Welcome to JPMorgan Healthcare Conference. I'm Seiji Wakao, a Japan pharma analyst. We will conduct this session in a fireside chat form, and James Gordon will lead the fireside chat. He is a European pharma analyst, and he and I are co-covering Takeda. I'd like to introduce the speakers from Takeda. Christophe Weber, President and CEO, Andy Plump, President, R&D, and Costa Saroukos, CFO, Ramona Sequeira, President, Global Portfolio Division, and Julie Kim, President, U.S. Business Unit. Let me turn it over to James.
Good evening, everyone. So I'm James Gordon. As mentioned, I'm a pharma analyst at JPMorgan, along with Wakao, we both look at Takeda. The plan for today is we're gonna have a fireside chat. So I'm gonna go through a couple of questions with the team, and then we both may have some further questions as well, and we'll leave time to take your questions from the audience. So yeah, thanks a lot for coming today to the conference. Maybe just to start with a big picture question, if we could, which would be... I think it was January 2019. I remember the Shire acquisition, $60 billion. So we're now actually five years on from that. So could you just describe what's changed since then? How has Shire integrated into Takeda?
Maybe if we start there.
Yeah. Thank you very much. Great pleasure to be with you. Well, it was a very bold move, for sure, but it's really accelerated the transformation of Takeda. It allowed us to focus more on innovative medicine, both on the portfolio and pipeline. It allowed us to be competitive globally, which we were not at the time, so we were a more regional player, but now we can compete in every key country, especially in the United States, which represents today 50% of our revenue. We became much more attractive as an employer, as well, through that process, which is very important, of course, for the long term. And financially, it changed the company. We doubled our revenue, we tripled our EBITDA.
We were able to generate very strong cash flow, which we can now reinvest on the shareholder return on, on, on our growth drivers. So it was really a very strong and a good move for the company. We are much better positioned. And, you know, if you reflect as well, back then there were four mid-sized company of our with our revenue profile. There were Shire, Allergan, Celgene, and Takeda, and you know what happened to the, the three others. So it was, we think, a very necessary move. Now, we are not finished yet. I mean, the integration is done. We are one company, but of course, now we are focusing on our long-term growth outlook and but we are in much better position now.
Thank you. Do you think that the market appreciates the progress of what Shire did add to Takeda? And if not, maybe what are they missing?
Well, I think the market was very surprised and frankly scared by the scale of the acquisition at the beginning. So we saw very strong negative market reaction. There was a lot of doubt about our ability to execute, to integrate, so very negative market sentiment. That has changed in 2022. When we completely finalized the integration, we started to see the benefit of the new company, and we have seen the market sentiment evolving very positively since 2022. We are not done yet. We think we have more to go, but clearly a change of market sentiment since 2022, when we completely finished the integration. Yeah.
Thank you. And if we think about how the company is performing at the moment, so for the year, for your financial year 2023, you're guiding for a revenue and a profit decline, and I believe that's because of a generic headwind, a heritage Shire product, Vyvanse, in the U.S. But what are you thinking about the return to growth, and how quickly will you return to growth, and how quickly will you be growing coming out of this Vyvanse patent expiry?
Yeah, it's mainly driven. It's a very exceptional year in terms of generic exposure. It's driven by two products, Vyvanse in the U.S., mainly, and Azilva, which is a product in Japan. Together, combined, it's about 10% of our revenue exposed to generic. So that's why we are declining this year. In fiscal year 2024, our fiscal year is April to March. In fiscal year 2024, we will see a wash out of that effect, so we'll. But not, it will happen at the end of the fiscal year 2024 because there is a carryover effect. So but in the second semester of fiscal year 2024, we start to see our growth rebounding, and for sure, in 2025. So we have been knowing about that for a while.
We have prepared for that, and we will start rebounding in 2024 and 2025.
Looking beyond that, what do you think the longer term revenue outlook is for the company?
Between now and the end of the decade, we have 10 products growing. As we call them, our growth and launch products. Products like ENTYVIO, products like TAKHZYRO. We just launched our dengue vaccines, for example. They will drive our growth until the end of the decade. Our generic exposure is much lower from 2024 onwards, so we are very confident about our ability to grow. From 2030, 2032 onwards, our main medicines, ENTYVIO, will face biosimilar, but by then, our pipeline will have progressed. We are aiming to launch very significant medicines between 2025 and 2030, and that will offset the decline of ENTYVIO. That's our long-term outlook.
