Takeda Pharmaceutical Co Ltd (TAK) 2008 Q3 法說會逐字稿

Hello everyone. My name is Hiroshi Takahara, I'm General Manager of the Finance and Accounting department. It is my pleasure to present you the summary of Takeda's consolidated results for the first three quarters of fiscal 2007. Please note that all figures reported in this presentation are aggregate results for the first three quarters ended March 31, 2007.

Please look at page three. Net sales increased by JPY72.2b or 7.2% from the same period last year. Operating income increased by JPY23b or 6%. Ordinary income increased by JPY30.5b or 6.4%. And net income increased by JPY65.2b or 24.5%. R&D expenses totaled JPY170.2b, an increase of JPY30.8b or 22.1%. Earnings per share, for the first three quarters recorded a JPY389.84, an increase by JPY84.98 or 27.9% over the same period of the previous fiscal year.

Please turn to the next page. Before examining each item, I would like to review the foreign exchange rate status that had considerable impact on consolidated results for the first three quarters of fiscal 2007.

Average exchange rates during the first three quarters of fiscal 2007 were JPY117 to the dollar, which was JPY1.1 weaker than the same period last year, and JPY153 to the euro, which was JPY14.9 weaker. As shown in this graph the weaker yen pushed up net sales by JPY13.1b, operating income by JPY2.5b, ordinary income by JPY4.1b and net income by JPY2.0b.

Now I would like to discuss the changes in sales in each of our business segments. Sales of ethical drugs increased by JPY69.2b or 7.8% from the same period of the previous year. Sales in Japan increased by JPY9.2b and sales in the overseas market increased by JPY60b.

The growth of Actos sales was significant, JPY5.7b in Japan and JPY53.4b in overseas markets. Total global sales increased by JPY59.1b or 23.3% accounting for more than 80% of the total sales increase in the ethical drugs segment.

Combined sales of Blopress in Japan and the overseas market increased by JPY15.9b and sales of AMITIZA, which is sold by TPNA in the U.S. also increased by JPY12.5b contributing to the net sales growth.

Sales by the consumer healthcare business increased by JPY2.6b or 5.7% supported primarily by the sales increase in Alinamin Tablets, Benza as well as a contribution of Actage SN tablets introduced into the market in November 2007.

In the next slide I will explain the details of sales of ethical pharmaceutical products in Japan. Blopress is the Takeda's top selling product in Japan. Sales of this hypertension treatment drug increased favorably by JPY6.7b or 6.5%.

Leuplin sales increase by JPY1.3b or 2.6%. Sales of Takepron increased by JPY5.0b or 10.9%. This increase was supported by several factors including the further penetration of OD tablets and approval for additional indication of non-erosive reflex disease ahead of other competitors in recent years, and an approval acquired (inaudible) 2007 for additional dosage and administration for the secondary eradication of Helicobacter pylori in gastric duodenal ulcers.

In the diabetes fields, Actos sales grew by JPY5.7b or 21.8% supported by promotion activities based on scientific evidences. Including the results of proactive study in which Actos was proved to be effective for preventing cardiovascular events.

On-the-other-hand, Basen sales declined by JPY2.6b mainly due to the impact of generic products.

In April 2007 new patient enrolment of post marketing surveillance or an all patient study for Enbrel was completed. Subsequently sales of this drug for Rheumatism increased remarkably by JPY5.7b or 66.5% as medical institutions or physicians authorized to prescribe the drug are increasing.

Please look at page seven.

Now I would like to explain details of sales by TPNA, our sales subsidiary in the U.S.

Sales of our core products, Actos Family, increased strongly mainly due to effective promotion activities focusing on profile of the products, sales of ACTO plus Met and Duetact, and external factors including a paper published in late 2007 regarding cardiovascular safety of the competitors product. During their first half, the Actos Family achieved a sales growth exceeding 20%. In the third quarter, growth continued at a rate of the mid-teen percentage. As a result, aggregate sales for the first three quarters increased by $371m or 20.7% from the same period last year.

