in back office, we are seeing really the impact of the AI and machine learning and the leveraging of data.
This is also a factor explaining the result that we are sharing with you today. If I go on slide five, I'll go rapidly on this because Andy and Costa will do a more deep dive. We have delivered our guidance; we are very pleased with that. We have been able to maintain our business continuity. At the same time, we were very active to fight against the COVID-19. We have designed our future way of working post-pandemic, which will be a hybrid remote face-to-face interaction. We have delivered our management guidance. Very importantly, we have accelerated our cost synergies, and we are delivering our $2.3 billion target one year in advance. We are done with the synergy.
We are at a state of low 30 % margin. You will see that our intent is to stay at this level of low to mid-30% margin while significantly increasing our R&D investment. This P&L performance, combined with our divestment strategy, has been allow us to reduce rapidly our net debt to EBITDA to 3.2x. The pipeline is progressing well. In fact, it's really maturing. This is why we are increasing our investment significantly in 2021 to double down. We are confident about this pipeline. We think it's truly innovative. We will cover that later. This investment, because we were able to accelerate the synergy capture, is not compromising neither our margin nor our deleveraging target. On the next slide, on slide number six, it's a snapshot on our financial result. Our underlying growth has been 2.2% in fiscal year 2020.
In the overall context of the pandemic, it does demonstrate the resilience of our portfolio. Our operating profit margin is also at 30%+ level, we have been able to grow our core operating profit at +13%. We have five new molecular entities which have been submitted for regulatory approval. Sorry, four which have been submitted for our regulatory approval. Our pipeline is progressing very well. I will spend a bit more time on slide seven because this is a bit more information that we are disclosing on the plasma-derived therapy value chain. As you know, we have created this end-to-end Plasma-Derived Therapies Business Unit led by Julie Kim, who is on the call today. I can really say that we have been managing also the pandemic crisis very well. We have been through an increase of collection center as well as some innovation.
We have been able to limit the plasma collection decline to -11% in fiscal year 2020, -5% at our U.S. center. I think it's a really great performance. We expect our plasma collection to increase by 30%+ in fiscal year 2021. On the production side, we are really seeing a strong performance in term of productivity. We are on track to increase our manufacturing capacity by 65% by 2024 with an existing infrastructure. Of course, this is why we believe that our margin will continue to increase in the foreseeable future with our PDT business because we are growing our business, and it's a fixed cost business, but fixed cost is there. Of course, our margin will continue to improve in the future. We expect our PDT Immunology business to grow between 10% and 20% in fiscal year 2021.
We are very pleased with the performance overall of the PDT business, and we are investing for the long term. As you know, within this business unit, we created a research and development organization, and they are investing on improving our existing product as well as totally new product, which of course will take more time to deliver. On slide eight, we have not remained passive in front of the pandemic. We have some expertise in the vaccines area. We didn't have in-house or with any established partner, a technology ready to be used to develop our own vaccines. The BioNTech or Moderna have been working on that for a decade. We were not in a position to deliver on vaccines, but we were very active to help in Japan to bring these two vaccines, the Novavax vaccines and the Moderna vaccines in Japan.
This is a very important operation that we are having, and we hope that the vaccination will accelerate in Japan, w e are playing our role for that. A few words on the hyperimmune globulin product. You have seen that the result of the trial that we conducted has not been positive, but we see this overall operation of this plasma alliance as a great success to demonstrate that the industry can create such an alliance, which allowed us to very rapidly actually answer that critical question as whether this hyperimmune globulin product will be efficacious against these hospitalized patients with COVID-19. Moving up to 2021, our top line growth is accelerating. On slide nine, our guidance is mid-single digit growth on an underlying basis. Our core operating profit underlying increase will be mid-single digit as well, with roughly 30% margin. Our Core EPS will also grow at mid-single digit growth.
We do see an acceleration of our growth. Of course, at the reported level, the reported number are heavily impacted by the divestiture or the past divestiture programs, but that will wane over time. I think the signal that our underlying growth is accelerating is very important. Overall, what we are seeing is that we are delivering on our commitment in fiscal year 2020, in spite of the pandemic crisis. We are actually accelerating our cost synergy, which is allowing us to accelerate our deleveraging. We are playing a role in the fight against the COVID-19 vaccines with two partnership, one with Moderna, one with Novavax for Japan. With Novavax vaccines, we are building our own manufacturing capacity, so it's a long-term agreement on partnership, and we are at an inflection point with the pipeline. It's a very exciting time with the pipeline.
We are seeing a very maturing pipeline, and that's why we made the decision to increase our R&D investment significantly. Because we were fast to capture our cost synergy, this R&D investment has not compromised neither our margin nor our deleveraging profile. I'll stop there, and I'll let Andy develop the R&D situation, t hank you.
Thank you very much, Christophe. Good morning and good evening to everybody. It's an absolute pleasure to be here to look back at the successes of fiscal year 2020 for Takeda's R&D and also to look forward. Bar none in my seven years at Takeda, this is the most exciting update I have the privilege of providing to you. 2020 was a significant year for us. We definitively completed our transformation. We completed the integration of Shire. We withstood and grew and continue to grow from COVID, taking lessons, learning silver linings on how to execute. Fittingly, as the first year of a new decade, it marks the new phase for our Takeda R&D rebirth, a phase of delivering for patients and for Takeda. As you can see here in this slide, despite the COVID pandemic and its challenges, we had major successes and made major strides in 2020.