Thank you, and I'll definitely come on to the pipeline. But maybe just before that, one other bigger picture question, which, which would be margins. So I believe for your 2023 period, you've guided for a 25.5% margin, but what are you thinking about longer term for the margin? 'Cause I know you have had a higher margin than that before. Where, where do margins go over that longer time period you're talking about?
So we want to go back to low- to mid-30s margin. In 2022, we finished at 32. As you said, in 2023, we'll be at 25, 26. We want to go back to low- to mid-30s margin. We think this is the very important for us. We are very committed to it. By the way, we spoke about the acquisition. We gain 10 points of margin through the acquisition that we described earlier. So we want to go back to low- to mid-30s margin. At the same time, we want to invest in R&D. We have some efficiency programs that we are working on very actively, leveraging especially data technology and AI, which will really improve our efficiency across our value chain.
Going back to low- to mid-30s margin is a very important priority for us.
Thank you. Maybe we'll shift to talking about some individual products and some of the growth products at the moment. So I believe the number one product at the moment is still ENTYVIO, but growth has slowed a little bit over the last few quarters. So could you just talk about the market dynamics for ENTYVIO, and what are your expectations for where we might see a re-acceleration for the product?
Yeah. Perhaps I will pass to Julie, our head of the U.S. business. Julie?
Sure.
Yeah.
So thanks for the, the question. When we look at ENTYVIO, we are still the number one prescribed biologic across the IBD market overall, as well as in the bio-naive segment. But we did, earlier this year, revise our growth to 8% for FY 2023, and that's based on a number of different factors. One, when you look at the overall market growth, we're still seeing the market growing in the mid-single digits, which is lower than historical rates, and you can see that reflected in a number of areas, one being diagnosis rates, particularly for Crohn's disease. And we think some of this is caused by the continued capacity constraints in the IBD centers, as well as less clinical time out in the community practices. So we do expect that to, to correct itself over time.
I'd say the second thing is that although this has been a very competitive market for a while, there's been an increase in the number of entrants in the recent year, and so that increase in competition, particularly when you look at later lines of therapy, has created some changes in market share. I would say the final thing, when you look at our global, although this is not part of my responsibilities, it's in Ramona's area, we continue to see very strong double-digit growth from a volume perspective in Europe, outperforming the market, but we've also seen significant clawbacks, which have impacted the revenue.
So those things combined have slowed the growth of ENTYVIO overall, but I would say we're very excited about the recent approval of our ENTYVIO subcutaneous formulation, or ENTYVIO Pen, in ulcerative colitis, and we expect to have approval in Crohn's disease in the coming months. And so this is going to be one aspect that will help us to re-accelerate growth of ENTYVIO. But bottom line, we're still very confident in our ability to hit our peak sales number of $7.5 billion-$9 billion.
Thanks. And maybe a couple of follow-up questions on ENTYVIO. So one would be the pen that you mentioned. I know it's early days or early months, it's been a few months, but how is the uptake of the pen going?
So as with all subcutaneous products, you do have an IV induction period, but we're very excited about what we're seeing anecdotally in the marketplace. For example, we just recently did a survey, and we have 98% awareness in target HCPs of ENTYVIO Pen, and we've gotten quite a number of requests in from health systems to distribute the pen, as well as requests from individual patients, or sorry, physicians with the reimbursement going through from a pre-authorization standpoint. So all point to a very positive start for ENTYVIO Pen.
Thanks. And ENTYVIO plays in an area where there's been quite a lot of innovation, and there is competition as well, and there's newer therapies. There's things like oral IL-23s, there's TL1As. What are you seeing at the moment in terms of competition, and are you concerned about competition heating up?
Yeah. So you know, it has become, certainly from the time we've launched ENTYVIO, almost 10 years ago now to today, it has become a very competitive and segmented market. I think, the things that we have going for us are we have head-to-head data showing superiority to TNF. We have a wide body of evidence now showing long-term efficacy as well as safety, and over the past few years, we've more and more been positioned in first line. So we tend to be the first biologic that people go to after they've failed conventional therapy. So that's really helping us to continue to grow, and continue to reach more patients as we go.
