Takeda Pharmaceutical Company
Annual Report 2023

Plain-text annual report

20 23 ANNUAL I NTEGRATED REP ORT Fiscal Year ended March 31, 2023 About x i d n e p p A R S C l a b o G l s l a i c n a n i F t e n a l P e l p o e P t n e i t a P e c n a n r e v o G t u o b A 2 2 T A K E D A I S A G L O B A L values-based, research and development (R&D)-driven biopharmaceutical company committed to achieving our corporate purpose: better health for people and a brighter future for the world. We strive to deliver truly transformative treatments, signifcantly increasing the value that we bring to society. 2023 Annual Integrated Report 2023 Annual Integrated Report CE O L ETTER D E A R S T A K E H O L D E R S , policies adopted in some countries in At Takeda, the patients we serve — and achieving outcomes for them and their health — have been at the heart of an efort to alleviate the pressure, raise concerns about the impact on R&D investment and innovation. everything we do for more than 240 years. I believe that health care systems need to Today, with health care systems increasingly urgently move toward value-based health under strain as life expectancies rise, care, an approach that pays for outcome populations age and innovative treatment and care quality and is set up around options expand, our patient-centered delivering results for patients. This is the and outcomes-focused approach is more true purpose of any health care system. relevant than ever. At the same time, we are realistic about the In our 2023 Annual Integrated Report, I’m scale of the challenge and recognize that pleased to share the progress we have a successful transition to a value-based made over the past year to deliver on system in the public market is unlikely in our purpose of better health for people the near-term and would not be sustainable and a brighter future for the world. We without an accompanying increase in are positioning ourselves for long-term government funding. sustainable growth, innovation and resilience while staying rooted in our core values of Integrity, Fairness, Honesty and Perseverance, brought to life through actions based on patient, trust, reputation and business, in that order. Innovating with Patients in Mind Public health care systems built on a fee- for-service model are facing signifcant fnancial and resource strain, and the restrictive drug pricing and reimbursement That is why Takeda’s global growth strategy is centered on the discovery and development of innovative, life- transforming medicines and vaccines that have the potential to be best-in-class or frst-in-class. At the same time, we are building resilience against external risks and making bold investments in data, digital and technology (DD&T) to upskill our people and drive value creation. x i d n e p p A R S C l a b o G l s l a i c n a n i F t e n a l P e l p o e P t n e i t a P e c n a n r e v o G t u o b A 3 3 Christophe Weber President and CEO 2023 Annual Integrated Report Advancing Our Pipeline to Deliver Life- Transforming Treatments to Patients Our innovative R&D strategy is delivering. In 2022, we achieved a signifcant milestone as our dengue vaccine, QDENGA®  (Dengue tetravalent vaccine [live, attenuated]), was approved for use in the European Union (EU). This followed a positive opinion from the European Medicines Agency’s (EMA) Committee for Medicinal Products for Human Use (CHMP), recommending approval in the EU and in dengue-endemic countries participating in the parallel EU- Medicines-for-all (EU-M4all)1 procedure. QDENGA has now also been approved for use in Indonesia, Brazil, Argentina, the U.K. and Thailand, with broad labels, for use regardless of serostatus. Other pipeline highlights include pediatric approval for hereditary angioedema (HAE) prophylaxis TAKHZYRO® (lanadelumab) in the U.S.; continued growth of gut-selective ENTYVIO® (vedolizumab); and approvals of EXKIVITY® (mobocertinib), for non-small cell lung cancer, and LIVTENCITYTM (maribavir), for post-transplant cytomegalovirus infection/disease, in key geographies. Together, these achievements will enable us to serve new patient populations, help prevent serious illness and reduce the treatment burden for many patients. Complementing our in-house R&D engine, we reinforced our long-term growth potential through business development to bring three highly innovative programs into our mid-to-late stage pipeline. We acquired, from Nimbus Therapeutics, a potentially best-in-class oral, selective allosteric tyrosine kinase 2 (TKY2) inhibitor that has possible application across a broad range of diseases, including psoriasis, psoriatic arthritis, infammatory bowel