Asia Healthcare Analyst, Pathology Associates Limited

Dion Stéfan Büchner M.D., FCAP

Asia Healthcare Analyst

Pathology Associates Limited

Thematic (Sector/Industry)

<p>Japan, after the US and China, is the world’s third largest pharma industry, worth ~$70b in 2016. However, according to research and consulting firm GlobalData (<a href="https://www.dddmag.com/article/2017/02/japanese-pharmaceutical-market-rise-slightly-72b-2021" target="_blank">link</a>), the Japan pharma market is expected to report mere 0.3% growth over FY16-22e to $72b.</p><p>One of the key reasons for flat growth rate is ongoing annual price cuts (bi-annual until two years ago), under which Japan Ministry of Health, Labor and Welfare (MHLW) cuts prices of adjudged expensive drugs to keep check on rising healthcare…</p>

Japan, after the US and China, is the world’s third largest pharma industry, worth ~$70b in 2016. However, according to research and consulting firm GlobalData (link), the Japan pharma market is expected to report mere 0.3% growth over FY16-22e to $72b.One of the key reasons for flat growth rate is ongoing annual price cuts (bi-annual until two years ago), under which Japan Ministry of Health, Labor and Welfare (MHLW) cuts prices of adjudged expensive drugs to keep check on rising healthcare…

Japan Pharma - Drug Price Revision in April 2018

Equity Bottom-Up

<p><strong>Announcement</strong> – Takeda, on March 28, 2018, confirmed that it is officially considering making an offer for Shire (NASDAQ: SHPG) and that it has time until April 25, 2018 to make a firm bid.</p><p><strong>Our Take</strong> – Takeda’s stock price reaction (down ~10% since the announcement) to the news suggests investors’ concern about the adverse impact on the combined entity’s reported earnings from:</p><ul>
<li>interest outflow on new debt raised (~$37b in addition to the existing net debt of ~$7b) and</li>
<li>amortization of potential…</li>
</ul>

Announcement – Takeda, on March 28, 2018, confirmed that it is officially considering making an offer for Shire (NASDAQ: SHPG) and that it has time until April 25, 2018 to make a firm bid.Our Take – Takeda’s stock price reaction (down ~10% since the announcement) to the news suggests investors’ concern about the adverse impact on the combined entity’s reported earnings from:
interest outflow on new debt raised (~$37b in addition to the existing net debt of ~$7b) and
amortization of potential…


Takeda + Shire - Highly Accretive Merger Considering Takeda’s Core Earnings

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Event-Driven

<p>Japanese pharma firm <a href="https://www.smartkarma.com/entities/11747" target="_blank" data-smartkarma-citation="entities:11747:1">Takeda Pharmaceutical Co Ltd (4502 JP)</a> said it is officially considering making an offer for diversified rare-disease-focused <a href="https://www.smartkarma.com/entities/22142" target="_blank" data-smartkarma-citation="entities:22142:1">Shire PLC (SHP LN)</a> in what would probably be a merger of equals (both companies have recently traded around the $40 billion market cap level). We are maintaining our fair value estimates for both until we see evidence that discussions are advancing; an official offer is expected in April. While we see Takeda's shares as fairly valued, we’ve seen…</p>

Japanese pharma firm Takeda Pharmaceutical Co Ltd (4502 JP) said it is officially considering making an offer for diversified rare-disease-focused Shire PLC (SHP LN) in what would probably be a merger of equals (both companies have recently traded around the $40 billion market cap level). We are maintaining our fair value estimates for both until we see evidence that discussions are advancing; an official offer is expected in April. While we see Takeda's shares as fairly valued, we’ve seen…

Takeda Considers Swallowing Shire, a Somewhat Surprising Move That Could Make Strategic Sense

<h2>Core coverage <strong>– relative valuations </strong>
</h2><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/049/367/original/core%20coverage.PNG?1523424273" class="editor-image img-responsive" data-smartkarma-image-id="49367"></figure><div class="content-caption">Price as on March 26, 2018<br>*Financial year of Otsula, Chugai and KHK ends in December</div><h2><strong><a href="https://www.smartkarma.com/entities/11747" target="_blank" data-smartkarma-citation="entities:11747">Takeda Pharmaceutical Co Ltd (4502 JP)</a> </strong></h2><p>(NB: Pre-Shire announcement | Pro-Forma analysis to be published shortly) <br>OW | CMP ¥ 5,550| TP ¥ 6,600</p><table class="table table-striped"><tbody>
<tr>
<td><strong>Key drivers / highlights</strong></td>
<td><ul><li>Currently marketed drugs including <strong>Entyvio </strong>(vedolizumab, in-house), <strong>Ninlaro </strong>(ixazomib,in-house), <strong>Trintellix</strong> (vortioxetine, co-develop with Lundbeck) &amp; <strong>Takecab </strong>(vonoprazan, developed in-house) to drive topline over…</li></ul></td>
</tr>
</tbody></table>

