Takeda Pharmaceutical Co Ltd (TAK) 2010 Q2 法說會逐字稿

Good day everyone and welcome to the conference call of Takeda Pharmaceutical Company Limited.

The conference call today is held based on presentation materials available at the Company's website and may we suggest that you visit its website to see the presentation materials on the display if you don't yet have printed copies on hand.

The conference call is scheduled to start at 3.30pm Japan Standard Time.

Please note that this telephone conference contains certain forward-looking statements and other projected results which involve known and unknown risks, delays, uncertainties and other factors not under the Company's control which may cause actual results, performance or achievements of the Company to be materially different from the results, performance or other expectations implied by these projections.

Such factors include economic and market conditions, political events and investor sentiment, liquidity of secondary markets, level and volatility of interest rates, currency exchange rates, security valuations, competitive condition and size, number and timing of transactions.

During the presentation from the Company all the telephone lines are placed for listening mode only and please agree that this presentation and Q&A session will be broadcasted on the Internet.

After the presentation you can take part in the Q&A session.

(Operator Instructions).

***Archived audio begins here***

(Interpreted).

Ladies and gentlemen, thank you very much for attending Takeda's year 2009 second quarter financial results information meeting despite your busy schedule.

My name is Ohtsuki.

I will be moderating this meeting today and starting from October 1 I have assumed this position.

Today, this is the Tokyo room and we have participants from Osaka as well.

And at the same time we have participants from overseas as well.

Then I would like to introduce the participants from Takeda today.

First, Mr.

Hasegawa, the President, and Mr.

Takahara, Corporate Officer, General Manager Finance and Accounting Department, and Mr.

Inoue, General Manager of Corporate Strategy and Planning Department, and Mr.

Iwasaki, General Manager Strategic Product Planning Department, and from Millennium, President and CEO, Dr.

Dunsire.

Now I would like to ask Mr.

Hasegawa, the President, to give us opening remarks.

(Interpreted).

Welcome everyone.

My name is Hasegawa.

I want to thank you all for making the time to attend today.

Regarding Takeda's financial results for the second quarter, Mr.

Takahara, General Manager of Finance and Accounting, will be providing an overview for you in a moment, as usual.

We had this mid-term plan and we have decided that we are going to become a global pharmaceutical company, emphasizing R&D, and we have had various strategy goals.

Our basic strategy has been to strengthen our in-house R&D which is to be augmented by active in-license and alliance activities to strong -- to establish strong basis for global basis.

And we have strengthened various aspects for global businesses.

Last year we acquired Millennium.

That is to strengthen oncology area.

And TAP became our 100% subsidiary after splitting the company.

And this was integrated with TPNA to serve as a very strong foundation in the United States.

Those are all a part of our efforts to achieve those goals I mentioned before and we have seen rather satisfactory results.

However, currently, when you look at the overall industry as a whole, there are some technological challenges to develop novel drugs.

And in addition to that, in various countries there are other challenges, such as increasing controls on healthcare expenditures and stricter regulatory requirements around the world, which have significantly slowed the growth in the pharmaceutical industry.

Takeda is also faced with various issues, like the issues of patent expiration for key drivers of growth until now, such as Prevacid and Actos, and we need succeeding products to augment those impacts.

And there are some delays in development, such as SYR-322, and that was delayed.

And also some discontinuations in development for several key products were experienced.

The external environment has changed and we had some internal changes in the environment.

And this year we have taken already a number of actions to deal with the situation.

For example, we have reviewed our approach to R&D and reorganized ourselves to ensure that we are investing in the right compounds, with good probability of successes.

We are focused now on the quality of the pipeline.

So there is a shift we are experiencing and in that process we have -- we need to tackle these various issues within this organization, and we are doing our best to resolve issues.

And some compounds in the late stage, we have some items and we would focus on them.

And also we are focusing on continuous launching of products that are truly competitive and matching the medical needs in terms of safety and also in efficacy.

