Dive Brief:

• Takeda plans to simplify how its workforce is organized, cut spending and slim down its drug pipeline in a restructuring aimed at improving its profit margin over the next several years.
• The Japanese pharmaceutical company revealed its plans alongside earnings for the 2023 fiscal year, which showed a sharp decline in operating profit compared to the prior year. Patents protecting some of Takeda’s top-selling and high-margin drugs, like the ADHD medication Vyvanse, have recently expired, putting pressure on the company’s finances.
• Takeda estimates it will incur about $900 million in restructuring costs during the coming fiscal year, which runs from April to March. The company aims to to improve its core operating profit margin by 1% to 2.5% each year from 2025 on, targeting an eventual range in the low-to-mid 30%.

Dive Insight:

Takeda has good company in restructuring its business, joining other large pharmas like Bristol Myers Squibb, Bayer, Sanofi and Novartis that have recently cut back on spending, laid off staff or reprioritized their research.

In Takeda’s case, the company is pruning an array of early-stage drug programs to focus investment on late-stage assets it expects to become large sellers, like an inflammatory disease drug it acquired from Nimbus Therapeutics.

“As we look ahead to FY2024, we anticipate having up to six programs in Phase 3 development,” said Takeda CEO Christophe Weber, in a company statement. “Advancing these promising therapies through late-stage development while moderately increasing our biopharma R&D investment is requiring rigorous prioritization, efficiencies and organizational agility.”

Among the drugs affected by Takeda’s prioritization are three mid-stage cancer therapies: modakafusp alfa, subasumstat and the cell therapy TAK-007. Development of the latter drug in blood cancers will be shuttered, and work instead shift to autoimmune conditions — a pivot that many companies involved in cell therapy are now making.

In all, 18 drug programs have now been cut from Phase 1 or Phase 2 testing, although some, like TAK-007, will continue to be developed in other indications. That’s up from 11 programs listed in a February presentation as removed from those stages.

Alongside the R&D prioritization, Takeda plans to invest further in what it terms “data, digital and technology,” and cut back on external spending in areas like supply chain and third-party vendors.

The company said it would share further details and timing of specific actions “in due course.” It did not respond to BioPharma Dive’s request for further information.

While loss of exclusivity for drugs like Vyvanse has hurt Takeda, the company anticipates it will have limited exposure to such risks moving forward, at least until the early 2030s. As a result, it expects to be able to return to revenue and profit growth from the 2025 fiscal year onward.