disease (IBD) and systemic lupus erythematosus. This TYK2 inhibitor — now named TAK-279 — has the potential to ofer the convenience of an oral therapy while addressing unmet medical needs. We also signed an exclusive licensing agreement to further develop and commercialize fruquintinib, a potential new treatment for refractory metastatic colorectal cancer, expanding our oncology portfolio. And we signed a licensing agreement to develop a frst-in-class celiac disease therapy with TAK-227. Recognizing the Power of Our People Ultimately, it is our people who drive our success. I continue to be inspired by our approximately 50,000 Takeda employees who live our values every day. Results from our annual global Employee Experience Survey confrm that our employees overwhelmingly understand how their work impacts patients and that they are able to make decisions guided by our values. We are building an exceptional people experience that promotes well-being and performance, embraces fexibility and emphasizes the value of regular face-to- face interactions. We believe that executing this transformation well could be a competitive advantage. I am proud that our people policies and practices have been recognized by the Top Employers Institute, which named Takeda as a Global Top Employer for the sixth consecutive year, one of only 15 companies to achieve this recognition. A Steadfast Focus on the Future of Our Planet Taking care of patients goes beyond developing life-transforming treatments. It's also about being responsible and ethical while protecting our planet. We remain focused on achieving net-zero2 by 2035 for our own value chain and by 2040 across our entire value chain, including our suppliers and customers, in accordance with the Science Based Targets initiative’s (SBTi’s) Corporate Net-Zero Standard. Our initiatives include conserving natural resources and designing our products with sustainability principles in mind. Better Health, Brighter Future This is a very exciting time for Takeda. The continued strengthening of our pipeline is a direct refection of our fnancial discipline and success in deleveraging, driven by our strong free cash fow. In fscal year 2022, we delivered core revenue3 growth at constant exchange rate (CER) of +3.5%, driven by sales of our Growth & Launch Products.4 On a reported basis, revenue was 4,027.5 billion yen (USD 30.3 billion), with a year-over-year increase of +12.8%. And we delivered or exceeded our management guidance for core revenue, core operating proft and core EPS growth at CER. Takeda delivered core operating proft growth of +9.1% at CER and a robust margin of 29.5%. This strong performance was driven by a combination of momentum in our Growth & Launch Products, solid commercial execution across the portfolio and disciplined cost control. We also continued to deliver important cash fow (446.2 billion yen free cash fow in FY2022), allowing us to invest in strategic business development activities and returning value to shareholders, while paying down debt. Our success in rapid deleveraging resulting in net debt to adjusted EBITDA of 2.6x at the end of March 2023. Excluding the upfront cash payment for TAK-279, this ratio would have been 2.3x. We have updated our capital allocation policy as a refection of our deleveraging progress and our new phase of investment for growth and shareholder returns, and in FY2023 we intend to raise the dividend to underscore confdence in our future growth. Looking ahead, I’m confdent that we have the right strategy, values and people capability to deliver our vision of providing life-transforming treatments to patients and our purpose of better health for people and a brighter future for the world. Christophe Weber President and CEO 1 The European Medicines Agency. Medicines for use outside the EU — EU-M4all. July 2020. Retrieved June 2023. 2 Takeda defines carbon neutrality and net-zero emissions in accordance with The Greenhouse Gas Protocol and the SBTi guidelines. SBTi’s Corporate Net-Zero Standard requires companies to reduce GHG emissions by more than 90% and use permanent carbon removal and storage technologies to counterbalance the remaining <10% of residual GHG emissions that cannot otherwise be eliminated. 