We had 12 approvals in key regions, particularly in Japan and a region that we continue to grow, in China. We saw, as Christophe mentioned in his opening comments, early signs of success for our Wave 1 pipeline. We now have in Wave 1, four of our experimental therapies for which we've initiated global submissions. We also had important data readouts for two key Wave 1 programs, [guess] and TAK-994, that significantly increased the probability of success that they'll be delivering over the next two to three years. Can we go to slide 12, please, Chris. Today, we have a pipeline. It's a pipeline that's poised to deliver. It will deliver today, in the intermediate, and in the long-term future. We have a Wave 1 pipeline that over the next three years will deliver up to three potential new molecular entities, as well as two COVID-19 vaccines in Japan.
We've established, and I'll share more with you on this, our flagship program in orexin. We have a very exciting and dynamic Wave 2 pipeline that represents a very high innovation bar, represents a diversity of modality, represents very strong translational science. In Wave 2, we have programs that are starting to demonstrate their value for patients with data and programs that are just entering into the clinic. We're making major pre-investments in certain programs. We've highlighted those to you, TAK-981, TAK-999, as examples, but there are others as well. It doesn't end here. As you can see in the upper right, we have a very strong and robust research and partnership engine, and in 2021, we expect 10-12 new INDs to flow into the pipeline.
Takeda R&D is ready, it's creative, and it can deliver today and well into the future to support the needs of patients and the ambitions of a company our size. Next slide. If you can go to slide 13, let's just double-click and look back on 4Q because it was a very active quarter for us. We saw multiple additions to the pipeline. I'll just mention two. TAK-861, our second oral orexin 2 receptor agonist, has now been dosed in patients, and TAK-186, which is the first tumor-activated bispecific that we brought into our Maverick partnership, which we consummated an acquisition of just last quarter. We've seen major pipeline stage ups, and I've already mentioned some of these. I'll just mention another one of our Wave 1 programs, and that's pevonedistat, for which we expect to see our first data cut from the PANTHER phase III study this summer.
Then, of course, lastly, we're not afraid to make decisions, and we make data-driven decisions. We're a dynamic organization. We have to be to stay agile and to meet the needs of patients. Over the last quarter, we made four data-driven decisions to remove programs from our pipeline. Next slide. Perhaps the most significant event last quarter was at the R&D Day on April six, when we disclosed data on our oral orexin program. We disclosed healthy volunteer data to give you a sense for the magnitude of effects that we were seeing in sleep-deprived individuals. We shared directionally with you data that we've seen from the first part of our 15-01 phase II/II-B study.
We were not able then, and we're not able now, unfortunately, to share data with you, but those data will be coming towards the end of this fiscal year or the end of next fiscal year. We did make a major decision in that program, that was a go decision to parts B and C of that multi-pronged study. Part C is a proof-of-concept study in type 2 narcolepsy, and part D is an accelerated dose-ranging study in type 1 narcolepsy. While we weren't able to share data with you, we shared with you the minimal bar that was necessary to move forward, both with respect to the maintenance of wakefulness test, with respect to the Epworth Sleepiness Scale, and with respect to the weekly cataplexy rate. I can tell you that our expectation is to be significantly beyond what this minimal bar is.
We're moving forward quite rapidly with this program. If we can go to the next slide, 15, please. Let me just restate. 2020 was quite an exceptional year for us. Through the pandemic, we were resilient. We developed new ways of working. As Christophe mentioned, even beyond the vaccines, we stepped up collaboratively on an international scale to ensure that we were part of the solution for this horrible pandemic. For the most part, despite the disruptions of 2020, we've delivered on the milestones that we mentioned to you at the beginning of the year. Of course, there have been some delays secondary to COVID. We've mentioned one of them to you, and that was our CAR NK program, TAK-007. We're now on track.
We filed an IND. We expect to start our Takeda multi-site phase II study using our frozen cryopreservation sometime over the next few months. Next slide. Lastly, looking back on 2020, before I move forward into the future, I'll remind you all that when I joined the company five or six, seven years ago, the vast majority of our focus was on our global and regional brands. In fact, 75% of our pipeline budget was focused on these programs. Today, we've shifted. The majority of our focus is on our pipeline, and almost 75% of our pipeline spend is now dedicated to our pipeline. With that said, we still continue to support our marketed portfolio and our global and regional brands. We predominantly do that through medical data sciences, but we also have programs, indication expansions, and regional expansions that require development support, as you see here.
Predominantly through 2020, we were able to hit on our major milestones. I will mention just two programs in this list for you. One is ENTYVIO. As you'll remember, our subcutaneous formulation was approved in Europe, and that launch is going quite well. We now have up to 10,000 patients who have already been treated with that subcutaneous formulation. We continue to make progress in the U.S. We had received a CRL, but we're quite confident in our ability to bring that subcutaneous product to the United States. Secondly, on NATPARA. All of you will remember that we were part of a voluntary recall. We continue to make very strong progress. We're in discussions regularly with FDA.
We have a very active single-use emergency program for patients with greatest need. We expect to submit what's called a prior authorization submission later this year, which will be a first step in our aspirations to bring NATPARA back to market. That won't happen this year, the commercial resupply, but we should have a better sense of the feasibility and timing of that over the course of this year. If we go to the next slide, please. Let's shift gears and let's look forward to 2021. 2021 will be an unprecedented year for Takeda. It will be an industry-leading year. It's a year that's quite rare for an R&D organization. As Christophe mentioned, we anticipate having five or maybe even six new molecular entities under review by major regulatory agencies, and by that we mean FDA and EMA. We expect up to four approvals.