And we will maintain number one position in our, what we call, mother country, in Japan.

And we want to also accelerate entry into new geographical areas, in Americas, Europe and Asia, to strengthen our presence in respective regions.

We are trying very hard to make good entry into new areas and that has been the issue from the very beginning of the mid-term plan.

We've considered various measures and strategies, but some did not show good results in the past.

But starting from April this year we have reorganized ourselves.

And thanks to that, this year, in addition to the sales capability in Canada, Spain, Portugal, Ireland, this year we have newly established sales capability in several countries, including Mexico, Sweden, Norway, Denmark, Luxembourg and Turkey.

We will continue to seek opportunities in expanding our in-house sales capability in the areas where there could be high growth potential.

Basically we are thinking of in-house organic growth.

In order to realize these visions, as was announced in the previous conference call, we have established a new governance structure.

We have new roles of Chief Scientific Officer, Executive Vice President of International Operations and Chief Administrative Officer.

And I also delegate responsibilities and authority to heads of divisions in various functions so that there will be further good communication and there would be flexible decision-making process.

We have also started the management and operating committee which was fully established July this year.

This new meeting will be the venue for the leaders to exchange opinions in a very flexible manner.

All the directors are present in this meeting.

And Millennium CEO, Dr.

Dunsire and also the head of the pharmaceutical function will be there, those who are not directors but they are very important members.

And they will participate in this meeting of management and operating committee to make best decisions for the Company.

That has started since July and we've had trial and error period.

But I think I now feel that this meeting, this committee is really functional and operational to contribute to fast decision-making process and that is becoming reality.

The changes are much faster than before now and it is harder to predict the future nowadays.

For the survival of our Company, what is most important is capability to change, not to be a hostage to the past success.

Quite often some companies are restricted by the paradox of success.

And if you look too much on the short-term efficiency you would not be able to correspond when the paradigm is drastically shifted.

We are aware of those issues.

And especially in this economic crisis, the pharmaceutical industry in western countries has changed dramatically.

The growth has slowed down substantially.

But still emerging countries are enjoying good growth.

Especially in pharmaceutical companies, when you look at the industry the changes have been substantial indeed.

Two years ago sub-prime loans started, followed by the Lehman shock last year and the world economy prior to the sub-prime, the world was enjoying unprecedented boom, economic boom, but that has changed to global recession.

In that process the US pharmaceutical market, which has been the driving power of the growth of the global industry, now, I think it is for the first time after the war it marked a negative growth trends.

That was unimaginable prior to the economic crisis.

Although the market has recovered a little bit, we will not be able to expect the past growth rate very soon.

But, as I said, BRICs countries and other emerging countries, like VISTA, those emerging countries are enjoying good growth.

In spite of the economic recession they do enjoy good growth.

But China, more than 20% growth was marked.

And even with lower growth areas, high single-digit growth is marked in the BRICs and other emerging markets.

Of course, the baseline is low, therefore the growth rate is high.

But still, China is about half of the size of the pharmaceutical industry, but still enjoying very good growth.

And that is a threat in a way, but when you look at the economic development, that is of course natural.

We hope to benefit from the fruit of those successes in the growth.

And also on the technology front, most of the new drug discoveries that have been supporting to date was the small molecule chemistry-based technology, but it is getting difficult to come up with innovative new drugs from this technology.

So some of the so-called biopharma, large molecule chemistry-based technology, which is expected to supplement novel drug discoveries, has already been yielding new drugs, such as antibodies and treatment vaccines.

However, so-called -- within the emerging technologies, like aptamer nucleic acid or the regenerative pharma, though they are progressing, they have not been able to come up to this stage where they will be able to produce a lot of novel new drugs.

And in this time, this excerpt is often being taken from Charles Darwin's Origin of Species.

It says that "it is not strong or wise that has survived, but that those who fight hard to adapt to the change have survived".

