Takeda Pharmaceutical Co Ltd (TAK) 2013 Q4 法說會逐字稿

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 achievement 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 conditions, and size, number and timing of transactions.

During the presentation from the Company, all the telephones are placed for listening mode only and the question and answer session will be held after the presentation. This conference call is being broadcasted live on the internet, but only for listening mode. With that we'd like to begin the conference. Mr. Christopher Hohman, please go ahead.

Thank you very much and thanks, everyone, for joining us today for this conference call for overseas investors to cover Takeda's financial results for the fiscal year 2012 and our mid-range growth strategy. My name is Chris Hohman, as introduced; I'm Senior Vice President of Corporate Communications. I would like to quickly introduce the panel here today with me. First of all, Mr. Yasuchika Hasegawa, President and CEO.

Hi, everybody.

Dr. Tadataka Yamada, Chief Medical and Scientific Officer.

Hello.

Dr. Frank Morich, Chief Commercial Officer.

Hi.

Dr. Masato Iwasaki -- sorry, Mr. Masato Iwasaki, Senior Vice President of the Pharmaceutical Marketing Division.

Hello.

Mr. Iwaaki Taniguchi, Senior Vice President of the Corporate Finance and Controlling Department.

Hello.

And finally, joining us from Cambridge, Massachusetts, Ms. Anna Protopapas, President of Millennium, the Takeda Oncology Company. We will first have opening remarks from Mr. Hasegawa, followed by Mr. Taniguchi and Dr. Yamada and then we will go into the Q&A session. I hope that you're aware of the financial information that was announced by Takeda today. If you go to Takeda.com, the investor section has all of the presentations and press releases that we issued today, so if possible please access these materials.

So first of all, as I mentioned, I would like to get started with opening remarks from President Hasegawa.

Hi, this is Yasuchika Hasegawa, President and CEO of Takeda Pharmaceuticals. Thank you for joining our annual earnings report conference call. Assuming you have reviewed our announcement materials, I'd like to make two comments. One is related to the operating margin gap in the year 2012, between our original announcement of JPY1,600 oku versus closure of JPY1,225 oku.

There are three key factors contributing to this gap. Number one is long-term investment based on the phantom stock option that we offer to the overseas senior employees, management team employees. Ever since second term Abe administration started December 26 last year, all the situation, macroeconomic policies and Japan Central Bank policies and stock market have changed dramatically. Due to this, for example, Takeda's stock price increased significantly during the course of fourth quarter from beginning JPY3,855 past year to JPY5,030 in past year, a 30% increase in one quarter. That contributed more than JPL100 oku in incremental P&L hit due to the phantom stock option that we offer to the overseas senior management employees.

Secondly, accelerated generic preparations for the end of the fiscal year particularly happened in the fourth quarter due to the Abe administration's encouragement to -- for the cost reduction in medical expenses, to promote generic use more so than before.

And thirdly, corporate-side misjudgment on last quarter sales and spending based on the past historical pattern we have accomplished, we made the judgment on the corporate side there might be an upside in the sales and that there might be a downside in spending, but that judgment was incorrect and in the end more or less sales was as projected and the spending was as projected. So those three factors contributed the gap between the original announcements versus year-end closure.

So we have learned a lesson and we have had in-depth discussion amongst the Senior Management Leader Team not to repeat the same mistake in the future again.

And because of the increasingly uncertain economic and market situation, we decided not to disclose three-year MRP in detail, instead we decided to disclose current year detailed plan plus indicative number such as top-line growth and bottom-line operating margin increase in the manner of compound annual growth rate for next five years. In that respect, we announced today for next five years compound growth rate of top line sales will be a mid single-digit and also the bottom line operating margin will be 20%-plus in compound annual growth rate.

And, on top of that, based on this, tragically we project we decided to pay out the dividend 100 -- maintain JPY180 per share for next three years namely 2013, '14 and '15.

And with regard to the 2013 operating margin, when we announced a mid-range plan last year -- about same time last year, we mentioned that this year, means 2013 fiscal year, operating margin will be JPY2,250 oku, but we ended up announcing today this year's bottom line will be -- operating margin will be JPY1,400 oku. This is primarily due to the sales decline in different -- various parts of the world. Starting from Japan we have, compared to the last year plan, more than JPY200 oku down slightly primarily due to the maybe too aggressive sales projection on [diabetic] products like Nesina and several others due to the -- because of earlier anticipated generic penetration as I mentioned.