Core coverage – relative valuations 
Price as on March 26, 2018 *Financial year of Otsula, Chugai and KHK ends in DecemberTakeda Pharmaceutical Co Ltd (4502 JP) (NB: Pre-Shire announcement | Pro-Forma analysis to be published shortly)  OW | CMP ¥ 5,550| TP ¥ 6,600

Key drivers / highlights
Currently marketed drugs including Entyvio (vedolizumab, in-house), Ninlaro (ixazomib,in-house), Trintellix (vortioxetine, co-develop with Lundbeck) &amp; Takecab (vonoprazan, developed in-house) to drive topline over…



Healthcare Specialist

Winnie Wong

<p>On 12 March 2018, <a href="https://www.smartkarma.com/entities/972" target="_blank" data-smartkarma-citation="entities:972:1">Biogen Inc (BIIB US)</a> announced an <a href="https://www.businesswire.com/news/home/20180312005361/en/Biogen-Acquire-Pfizer-First-in-Class-Phase-2b-Ready" target="_blank">agreement</a> to acquire <a href="https://www.smartkarma.com/entities/1131" target="_blank" data-smartkarma-citation="entities:1131:1">Pfizer Inc (PFE US)</a>'s first-in-class, Phase 2b ready AMPA receptor potentiator, <strong>PF-04958242</strong>, for cognitive impairment associated with schizophrenia (CIAS).   The deal will include an upfront payment of $75 million plus potential milestones of up to $515 million, as well as tiered royalties in the low to mid-teen percentages.  Biogen aims to initiate a Phase 2b trial in the second half of 2018.  </p><p>Globally there are over <a href="http://www.who.int/mental_health/management/schizophrenia/en/" target="_blank">21</a>…</p>

On 12 March 2018, Biogen Inc (BIIB US) announced an agreement to acquire Pfizer Inc (PFE US)'s first-in-class, Phase 2b ready AMPA receptor potentiator, PF-04958242, for cognitive impairment associated with schizophrenia (CIAS).   The deal will include an upfront payment of $75 million plus potential milestones of up to $515 million, as well as tiered royalties in the low to mid-teen percentages.  Biogen aims to initiate a Phase 2b trial in the second half of 2018.  Globally there are over 21…

Standing Alone in the Ampakines Pipeline: Biogen Sees Potential in Pfizer's Neuropsychiatry Asset

Japan

Takeda Pharmaceutical Co Ltd focuses on the Research & Development, Manufacturing, Sales and Marketing and Import/Export of Pharmaceutical Drugs. The Company focuses on the following core therapeutic areas: Cardiovascular & Metabolic, Oncology, Central Nervous System, Respiratory & Immunology, General Medicine (Gastrointestinal & Genitourinary) and Vaccine.

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Takeda Pharmaceutical (4502 JP)

Japan Pharma - Drug Price Revision in April 2018

Japan, after the US and China, is the world’s third largest pharma industry, worth ~$70b in 2016. However, according to research and consulting...

Dion Stéfan Büchner M.D., FCAP

Takeda + Shire - Highly Accretive Merger Considering Takeda’s Core Earnings

Announcement – Takeda, on March 28, 2018, confirmed that it is officially considering making an offer for Shire (NASDAQ: SHPG) and that it has time...

Dion Stéfan Büchner M.D., FCAP

Takeda Considers Swallowing Shire, a Somewhat Surprising Move That Could Make Strategic Sense

Japanese pharma firm Takeda Pharmaceutical Co Ltd (4502 JP) said it is officially considering making an offer for diversified rare-disease-focused...

Morningstar, Inc.

Japan Pharmaceutical - Sector Overview

Core coverage – relative valuations Takeda Pharmaceutical Co Ltd (4502 JP) (NB: Pre-Shire announcement | Pro-Forma analysis to be published...

Dion Stéfan Büchner M.D., FCAP

Standing Alone in the Ampakines Pipeline: Biogen Sees Potential in Pfizer's Neuropsychiatry Asset

On 12 March 2018, Biogen Inc (BIIB US) announced an agreement to acquire Pfizer Inc (PFE US)'s first-in-class, Phase 2b ready AMPA receptor...

Winnie Wong

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