AMITIZA was launched into the market in April 2007 supported by the co-promotion launching with TAP commenced in March 2007 and temporary sales suspension of competitors products. AMITIZA sales increased by $106m. ROZEREM sales also increased by $26m from the same period last year supported by the co-promotion with TAP started in February 2007. Revenues from the co-promotion activities decreased by $57m mainly because the contract with TAP ended in the end of December 2006. Consequently, net sales by TPNA increased by $446m or 22.4% from the same period last year. In terms of Japanese currency, net sales by TPNA increased by JPY54.4b or 23.6%, including JPY2.7b resulting from the positive impact of the weaker yen.

Now please look at page eight. I would like to discuss worldwide sales of our in-house ethical pharmaceutical products, including sales that are affiliated to companies accounted for by the equity method. Global sales of in-house ethical pharmaceutical products total JPY1,018.5b, an increase of JPY60.9b or 6.4% over the same period last year.

Looking at sales by region, sales in Americas increased JPY29.8b or 5.8%, mainly supported by TPNA sales. Sales in Europe increased by JPY16.3b or 13.3% including positive effect of the currency translations. Sales in Japan increased by JPY11.3b and sales in the Asia market increased by JPY3.6b. Please turn to the next page.

Next, I would like to explain the results for the four international strategic products, which account for a significant portion of our in-house ethical pharmaceutical product sales. Supported by significant sales extension achieved by TPNA in the U.S., a remarkable growth in Europe by JPY7.3b, or 43.9%, and strong growth exceeding 20% in Asia and Japan contributed to Pioglitazone's global sales of increase of JPY59.9b or 23.4%.

Global sales of Lansoprazole declined by JPY25.4b or 8.3%. Although the sales increased in Japan, sales in Europe dropped due to the increasing impact of generated products in the PPI market. Candesartan achieved favorable sales both in Japan and in the overseas market. Global sales increased by JPY16.2b or 10.3%. Sales growth of Leuprorelin remained low with an increase of JPY2b or 1.4% due to the contraction of the market in intensified competition. Total sales of the four products increased by JPY52.3b or 6.1% from the same period last year.

Now please look at page 10. I would like to explain details of operating income. The gross profit ratio improved by 1.6 point. This was mainly because sales increase in in-house ethical drugs that have high gross profit margins and also because the weaker yen had a favorable impact. Gross profit increased by JPY73.7b or 9.4% from the same period last year.

R&D expenses increased by JPY30.8b or 22.1% due to a significant increase in development expenses and research expenses, as well as payment of in-licensing fees to win back for compounds for the treatment of mood and anxiety disorders. Selling, general and administration expenses increased by JPY19.9b or 7.5% mainly due to the increase of selling expenses in TPNA. As a result, operating income increased by JPY23b or 6.0% from the same period last year.

Finally, I would like to explain the key components of net income. Equity earnings of affiliates decreased by JPY1.9b from the same period last year. This decline includes a JPY2.3b decrease of equity earnings of TAP in the U.S. Other non-operating income increased by JPY9.4b mainly due to the increase in the financial revenues of JPY8.3b in Takeda America Holdings, a holding company in the U.S., and Takeda Pharmaceutical in Japan. As a result, ordinary income increased by JPY30.5b or 6.4%. Extraordinary income of JPY39.6 was recorded for the first three quarters of fiscal 2007 mainly in connection with sales of affiliates shares. However, compared with the same period last year, external income decreased by JPY800m. Due to additional taxes of a JPY57.1b paid in connection with the transfer price taxation last fiscal year, we have seen JPY35.6b decrease in tax this fiscal year. That's net profit increase by JPY65.2b or 24.5%.

There are no changes to the full year -- excuse me, full term business forecast that we announced in November last year.

This concludes my presentation of business results for the first three quarters of fiscal 2007. Now General Manager, Kiyoshi Kitazawa, from the Strategic Product Planning Department will report the recent R&D pipeline update.