What we see with the number of other products coming into the market now, you know, there is unfortunately for patients with IBD, there's nothing that is really breaking that efficacy ceiling. So they're kind of all in a crowd, and they all have a, a similar type of efficacy depending on the individual patient, and nothing is really breaking that efficacy ceiling. So we're seeing the newer agents start to get used more in maybe a little bit later line of therapy, while ENTYVIO is being preserved in, in first-line therapy. We are actually doing some work right now at a number of trials globally, looking at different modes of combination therapy. So because you haven't broken that efficacy ceiling, there is a desire now for some thought leaders to combine therapies, particularly during an induction stage.
And so we're doing a few trials because people tell us, or thought leaders tell us, that really, if you're going to combine therapy, ENTYVIO is your ideal foundational therapy because of the body of evidence, because of the safety, because of the long-term efficacy. So we're starting to do some work now looking at different, combination therapies, looking at different, ways to treat to target, to see if there's more we can learn about how to best treat these patients, given the number of new agents in the, in the market right now.
And would you just be looking at combining ENTYVIO with other companies' drugs, or could you also combine it with, like, maybe your own TYK2?
Well, certainly that's a question we're asking. So right now, our focus for TAK-279, which we're very excited about, is obviously psoriasis, psoriatic arthritis, and starting our work in ulcerative colitis, colitis, and Crohn's this year. So we're very focused on getting that work going. But certainly, that is a question we're asking ourselves as we look at kind of the next stage of development. Do we want to look at that in combination with ENTYVIO? We haven't, haven't ruled that out, but nor is it our first priority as we work to get these indications approved.
Thanks. I'm aware I've asked quite a few, ENTYVIO questions, so maybe I'll shift a bit to a heritage Shire area, which was plasma-derived therapies. So you've had strong growth there. It's a double-digit revenue growth area, but what's the longer-term outlook for plasma therapies? Because, like, I cover argenx, for instance, who've got an FcRN inhibitor, so there's some new innovative therapies coming along. Do you see those significantly displacing your, your plasma business?
I mean, I can take an answer, and maybe Julie has some things to add, too. She spent a very long time in the plasma-derived therapy area. But, you know, what we see happening in the IG space is we've seen the indication for myasthenia gravis, which is a fairly small, limited indication, and so we don't see that impacting our business. The next place people are going is CIDP. It's a fairly heterogeneous disease, and so there is a role for plasma, but there are some patients that do not respond to plasma, and there's a hope that those patients will respond to an anti-FcRN because it's a very, very difficult life for those patients if they don't respond to plasma.
At the same time, primary immunodeficiency is growing, secondary immunodeficiency is growing, the need for plasma around the world, the diagnosis is growing around the world. So, you know, we continue to be in a, in the type of market, in the space, where trying to keep up with growing demand is going to be a constant, you know, constant challenge for us. So we welcome new entrants, and we see the growth happening in, in all of these areas, overcoming some of the new entrants coming into specific areas. And Julie?
Yeah, and when you look at the growth for IG in specifically, we've taken into account the impact of other alternate therapies like the anti-FcRN. So we still see long-term growth for the IG portfolio and for our plasma portfolio overall, specifically for the U.S., which is the largest market for immunoglobulins globally. We look to see mid- to high single-digit range growth year-over-year, and there isn't an alternate therapy that's on the horizon that can entirely replace IG across all the indications that Ramona mentioned. So we're pretty confident about the ability to continue to grow.
What about margins for the plasma business? Because I think the margin has been below the group, and so it has been dilutive to margins. But is that something that can change? Can this be a business which can have big margin improvement?
So we are starting now. For the first time since we acquired this business, we are starting to see margin improvement. The margin was under pressure during COVID crisis because of the donor fee increasing. We are starting to see a reversal of that for the last two quarters, a bit more actually. And so that's important because this is a business with lower margin. Gross margin is lower than the biopharmaceutical business. The overall PDT business margin will become non-dilutive to the company margin in the long term, because there is less R&D investment required for this business. But we are starting to see now a gross margin improvement, and we believe it will continue because we are managing better this business. We are managing better our donors.