We should once again remember this phrase and by pursuing further efficiency in business activity and at the same time by conducting proactive business development activity.

Those kind of activities will become very important challenges for our Company and the management of Takeda is aiming to opening up the future development by pursuing those kind of activities.

And we have been receiving a lot of warm support from you and also we have been receiving a very difficult critic from you as well.

But although this is not a problem that is limited to Takeda but the fact that we are going to see the expiry of the major products and we have not been able to come up with a very clear-cut answer to that.

So we are in a dilemma rather.

So this dilemma, as I have mentioned earlier, we would like to take this as an opportunity and we would like to strengthen our business organization and pursue efficiency.

And also we would like to accelerate and strengthen our business development activities.

By doing so, we would like to overcome this difficult time.

And we hope that we will be able to show you what kind of ideas that we have in order to overcome this difficult situation.

So, with this, I would like to conclude my opening remarks.

Thank you very much.

(Interpreted).

Takahara will be making a presentation now.

(Interpreted).

My name is Takahara.

It's my pleasure to present to you the summary of Takeda's consolidated results for the second quarter of fiscal 2009.

As shown in this table, consolidated net sales for the six months ending September 2009 decreased by JPY51.7b or 6.4%, despite the increase in sales from the growth of VELCADE and the launch of KAPIDEX and ULORIC, as well as additions in sales from TAP and Millennium into the consolidated sales due to the one-month difference in the attribution period.

The negative impact of the appreciation of yen of JPY51.6b was significant.

On the other hand, operating income increased by JPY157.5b, to JPY242.5b, mainly because the in-process R&D expenses was incurred in the same period of the previous year but not recorded in this period.

Net income increased by JPY117.8b, to JPY189.6b because the increase in operating income and the decrease in taxes covered the decrease in extraordinary income from the transfer of the Lupron business recorded in the same period of the previous year.

Earnings per share, excluding extraordinary factors, increased by JPY44.49 to JPY278.79.

Next slide please.

As you can see, the foreign exchange had a negative impact on net sales, operating sales and net income.

Next slide please.

These amounts represent the actual sales of existing businesses, excluding the impact of the one-month difference in the attribution period regarding the consolidation of TAP and Millennium and the impact of the appreciation of yen.

Compared to the same period of the previous year, it has decreased by JPY10.7b.

The components are shown at the bottom right.

Although the net sales of ethical drugs shows a decrease of JPY1.7b, this includes a decrease in domestic sales of JPY3.9b, the products for which Takeda acts as a distributor to wholesalers.

Excluding that, the sales of these products has increased.

Next slide please.

And this slide shows the changes in sales by business segment.

The net sales of ethical drugs decreased by JPY45.7b or 6.3% compared to the same period of the previous year.

Sales in Japan increased by JPY1.7b or 0.6%.

Overseas segment was affected greatly by higher yen.

As you see, the overseas sales of candesartan, pioglitazone and lansoprazole has decreased.

On the other hand, the sales of Millennium's VELCADE has increased by JPY6.3b.

The total overseas sales of ethical drugs decreased by JPY47.5b or 10.5%.

Sales in the Consumer Healthcare business, due to the decrease in sales of Nicorette and others, decreased by JPY1.5b or 4.5%.

Compared to the same period the previous year, the sales of TPNA has increased by $63m or 2.4% to be $2,653m.

The sales in the Actos family increased by $77m, or 5.1% due to the growth of both Actos and ACTOplus met.

And sales of KAPIDEX and ULORIC, for which sales promotions started in February and March, were $25m and $17m respectively.

This slide introduces the changes in ethical drugs sales by region.

This figure excludes sales of products for which Takeda acts as a distributor to wholesalers.

The whole Takeda Group sales decreased by JPY42.6b or 6.5% from the same period of the previous year.

When excluding the impact of the appreciation of the yen, net sales increased in all regions by the total of JPY8.8b, or 1.3%.

Now I would like to explain the sales results for Takeda Group's main products.