My name is Kiyoshi Kitazawa, General Manager of Strategic Product Planning Department. I will give you an update of the pipeline development since the first half report last November, starting this time with disclosed projects in the Phase I, changing our previous policy of disclosing those in Phase II. The new policy is to comply with the recent revision of the FTA Modernization Act which became effective in September 2007, and also to follow proposals from the International Federation of Pharmaceutical Manufacturers and Association and WHO. This is also one of Takeda's management efforts to improve transparency and information disclosure for stakeholders. Next page please.

Takeda intensively invests in management resources in four core therapeutic areas aiming to enhance its R&D pipelines with sales associated for future growth and to launch new products as early as possible. There are three strategic pillars for this. Enhancement of in-house research and development capability, maximization of product added value, and strengthening in-licensing and alliance activities. Next page, please.

This slide shows projects in the lifestyle-related disease area, which is the most important area for our company now and in future. In the diabetic area, Takeda filed in Japan for an additional indication of AO-128, our [basin] for prevention of onset of type 2 diabetes in patients with IGT, or impaired glucose tolerance, last December. In the patients with IGT, the guide and treatment and/or exercise therapy is conducted. However, that is not sufficient in some cases.

Takeda submitted a new drug application to the U.S. FDA for SYR-322 in December 2007, a highly selected DPP IV inhibitors. The NDA submission was supported by six Phase III clinical trials involving over 2,000 patients conducted in 220 centers worldwide. The safety and efficacy of SYR-322 was studied as a once-daily monotherapy adjunct to diet and exercise and also as an add on service to other anti-diabetic medications including sulfonylureas, metformin, thiazolidinediones, and insulin. In the studies, SYR-322 was associated with statistically significant reductions in hemoglobin A1c and was well-tolerated and weight neutral and there was no increase in hypoglycemia compared to the placebo. Next slide, please.

Here are other progresses in this area. Phase II studies of TAK-085 started in Japan this January, an agent for the treatment of hypertriglyceridemia. We obtained an exclusive development marketing and distribution right in Japan from Pronova Biocare AS in Norway under the agreement in November 2005. TAK-085 contains highly concentrated ethyl esters of EPA and DHA extracted from fish oil. TAK-085 has already been approved and is commercially available in the U.S. for the treatment of the adult patients with high triglyceride levels, and in major European countries for the treatment of post-myocardial infarction in adult patients with high triglyceride levels.

TAK-045 is mentioned in this slide and this -- sorry, TAK-475 was shown regarding the strategy for development. We will talk with the regulatory bodies and we will decide on our final strategy and as soon as we come up with the conclusion, we will release our discussion conclusion.

The second area is oncology and urological diseases. Takeda is intensively investing it's management resource in this area as [cited] as core therapeutic areas in the future. Starting from this time, we have six items newly released which are in Phase I. Next page.

This is the field of CNS and bone joint diseases. Phase III studies are Lu AA21004 started December 2007, which is an agent created by Lundbeck in Denmark for the treatment of mood and anxiety disorders. We have the core development and core marketing alliance with Lundbeck covering U.S. and Japanese markets for this compound. This has a novel but chemical structure and mechanism action different from other anti-depressant drugs. This compound is expected to have better efficacy and safety profile. Next page, please.

This is gaestroenterological disease area. TAP Pharmaceutical Products, a 50-50 joint venture with Abbott Laboratories submitted an NDA to the FDA for TAK-390MR in December 2007. In Japan, its Phase II studies have started. TAK-390MR is a proton pump inhibitor that employs a novel modified release technology on dexlansoprazole discovered by Takeda. This profile to technology enables sustainble PH control in the stomach. In addition, it's efficacy in moderate and serious patients is expected to be superior to that of Lansoprazole. The NDA submission this time for the use of TAK-390MR in the treatment and maintenance of patients with erosive esophagitis and non-erosive reflux disease. The NDA is based on global studies conducted in more than 20 countries using more than 6,000 subjects with erosive and non-erosive GERD.

For the DM-68 we have the additional clinical studies going on and it is going smoothly and we will provide additional study results in '08 to FDA.