With regard to the United States, due to the voluntary withdrawal of the OMONTIS, caused more than the -- and the other product shortfalls, versus last year's plan, caused more than the JPY500 oku shortage. And the EU close to JPY200 oku and the other region JPY280 oku, so combined we have JPY1,400 oku shortage in sales compared to the previous year announcement.

But on the other hand, of course a shortage of the sales, we have JPY400 oku in cost of goods reduction and also, at the same time, we reduce SG&A by JPY250 oku, so net/net we have JPY750 oku negative impact on the bottom line operating margin. Those are the primary reasons of the gaps between -- on the operating margin between the last year announcement amount versus this year's planned amount.

That's the opening remarks I'd like to make. Now I'd like to turn the microphone to Iwaaki Taniguchi who is going to talk briefly about numbers more in detail. Thank you.

Hello, this is Iwaaki Taniguchi, Head of Corporate Finance and Control at Headquarters. I will walk through our financial performance of fiscal year '12 and outlook for fiscal year '13 together with guidance for our sustainable future growth. Please move to the presentation page two, which presents the results of fiscal year '12.

Let me quickly introduce key figures for '12. First of all, net sales is JPY1.557 trillion, which is a 3.2% increase from previous year. Then the operating income is JPY122.5b, which is 53.8% decrease. For your information, operating income excluding special factors is JPY267.5b, which is 35.5% decrease. Finally, net income is JPY131.2b, which is a JPY7.1b increase from previous year.

Let me deep dive into each component with financials on the next page. Here I want to explain the breakdown of sales increase by business segment. First one is Ethical Drug segment in Japan. Although, our net new product line, including Nesina and Azilva, has made a good stead and a good contribution, it was not sufficient to offset a decrease of major existing products like Actos and Blopress, which were impacted by late 5% capping in the listing price by Japanese government. Overall result is JPY3.8b decrease from previous year for this segment.

As for overseas Ethical Drug segment we recorded JPY46.8b increase due to full 12-month accounting of legacy Nycomed product portfolio, as well as new acquisitions such as URL and Multilab in Brazil.

Please move on to the next page. This page shows breakdown of net sales increase by product. As you can see, although we experienced a decrease in Actos and other three major products, we had a significant increase of JPY94.4b in new product category which was launched after 2009. Plus we have a benefit of full-year accounting of legacy Nycomed products in 2012 compared to only six months in previous year. Please also note that Velcade has experienced a steady growth.

Please move on to next stage then this chart shows the breakdown in sales increase by region. Thanks to broader business footprint of Nycomed, we experienced a significant increase in Europe, Asia and Middle East, Oceania and Africa. As for America, in the existing portfolio such as Velcade, Dexilant and Uloric combined with our new product launches -- acquisition of URL and Multilab have significantly offset the effects of product expiry of Actos. Other result, decrease in Americas was limited around 9%.

Please go to the next slide. Then this is the status of emerging country -- emerging markets, which is most important growth driver to Takeda. As of fiscal year '12 emerging markets represent roughly 15% of our net sales in Ethical Drug segment, which has increased 190% from previous year. Even if we exclude FX effects and also if we make up to companies whom we've acquired company's annual rights-based sales, we also recorded JPY25.6b sales increase, which is a 14% increase from 2011.

Please turn to next page. Now I'm walking through contributing factors of operating income. Mainly due to avoidance of previous year's one-time Nycomed acquisition charge in intensive step-up, gross profits have increased by JPY33.9b.

However, because of the full-year consolidation of the costs associated with legacy Nycomed on a 12-month basis and also increase of amortization charge related to our new acquisition rights URL, which is roughly JPY43b, SG&A expenses overall have increased by JPY134b. As for R&D expenditures, due to good progress of a clinical study in late-stage pipeline, it has increased JPY42.4b this year. As a result, operating income in 2011/2012 was JPY122.5b, which is 53.8% decline from last year.

Please move on to the next slide. This is showing bridging for net income from previous year. After all net income for '12 was JPY131.2b, which was JPY7.1b increase from previous year. Let me explain some backgrounds. First of all, we recorded JPY34.4b increase in the net extraordinary income statement, which I will deep dive on the next page.

Secondly, we experienced a significant increase in tax, which is JPY129.9b. This refund is related to Prevacid transfer pricing settlement from Japanese tax authority, this is the major reason. This is also combined with natural decrease of tax due to lower pre-tax income level compared to previous year.