Although sales of VELCADE increased by JPY6.3b, or 38.5%, sales of all four main products decreased on yen basis due to the appreciation of the yen.

Excluding the impact of the foreign exchange, pioglitazone sales increased by JPY12.4b, and candesartan sales increased by JPY1.5b, whereas lansoprazole sales decreased by JPY6.4b, and leuprorelin sales decreased by JPY2.5b.

This slide shows the details of the changes in operating income.

Although gross profit margin remained almost at the same level, because the net sales decreased, the gross profit decreased by JPY41.4b or 6.3%.

The one-month difference in the attribution period of TAP and Millennium consolidation pushed up the amortization expenses of intangible assets and goodwill by JPY4.1b.

However, the SG&A expenses decreased by JPY13.4b, mainly due to the impact of the appreciated yen.

On the other hand, same period last year posted in-process R&D expenses JPY168.7b, but not for this quarter.

This pushed down R&D expenses by JPY185.5b.

As a result, the operating income significantly increased by JPY157.5b compared to the same period of the previous year.

Those green bars at the right side show the decrease of the operating income by JPY7.2b when the extraordinary factors are excluded.

Now I would like to explain the details of the changes in net income.

Although the operating income increased by JPY157.5b, non-operating income loss became worse by JPY3.6b due to the factors shown in this slide.

As a result, the ordinary income ended with increase of JPY153.9b.

At the same time, the fact not having Lupron business transfer gain of JPY75.3b this fiscal year pushed down extraordinary profit by same degree.

However, on the other hand, tax and others decreased by JPY39.2b, resulting in increase in net profit by JPY117.8b to be JPY189.6b.

With respect to taxes, due to both TAP's and Millennium's merger, the consolidated effective tax rate recorded rose to 58.2% in the previous year.

However, in this period, by recognizing the deferred tax effect resulting from the merger of the manufacturing bases for drug production and drug substance in Ireland, and in addition to this, with the revision of Japanese tax law where 95% of dividends to be received from overseas subsidiaries becomes non-taxable, made the amount of tax decrease.

And the effective tax rate became 25.1%.

Those green bars at the right side represent the net income excluding extraordinary income and other factors.

And it shows net income to increase by JPY27.5b.

Next, I will explain the summary of our cash flows.

As you can see, the cash flow for the period ended with cash inflow of JPY41b, especially operating cash flow has improved significantly from the previous year.

And hereafter I would like to explain the forecast of full year results for fiscal 2009.

But first, let me start by comparing the actual results to the forecast for the first half of the year.

We were JPY4.5b short in net sales.

Although the foreign exchange, especially the decline yen to the euro, acted in our favor by JPY7b for the first half, but forecast sales were not achieved because domestic ethical drug sales of Blopress and other products was below our forecast.

And in addition, in the US, the penetration of the new drugs to the market was a little behind due to the slightly delayed launch of those drugs.

On the other hand, expenses were decreased because of a decline in R&D expenses, mainly due to shifting of payment timing of licensing fee to second half, and also due to fall in SG&A because some of the marketing activities were pushed back to the second half.

Thus operating profit exceeded the forecast by JPY42.5b.

Following the operating profit, both ordinary and net income exceeded the forecast too.

And the last slide, I would like to explain full year forecast based on the actual results of the first half of the year.

Starting with sales, we have changed the dollar/yen exchange rate from JPY95 to $1 to JPY90 to $1.

So although this will have a negative effect compared to the original forecast, that will be about JPY8b or so.

However, as I have mentioned earlier, for the first half we have enjoyed a positive favor of the foreign exchange difference by JPY7b or so.

So we believe that this foreign exchange impact on annual basis is quite minimal.

However, considering the domestic pharmaceutical sales and marketing situation of the newly launched drugs in the US, we do not expect to achieve the original forecasted sales amount.

So we have revised down full year forecast by JPY20b, to be JPY1,480b.