We expect major data readouts for both our Wave 1 and Wave 2 products. Huge steps forward. This will be a defining year for orexin, both for TAK-994, which we hope to move into a phase III study by the end of this year or early next year, as well as our two other molecules as part of that franchise, TAK-861, our second oral molecule, and our IV molecule, in which we'll start to be exploring IV administration indications in hospitalized settings. It will also be a remarkable year for China and Japan. We expect up to 40 potential submissions and approvals in those regions. Next slide, please. Our success has been predicated on a highly disciplined, very clear, and consistent strategy that we've put in place over the past several years.
That strategy includes a very high innovation bar, deep therapeutic area focus, building internally core capabilities in certain areas like cell gene therapy and data sciences, focusing on targeted and often rare patient populations, building a very strong industry competitive and industry-leading internal laboratory, but also inverting ourselves and facing externally into our partnerships, using data and digital to generate evidence, importantly, to maintaining a budget that's highly agile and externally facing. We've proven we can be quite efficient and effective with a budget that's like that. If we go to the next slide, let's actually talk about the budget. Christophe mentioned at our April sixth R&D day, he restated, we're in the process of growing our R&D investment to meet the needs of our pipeline. We don't look at R&D budget as a percent of sales, w e don't think that's the right measure.
The right measure is what does our pipeline need, and do we have enough to support a sustainable pipeline through our research and partnership strategy well into the future? The fact is, today, our pipeline demands an increased investment. Before I go into that, let me just say that as we've ended our integration with Shire, we've hit our synergy target. We've saved over JPY 60 billion in synergies. How? Through pipeline rationalization. Over the last two years, through data and strategic-driven decisions, we've discontinued over 30 programs. We're larger. We can save more on procurement, as Costa has discussed on many different occasions. Thirdly, we've had some redundancies in terms of capabilities and in terms of sites, particularly moving activities from Europe to the U.S. Through all that, we've been able to hit our synergy target.
We're now in rebuilding mode, and we've started that. Over the past year, we've invested an additional JPY 10 billion, and next year, for 2021, we expect that to be over JPY 65 billion. We expect that that investment will increase into 2022. Not at the same rate, our expectation, based on the pipeline momentum that we have, is that that will continue to increase. We're asked, where is that money going to? There are three buckets. Pipeline momentum. orexin is a great example. Pre-investing in programs like TAK-981, like our cell therapy capabilities. In fact, building capabilities. We've worked intensively over the past several years to build a very different and new externally facing R&D model. We've also learned that there are certain capabilities that are better brought in-house to create the agility and to accelerate. We're rebuilding those capabilities actively right now.
We've also had very successful partnerships, and we're now investing in several of those partnerships, as you can see in the lower right. If we go to the next slide 20 please, Chris. Fiscal year 2021 will be an inflection year for Takeda R&D. It's going to be a really great year for all of us, and it will be a highly competitive year across the industry. I'm quite proud of what we've accomplished. These are some of our commitments for 2021. I won't go through all of them. I'll just mention that if you look at the Wave 1 commitments, you're looking at a series of pivotal study starts, pivotal study data readouts, and importantly, submissions and approvals. It doesn't end there.
We expect 2021 to be a defining year for our orexin franchise, and we expect to see major proof of concept in data readouts and go decisions to pivotal studies for our Wave 2 pipeline. If you go to the next slide, please. I'll just mention that, again, as with 2020, in 2021, we'll continue to focus on our global and regional brands as appropriate. I'll just mention two highlights for the next year. One is we continue to invest in our most significant brand, and that's ENTYVIO. This year, we hope to start a pivotal study with the new device. It's a needle-free, painless injection device that we've developed with a partner, Portal Instruments, and we expect to start a pivotal study for that next year.
A second comment I'll mention for 2021, not shown on this slide, is mobocertinib, where we've made the decision not to run a combination study with chemotherapy in the front line, but rather to initiate a second line study of mobocertinib, a phase III study of mobocertinib versus docetaxel. If we go to the last slide, before I hand it over to Costa for the financials, let me just end by saying our R&D engine is delivering. We have 11 Wave 1 programs, all targeting high unmet medical need with a very strong likelihood of delivering over the next few years. As we've said, by this year, we'll have five to six of these programs in review by the FDA and/or EMA, and we expect up to four approvals. We have our two COVID vaccines that we're partnering in Japan.
We have a very exciting Wave 2 pipeline that's now over 30 highly innovative experimental medicines, and we continue to deliver in China, our largest growth region. With that said, Costa, I will pass it over to you.
Thank you, Andy. Hello, everyone. Let me start on slide 24 with a summary of how we've continued to execute against our financial commitments over the past year. Firstly, we've delivered our management guidance for fiscal year 2020 with strong underlying performance driven by our 14 global brands, demonstrating the resilience of our portfolio. We have also accelerated cost synergies. I'm delighted to announce we have now achieved the $2.3 billion synergy target one year ahead of plan, while also supporting our strategic investments in R&D, China, and plasma-derived therapies. This has helped drive continued margin improvement with an underlying core operating profit margin of 30.2% in fiscal year 2020. We have also exceeded our $10 billion non-core asset divestiture target with 12 deals announced worth up to $12.9 billion in total.
Proceeds from these divestitures, alongside robust operating cash flow, has enabled us to make great progress on deleveraging. We ended the fiscal year with net debt to adjusted EBITDA ratio of 3.2x , an improvement from 4.7x two years ago. With synergies captured and the bulk of divestitures closed, we are now pivoting from integration to a phase of accelerating the top line and ramping up investment in our innovative pipeline. Please move to slide 25, where it shows our fiscal 2020 results compared to the latest guidance we gave in February. On an underlying basis, we either delivered or exceeded management guidance on every measure. Underlying revenue growth was 2.2%, driven by our 14 global brands.