3 Core revenue, core operating proft, core operating proft margin, core EPS, CER % Change, net debt, adjusted EBITDA, and free cash flow are non-IFRS measures, i.e., measures not calculated and presented in accordance with IFRS. See the fnancial appendix at the end of Takeda's FY2022 investor presentation (available at takeda.com/investors/financial-results) for further information about Takeda’s Non-IFRS Measures and reconciliations to the most directly comparable measures calculated and presented in accordance with IFRS. 4 Please refer to page 49 for definition of Growth and Launch Products. x i d n e p p A R S C l a b o G l s l a i c n a n i F t e n a l P e l p o e P t n e i t a P e c n a n r e v o G t u o b A 4 2023 Annual Integrated Report B E TT ER H EALT H FOR P E OP L E, B R IG HTER F UT U RE F OR TH E WO RLD A M E S S A G E F R O M Takako Ohyabu Chief Global Corporate Affairs and Sustainability Officer x i d n e p p A R S C l a b o G l s l a i c n a n i F t e n a l P e l p o e P t n e i t a P e c n a n r e v o G t u o b A 5 W H I L E M U C H H A S changed since Takeda was established in 1781, our founding philosophy has remained constant: to serve patients with integrity in a way that also benefts society. By doing so, Takeda has expanded its business to become the global values-based, R&D- driven biopharmaceutical company it is today. We are guided by our values, which incorporate Integrity, Fairness, Honesty and Perseverance, with Integrity at the core. Our unwavering values are embedded in Takeda’s global growth strategy and drive our business decisions. We aim to make decisions that put the focus frst on patients, trust and reputation, with the goal of building a sustainable and high- performing business in the long term. A little more than one year ago, I embarked on the journey to operationalize sustainability as an integral part of Takeda’s way of doing business. In this time, I’ve met and listened to many internal and external stakeholders. As I refect on these conversations, I realize how much more we must accomplish to truly fulfll our purpose. Yet these conversations also instilled in me great confdence in the future for three reasons. First, creating a positive impact through our corporate values is in our heritage. This is a unique strength of Takeda. Second, our employees are giving life to these values. Each and every colleague I work with, 2023 Annual Integrated Report x i d n e p p A R S C l a b o G l s l a i c n a n i F t e n a l P e l p o e P t n e i t a P e c n a n r e v o G t u o b A 6 wherever they are in the organization, is a and empowered our people to accelerate leader who makes values-based decisions innovation, enabling us to not only develop and is empowered to do what’s right for patients. (Read more about our values- based culture on page 12.) Last, but not least, our corporate philosophy refects the product, but also to ensure timely supply while fulflling our commitment to our planet. At our Singen manufacturing site, data and digital solutions are further stakeholder expectations, helping to ensure augmenting our ingenuity, and the adoption that sustainability is an integral part of our of new technologies is allowing us to business strategy. This fuels not only our reimagine ways of working that foster business growth but also our resilience. creativity, enabling lifelong learning and (Read more about our sustainability framework on page 14.) employee well-being. I am hopeful that this and other examples Take for example the development and in our report will illustrate how we are introduction of our QDENGA vaccine. anchoring sustainability at the heart of our Dengue fever is among the most common business and underscore my confdence mosquito-borne viral disease worldwide, in our long-term growth and future endangering half of the world’s population. contributions to global health. Climate change has accelerated its spread, especially among under-served communities with limited access to health care. Achieving great things is not without challenge and risk. But we are not afraid of moving forward, constantly asking For more than 70 years, Takeda has focused ourselves how we can make a positive on vaccine development, most recently diference in patients' and people's lives, by being at the forefront of innovation in guided by our values and feedback from developing this potentially life-transforming our stakeholders. As we do, I will continue vaccine, which expands dengue prevention to encourage and support our people, who options for communities in need of make our progress possible. Together, I have protection. We are prioritizing countries no doubt that not only Takeda, but also the with the highest burden of disease and society in which we operate, will continue where barriers to access for vaccines are to grow stronger and more resilient. particularly complex. We have challenged 2023 Annual Integrated Report T H E Q D E N G A S T O R Y TACKL IN G PUB LI C HEA LTH THRE AT S IN A R APIDLY CHAN GING WOR LD D E N G U E   — prevalent in more than 100 countries¹ — has had a signifcant impact on public health for decades. This viral disease often has the greatest impact on the most vulnerable populations with limited access to care, mostly in Asia and Latin America, although it can afect people worldwide. This includes people most likely to struggle with out-of-pocket medical payments who face difculty making ends meet when out of work due to illness. What’s more, dengue is only getting worse as the world gets warmer.2 During the past 20 years, climate change and urbanization have expanded the geographic range of the mosquitoes that transmit this disease and increased the speed of its spread. This has led to an eightfold increase in dengue cases globally.3 Addressing the Burden Through Innovative Research The dengue virus, which has four serotypes, has challenged vaccine development for years. Takeda’s dengue research eforts stretch back more than a decade. Throughout, we have worked to address the complexity of the disease as well as its global prevalence. For example, Takeda’s pivotal trial for its dengue vaccine included populations across eight dengue-endemic countries in Asia and Latin America. O N E O F O U R C O N T R I B U T I O N S to building resilience to the impact of climate change is through cutting-edge R&D to help prevent climate-accelerated diseases such as dengue. (See the Planet section for more information on how we are taking urgent climate action.) x i d n e p p A R S C l a b o G l s l a i c n a n i F t e n a l P e l p o e P t n e i t a P e c n a n r e v o G t u o b A 7 2023 Annual Integrated Report Learn how we are working to reduce our greenhouse gas emissions at our manufacturing sites in the Planet section. cutting-edge anti-counterfeiting technology to help ensure all products that enter the legitimate supply chain are verifable. It also allows us to easily identify counterfeit vaccines, further supporting vaccine confdence and population uptake. To support the goal of providing seamless and equitable supply of vaccines once the vials leave our site, we have invested in creating a local network of in-country distributors. Progressing Toward Global Availability Takeda was invited by the CHMP of the EMA to participate in the frst-ever parallel assessment of a product for use in the EU T A K E D A H A S B E E N helping to prevent serious diseases through vaccine development for more than 70 years through our efforts. In August 2022, Takeda succeeded in Preparing to Meet Global Demand “Through large, diverse trials, we focused vaccine. To augment our expanding internal securing its frst approval for a new dengue vaccine, QDENGA, in Indonesia. QDENGA is the only dengue vaccine approved to help protect people against dengue regardless of previous dengue exposure and without pre-vaccination testing — a previously unmet need in dengue prevention. on demonstrating the favorable safety and efcacy profle of QDENGA and that it can be used and trusted by the communities most in need of protection,” said Derek Wallace, vice president and head of Global Dengue Program. “We also invested in four and a half years of follow- up, in line with World Health Organization recommendations, to demonstrate its long-term impact on symptoms and hospitalizations, as well as safety.” To prepare for the scale up required for the global supply of QDENGA, Takeda and for countries outside the EU. has invested in digital-driven strategies and built two cutting-edge manufacturing facilities at our site in Singen, Germany. Additionally, we are converting an existing building on the site to manufacture the capabilities, we partner with external companies to support global supply as well. In October 2022, the CHMP issued a positive opinion for the EU and dengue- endemic countries that took part in the EU-M4all procedure. In December 2022, the European Commission (EC) approved QDENGA for use in the EU. EC approval will be taken into account by the EU- M4all countries as they consider their own Digital technologies are helping improve product quality and productivity. For regulatory reviews. In 2023, we received approvals in multiple dengue-endemic example, we are working with an academic countries. We believe that these approvals research institute to develop an advanced are just the beginning in our efort to AI system that can detect potential vial provide a new prevention tool to a broad defects with a higher degree of accuracy population and may substantially impact at a faster speed than human inspection the spread of dengue. would allow. We are also leveraging our T H E I M P A C T O F D E N G U E • Dengue is a rapidly spreading mosquito-borne viral disease