Lastly, the next page, we -- I would like to highlight the result of the HIJ-CREATE study which were presented during the American Heart Association in November 2007. This study started in June 2001 by 14 medical institutions headed by the Department of Cardiology of Graduate School of Medicine, Tokyo Women's Medical University. CREATE study is a large-scale outcome study with coronary artery disease patients with hypertension in Japan.

Comparing reduction of incidence of major adverse cardiovascular events between the patients on candesartan, which is an ARB agent, and the patients on non-ARB standard therapy, the total number of patients is 2,049. The three main findings were obtained in the study. Number one, therapy with candesartan showed 11% reduction in incidents of major advanced cardiovascular event as compared to the none-ARB standard therapy. Number two, therapy with candesartan reduced the new onset of diabetes as compared to the non-ARB standard therapy. There is a stasticically significant difference. Number three, therapy with candesartan showed statistically a significant reduction in incidents of major adverse cardiovascular events in patients with impaired renal function as compared to the non-ARB standard therapy.

That concludes my presentation. Thank you very much for your attention.

Next, we would like to move to the Q&A session. Operator, please start the session.

We have the question and answer session now. (OPERATOR INSTRUCTIONS). Now the first question Merrill Lynch, Japan. Mr. Miyoshi is going to ask a question. (OPERATOR INSTRUCTIONS).

My name is Miyoshi from Merrill Lynch. I have several questions for you. First, related to your financial result, about the net sales, earlier from your General Manager, Takahara, mentioned that the numbers that were stated in this presentation is the aggregate number for the three quarters for this fiscal year and you had explained about the gap with the same period last year.

But just take a look at this third quarter, for the growth of the in-house ethical drugs, it looks as if it doesn't grow -- it didn't growth much, and in the past for last five years or so the domestic core drugs have been achieving a growth exceeding that of the market, but this growth this time is significantly slow down so I would like to hear your comment about this.

This is Yamaoka. Good afternoon. So it is true that from October to December timeframe, just looking at this third quarter, it showed a slightly different pattern from what we have seen in the past, and actually this trend is not related directly to the trend that we are seeing in the market. In some products the way in which that distribute our products have changed and this has shown as an impact to the number. But if we take a look at in aggregate terms for the last three quarters, it didn't show much impact. And when we take a look at the transaction that we are having with our customers I believe that we are seeing relatively higher growth compared with our competitors. So this is a one-time kind of an impact or influence.

And this is a question to Dr. Kitazawa. From this time you mentioned that you are going to disclose the Phase I products and new but it looks as if that you haven't disclosed about the regional information. It is not as if that I'm asking you to disclose the regional information but I just wonder basically where do you do your Phase I trial, in Europe or in Japan?

Basically, for the Phase I trial we do in Japan and in Europe and we start then concurrently or mostly almost, but for one -- for part of the trial we may start Europe first. And then if you ask me whether we would start our trial first in U.S. or Europe, we wouldn't conduct a trial both in U.S. or Europe. But according to our past experience rather than to go ahead with U.S. first we tend to have more compounds tested in Europe first.

Thank you very much. And another question, the Actos and [Agregroclygines] combination drug, ACTOplus is for arthritis too and that is Phase III at the moment and this is the same information you used -- disclosed as new but, roughly speaking, which -- what should see the timing of it? I just wonder how much behind is it? Can I have your advice on it?

We try to maximize the (inaudible) on product and we seek every possibility of additional indication and additional turn off and, therefore, we have revised our 332 and we are accelerating our pace. However, I want you to understand that regarding the timing of application, we are not ready to release but if you -- I may just giving the rough idea, it's not going to be far ahead in future.

How much time are you going to spend for Phase III?

As you know, Phase III studies does not deal with new issues. Normally, our two years or three years spent in Phase III to look at the long-term efficacy and try to get a large amount of it, maybe 1,000 cases, but in this particular case we are not seeking of that. BV, bio validity, data should -- is one item and we have various datas already for the combination and so we have passed data. Therefore, we would like to use (inaudible) for early application.

Thank you very much.

From Schroder Securities, Mr. Tamura.

My name is Tamura from Schroders. I have a question to Dr. Kitazawa. First, domestically, IGT application, so PMDA is current consulting with you I understand, and regarding IGT the PMDA is supporting your efforts, right?