The chart in the next slide is showing a breakdown of those extraordinary income and loss items. The total extraordinary income was JPY95b, but there was extraordinary loss, on the other hand, at JPY78.5b. The net amount is JPY16.5b extraordinary income, which is a [JPY34b] increase from last year.

Let me explain a little bit about the impairment loss. The biggest item is a write-off of roughly JPY33b intangible assets related to Daxas, which was generated through acquisition amortization. The main factor is reducing our sales forecast for this product, reflecting more stringent reimbursement environment in major European countries these days.

Please go to the next page, which presents our cash flow situation. So this is the cash flow description for fiscal year '12. The net increase in cash is JPY91.3b. Overall our cash balance end of the year -- fiscal year is JPY545.6b, which is roughly JPY90b increase from previous year.

Please turn to next page. Now I'd like to explain about comparison with the financial forecast back in February, which was already explained by Mr. Hasegawa. He explained as for net sales, thanks to appreciation of yen -- Japanese yen against other currency, final figure recorded JPY7.3b increase compared to February announcement. However, due to further increase of cost items, our final operating income was JPY37.5b short of our JPY160b target.

Major reason of cost increase was those translational effects of overseas cost items denominated in non-Japanese yen combined with the increase of equity-based compensation due to increase of the stock price in Japan. At bottom line we generated extraordinary income by selling a portion of our marketable securities, but due to newly added impairment loss items, our final net income is short of the target for JPY23.8b.

The next page shows our discussion towards the future. Let me move on to fiscal year '13 financial forecast page, which is page number 13. Here I'm showing the fiscal year financial forecast for '13. For your reference our currency rate assumption this time, this fiscal year is JPY90 per dollar and JPY120 per euro.

For net sales we expect JPY1,590b, which is JPY32.7b increase from last year. FX effects among this sales increase is roughly JPY80b. We will maintain JPY300b level of R&D expense for sustainable future growth. As for SG&A expense we have started a Company-wide initiative to establish moreover an efficient operating model and we are now focusing on the cost efficiency by revisiting all expenditure items.

Needless to say, it is very important to maintain critical investment for our future rapid growth in emerging countries as well as penetration -- preparation for our product launch. However, we are determined to eliminate any cost item wherever possible. So anyway, as a result, we expect to achieve JPY140b for operating income, which is 14% increase from previous year, fiscal year '12.

So this is the fiscal year 2013/'14, let me move on to the next page. So now I'd like to explain the comparison between the new financial forecast as of today and that in our previous meeting in the spring. Indeed, domestic and international environment for pharmaceuticals business has drastically and rapidly changed. This has resulted in our downward adjustment.

For net sales we have taken accounting to a more stringent reinvestment and competitive environment both in Japan and Europe. Furthermore, we have also factored in sales decline caused by a withdrawal of some products from the market. For cost side, as I mentioned earlier, we will maintain only required investment related to new product launch so that we can accelerate our sustainable growth from now on. Having said that, we will monitor closely all cost items, maintain a cost level lower than our previous mid-range plan without considering FX effect.

The next page is update on new accounting standard IFRS. As indicated previously, in order to increase comparability with other international competition, we will migrate to IFRS accounting standards from end of year 2013 this quarter. So, for our investors' listening purpose, we are here in disclosing IFRS-based financial forecast for 2013 here.

Our operating margin IFRS is roughly JPY15b higher than that of current Japan-GAAP-based number, mainly due to more avoidance of amortization of goodwill. If you need further breakdown please take a look at page 23 of appendix. Being consistent with IFRS migration, we need also disclose core earnings, a key performance indicator, which is pretty common among our international competition. Our expected core earnings in '13 are JPY280b, which is approximately 18% of our net sales.

Our next page shows our mid-term financials target or guidance up until 2013 for your reference. So as Mr. Hasegawa mentioned, we're expecting a net sales increase around mid single digits for next five years on a compound annual growth ratio basis. Same for -- 20% at least for operating income for next five years, 20% CAGR, and dividend to be maintained at current level for next three years and we also expect R&D spending around JPY300b level.

Please move on to the next slide, which describes Project Summit for our future operating model efficiency. So our net goal of this project is increasing operating level through creating more robust and efficient operating model on global basis. They act with some functional subcategories, which have its own agenda and goals.