We are utilizing, in a better way, our manufacturing capacity. All the growth that we have generated until now, and that we will generate in the next five years, will be delivered through our existing manufacturing capacity that we are using better, and that's, of course, improving our margin. That will help us to return to our low- to mid-30s margin.
I think you've got quite an ambitious target to expand capacity by about 50%. So can you do all of that with your existing capacity, just by using it in other ways? Or are you actually going to need to do quite a lot of CapEx to increase your capacity within plasma?
So that, no, that 50% will be done with our existing manufacturing capacity, but we are actively working on our efficiency. So the yield improvement is very important and optimizing the way we work, but that will be within our existing manufacturing capacity. We still need a little bit of capital investment, but we're not talking about new site, for example, or massive investment. We have actually announced a new investment in Japan, but that's- that will come after this 50%. So it will come online in the year 2028, 2029. Yeah.
Thank you. Complementary to your plasma business, you've got a rare disease business, including therapies like TAKHZYRO. But do you think there's going to be more competition there? How are you viewing the outlook for that product? And do you think we could see a big impact, for instance, from oral options coming along?
Well, you know, there is more competition everywhere, so I think the key is your product good, better than standard of care, and is it... And are you able to compete as well? I think we have a very strong rare disease capability, not only with TAKHZYRO, but our immunoglobulin business treats rare disease as well. So we have actually developed a rare disease capability in the last few years, which is very interesting, and it allow us to launch new rare disease product as well. So we launched LIVTENCITY recently, which is also a very different space, you know, for managing post-transplant. But that's a rare disease, too. That's the same type of mechanism or go-to-market, if you like, capability that we have developed over the years.
And if I may, with TAKHZYRO, it's 5 years post-launch, and we continue to see very strong growth, 13% year-over-year, first half of this fiscal year. And when you look at new patient starts, we've actually had a resurgence in new patient starts, with over 50% coming from patients who are new to Takeda HAE therapies, and 45% of subscribers, prescribers, sorry, are new as well. And so that's really reassuring in terms of TAKHZYRO. And to your point about standard of care, TAKHZYRO is the standard of care when it comes to prophylaxis in an HAE. And although we did experience a bit of decline once, first oral launch, we've also seen patients come back because of the proven efficacy and safety of TAKHZYRO.
Thank you. And shifting from rare disease to a, a product that could be for a lot more people. So I know you've got QDENGA, so your Dengue vaccine approved, and you've launched. Maybe to start with, how has the initial launch gone?
Yeah. So I can, I can give you a high level, and maybe it'll be important to just start with the fact that we waited to submit this for approval until we had four and a half years of data, and that was because there had been a previous launch where there had been some issues. So we really wanted to make sure we had a very solid product. We were looking for not only efficacy against dengue infection and against hospitalization, but also we were looking for sustainability, and we were looking for every subset to make sure that we weren't - there was no signs of people getting worse from taking the vaccine. So we came to the market with a very solid data package and a lot of years of use on the market.
I think that helped us a lot overcome some of the concerns that had, you know, been prevalent with the prior vaccine. So since then, as we've launched now, we've had very favorable uptake and feedback. So we've launched in Europe, a number of travel markets in Europe, and have, you know, very favorable feedback and uptake and utilization there. We've made it available now in a number of endemic markets, Indonesia, Thailand, Brazil, Argentina, just got approval in Colombia. We just signed our first national immunization program in Brazil, which was actually faster than we were even expecting, given this type of market. Usually, you know, it takes some time for governments to work out their immunization plan. So, I mean, the reality is the burden of dengue is growing globally.
We're starting to see Dengue in places where it wasn't before, and we're seeing more and more cases in places where it has been. That's due to globalization, climate change, et cetera. And so, you know, this vaccine is just being launched at the right time. So we're seeing... I would say, we're tracking to all at or slightly above all of our expectations right now, but it's still very early days, and so we're still in the launch phase where we still need to go make it available. In the endemic markets, we start with private, and then we move to public. So even in these endemic markets, you don't jump into public right away. You start with private market while the governments work out their immunization schedule, which cohorts they want to immunize, and then we move into public.