that poses a risk to half of the world’s population.4 • Nearly 90% of estimated dengue burden is in middle-income countries5 where barriers to care are particularly complex. • Each year, there are an estimated 390 million dengue cases worldwide.6 • Up to 80% of infections are asymptomatic. Symptoms can vary greatly, ranging from mild, undiferentiated fever, to fu-like symptoms and joint and muscle pains. Although uncommon, severe cases can lead to organ impairment and/ or plasma leakage, which may lead to serious complications including death.7 • There are approximately 20,000 to 25,000 deaths globally, mainly among children, due to the virus.8 • Hospital systems can quickly become overwhelmed during dengue outbreaks, which can have repercussions on the care of non-dengue infected patients. x i d n e p p A R S C l a b o G l s l a i c n a n i F t e n a l P e l p o e P t n e i t a P e c n a n r e v o G t u o b A 8 2023 Annual Integrated Report Paving the Way for Broad and Equitable Access We are working with diverse stakeholders, including governments, health care providers and other trusted local and international stakeholders to accelerate access to QDENGA. Together, we are prioritizing countries with the highest burden of dengue — mainly in Latin America and Asia. We are frst launching in private, endemic and travel markets, pricing the vaccine comparable or lower-than-average compared to the price of other innovative vaccines. Our pricing for QDENGA will be determined on a country-by-country basis using factors such as gross domestic product, out-of-pocket health expenditure, national policies covering vaccinations and available health care resources. We will also T H E I N T E R N A T I O N A L S O C I E T Y for Pharmaceutical Engineering recognized the value of our dengue vaccine manufacturing innovations naming Takeda’s Singen factory as its 2022 Facility of the Year Awards Overall Winner. Continuing the Journey The story of QDENGA is step one. To comprehensively mitigate the efects of mosquito-borne diseases, we will continue to collaborate with local partners to help strengthen health systems and supply chains, help create new solutions to reduce mosquito breeding and invest in public health education. support initiatives at the national, provincial “Our eforts to improve public health and and individual levels, including exploring private payer and innovative fnancing reduce the economic burden of dengue on health systems and individuals are just options, as well as value-based contracting. beginning,” said Alberta Di Pasquale, head Over time, our aim is to make the vaccine as accessible as possible through National Immunization Programs, which are government-funded programs that typically provide free vaccination to eligible participants. We are also developing educational materials to help health care providers increase awareness of the benefts of vaccination and investing in digital education tools for consumers such as KnowDengue.com. of Vaccines Medical Afairs, Growth and Emerging Markets Business Unit. “We are committed to serving the most vulnerable communities at risk of dengue through our vaccine and our eforts to support health system strengthening, to help ensure no one is left behind.” 1 World Health Organization. Fact Sheet. Dengue and Severe Dengue. January 2022. Retrieved April 2023. 2 World Health Organization. Fact Sheet. Dengue and Severe Dengue. January 2022. Retrieved August 2022. 3 Trivedi S, Chakravarty A. Neurological Complications of Dengue Fever. Curr Neurol Neurosci Rep. 2022 Aug;22(8):515-529. Retrieved Nov. 11, 2022. 4 World Health Organization. Fact Sheet. Dengue and Severe Dengue. January 2022. Retrieved August 2022. 5 Supplement to Stanaway JD, Shepard DS, Undurraga EA, et al. “The global burden of dengue: an analysis from the Global Burden of Disease Study,” 2013. Lancet Infectious Diseases, Volume 16, Issue 6, pages 712-723, June 2016; http:// dx.doi.org/10.1016/S1473-3099(16)00026-8.; Income Classifcation: World Bank: List of Economies, June 2018. https:// datahelpdesk.worldbank.org/knowledgebase/articles/906519-world-bank-country-and-lending-groups; 2018 World Development Indicators. World Bank. https://databank.worldbank.org/data/reports.aspx?source=2&series=NY.GDP. MKTP.CD&country=#. 6 Trivedi S, Chakravarty A. “Neurological Complications of Dengue Fever.” Curr Neurol Neurosci Rep. 2022 Aug;22(8):515-529. Retrieved Nov. 11, 2022. 7 European Centre for Disease Prevention and Control. Fact Sheet about Dengue. April 2023. 