For sales and marketing we aim at more integrated marketing strategy and sales support activities among global, regional and country levels so that we can create more synergy in this respect. For manufacturing supply chain, we intend to leverage more on existing, very broad global network and infrastructure of legacy Nycomed.

For R&D, we will further increase the efficiency of R&D activities and carry on optimal investment to create innovation. For general and administration, we will even increase the efficiency by further integrate and unify our current dispersed and diversified G&A operations and procedures.

So with these activities we are targeting 25% core earnings to be achieved by fiscal year '17. This is the end of my presentation. Thank you very much for listening.

Thank you and finally, Dr. Yamada will give an update on R&D activities.

Thank you very much, Chris, and thank you all for listening in. I know you have a copy of the presentation so I'm going to truncate my presentation somewhat and jump around a little bit. Going to Phase 3, Phase 3 points out that we had a very good year in FY12, we had many important approvals and filings.

Just on the approvals side I should point out Nesina was approved in the US, Adcetris was approved for relaxed refractory Hodgkin's lymphoma and ALCL in Europe. And what is not shown on this page is the recent approval of Tofacitinib, which we have in-licensed from Pfizer in Japan.

On the registration and filing side, there are four products that I would just like to high that will represent important launches in FY'13 going into FY'14. One is Brintellix, our mixed model anti-depressive partnered with Lundbeck; Contrave, which is an obesity product; vedolizumab, which is a monoclonal antibody against alpha-4 beta-7 integren for ulcerative colitis and Crohn's disease; and lurasidone for the treatment of schizophrenia. Lurasidone being launched in Europe.

One other item on the filing side just to take note of is BLB-750, which is our pandemic influenza vaccine. This is important, given its potential adapting -- adaptation to an H7N9 vaccine should that be required.

Going to page four, the next page, we have a very strong Phase 3 program. You've heard much about this, so I won't comment more other than to say that we have some very important and revolutionary products here TAK-875 for diabetes chief amongst them but in addition orteronel, TAK-700, MLN9708, that's called Ixazomib and an interesting compound called Vonoprazin or TAK-438 potassium-competitive acid blocker currently developed in Japan.

On page five, we note some important partnerships that we have developed in the past year. I will like to highlight two. One is LigoCyte, which is an acquisition of a vaccine company to support our emerging vaccine franchise. This company provides us not only with a VLP technology on which to build other vaccines but brings to us a Phase 2 asset in a Norovirus vaccine, Norovirus diarrhea being most a common cause of epidemic diarrhea in the world and a major cause for morbidity and mortality, both in the developing world and in the developed world.

The other partnership I'd like to highlight is Advinus, which is an Indian company that has partnered with us to develop new INDs. We've developed this relationship as a competition between our internal programs, our internal capability, and Advinus in external capability creating with the same targets, developing in them in a race to make INDs.

A clinical element shown on slide six is a measurement of R&D productivity. When I came into Takeda just two years ago, I was faced with the graph on the left, which was an assessment done by BCG of productivity amongst companies in the pharmaceutical industry, it's really based upon eNPV of products in the clinical stage against -- a change in eNPV against an investment in R&D. And as you can see in this analysis, it looks like Takeda is second from the bottom of the cohort that was examined in terms of change in eNPV as a function of R&D investment. It looked like Takeda was losing $0.50 on every $1 invested in R&D.

Moving forward a few years, we have reversed this slide; we're now second amongst the industry comparator group. We turn $1.40 on every $1 invested in R&D and indicates a very substantial improvement in productivity.

I would like to move forward to R&D initiatives in the mid-range growth strategy and I would like to move to slide 11. We basically have three approaches to improving R&D productivity, short term, mid-term and long term.

In the short term shown on slide 11, we'll leverage our advantage of the rich late stage pipeline. For this we want to make sure that our successful programs move forward to approval, vortioxetine, Brintellix is the brand name, for depression, Contrave for obesity, vedolizumab for ulcerative colitis and Crohn's disease, and lurasidone for schizophrenia. We will focus attention on our exciting Phase 3 programs including fasigligam, TAK-875 for diabetes; vonoprazan, TAK-438, for acid peptic disorders; ixazomib, 9708, as a follow-on proteasome inhibitor -- oral proteasome inhibitor for multiple myeloma; and TAK-700 orteronel for prostate cancer.

We have also some very assets moving forward in the late stage. Our diagnostic therapeutic combination for treatment of Alzheimer's disease using a TOMM40 biomarker and the Norovirus vaccine.