Yes. That is right. In Japan, for IGT, impaired glucose tolerance cases has not been approved yet in Japan and every time we discuss with PMDA, the regulatory authority in Japan, and they have various consultations. We need to see whether PMDA will accept just as IGT maybe they will add some additional conditions but we will continue our discussions with PMDA.

What about their feedback of the investment? Do you have any idea?

We have no idea as of now. Thank you.

Now, my next question is you have some new release for Phase I, in the past you did not have this closure and what are new in the newly added items?

In Oncology, as a new MOA, well, we do have some new items here because we have not disclosed in the past. So in the life-related -- lifestyle-related area your focus and concentration has been working now and starts showing some results. In the diabetic area, as you know, we have Actos and DDP4 inhibitor is coming, and we would like to strengthen those bases. So that is our priority area. That is our understanding.

Thank you very much. My last question, [from syrics], former [syrics], and your IP is going to be related to TAK?

That is right. Those IPs will belong to us so we'll assign TA key code as compound code.

Masuzoe from Deutsche Securities is the next questioner.

My name is Masuzoe from Deutsche Securities. Good afternoon, gentlemen. I have a set of questions to you. The first one, does the third quarter nine months financial results, take a look at those numbers. Those numbers are in line with the company's forecast and our progress rate compared with the previous years' one, [80] in sales, in terms of sales only 7% achievement and operating profit, 83% achievements, these against the operating profit of $480m. I can understand that this operating profile level is in line with the company's plan.

This is Takahara. So the numbers that we announced in the interim report, there is one entry that 400b of operating profit and the sales target and the ordinary profit I believe that we are in line with our forecast that we have announced in the interim report. And we mention about what would be the impact of the foreign exchange rate impact. That's already been incorporated in our forecast, which was announced in interim report, so that is not additional impact that we are seeing at the moment.

I'm not sure whether Takahara is checking this or not but according to [Shikiho] the 500b for the impact and [590b] for the impact and JPY110 of the -- JPY110 to the dollar. Well, this may depend upon how you book it but if you were to use JPY230b as you planned for JPY450b is it -- can you expect to go beyond JPY500b level?

This is Takahara. Well, for this fiscal term we do not see any factors that would push up this number.

And another one, this is not related to your company but about [TAP], (inaudible) generic is coming up from December and why it has come up with the [authorized generics] and America's PPA market will become tougher. That's how the people are seeing in this market but and there might be impact (inaudible) but [perimitted] but I'm sure that --

Can I understand that price will become severe for PPI market, if you have any opinion about that I would like to share?

For the PPI market, especially in the U.S. as you pointed out, generics are coming into the market. And also OTC drugs are expanding very much. Because of that when you look at the coming days ahead 390-MR when it comes into the market it may not be comparable with Lansoprazole or (inaudible).

Thank you very much.

Yamaguchi from Nikko CitiGroup. First the U.S. Actos. As Mr. Takahara mentioned in three quarters you tend to show some slowdowns and a band of shares not moving, therefore the picture looks very flat. Including fourth quarter maybe the sales will go up. Do you find any factors that you can push up the sales or do you think it's not quite possible, the numbers will remain flat do you think?

Well the point that you raise, that is probably you are comparing against Actos and Avandia. That's the first point that you're making there. But as you may know, Avandia has a very strict restriction on it, a labeling restriction on it and although gradual, Actos share is increasing. But on the other hand for the oral intake drug the market's growth itself is not that high as compared with the initial expectation that we had.

And another point is Genuvia it is fighting very hard in this market so for this fiscal year '07 I do not believe this market share will go up from the growth that we have seen in the first half of '07.

And for domestic market progress, you know, this is the number one product and competition is very severe, I understand that. But it looks as if it's slowing down gradually and full year you mentioned about the that could double-digit maybe achievable but I can understand that so far it might be difficult to achieve double-digit, for this one, for this fiscal full year term.