Underlying core operating profit growth was 13%, with a 30.2% margin benefiting from accelerated delivery of cost synergies. Our underlying Core EPS growth was 24.6%, and this was due to a lower underlying and core tax rate. On the bottom half of the slide, you can see the reported revenue was broadly in line with the forecast at almost JPY 3.2 trillion, with business momentum offsetting the impact from certain divestitures, and that closed earlier than planned. Reported operating profit was JPY 509.3 billion, exceeding the forecast by 17.3%, mainly due to a gain on the sale of Takeda Consumer Healthcare Company Limited, which closed on the 31st of March. This gain was partially offset by an additional non-cash expense related to remeasurement of a contingent receivable for Xiidra milestones.
Core operating profit was JPY 967.9 billion, slightly below the forecast due to a ramp-up of R&D investment in quarter four. Also impacted by divestiture timing. Reported EPS was JPY 241, more than double our forecast. This was driven by the same upside impacts as reported core operating profit. A favorable tax rate due to the acceleration of legal entity optimization and recognition of deferred tax assets. Core EPS was in line with our forecast at JPY 420. Finally, free cash flow was approximately JPY 1.24 trillion or $11.2 billion. This was a significant overachievement versus the forecast, due to the sale of the consumer healthcare business, alongside working capital improvements and lower cash taxes. Moving to slide 26, which shows the fiscal 2020 results versus prior year. Reported revenue declined by -2.8% due to foreign exchange and divestiture headwinds.
Underlying revenue growth, which adjusts for these, was growing at 2.2%. Reported operating profit of JPY 509.3 billion was a significant improvement of over 400% versus prior year. This was mainly due to lower expenses related to the Shire acquisition, as well as gains from the sale of non-core assets. Core operating profit, which adjusts for purchase accounting and non-recurring items, was JPY 967.9 billion, an increase of 0.6% despite headwinds from foreign exchange and divestitures. If we adjust for those, underlying core operating profit growth was very strong at 13%. We also delivered core and underlying core operating profit margins over 30%. Reported EPS was JPY 241, almost 750% higher than prior year, and core EPS was JPY 420 with growth of 8.5%. Underlying core EPS growth was up 24.6%. Finally, we delivered abundant cash flow in fiscal 2020.
Operating cash flow was over JPY 1 trillion, including a deposit related to certain vaccine operations. Excluding this deposit, operating cash flow would've been JPY 835.4 billion or approximately $7.5 billion, with growth of 25% versus prior year. Free cash flow, which adjusts for the deposit and also reflects divestitures and CapEx, was an impressive JPY 1.24 trillion or approximately $11.2 billion. Slide 27 gives more insight into the magnitude of the foreign exchange and divestiture impact on our reported revenue and core operating profit. As you can see, appreciation of the yen had a negative impact of three percentage points on revenue. This was due to appreciation of the yen versus the U.S. dollar and several emerging market currencies. Divestiture impact year-over-year revenue growth, it impacted us by 2.1 percentage points.
Of note, despite these foreign exchange divestiture headwinds, we were still able to deliver core operating profit growth of 0.6% in fiscal 2020. On slide 28, I'll discuss revenue drivers for fiscal 2020. Our five key business areas, representing 82% of total revenue, continued to grow steadily at 4.7% on an underlying basis. GI, which accounts for approximately a quarter of revenue, continues to grow exceptionally well at 14%. This was spearheaded by ENTYVIO, which continues to gain market share globally. Rare diseases declined by 2%, with rare metabolic impacted by the NATPARA recall in the U.S. and rare hematology impacted by competition as expected. On the other hand, our HAE franchise is expanding well with growth of 10%, driven by the continued strong performance of TAKHZYRO. PDT Immunology delivered 10% growth, driven by 16% growth of the immunoglobulin portfolio.
However, we did see a decline of albumin due to a temporary interruption to batch releases of albumin glass in China. This has since been resolved, and we expect growth to recover strongly in 2021. Oncology grew 1% with growth brands such as NINLARO, ALUNBRIG, EXKIVITY, and ENTYVIO offsetting the declines of VELCADE and LEUPLIN. Neuroscience declined by 2%, with both VYVANSE and TRINTELLIX impacted in 2020 by COVID-19 stay-at-home restrictions. New patient starts are recovering, but are not yet back to pre-COVID levels. Finally, the other non-core products declined by -9%. This is a group of products which has been the target of our divestiture program. The impact will be much smaller in fiscal year 2021 and beyond. Now on slide 29, this slide shows the revenue of our main products within our key business areas.
In particular, we are focused on maximizing our 14 global brands, that's indicated here by the red globe symbol. In total, these products generated over JPY 1.2 trillion in fiscal year 2020, or approximately $11 billion, with growth of 16% on an underlying basis. Please note that this is despite the headwinds from the NATPARA recall in the U.S. and albumin sales dynamics in China. Therefore, we expect the growth of these 14 global brands to accelerate in fiscal year 2021. Moving now to slide 30, which shows the bridge from reported to core operating profit in fiscal year 2020. Here you can see the major one-time or non-cash items that we adjust out from core operating profit. Including in these adjustments are Shire integration costs and the unwind of inventory step-up, both of which we expect to be much smaller in fiscal 2021.