All of that is progressing as we would have expected, and very good feedback so far.
Some of the countries where you'll be selling the products are less affluent. Has that been a challenge? Are governments able to afford this product, and is it always governments that are gonna pay for it, or are there sometimes other mechanisms whereby this could get paid for?
So, you know, there's a number of things we do. One is in the private endemic market, so think about in Indonesia, we wanna make sure that people in the private segment can afford it, and so we did price it specifically lower than a lot of other private vaccines, so that because it, it... You know, this is a community type of vaccine. Unless enough people are taking it, it's not really gonna work, and so we did price it to make sure that people in the private market could access it and take it, and we see that happening in these markets. Then, we go to the public negotiations, and with the public immunization programs, they tend to pick very specific cohorts.
So they might pick a specific age group, they might go to certain regions, but they have to kind of plan where they wanna roll out their immunization program. So those two things happen in parallel. And then there will be other groups like PAHO and Gavi, that will help some of these very low-income countries. The middle-income countries, you know, we're doing quite well in so far. These low-income countries will come on board as we get PAHO and Gavi. You know, I will say we're ramping up manufacturing as we speak, and so, you know, our initial plan to start with private and go to public means that you don't get to full capacity for another couple of years on our manufacturing plan.
So we have a CMO in Germany, we have our own plant that we're standing up as we speak, and we're just in the process of finalizing another CMO in India that will do the multi-dose vials to the endemic market. So all of that's progressing as planned. It's gonna take a few years to actually get that full ramp up and running.
This may take some time, but in terms of how big this could be, I know you have to invest some time in advance for vaccine manufacturing. Within, say, 5 or 10 years, what sort of capacity, how much of this vaccine, you along with partners, would you be able to make?
Yeah. So our plan is to get to 100 million doses. That's our goal. And so between our plant and our CMOs, our goal is to get to 100 million doses.
Per year.
Per year, yes. Yeah.
Good work. I'll stop asking QDENGA. A couple more, then maybe come on to the pipeline. One was about, you got some approvals for some new products. So you've got ADZYNMA and FRUZAQLA, so for cTTP and also for colorectal cancer. So just early, but how is the initial launch going there?
So ADZYNMA is a very recent approval, and while it's, I would say, too early to say the overall success, where the initial reaction has been quite positive. This is an ultra, ultra rare disease, so less than 1,000 patients in the U.S., but we already had, I would say, very high awareness in the specialty centers where these cTTPs are, and the product is very much welcomed.
FRUZAQLA is also early, but there is not much to treat metastatic colorectal cancer from stage three and four. Frankly, there is not much. So I think these medicines will be very much welcomed by the patient and physicians.
Thanks. Well, so I'll shift from new launches to some pipeline. Maybe if we talk about your TYK2 inhibitor. So I think you've now initiated the phase III in psoriasis, and you're also going to go for some other indications. So just sort of high level, the overview of the program, where are you developing this? When will we see data? That'd be, that'd be great.
Terrific. So of course, we're extremely excited about about TAK-279, our our selective TYK2 inhibitor that we just acquired last year from from Nimbus Therapeutics. Ramona mentioned earlier, right now, our focus is in four core indications, psoriasis, psoriatic arthritis, Crohn's, and ulcerative colitis. We've had a great transition last year with with Nimbus, and we actually kicked off our psoriasis phase III program. So two two studies, six weeks ahead of schedule. So those were started in November of last year, and we're seeing enrollment progress significantly ahead of of plan. We're going to start this year a head-to-head study against Sotyktu.
So we have strong rationale based on the pharmacology of the molecule and based on interstudy comparisons of our phase IIb study with the Sotyktu data, that we have clearly a superior molecule, and we can test that in a, you know, feasible, head-to-head study. So that's, that's off and running. We had a great psoriatic arthritis phase II-B data, that we presented at the end of, last year, and we're moving very quickly to get a phase III program started, and then we're kicking off the phase II-B studies with UC and Crohn's disease. So that's, that's a lot. We have a huge team that's been you know, stood up almost instantaneously around this program. There's just tremendous excitement. We're focused on those four core indications, but there's a lot more that we could potentially be doing.