8 European Centre for Disease Prevention and Control. Fact Sheet about Dengue. April 2023. x i d n e p p A R S C l a b o G l s l a i c n a n i F t e n a l P e l p o e P t n e i t a P e c n a n r e v o G t u o b A 9 2023 Annual Integrated Report TA KED A AT A GLANCE F Y 2 0 2 2 G L O B A L R E V E N U E 1 E M P L O Y E E S 14% 15% 21% A P P R O X . $30.3 B I L L I O N 52% 13% A P P R O X . 50 30% T H O U S A N D 12% United States 43% Japan Europe & Canada Growth & Emerging Markets R & D A N D P A R T N E R S H I P S O U R A R E A S O F F O C U S $4.8 billion1, 2 in R&D investments 200+ partnerships to help us bring innovation to patients ~40 new molecular entity clinical stage assets Gastrointestinal and Infammation Rare Diseases Plasma-Derived Therapies Oncology Neuroscience Vaccines 1 Convenience translations have been made at an exchange rate of 1USD = 132.75 JPY. 2 All numbers as of end of June 2023, other than fiscal year 2022 global revenue and R&D investments. x i d n e p p A R S C l a b o G l s l a i c n a n i F t e n a l P e l p o e P t n e i t a P e c n a n r e v o G t u o b A 10 F O U N D E D 1781 O S A K A , J A P A N C O U N T R I E S A N D R E G I O N S ~80 R E S E A R C H S I T E S 3 M A N U F A C T U R I N G S I T E S 25+ G L O B A L H E A D Q U A R T E R S Tokyo J A P A N G L O B A L H U B Cambridge M A S S A C H U S E T T S , U S A 2023 Annual Integrated Report SUS TA INED GROWTH, ENDU RING VA LU ES T A K E D A B E G A N in 1781 selling traditional Japanese and Chinese medicines in a local market in Osaka, guided by the principle of SANPO-YOSHI. It means good for the seller, good for the buyer and good for society. Successive Takeda CEOs have remained true to this principle in both word and action for more than 240 years. They have used their generation’s context and language to link Takeda’s business actions with this business principle: when we serve patients with integrity, we also beneft business and society. Today, Takeda’s corporate philosophy articulates why we exist (our purpose), where we are going (our vision) and how we deliver on our vision (our values). x i d n e p p A R S C l a b o G l s l a i c n a n i F t e n a l P e l p o e P t n e i t a P e c n a n r e v o G t u o b A 11 O U R C O R P O R A T E P H I L O S O P H Y P U R P O S E Better health for people, brighter future for the world. V I S I O N Discover and deliver life-transforming treatments, guided by our commitment to patients, our people and the planet. VA L U E S We are guided by our values of Takeda- ism, which incorporate Integrity, Fairness, Honesty and Perseverance, with Integrity at the core. They are brought to life through actions based on Patient-Trust- Reputation-Business, in that order. 2023 Annual Integrated Report FOSTER ING A VALU ES-BASED CULTURE A T T A K E D A , we describe ourselves as having a “values-based” culture. This • Global Induction Forum, which is hosted twice a year by our CEO with members • Takeda Values Ambassadors, who through various internal mechanisms, work with our ethics and compliance including the Takeda Ethics Line. In fscal means that in addition to complying with of the Takeda Executive Team, ofers new ofcers to help our employees bring year 2022, we launched a refreshed all applicable laws and regulations, it is senior leaders around the world a unique our values to life. To date, more than speak-up campaign to empower our essential for us to make decisions and take opportunity to learn about Takeda’s rich 1,000 Takeda people in more than 60 people by raising awareness of why, actions that are purposeful and meet the highest ethical and moral standards at all times. We re-enforce our values to shape our culture through various mechanisms heritage, values and vision. In keeping countries have volunteered or been when and how to voice a concern and with our patient focus, leaders at the nominated to serve as role models for how to respond when someone speaks latest Forum had an opportunity to meet Takeda’s values. Their colleagues can up. The campaign went beyond simply with a patient virtually and took deep turn to them with concerns or questions. voicing concerns, to encourage speaking and learning programs, from new employee dives into our strategy, global business, Coming together as a global community, up for our values and creating a culture orientation to practical, ethical decision- values-based decision-making and Values Ambassadors share ideas and of psychological safety more broadly. making tools and beyond. Examples include: leadership behaviors. • Code of Conduct, which encourages • Values Journey Curriculum, which lays experiences through internal social media tools, meetings and global events. personal accountability of our people out global expectations for all employees, through