On slide 31, I'll talk about our synergy delivery. I'm very pleased to announce that we have delivered on our $2.3 billion synergy target in fiscal year 2020, a full year ahead of schedule. You'll recall that this synergy target was originally $1.4 billion at the time of the Shire acquisition announcement. Not only did we substantially increase the original target and deliver in an earlier timeframe, but we also expect the final cumulative integration cost to be between $ 2.7 billion-$2.9 billion, which is below our $3 billion guidance. On the right-hand side, we highlight some programs that have been key in our successful integration of Shire. I'm very proud of the work we've done here as an organization. We rapidly rationalized headcount, delivering $830 million of savings with minimal business disruption. With our increased scale and streamlined vendor strategy, we strategically drove procurement savings of over $700 million.
We undertook an enterprise-wide location strategy to consolidate sites and optimize legal entities. We also accelerated our shift to the cloud, rolling out cutting-edge automation platforms and training to save hundreds of thousands of hours of productivity. We'll showcase some of these examples of robotics and automation at the finance IR day in the coming months. On slide 32, we highlight how the synergies have underpinned our underlying core operating profit margin improvement to 30.2% in fiscal 2020. You'll note that we've made some strategic reinvestment of these savings already in R&D, PDT, and China launches. Going forward, we are targeting a low to mid-30% underlying core operating profit margin. The accelerated schedule of synergy delivery is a key factor in offsetting the margin impact from our planned increase in R&D investments in fiscal 2021.
Looking ahead to fiscal 2023, we see key opportunities to maintain low to mid-30% margins. We expect continued revenue growth driven by our high-margin 14 global brands and also our Wave 1 pipeline launches. There is also the possibility that we may extend some of our COVID-19 vaccine collaborations. In addition, we expect to continue driving improvements in PDT margins due to process optimization and product mix, and to maintain disciplined SG&A control. Slide 33 shows a summary of our non-core asset divestiture program. With the recent sale of a diabetes portfolio in Japan, we now have announced deals worth up to $12.9 billion, greatly exceeding our original stated target of $10 billion. Please note that the Japan diabetes divestiture closed in April 1st, and therefore is not captured in our fiscal 2020 cash flow.
We also have one deal still to close for a portfolio of non-core assets in China. We expect this to complete in the coming months. On the right-hand side of the slide, you can see that we have made great progress with the sale of real estate and marketable securities in fiscal 2020, delivering approximately $1.4 billion in proceeds. This brings the total of real estate and securities divested since fiscal 2018 to $3.5 billion. Switching to cash flow on slide 34. This shows the evolution of our cash balance in fiscal 2020. Operating cash flow was over JPY 1 trillion, including JPY 175.5 billion of deposits restricted to certain vaccine operations. Excluding this deposit, operating cash flow for the year would have been JPY 835.4 billion, comfortably covering the dividend and interest and allowing us to reduce our debt ahead of plan.
Free cash flow, which adjusts out the deposit and also takes into consideration CapEx and proceeds from the sale of non-core assets, was an abundant JPY 1.24 trillion. This included cash from marketable securities, sale of real estate, and non-core asset divestitures. As a result of our robust cash flow, we ended the year maintaining our strong liquidity profile of approximately JPY 1.5 trillion or $13.5 billion. Slide 35 traces our net debt evolution starting back from March 2019, shortly after the close of the Shire acquisition. At that point in time, net debt was approximately JPY 5 trillion, with the net debt to adjusted EBITDA ratio at 4.7x Since then, we have continued to generate strong operating cash flow, supplemented by non-core asset sales. As a result, in two years, we have reduced our net debt by approximately JPY 1.7 trillion or $15 billion.
As of March 2021, net debt to adjusted EBITDA is down to 3.2x . Deleveraging continues to be an important near-term focus for Takeda, and we aim to finish fiscal 2021 with a ratio below three times. Moving now to fiscal 2021 guidance on Slide 36. First, let me walk through the management guidance. As a reminder, these are underlying growth rates which adjust for foreign exchange and divestitures. As Christophe explained earlier, we expect top-line growth to accelerate in fiscal 2021, and our guidance is for mid-single-digit underlying revenue growth driven by our 14 global brands. In particular, we expect strong double-digit growth to continue for ENTYVIO, TAKHZYRO, and our PDT portfolio. Furthermore, 2021 will be an inflection year for the pipeline. We intend to make the necessary R&D investments to support development of our innovative Wave 1 and Wave 2 programs.
In spite of this ramp-up of R&D investment, we still expect to deliver mid-single-digit underlying core operating profit growth due to improved product mix and the impact of our accelerated synergies. Underlying Core EPS is also expected to grow mid-single digit. On the left side of the slide, we show some numerical forecasts for the coming fiscal year. Reported revenue forecast is JPY 3.37 trillion . Reported operating profit forecast is JPY 488 billion . Core operating profit forecast is JPY 930 billion , and Core EPS forecast is JPY 394 . In line with our shareholder returns policy, we intend to maintain the dividend of JPY 180 per share. From Slide 37, let me explain some of the main factors driving year-on-year performance in our forecast. Firstly, reported revenue is expected to grow 5.4% to JPY 3.37 trillion .
Although we expect to book JPY 133 billion of one-time reported revenue from the diabetes portfolio divestiture in Japan, it will be more than offset by the JPY 185 billion of revenue that we lose from divested assets. However, despite this non-recurring net headwind from divestitures, we still expect revenue growth of 5.4%, driven by business momentum and with some benefit from FX. Please also note that our divestiture program is largely complete. While divestitures have a significant impact on reported revenue growth in fiscal 2021, the impact should be much lower in future years. Slide 38 shows core operating profit, which was JPY 967.9 billion in fiscal 2020, and we forecast JPY 930 billion in fiscal 2021. As with revenue, there is a significant headwind from divestitures. However, underlying business momentum driven by product mix and the benefit of accelerated synergies is expected to more than offset this impact.