We just want to make sure that we're successful in those, in those indications, and then we're looking at how we can expand beyond.
Thanks. And you may have partly answered this, but I think Bristol have had some issues in terms of reimbursement and maybe some concerns around toxicity. So does that dampen your enthusiasm at all for your products, or are the reasons this would be different?
So we don't believe that it's a class challenge, and we've had a good track record in terms of creating good access for our products as we launch, if you look at LIVTENCITY, et cetera. And we're on, I would say, a good track to create very strong access for ENTYVIO Pen, and we would expect to do the same when it comes to launching TAK-279.
And are you already ready for this launch, or would you have to do... There is still some way off it, but would you have to do a lot of work to build a big sales force? Where are you on that?
So it's a little bit early to hire sales force at this point, but we have brought on team members in terms of medical affairs. There's quite a lot of interest and excitement in this asset, as well as in terms of Takeda as a company, and so it's not been a problem to attract talent.
Great. Well, maybe we'll shift to one other pipeline product, so the orexin franchise. So I think you've now completed the phase II for TAK-861. So when do we see some data there?
So, very excited about the orexin, the orexin program. So TAK-861 is now our lead oral molecule, as you're mentioning, and we stood up last year two phase II-B studies. One was in Type 1 narcolepsy, the other was in Type 2 narcolepsy. We had estimated that it would take about 16-18 months to enroll those studies, and we actually completed it in 11 months. So there was just tremendous enthusiasm for the mechanism. 180 patients enrolled. The vast majority of those patients are transitioning to the open label extension, which is really a terrific sign, and blinded, we haven't really seen any safety issues. We've seen no evidence of any liver toxicity, which is, of course, a key consideration.
We're planning at risk to start the phase III study, and the hope is that we can start that study mid-2024 in Type 1 narcolepsy. We should be seeing data soon, and we're considering the best mechanism for presenting that data externally.
As well as liver tox, I think there's been some other products in the class had visual disturbances or other cardiovascular issues. Have you seen anything like that?
So, in our phase II-B study, of course, where the data sets are still blinded, but when you looked across the blinded data, so you're looking at both patients who are treated with placebo or with 861, we don't see visual disturbances. And there's no reason for us to believe mechanistically that this would be an on-target effect. So we don't see visual disturbances. I think the cardiovascular issues, obviously, this, we're painting a broad stroke here when we say cardiovascular issues. We know mechanistically, we've seen this in all the molecules with short-term doses. You see very small bumps in blood pressure and heart rate, and what we've seen with all of our molecules, we'll see if this plays out with 861, rapidly, those come back down to normal.
What's being disclosed externally with respect to cardiovascular issues? Not aware of.
Am I right, you also got another follow-on compound that's also an orexin? Is that just a backup, or might that be developed somehow slightly differently?
Yes. So this is a really novel pathway, and it's very exciting in terms of the potential number of indications that we can go after. So we have three molecules. We have TAK-861, which is gonna we plan to move forward minimally in Type 1 narcolepsy, and we'll see the data as to whether it can expand to Type 2 narcolepsy and idiopathic hypersomnia. We have TAK-925, which was the first molecule that we brought into the clinic. It actually was only formulated as an IV. We couldn't reformulate it in a way that would be feasible for patients with Type 1 or Type 2 narcolepsy. And so we've actually repositioned that into the hospital setting, where we're using that in a phase II-B study in patients with postoperative to help patients in a postoperative setting, post anesthesia.
And then the third molecule, TAK-360, is a molecule that will enter the clinic in the next couple of months. It's an oral molecule, quite distinct from TAK-861. And so we'll see how, based on the TAK-861 data, how we position that backup molecule.
Thanks, and maybe in the interest of time, I won't ask any more specific pipeline questions, but are there any particular things in the pipeline I haven't asked about you think we should be, if we had more time, talking about?