Forecast for the R&D expenses will not be changed since we expect a deferred amount from the first half to be incurred in the second half of the year.

So annual basis it is JPY200b (sic - see presentation) or so.

And gross profit may decrease due to revising down of the net sales, about JPY15b or so.

But R&D expenses will stay at the time -- same amount.

However, we are expecting to see around JPY15b decrease in SG&A from initial forecast, referring to expense cutting initiatives that we are conducting right now.

Therefore there will not be any change of operating profit target of JPY395b.

So same goes with recurring profit and net profit.

And, furthermore, earnings per share, EPS, excluding extraordinary income and other extraordinary factors which the Company uses as one of the target management indices, will not be changed from JPY424.29.

Relating to the dividends we decided to pay JPY90 per share to shareholders as this interim dividend.

Also we plan to play JPY90 as the year end dividend as well, both of which are seen as the forecast.

As the original forecast, excuse me.

And with that, I would like to conclude my part.

Thank you very much for your attention.

(Interpreted).

Next is Mr.

Iwasaki, General Manager of Strategic Products Planning.

(Interpreted).

My name is Iwasaki.

I will give you an update of pipeline and R&D activity since the first quarter of fiscal 2009.

Next slide please.

The pipeline progress since Q1, reported July 31, is shown on this slide.

In addition to the life-cycle management of the products in lifestyle-related disease area we have started Phase I clinical studies on the new compound, TAK-329.

Also a subcutaneous formulation of VELCADE in the US entered into the Phase III.

TAK-329 is expected to enhance glucose uptake in the liver and insulin secretion from the pancreas by activating glucokinase.

We expect the subcutaneous formulation of VELCADE offers physicians and patients and alternative and convenient dosing option.

In the following slides I'd like to explain about TAK-700, which has entered a Phase II in the US for the treatment of prostrate cancer, and about BASEN, which our newly obtained additional indication on IGT in Japan.

TAK-700 is a non-steroidal androgen synthesis inhibitor and it selectively binds to and inhibits the enzyme 17, 20-lyase, and suppress the production of androgen in both the testes and adrenal glands.

Currently marketed gonadotropin releasing hormone analogues only inhibit the production of testosterone in the testes.

However, this compound can suppress secretion of adrenal androgen.

Now we are conducting the Phase II studies which examine safety and tolerability of TAK-700 in patients with chemotherapy-naive metastatic castration-resistant prostate cancer.

This slide explains BASEN tablet which has been recently approved for additional indication.

BASEN has been marketed in Japan since 1994 and it is now approved for the additional indication of prevention of onset of Type II diabetes in patients with impaired glucose tolerance or IGT in Japan.

The dosage and demonstration of the indication are described in the slide.

It is known that patients with diabetes are at high risk for complications such as cardiovascular diseases.

IGT itself has also symptoms on hyperinsulinemia and insulin resistance and the risk of onset of cardiovascular disease is considered high among IGT patients.

We expect BASEN has advantages to treat IGT patient, not only to prevent the progression to diabetes, but also to prevent cardiovascular diseases.

I will now explain Hematide licensed from Affymax.

We are planning to submit NDA within FY2010.

Hematide, a synthetic peptide-based erythropoiesis-stimulating agent, ESA, is designed to stimulate the production of red blood cells.

It is expected to have an improved convenience of once-monthly dosing and clean profile relative to EPO-associated Pure Red Cell Aplasia or Prca.

The Phase III program consists of four clinical trials, two in dialysis and two in non-dialysis patients.

They are progressing steadily and we expect completion of treatment within this year.

We expect about four months of data gathering and analysis prior to reporting tentative results in the second quarter of 2010, and submit NDA in the same year.

Thank you very much.

This concludes my presentation.

We have a Q&A session now.

(Operator Instructions).

(Interpreted).

So today we have the meeting using the meeting room in Tokyo, Osaka and there are some overseas participants too.

So we are going to receive the questions from each one of those announced.