a principles-based approach, helping move them along a journey from • Takeda’s speak-up culture initiatives and campaigns aim to create a safe place guiding their actions under a wide range basic awareness of our values when they for employees to raise concerns about of circumstances. It empowers us to confdently make decisions that are consistent with our values and helps join, to understanding what our values mean, to practical application so they can potential misconduct and any actions that are not aligned with our values, confdently apply these values every day while also ofering protection against ensure our commitment to maintaining and become role models for others. retaliation. Concerns can be raised the highest ethical standards at all times. x i d n e p p A R S C l a b o G l s l a i c n a n i F t e n a l P e l p o e P t n e i t a P e c n a n r e v o G t u o b A 12 2023 Annual Integrated Report x i d n e p p A R S C l a b o G l s l a i c n a n i F t e n a l P e l p o e P t n e i t a P e c n a n r e v o G t u o b A 13 OUR VAL UES IN AC TION D A T A , D I G I T A L A N D T E C H N O L O G Y continue to drive innovation and breakthrough discoveries commercial and patient services teams as they develop and utilize health data and AI in their products and services. Additionally, in health care. As they do, we continue to as the use of advanced analytics and AI lead through our values-based approach to continues to accelerate, the TRUST team help ensure we remain true to the highest partnered with our Cyber Digital Trust standards of ethics and integrity. One way team to issue guidance on the use of large is through Takeda’s Responsible Use of language models such as ChatGPT. Science and Technology (TRUST) team. The TRUST team translates bioethics and In 2022, the Notre Dame-IBM Technology Ethics Lab selected a proposal from the technological ethics into our responsible TRUST team that addresses the need for innovation approach, which guides the day- auditing methodologies for AI within the to-day activities of each employee. Through an enterprise-wide hack-a-thon,1 the team developed employee-owned foundational principles and various learning resources that employees can use. In 2022, together with the Takeda Ethics Advisory Council, the TRUST team created and published Takeda’s Position Papers on Data Sharing and Reuse of Health Data and the Use of Artificial Intelligence (AI). These principles provide foundational guidance to R&D, life sciences sector. With this research award, Takeda will leverage its expertise to design an end-to-end AI audit process for our business and the broader life sciences industry.2 Additionally, within our governance structure, we have integrated our Global Privacy Ofce into our Global Ethics & Compliance organization to responsibly accelerate Takeda’s digital ambition. 1 Hack-a-thon is an event in which people gather and solve a problem in a collaborative and rapid way. 2 Takeda elected not to receive a monetary award. 2023 Annual Integrated Report SUS TA INABILITY FR AMEWORK AND ME TRICS I N F O R M E D B Y an ESG materiality assessment of nonfnancial issues strategically important to our company and stakeholders, we developed our corporate philosophy imperatives (Patient, People and Planet), which identify where Takeda must invest to deliver on our vision and purpose. In fscal year 2022, we engaged with external stakeholders, including investors, on our imperatives. Based on the feedback, we evolved them to create a simplifed framework and sustainability focus areas. We measure our progress toward our corporate philosophy imperatives and sustainability focus areas through our corporate philosophy metrics. We developed these metrics with employees from across the company in a bottom-up approach and provide employees with frequent progress updates in our internal metrics dashboard. By doing so, we are creating ownership among all employees in all parts of our operations. These metrics also help hold us accountable for delivering sustainable growth and building trust with our external stakeholders. O U R S U S T A I N A B I L I T Y F R A M E W O R K P A T I E N T Translates science to discover and deliver life-transforming treatments and vaccines for patients and communities with limited or no options. P E O P L E Attract and develop highly skilled talent and invest in creating a diverse, equitable and inclusive workplace that supports our staf s well-being. ’ ’ P L A N E T As global warming and pollution increasingly impact human health, we remain committed to environmental leadership. Y G O L O N H C E T D N A L A T I G I D , A T A D N O I T A V O N N I R U