Sure. It's always a dangerous question to ask the R&D head an open-ended question about the pipeline like that. But I'll say, of course, we have our next approval that we hope is coming up, knock on wood, in February. We have a PDUFA date for TAK-721 in eosinophilic esophagitis, so we're very excited about that. But to keep this simple, I'll mention three programs that we should—everybody should be thinking about. One is TAK-935 or soticlestat, so that will be our next phase three readout that will be coming this year, in two populations, in Dravet syndrome and Lennox-Gastaut syndrome. These are rare pediatric epilepsies. These poor kids are on polypharmacy. TAK-935 is; it's based on the phase two data, quite a differentiated profile, very well-tolerated, which is quite unusual for medications for these indications.
So that's one. The second is TAK-999, which is now accelerating in phase 3. That's the siRNA that knocks down the mutant alpha-1 antitrypsin enzyme, and it's being tested in patients with liver disease. We're really excited about that program. And then, the third is we don't talk a lot about our oncology portfolio because it's a mid- to early-stage portfolio and maturing. But over the next 12-18 months, we're going to see data readouts. And there's one program in particular I'll highlight, which is TAK-676, and this is our lead STING agonist. We have two STING agonists, and we actually have seen some quite interesting pharmacodynamic responses, and we've seen some clinical responses that are quite intriguing, so I would say that would be the third one.
It sounds like there's quite a lot going on in terms of R&D. Can you still deliver some of the comments from earlier in this conversation about margins, if you also need to invest a lot more in the pipeline? Is there gonna need to be a bit of a step up for some of these things?
So that's the challenge in a way that we are managing is that we want to deliver this pipeline without compromising on our margin recovery. So our R&D investment will increase, but moderately, and that's the challenge. Now, in a way, we are fortunate because we are entering an era of massive efficiency gain, especially leveraging data technology and AI. I mean, we are very, very focused on that. So that will help us delivering these two goals.
Great, thank you. Well, we started the conversation talking about digesting a big deal, a $60 billion acquisition of Shire. What about capital allocation going forward in terms of further deals? Might you go into another Shire, or what's the thinking there?
No, we won't go into another Shire because we don't need it. We have the scale, we have the financial strength that we were looking for. So regarding BD, we will focus on enriching our portfolio and pipeline, so very much asset focused, looking at very differentiated assets, late stage instead, depending on the therapy area. So we are very much focusing on that. Yeah.
Great, thank you. Well, maybe the final question for me was just, I think it's about nine years you've led Takeda, and so we've had some big deals, we've had a lot going on in the pipeline. Are there other things you still want to do? What's next?
There is a lot to do. There is a lot to do.
Yeah.
We have to return to growth, we have to recover our margin, we need to deliver the pipeline, and this, technology on AI transformation is very exciting but not easy to do. We are very much focusing on that. It's a big transformation and change management in the company. It will completely transform our operation in the next five years.
Great. Well, maybe the final question would just be key messages you'd like us to come away from this.
Well, we are very well positioned for the future, focusing on growth and shareholder return. If you look at our capital allocation policy, we are now in really well positioned to focus on growth and shareholder return.
Great, thank you very much. I think we've got time for maybe one or two questions as well. Do you want to open the Q&A?
Okay. So I take questions from the floor. Any questions?
Is there anything you'd like to ask? Okay.
So, firstly, I'd like to ask about next year and fiscal 2025. You commented on fiscal 2024, probably margins or so or profit will be flat or small. Could you comment on the outlook fiscal year 2025? So begin to growth, so I wanna know about this point in more detail.
If you look at the growth pattern, this year, we are declining in fiscal year 2023, so we're not finished with fiscal year 2023. Fiscal year 2024, the first semester will still not be a good one, because of the generic entry date. The second part of 2024 will be much better because it will be more on a like for like. So then we will start to see a better growth outlook in the second part of 2024, and then we'll get a much stronger growth outlook in fiscal year 2025.
Okay.
Yeah.
Yeah.
Yeah. Now, there are still, of course, variance. We are monitoring week by week how the generic cannibalization is happening. It's a complex process because it's a scheduled substance, so there is a lot of... It's a relatively different situation, but that's overall, the pattern I just described is what will happen. Yeah.
Thank you. Guys, so any questions? For sure.
Great. Yeah. Great, that's great. I think we'll wrap up here. Thank you very much for joining us today.
Thank you.
Thank you very much.