This is Yamaoka. So compared with the usual growth rate that we had, I got this impression that the growth is falling down a bit. But the later of the single digit growth probably we can achieve that and also we're seeing the [Paris] data is coming up. (Inaudible) contrasting result in a Japanese domestic market, those datas are coming up a lot. So we do not believe that we will be losing against our competitors, or rather we hope that we'll be able to achieve a growth rate that is an average of the market.

Maybe this was explained in the presentation, but using the overseas data to accelerate domestic clinical testing, is it possible to do that?

So you are talking about the (inaudible). So what are you talking about here?

So using the overseas data to bridge then and then to file for the -- file early, that's my question?

Which compound are you talking about?

About TAK-085.

So we try to use the overseas data as much as possible and at this point in time with the regulatory authorities we are in discussion of how we will be able to use overseas data. I'm not sure whether there's a bridging can be established 100% or not. It's something I cannot comment on right now. But it is true that we have a pool of data available in overseas market so we would like to leverage on that.

Thank you very much.

Our next question is from Mr. Sakai from Credit Suisse Securities. Please go ahead sir.

My name is Sakai from Credit Suisse. I have two questions to you. One is about R&D and JPY170b, you have consumed this amount until third quarter an if you're not changing the forecast then the remaining JPY60b is there and until the first half you have spend JPY10b for the (inaudible) and I understand that for full year is a JPY30b worth. And for the third quarter in order to increase the milestone or the (inaudible) licensing fee I just wonder whether that is a burden on you or not? Or 300 minus 100, so JPY20b in licensing costs, whether that amount is remaining from the (JPY60b) for the fourth quarter or not. That's a confirmation I would like to make with you.

This is Takahara. Well (inaudible) in licensing Phase III, we have started that in third quarter and for the R&D cost, for this fiscal year, JPY230b budget, I believe that we are going to consume that. We believe that we are not going to be left with a big number unconsumed.

So for the third quarter JPY70b plus increase in R&D cost what we've seen in the third quarter and this inflated portion is due to the Lundberg in license fee is that correct?

Yes.

So for the in licensing cost how much amount are there to be left to be used for the fourth quarter?

Well we are not disclosing that number externally so I won't be able to give you the specific number there. I'm sorry.

And another question is about ACTOplus Met XR situation.

The works in Florida, the factory is still on suspense at the moment. So by having XR launched after the main body itself can be replaced and probably this process will be accelerated. But if we are not going to see the XR launched then (inaudible) launch in Actos combination drug launch might come up so what's your perspective about that?

This is Kitazawa speaking. As you mentioned for the XR we are outsourced there to Watson and Watson's side have GMP, the need to have their SDA's inspection to be completed for GMP. If that goes without any problem and as soon as that inspection is completed very soon this will be approved by the authority and for the GMP inspection according to Watson not so far distance in the future they plan to have GMP inspection.

I understand the first quarter is your plan so January, March period you said, your understanding? If you have that information. Well you may say that that's the plan for Watson's so. Because of the contract you have to ask Watson to manufacture and you're not thinking of using other manufacturers?

Well this is once-a-daily drug. This is a very special technology therefore we cannot transfer this easily to other manufacturers. I hope you understand this.

Thank you very much.

Thank you very much sir. Our next question is from Mr. Hiroshi Tanaka from Mizuho Securities. Please go ahead sir.

Hello. My name is Takahara from Mizuho Securities. About SGA. For the third quarter alone, excluding the R&D cost, it looks as if that SGA cost is slightly decreased, about JPY5b or so. So is there any reason for this?

This is Takahara. So from the factor -- the reason was our company -- the parent company (inaudible) JPY3b or so and TPNA about JPY2b decrease are seen there. And detail, that will be the reason for this decrease.

In the interim report the President mentioned that the Rozerem's sales method to be changed and kind of a comment was made from the President. So can I understand that some kind of change is happening with regards to sales of Rozerem in TPNA is happening?

This is Takahara. The marketing strategy is to be reviewed for Rozerem, that's the story we heard and with regards to AMITIZA the marketing strategy to be an active trend, that's what I heard and that is the only comment I can make for you.