So first of all we would like to ask the participants from Tokyo.

But I would like to first introduce the participants, Mr.

Hasegawa, the President, and Mr.

Inoue, General Manager of Corporate Strategy & Planning, and Mr.

Takahara, the General Manager of Finance & Accounting, and Mr.

Iwasaki, Strategic Product Planning department.

And, from Millennium, Dr.

Dunsire.

So I would like to have a question from Tokyo first.

Mr.

Yamaguchi-san.

(Interpreted).

My name is Hidemaru Yamaguchi from Citigroup.

So I would like to ask a few questions.

So in Mr.

Hasegawa's presentation you mentioned that you will like to seek for the efficiency, and also you said that you want to do the business development.

So I'm sorry to say this but is that referring to the reduction of costs in US, like reduction of a number of our MR?

Or for the -- and for the business development, are you referring to the fact that you are thinking of doing M&A in the other regions?

(Interpreted).

About the first question, we have been trying to be efficient in doing our business to date.

But, as I've mentioned earlier, for example like R&D expenses, the conversion from the volume to the quality.

Even we revise, we do our business from that perspective, maybe we put too much of emphasis on speed and volume.

So at the CMC, create the new [sales] staff and then waste them.

So that kind of front-loading type of thing was happening and probably we were doing too much of that comparing ourselves to the industry norm.

So due to various reasons we recognized that we have a further room to be more efficient and also, at the same time, the benchmarking is not sufficient enough either.

So we thought that there is some room for efficiency from those lessons that we have learned in the past.

And the reduction of the sales force in the US, that's something that we are not thinking of at the moment.

And with regards to M&A, we have been saying that we will be thinking of doing M&A if some deals is matching to our criteria.

But as I have been saying, the emerging markets and the other one will be the patent cliff.

In order to overcome those areas, we might be looking for those possibility more aggressively than in the past.

Probably the beginning of this week there was an interview that we have had and my comment was quoted unexpectedly against my intention.

But, as I have been saying, the M&A that is targeted for a synergy is something that we are not going to do.

The regional coverage or the pipeline synergy or the closeness of the management style, those will be the important to us in doing the M&A.

And if there are some very good targets then we would pro-actively think about that.

We would like to advance in doing that kind of a deal.

And there is no change to that.

(Interpreted).

Regarding the payout ratio of dividend, maybe for short term you will suffer a little bit in terms of performance, but you expect performance to recover.

So would you change payout ratio or you would maintain a payout ratio, or do you try to lower that for a short period of time?

(Interpreted).

My manners are saying that Takeda would probably lower the dividends in those articles based on the US speculations.

But what I'm feeling now is unless something drastic changes I would maintain the current payout ratio, dividend ratio.

Whether we would erase or not, that is up to the situation, but that's what I'm thinking now.

Thank you very much.

(Interpreted).

Muramatsu from Nihon Keizai Shimbun.

For the overseas business, except US, what is the overall direction?

Especially about European businesses, this year, as you mentioned, you have some sales basis in Europe.

Do you think you have covered major markets in Europe now or do you think you still need to expand furthermore?

That's the first question.

And for the emerging markets, as you said, emerging markets can have different [compact] countries, but what are the emerging markets for Takeda?

(Interpreted).

First question about Europe, in terms of EU our sales distribution network in Europe basically covers Europe I think.

But whether you include Russia or not is another story.

Turkey is a part of Europe, as I mentioned before.

But Russia, the potential may be high so we hope that we can have a footprint in the near future in Russia.

And for the emerging markets, that was a general question raised.

And, as I said, China is about a half of the size of Japan and has the growth rate of 25%.

And according to IMS statistics we are at 400 ranking level, close to nothing.

So considering our potential capability and then we should have, let's say a size 10 times than the current level, but we haven't been able to achieve that because of some management capabilities compared to other multinational companies.

We need to strengthen our sales and presence in China, in other emerging markets other than China because we need to set priorities because we have limited resources.