In the midterm, we want to fill in the mid-stage portfolio. And to do this, we're going to push forward our promising pre-clinical and clinical assets. They include TAK-385, which is GnRH antagonist for uterine fibroids; 8237 an Aurora A kinase inhibitor; 4924, a NEDD8-activating enzyme inhibitor; and two very unusual and exciting compounds -- an AMPA potentiator and CD38 receptor antibody.

We have also had this project to basically looks through our attic to find the assets which could be used for additional indications and we have new programs that we'll be talking about in the future in diabetes, NASH, asthma, idiopathic pulmonary fibrosis and schizophrenia.

In business development, we've focused on assets that are earlier stage given our late -- the richness of our late stage portfolio, compounds that are ready for proof of concept experiment.

And in this regard, on the next page, we show an acquisition that was just announced yesterday. We acquired Inviragen, a vaccine company that has a Phase 2 asset for dengue and other vaccines for EV71, hand, foot, and mouth disease and Chikungunya. This acquisition complements our VLP technology acquired with LigoCyte in providing expertise in live virus vaccines. These two acquisitions form the cornerstone for an outstanding vaccine franchise and evolution.

On the next page, we will focus on improving R&D productivity in the long term by strengthening our research competitiveness and productivity. Just to give you some -- an example of what we did last year that we'll continue moving forward. We did increase our cost per drug candidate by 40% last year in our discovery group. In the progress of candidates to IND, we decreased a time from what was an unacceptable 31 months to 12 months. It was a very good collaborative joint effort. And we will put forward these kinds of initiatives to continue to improving our discovery research capabilities.

Finally, on page 16, a pipeline that's moving forward, FY '13, '14, '15 and '16, we have a full and rich and deep pipeline in all the regions in the world. And we feel, therefore, that we have a very bright future in -- on the basis of our the -- outstanding late stage portfolio. Thank you very much.

Thank you. So, with that, we would like to commence the Q&A session. So, I request that the callers limit themselves to two questions each. And to ask a question, please follow the instructions of the operator.

Operator, please?

(Operator Instructions). The first question is from Miss [Salva Puccialatti] from Platinum. Please, go ahead.

Yes, hi. I first want to clarify the 20% operating profit growth, which you forecast for '13 till '17, is that based on your reported Japanese GAAP, the adjusted GAAP or on IFRS?

And the second question is the new core earnings -- is the new core earnings the same as the old operating income, excluding special factors? Or is that the new adjusted net earnings number?

Let me answer to your question. So, 25% increase per year, average year is related to the core earnings up until 2000 -- no, no, no, 25% operating margin to be achieved by 2017 for core earnings. But we also expect the increase over operating income at the rate of at 25% for the next five years as well. Sorry, I mean 20% --

So, 25% operating margin on the core --

No, no, no. I'm sorry.

On the core, so basically on all the adjusted, and also 25% growth on average per year on core earnings.

No, no, no, 20% annual growth for operating income for next five years on average basis. And --

But what operating profit is that?

It's Japan GAAP, but we are migrating to IFRS from the March next year. But for 2013, we will make announcement under Japan GAAP, so operating income-wise, you -- please understand this is the Japan GAAP based number, 20% CAGR.

Okay, okay.

And the 25% -- the core earnings -- the ratio against sales is to be achieved by 2017.

Okay, thank you.

Core earnings is the same concept -- same cost concept as the operating income without special factors.

Okay, that makes sense.

Thank you very much. Next caller, please.

The next question is from Ms [Amelia Sincessi] from [Hunter Fitzgerald]. Please, go ahead.

Hi, good evening. I was actually going to ask about the profitability margins for your emerging markets business. You've previously said that it stands at around 30% and you're looking to push it in line with peers at around 40%. I was just wondering if you could give us an update of where it stands now and whether that guidance still holds.

And then, secondly, I might have missed it during the presentation but wondering what sort of extraordinary related expenses we need to expect for Omontys next year?

Frank Morich, I'm answering your first question about the profitability of emerging markets. We have emerging markets that have profitabilities which are in the area of 40% and for our business we can say that there seems to be a relationship between market share and profitability. And we have, of course, strongholds where we have pretty strong market positions. In other areas where we're still focusing on growth and do heavily invest in growth, we, for the time being accept lower margins but the goal is to bring the emerging market business as a whole into the range of 35% to 40%, which according to our understanding is in line with best practices.