If we held R&D expenses flat year-on-year, our core operating profit forecast would be approximately JPY 1 trillion. As Christophe and Andy have emphasized, we see significant opportunity in our innovative pipeline, and we intend to ramp up R&D investment in fiscal 2021 to support development of our Wave 1 and Wave 2 programs. Please remember that while we are making a large step up in R&D spend this year, we expect the incremental increase in future years to be lower. As with revenue, the impact of divestiture core operating profit should be much lower from fiscal 2022. Slide 39 walks through some of the main items reflected in our reported operating profit forecast for fiscal 2021 as compared to prior year. As we have already explained, we expect a significantly increased step-up of R&D expenses in 2021, which results in lower core operating profit.
Next, we expect a low amount of one-time gains on the sale of non-core assets. In fiscal year 2020, we booked JPY 228.9 billion of gains, whereas in fiscal 2021, we expect the main item to be the gain on the Japan diabetes portfolio. On the other hand, we do expect to benefit in fiscal 2021 from lower Shire integration costs as well as lower impact on cost of goods from inventory step-up. As a result of all these factors, we are forecasting fiscal 2021 reported operating profit of JPY 488 billion. Next, slide 40 shows our latest debt maturity ladder. Our abundant cash flow allowed us to pay off all debt that matured in fiscal 2020. Last month, we called a JPY 200 million bond, which means we have also completed our fiscal 2021 maturity obligations one year in advance.
Given the strength of our cash flow, we expect to prepay a total of approximately JPY 450 billion or $4.1 billion in fiscal 2021. This also includes $2 billion of a fiscal 2025 loan, which we called in April and will prepay in June. As you can see from the debt ladder, we are keeping well ahead of our debt repayment schedule, supported by robust cash flow. On the next slide, I'll provide our cash flow guidance for fiscal year 2021. Please turn to slide 41. Here you can see our forecast for JPY 600 billion-JPY 700 billion of free cash flow in fiscal 2021. This reflects our expectation for strong cash generation from the business, as well as gains from announced divestitures, such as the Japan diabetes portfolio and the offset from CapEx.
As mentioned on the previous slide, we intend to pay approximately JPY 450 billion of debt in the coming year, the vast majority of which is prepayment of debt that matures in future years. Moving to slide 42 in our capital allocation policy. As we continue to deliver on our financial commitments and generate strong cash flow, we'll allocate capital to maximize value for patients and shareholders. We will invest in our growth drivers, especially R&D, new product launches, including in China, and plasma-derived therapies. We'll continue to deleverage rapidly towards our target of low twos net debt to adjusted EBITDA ratio, and we are aiming to break below 3x within fiscal year 2021. Finally, we remain committed to competitive shareholder returns. In addition to driving growth of the business, we'll also return cash to shareholders, maintaining our well-established dividend policy of JPY 180 per share annually.
Finally, on slide 43, let me summarize the key takeaways. Takeda has delivered on its financial commitments and how we are now pivoting from integration to now acceleration of the top line and pipeline. Looking back over the period since the Shire acquisition, Takeda has consistently delivered management guidance every year through the integration and through the COVID-19 pandemic. We have realized synergies of $2.3 billion, one year ahead of plan, and exceeded the original $1.4 billion target. These synergies have enabled us to expand margins, reaching 30.2% underlying core operating profit margin in fiscal 2020, compared to 22% in fiscal 2018. We have exceeded our non-core asset divestiture target with up to $12.9 billion of deals announced versus the initial goal of $10 billion.
With divestitures proceeds and robust operating cash flow, we have made excellent progress with deleveraging, reaching 3.2x net debt to adjusted EBITDA in March 2021, down from 4.7x two years prior. Pivoting to the future, we expect top-line growth to accelerate in fiscal 2021, with guidance of mid-single digit underlying revenue growth. We expect this momentum to continue over the medium term, driven by our 14 global brands and Wave 1 pipeline launches. Fiscal 2021 will be an inflection year for the pipeline. As we ramp up investment in our innovative Wave 1 and Wave 2 programs, we are now targeting margins in the low- to mid-30% over the medium term. Meanwhile, we expect to continue making progress with deleveraging and are on track towards low 2x net debt to adjusted EBITDA ratio.
In summary, Takeda is in a position of financial strength, and with the integration essentially completed, I'm excited about the opportunity for acceleration of the top line and delivery of our pipeline of innovative medicines. Thank you for your attention. I will hand it back to Christophe for closing comments.
Thank you, Andy and Costa. We are talking about 2021 as an inflection year. I think it truly is. We have finalized our synergy and integration, so we are now at a steady state, and the organization is really stable, and we can really focus on driving our business on the pipeline, and it will be an inflection year for the pipeline. I think it's an exciting time for us. I'm looking forward to your question, t hank you.
To take questions from the listeners. We'd like to set the maximum number of questions from each person to be two. You are now in a Q&A session. Press zero one to join the queue to ask a question. Press zero two to cancel your request at any time during the session. We have a question-and-answer session now. If you have a question, press zero one. If you want to cancel a question, press zero two. Please start your question with your name and the company's name. If you have a question, please press zero one.
Can you hear me? This is Yamaguchi, Citigroup.
Yes, we can hear you.
I have two questions. The first question is about PDT value chain. Thank you very much for more information provided to us. What I'd like to ask you is that in FY 2020 and FY 2021, market will be continuously challenging, but you have been increasing sales and also the plasma collection has been increasing. It said so in the slides. As a result, this business margin, industry-wise, I think it is quite challenging. What is your margin outlook as a direction? The second question is about de-leveraging target. I think it used to be said two times, but now it says it's in the level of 2x. Is it a change of the target or it's just a wording change?