So we will identify our priority and target markets.

For example, Brazil, TPNA can cover the South America as a whole and at what timing what would be the footprint for us, that is considered, being considered by TPNA.

For India, TP Asia is covering this territory.

And TP Asia is just newly born and so, together with the headquarters, what should be our strategy in terms of timing and the footprint and the size of our presence there, we will continue discussing that.

Thank you.

The next question.

(Interpreted).

My name is Onozuka from JP Morgan Securities.

I have two questions.

The first one is that, and this is similar to what Yamaguchi-san has asked, you haven't come up with a solution to the expiration of the patent and efficient [EBD] development.

You said at the very end that you might be able to show your ideas in a not far distant future.

But would those ideas be the medium-term business plan that that will be in line with the current business plan or what?

(Interpreted).

Included in that, we are currently trying to finalize the direction that we are going to head for.

And after we clarify this direction then we would like to hold a separate venue to explain about to you.

(Interpreted).

And, yes, the second question is with regard to US Actos.

The prescription trend, it looks as if that the end-user side is quite small but the shipment is quite large.

Is that because that there was a tighter shipment at the end of the last fiscal year or are you off-taking -- are you producing a slightly bigger inventory?

(Interpreted).

For this inventory in the distribution we try to maintain the adequate level.

And Actos has shown a 5.1% increase so we would like to maintain this level going forward too.

In this second half, the earlier of the single-digit, like somewhere across the 5% is the level that we will like to maintain.

So this is within our expectation.

(Interpreted).

ACTO met XR, the launch of that is delayed once again, but what are the reason of launching it later?

(Interpreted).

We already got the approval but in the manufacturing process we found out that there are some improvements that we have to make.

So that's something that we are considering at the moment.

But with regards to the content, we are about to finalize it so this time we have pushed, that's the reason why we showed the launch date to be the earlier, first half of next year.

Any other question?

(Interpreted).

Ono from Nikkei BP.

In US, DPP-IV inhibitor Saxagliptin was approved, but alogliptin was being filed prior to that.

And why are you behind in terms of the approval?

What is the analysis on this?

Have you made analysis on this?

(Interpreted).

As I have said before, we don't think it is related to the data itself.

But when we filed the guideline regarding diabetes drugs, that was not clear at that time and we were not meeting those criteria.

But October, we had started examine this clinical study and this study will be able to show results that can satisfy the guideline.

(Interpreted).

Bristol Myers did it but you didn't.

Why is that?

(Interpreted).

This is hind talk, but this guideline, prior to the guidelines issuance, saxagliptin, they may have anticipated that or I don't know.

But, as Iwasaki said, the cardiovascular risk evaluation was required and Bristol had enough number of patients, but in our case not so.

Therefore, although we were -- of course we are very sure that we will be able to show the safety of cardiovascular risk.

But we could not show that data level at that time.

If you think that is because we did not foresee that enough, that is up to you.

(Interpreted).

Any reflection regarding communication with FDA?

(Interpreted).

Whatever clinical studies of course you have various views or points that you wish you have done otherwise maybe.

But, as I've said many times, reviewers numbers may be short and the reviewers change right before the meeting.

And there are many, many things we would like to address to the FDA but saxagliptin and alogliptin compared and we were ahead of them in filing.

But we couldn't get the approval, but they got it and that is a fact.

And regarding that, we of course have discussed this internally and we will never let this happen again.

And for that, what we need to do is being discussed so that in future we will have better result.

Thank you.

(Interpreted).

Then going to the gentleman at the very front.

(Interpreted).

My name is Sakai from Credit Suisse.

I have two questions with regards to Hematide.

So if things go through then I think this will be launching 2011 in US, but how are you going to sell this?

The TPNA's MR, are they going to sell this directly?

In other words, do you think that you will be able to sell this product without increase the number of headcounts?

In other words, what kind of a channel are you thinking of?