And the second question regarding to Omontys, I hand over to Iwaaki again.

As for Omontys, we accrued all related in 2012 already. There's no more expense related to this product in 2013.

Okay, great.

Thank you too. I'm sorry.

Okay. And I was just sort of trying to go back to emerging market question, not to be annoying but I'm just wondering on the whole where we standing now, given your goal is 35% to 40% I'm just wondering the merged average where are we at the moment. I do understand that some are probably already there.

So, we normally don't give away these numbers. But I don't think you make a big mistake if you just use the middle ground between the 40% and something that is between 20% and 30%, then I think you've --

Okay. Great, great. Thanks.

Thank you, operator. Do we have another caller with a question?

(Operator Instructions).

Okay. I understand there's one more question, so please go ahead.

(technical difficulty) in stock options and they have been taken in the operating profit and this is not a special item. They're basically taken in the reported. Is that correct?

That's correct. Yes. All those phantom stock options related to expense is accrued within the category of R&D expense for R&D people and the -- in the category of general and admin for sales and marketing and for G&A staff.

Okay. And the other question --

(multiple speakers)

Not in special category.

So, basically, this is also going forward. This is not only a one-off. That is basically also in the forecast of next year, so that's a stable number?

Not necessarily. Depending on the behavior of exercising -- pattern of exercising and the granting and the -- those situation there to be affected by those factors.

Okay. So, the other delta is higher SG&A cost, which continues in the next years. Can you just explain why the SG&A cost is so much higher than you anticipated?

Because as I mentioned in my presentation, we continue to make necessary investment for future growth such as new product launch preparation and the expansion in emerging countries. But as I mentioned also, we tried to maintain cost as much as possible at smaller cost so we don't expect significantly increase [results for] ForEx FX basis from current level.

But you invested last year than much more than you thought, so basically you start off a higher base but you continue it.

We would expect to have same level of SG&A at least next year. After 2014, it depends on the situation in product launch and emerging country situation as well.

And can I just understand a bit more what's going on in the gross margins? So, basically, the gross margins will change significantly from here going forward or should they stay more flattish.

Iwaaki Taniguchi Well, in terms of cost of goods sold, which is important contributor of gross margin, we try to maintain cost of goods sold as much as possible. Although, there's some necessary increase related -- in consistent with sales increase but the percentage of cost of goods sold against sales will decline, so that we can increase our operating margin and gross profit as well.

So, the gross margin should go up over next year, is what you're saying?

Gross margin should go up because the sales increase will absorb the increase of cost of goods sold so gross margin should increase for next -- at least three years, yes.

Do we have any other questions?

Can I just maybe ask another question?

Sure. I think we have time for one more question.

Do you have a feel for what the tax rate will be this year?

Well, tax rate -- (multiple speakers)

What is the assumption in your numbers.

The tax rate this year is very unique because we received a huge refund from Japanese government related to a [trans-operating] settlement.

From next year, we are coming back to the normal tax rate, corporate tax rate, marginal corporate tax rate like 40% or lower 40% reflecting the Japanese corporate tax rate plus some non-tax deductible items, deferred tax income.

So, this is much higher than most people think because the tax rate should go down in Japan in general, no? So, you say in your forecast, you've got a higher than 40% tax rate?

Yes, because of the amortization of goodwill. So, this will inevitably impact the corporate tax rate because those deep amortization of the goodwill is not deductible item, it will, on surface, inevitably impact corporate tax rate on a consolidated basis.

Okay.

I understand there's one more question on the line from the investors. Operator?

The question was from Miss Salva Puccialatti from Platinum. The next question is from [Mr. Rogers from Private Investors]. Please, go ahead.

Hi. I have quick question. I was just wondering if you could give us an update on Omontys? Thanks.

This is Tadataka Yamada. Omontys, the NDA and INDA -- yes, the IND and the NDA have been transferred, (inaudible) to Takeda and Takeda has assumed all responsibility for subsequent investigation and the recalls of the distributed product. We are working directly with the FDA on this.

Just as a follow up, do you think it will make it back to market?

I wish I knew the answer to that. I can't say.

Okay. Thanks a lot.

Okay. So, with that brings us to the end of the call today. I would like to thank everyone for participating and for your interest in Takeda. Thank you very much.

Thank you for taking time to join us today. That conclude today's conference call. You may now disconnect your lines.