Christophe, would you like me to take the question on PDT?
Yes, please, y eah.
Thanks for the question, Yamaguchi-san. In terms of our margin outlook, we do expect to be improving our margin year-on-year as we move forward. You've heard from both Christophe and Costa, our continued focus on transforming our overall value chain. While we did have increased costs through the past fiscal year due to the pandemic, we are putting in place measures to improve our efficiency and overall effectiveness through all aspects. That will help us to improve our margin as well as what we're doing on the product portfolio side in terms of our continued growth in IG and the mix of products from subcutaneous growing faster than the intravenous portfolio.
Thank you, Julie, and thank you Yamaguchi-san for your question. The low two times is more a clarification. Historically, we've been saying 2x and we've been getting many questions saying, "Well, what does two times mean? Does it have to be 2.0x or can it be 2.1x, 2.2x, 2.3x ?" That's why we wanted to clarify that to allow greater flexibility for us rather than be just fixated that it needs to be down to 2.0x . So that's more, not changing the focus of de-leveraging, but allowing more flexibility on the wording of 2x , low 2x . Thanks.
Thank you.
Next question.
Hello, can you hear me?
Yes, we can hear you.
Thank you, m y first question is about core operating profit outlook. In the past, you said that mid 30% was going to be targeted in the next two or three years, but now you say low 30%. Maybe this is because of higher R&D expenses. In terms of SG&A and also gross profit, what kind of improvements can we expect going forward? Currently core OP is less than 30%, and how do you expect this number to improve? My question really is how you expect the margin to improve for the whole company, for the whole group. That is my first question. My second question is about the pipeline, about TAK-981. This is Wave 2 pipeline, I think. As one of the advanced investments, you have talked about that. I think you have high expectations this year because of some development expected this year.
Is there anything you can share about this program at this point in time? Any more details you can share with us?
Thank you very much. It's Costa here for the question. You're right, we have changed the terminology from mid-30% to now low 30% to mid-30% because of course, we've increased the investment in R&D. We've highlighted that in 2021, it's approximately $600 million incremental. Despite that, just to correct your comment around core operating profit, whether it's underlying or core underlying profit is core operating profit margin is just over 30% in fiscal year 2020. We believe that despite increasing in the investment in R&D, we'll still be within that range in fiscal year 2021. How do we achieve that? Well, firstly, we've accelerated the synergies. We accelerated the synergies of $ 2.3 billion one year in advance, and that's going to help continuation of improved margins. Secondly, we will be growing the top line and accelerating the top-line growth, and that's predominantly driven by our 14 global brands.
These 14 global brands typically have a higher margin than the rest of our portfolio. With these two drivers, the revenue top-line acceleration and the fact that we've accelerated the synergies will allow us in fiscal year 2021 to maintain our underlying core operating profit margin in approximately 30% range. Year-on-year, we'll continue to monitor. Of course, the steady state will be anywhere between 30% to mid-30% margin, depending on the year and depending on how the pipeline is starting to declare itself. I think that's the sort of level of flexibility we need. Despite that, we are really driving efficiencies, and the main efficiencies are coming from a reduction in SG&A. You'll see that's part of the synergy deliverables with the automation, the consolidation of the back offices.
Orasan, on your question with respect to TAK-981. We expect to have proof of concept in 2021. Nothing new to disclose, but I'll just restate that this is our SUMO inhibitor. It's a very unique mechanism. It has very well-documented immune effects in humans, including very strong effects on type I interferon response. We've seen activity both as a monotherapy and across a number of different combinations. We're now expanding our cohorts in our phase I/II study. As I mentioned in the talk, this is one of the mechanisms where we've made a very significant pre-investment, both in terms of CMC and in terms of our clinical trials anticipating success. We'll have a better sense over the course of this year for the future of this program.
Thank you.
Hello, this is Muraoka from Morgan Stanley. Thank you. My first question, looking at the guidance, JPY 3.3 trillion and core OP of JPY 930 billion. Moderna's vaccine and Novavax vaccine, are they reflected in those numbers? If they are reflected in the numbers, when it comes to the product classification, is it being covered under others? Because I think JPY 100 billion or JPY 200 billion is covered under others. Is that correct? My second question, looking at the guidance, maybe I am reading this wrong, but JPY 930 billion of core margins and the sale gain of the diabetes portfolio is JPY 130 billion. Is the diabetes sales included in that number? Let me confirm the number with you, t hank you.
Thank you, Muraoka. It's Costa here. To clarify, the guidance for 2021 assumes 50 million doses of Moderna. That's what we have booked in our forecast for 2021. Any other discussions that we've got with incremental doses for either Moderna or Novavax are still pending. There's still discussions happening between all parties. At this stage, the only portion on vaccines is the 50 million doses of the Moderna. Your question regarding the growth. Maybe refer back to the slide on the reported. I think it's slide 37 of the deck. Here you can see the reported revenue moves from JPY 3,197.8 billion for 2020, it increases to JPY 3,370 billion. You have the underlying business momentum generating the growth there.
You're right, we have booked the JPY 133 billion of the sale of the diabetes portfolio because these proceeds were for four diabetes products sold to Takeda, and this is recorded as revenue in accordance to IFRS 15, given that this was an asset transfer deal and wasn't a business transfer deal where we transferred marketing authorization and employees, and it's been consistent with the past similar asset transfer deals. Of course, we have the headwinds from the impact of divestitures, JPY 185 billion from the divestitures that we've already announced and completed. That's the evolution of the reported revenue growth. Thank you for your question.