Of course, you are going to dialysis center, but I'm sure that you are going to visit the internists and others, but -- and the channels, sales channel is one question.

And would you be able to do the bridge in Japan?

(Interpreted).

For the sales strategy, we haven't detailed out yet.

But basically most of the patients will be the Actos patients.

And also the dialysis center, the patient concentration there will be quite big.

So we are not thinking of -- we do not believe that we need to increase the number of headcount for the MRs in order for us to sell this.

And the bridge into Japan, that will depend on the development stage two, so we need to think about this comprehensively.

But I believe that we will be able, we will be required to provide the Japanese data for Japanese market.

(Interpreted).

And about the KAPIDEX, I'm sure that Mr.

Hasegawa is worried about this, about the tendency or the trend of the sales.

When I ask the IR people, there are three cases in which that was adapted to the formula as at August.

And unless this goes up you won't be able to sell in volume.

So how much of the take-up is happening on a formula?

What kind of initiative that Takeda is doing?

We don't have Mr.

Alan MacKenzie here, but I would like to ask the question to you.

(Interpreted).

You seem to be very much worried that things are not according to the schedule.

Are you okay?

I hear that quite often.

This is not a bullish comment or anything.

But although we have not announced, but internally we have the plan and compared to that it is true, it's a bit short still.

Considering the current environment and considering the competitors sales trend in the market we think things are satisfactory.

And regarding the acceptance or adoption of formulary, I do not have specific numbers here.

And we've had discussions and my knowledge about the US market is getting old-fashioned, but I'm talking with Alan MacKenzie regarding Medicare was here in January on the update of formulary.

So that's the situation.

And KAPIDEX, unfortunately, I think it was February or March, so that was the launching time, therefore not in time for this year's formulary.

So we of course try to catch up with that.

As for the question by the person from Nikkei BP, saxagliptin's first sale weeks' up-take and KAPIDEX first sales of for the Rx, ours is much better.

And Prevacid, Actos, first sales, initial sales, compared to that the share growth in prescription is comparable.

So we are still very confident regarding this product.

Thank you.

So is there any question from Osaka or some overseas participants?

So if not then we would like to come back to Tokyo to see whether there is additional question from the floor.

(Interpreted).

My name's [Yura] from Barclays Capital.

I have one question to you.

So the decrease in the revenue for the product that Takeda is acting as a distributor to wholesalers, I think this is a Wyeth product.

But we should be able to recover this or is this just a one-time kind of a thing?

(Interpreted).

So Wyeth products supply, supply of the Wyeth products, so back order situation or out of stock, to causing our stock out is resulting in the deterioration of the trust in Japanese market as well as in US.

And I have been telling this to, a number of times to the Wyeth people and I -- but, unfortunately, it took quite a long timing to see the improvement in this.

And I'm not sure whether this is the cause of it, but was Japan's President have been changed.

And, after that, looking at the current situation, probably this kind of problem will not occur once again.

So at least the situation has changed so that I can be confident that this kind of a thing will never happen again.

(Interpreted).

So would you be able to recover this going forward?

(Interpreted).

The market is quite tough, so if the product is switched over with a different product it is very difficult to switch it back to our product.

It would take a long time.

But our people says that if we take time we will be able to switch them back to ours, but it will take a long time, as I mentioned.

And for those that are short and are in the stock outs, we have to ask the others to provide those products to us.

And -- but if we -- we won't be say -- we won't be able to say that we do not have to have that supply because we have this out or supply from Wyeth, so it would take time to recover.

But thank you very much.

(Interpreted).

Thank you very much for many questions.

The time is up now and we would like to close today's meeting.

Thank you very much for your participation.

Thank you.

Thank you very much.

Thank you for taking time and that concludes today's conference call.

You may now disconnect your lines.

Portions of this transcript that are noted "interpreted" were interpreted on the conference call by an Interpreter present on the live call.

The interpreter was provided by the Company sponsoring this Event.