Thank you very much.

Thank you very much sir. Our next question is from Mr. Nakazawa. Please go ahead sir.

My name is Nakazawa from Mitsubishi UFJ Securities. My first question is the third quarter the sales growth is on a falling trend is what is mentioned from the first questionnaire. You mention that the distribution method has been changed for a part of the products. Is it just a part of your total products or the impact has been covering the whole products but only the partial influences are raised or (inaudible) in the third quarter? Is it so? And what is going to happen for the fourth quarter.

This is Yamaoka. I have answered to the first question. In the third quarter, especially for the month of December, the impact was seen greatly in that month. From November to December -- October, November, we didn't see great impact from this change of distribution. And the fourth quarter, for the January we are seeing a positive influence for the month of January. So this is applicable to only a part of the products that we have, so if we look in a total view then the impact is not that significant for the fourth quarter too.

So when you say part of the product, that product occupies quite a percentage in total sales.

This is Yamaoka. Well some of the products occupy a big portion in the total sales.

And the second question I have is about the share development. So since you disclosed this information I would like to understand about the mechanism for the first phase products. And specifically speaking TAK-375, this is ITG and TAK-605, this is a promotion of the neuro. So can I understand about that?

So TAK-379, this is a diabetic drug and the development has started. This is for insulation sensitizer that--

Is this (inaudible)?

Yes, it is (inaudible).

(inaudible)

I cannot disclose the information of that level yet.

And another compound TAK-605.

This is for regeneration of neuro nerves like Parkinson's Disease and Alzheimer's Disease to suppress progress. As Takahara said before this is 08 this is moderating compound but this one is different. This is 065 is different from the past one.

Thank you very much.

Thank you very much sir. (OPERATOR INSTRUCTIONS). Our next question is from Mr. Shimura from UBS Securities. Please say your name and company name and ask your question.

My name is Shimura from UBS. I have two questions. This is related to TAK. PPI market is very competitive as was pointed out. Next June, switching strategy like you did in next year may be one of your options. Marketing for 390-MR, what is your idea of 390-MR?

Well you mentioned marketing but we have the patent and that expires in '09 in U.S. And as you just mentioned generics are coming into the market and that momentum if growing. We need replacement of (inaudible) and TAK-390-MR can be a very good candidate for this. And we have filed, and as I mentioned (inaudible) for moderating severe patients efficacy is very favorable. Using that kind of data we would like to differentiate our product from the competitors.

My second question, 322, I understand you are have completed these findings and what is you publication strategy? And of course you have the ADA but you need to grow momentum. If you launch in October or November you of course need to grown momentum and what is your publication strategy?

(Inaudible) would be ADA, the American Diabetes Association and at that occasion we can disclose much of our Phase III study result. And towards launching and approval our internal team will, of course, come up with good ideas and strategies as to the timing and the publication strategy. And we have a publication plan based on our discussion. But when we disclose what data, when it comes to those kind of specifics I cannot disclose at this moment.

So that means you may have some major event before ADA?

I don't think so. There will be no major press release before ADA.

Thank you very much,

Thank you very much. We would like to have the last question. (OPERATOR INSTRUCTIONS). Our next question is from Miss Kashima from BlackRock.

Please ask your question.

My name is Kashima from BlackRock. Good afternoon. I have one question about domestic, should there be no changes to the distribution method in a domestic market, what would be a sales number that you may have achieved?

This is Yamaoka. This is a hypothesis if we did not have any changes in distribution, that is very difficult to assume that scenario, but if there is, there are push-up factor, that would be about JPY5b to JPY6b, that's my assumption there. But actually we cannot validate that number, so this is my gut feeling kind of thing. But this one time event was not there, therefore this second half I believe that the -- sales power to the user is above the rate of the market, so we're not so much concerned about this.

Thank you very much.

Thank you very much. We have finished the question and answer session. Back to Mr. Inoue.

Thank you very much everybody. Now we would like to end the conference call. Thank you very much for your participation. I hope you continue to provide us your support. Thank you very much.

Thank you for attending conference. We have finished the conference call.