If I may add a comment just to clarify. You'll see on slide 75 the reconciliation for our 2021 guidance, and you can see that we adjust out the diabetes portfolio sale from the core operating profit guidance of JPY 930 billion. The JPY 930 billion does not include the gain from the diabetes sale.
Thank you very much.
This is J.P. Morgan speaking. My first question is about the PDT business. Concerning collection volume, compared to 2019, it was - 11%, and compared to your previous explanation, I think that my impression is that this negative impact was smaller. Therefore, I'd like to know more details. What is quarterly dynamics, and especially from January to March, has it grown? On a yearly basis, it's - 11%. However, in this fiscal term, you expect a 10%-20% growth of PDT business. That is, I think, back to the pre-COVID level of expectation. If we consider the run rate of this growth rate, can we expect that the year after the next, the growth rate will be even higher? Can we expect it that way? The second question is about VYVANSE. According to explanation, the COVID-related impact still continues.
In your plan, in this coming fiscal year, it will be showing recovery. Could you give us more details by geographical regions and what is the current situation, so how you are going to achieve this plan?
Julie, can you take the PDT and I will answer the VYVANSE question?
Yes, thank you very much for the question. In terms of our plasma collection outlook, as you had noted, we did have an impact like the entire industry did in FY 2020. Through a number of different measures, including additional operational efficiencies, a continued focus on transforming the overall approach in terms of leveraging digital and technology, we were able to mitigate some of the impact of the pandemic. I'm incredibly proud of what the team accomplished in FY 2020 in regards to the plasma collection. Especially when you look at our U.S.-owned center network, where we only had a -5% decline in FY 2020. As we look forward into 2021, yes, we do expect to have significant growth.
We will continue opening new centers as we have done for the past several years, as well as focusing on any other opportunities to find incremental plasma sourcing opportunities for us. In terms of the quarter to quarter, in the January through March, you were asking about Q4. We did see some continued softness in the U.S. As many of you may know, there were significant storms in February that disrupted many of the businesses, particularly in the middle part of the U.S. and the South. We also had the impact of the stimulus checks, but we have seen continued improvement, especially in the more recent months, going into March and April. I'm happy to share that in April, we actually had our last week in April was our highest collection of plasma and donations coming through for BioLife.
That gives you an indication of the strength of our recovery going into this fiscal year. In terms of the growth rates that you were asking about, we are expecting, as I mentioned, continued growth in our plasma collections, but we're also expecting to be able to deliver growth in terms of our product portfolio. The IGs, we are expecting mid to high single-digit growth. Albumin will fully recover, and the growth will be in the +30% range. Overall, we expect a very strong year for the PDT immunology portion of the portfolio. We do expect that the growth will be able to accelerate in 2022 as we continue to execute against our plans.
Thank you, Julie. Regarding VYVANSE, we do expect a rebalance of the demand, starting with the adult segment, followed by the pediatric segment. We are starting to see that already in Q4. If you look in the U.S., Q4 was a bit better. We expect to progressively rebound. I think if you need more granularity, go on the data book and you see in our data book, we forecast VYVANSE at +8% in fiscal year 2021 on a reported basis, +5% on an underlying. The majority of our revenue is coming from the U.S. anyway.
Thank you, t hat's very clear.
I have just one question. narcolepsy TAK-994, phase III. Regarding the protocol of the phase III study, well, I think you will start a phase III study in the second half, and I think this is going to cost a lot of money for you because you have to combine this with a diagnosis to some extent. Otherwise, you cannot really register many patients, a t least that's my assumption. Including that perspective, what is your plan for information disclosure for this program? That's my question.
Hi, Sakai-san. Just to be clear, the phase II-B study for TAK-994 is now up and running. As I mentioned in one of the R&D slides, our intent by the end of the year is to have an agreed upon protocol for our phase III program with agencies. I think it would be a stretch, not impossible, but a stretch to start that study in FY 2021. Our expectation, though, is that we'll start early in FY 2022. It's a highly targeted patient population. The diagnosis of known patients is actually not that difficult. It's based on a genetic predisposition marker in one of the MHC genes, a very specific HLA genotype, and then also based on clinical rounds. The diagnosis is not that difficult, and we're gaining significant experience over the past couple of years in running this program and also now in our phase II-B program.
I think that program won't be terribly expensive and it won't be terribly long. We'll provide more details on that towards the end of the year. In terms of additional data disclosure, we share data, as you will recall, on April 6th. We've seen data from part A, four-week data from TAK-994, and we've shared directionally with you the results from those patients. Given the fact that we now have an ongoing study that we expect to use as part of our submission, we're very careful not to disrupt the data integrity from that study. Our expectation is that our next data disclosure, which will be a significant one, will be towards the end of this year or early next year.
Understood, t hank you very much.
Because of a time constraint, we'd like to make the next question the last question for today, t hank you. The next question is from Mr. Stephen Barker from Jefferies. Barker, if you please.
Yes, Steve Barker from Jefferies. Thanks very much. Just one question regarding your assumptions for revenues in the current year. Slide 37, it appears you are forecasting a substantial tailwind from Forex. I was wondering if you could actually put a figure on that box and if you could provide some background to your thinking. Why do you think the currencies are going to move in your favor this year? Thank you.
We believe we've been analyzing based on the current trends, the upside or the tailwind in FX will be approximately 3%, is what we forecasted, Steven. Thanks for your question.
We'd like to end the financial results briefing for today. Thank you very much for your participation despite your busy schedule. We ask for your continued support, t hank you. Thank you for your taking time. That concludes today's conference call. You may now disconnect your lines.