O S E L B A N E • Deliver innovative life-transforming medicines and vaccines • Provide health benefts that are valued by patients and society • Accelerate global, equitable access to medicines and vaccines • Develop talent and invest in lifelong learning • Advance diversity, equity and inclusion • Create a culture of well-being • Achieve net-zero ambition • Conserve natural resources • Design with sustainability in mind H T W O R G S S E N I S U B D E N I A T S U S x i d n e p p A R S C l a b o G l s l a i c n a n i F t e n a l P e l p o e P t n e i t a P e c n a n r e v o G t u o b A 14 2023 Annual Integrated Report I M P E R A T I V E S M E T R I C S W H Y I T M A T T E R S R E S U LT S C O R P O R A T E P H I L O S O P H Y M E T R I C S 1 P A T I E N T Achieving Pipeline Milestones # of pivotal study starts and approvals Disclosing Clinical Trial Results % of achievement for timely disclosure of clinical trial summary results on public registries Maintaining Uninterrupted Supply % of order lines dispatched on-time-in-full Upholding Manufacturing Quality # of health authority inspections without critical observations Global Access to Growth & Launch Products2 # of key countries where patients have access to the product through reimbursement Access to Medicines Programs in Low- and Middle- Income Countries and Evolving Healthcare Systems # of newly enrolled patients in Takeda’s afordability-based PAPs Engaging Employees % of favorable responses to questions regarding engagement in the Annual Employee Experience Survey Upskilling Employees in Progressive Technologies Cumulative % of employees who have taken at least one data, digital and technology training course since the frst quarter of FY2020 P E O P L E Improving Employee Well-being % of favorable responses to questions regarding well-being in the Annual Employee Experience Survey Embracing DE&I (Gender Representation) Enterprise-wide gender breakdown Reducing Scope 1 & 2 GHG Emissions % reduction in Scope 1 & 2 GHG emissions Engaging Suppliers towards Scope 3 GHG Reduction % of Takeda’s Scope 3 GHG emissions that are from suppliers who have committed to setting science-based GHG reduction goals, aligning with SBTi standards Diverting Waste from Landfill % of waste diverted from landflls P L A N E T Conserving Freshwater % reduction in freshwater withdrawal Pivotal clinical studies generate the data that the regulatory authorities use to decide whether or not to approve a treatment or vaccine. The initiation of these studies, together with the number of approvals, demonstrates our progress on delivering innovative life-transforming medicines and vaccines. Timely sharing of clinical trial information ofers clinical research transparency that will spur scientifc innovation, improve medical care and build public trust. Our disclosures include results from interventional phase 1 - 4 clinical trials. Uninterrupted supply of our treatments is essential to achieve our purpose. In order to track our supply and quality performance, we track on-time and full delivery of products, as well as successful Health Authority Good Manufacturing Practice (GMP) inspections. Delivering life-transforming treatments and vaccines requires more than developing medical breakthrough treatments and ensuring a safe and uninterrupted supply. To achieve our purpose, we must make our innovation broadly accessible to those who need it most. This is why we partner with local governments and organizations to register our products in multiple countries and secure sustainable access as soon as possible. In addition, our afordability-based Patient Assistance Programs (PAPs) provide fnancial support for eligible patients who otherwise would be unable to aford treatment. These programs are based on individual means testing criteria and medical eligibility. Engagement rate refects employees’ motivation for work and their commitment to high performance. By empowering life-work alignment for our people, we are enhancing well-being, building a foundation for meaningful work and high engagement, as well as ensuring our people feel their best so they aspire to learn and grow more each day. By building our employees’ skills in data, digital and technology, we can speed innovation and improve outcomes for patients and society. We also measure our progress on DE&I, starting with focusing on enterprise-wide gender representation. The predicted impacts of severe climate change scenarios present a threat to global public health and business operations. Takeda takes this threat seriously and has committed to achieving net- zero greenhouse gas (GHG) emissions in our own operations (scopes 1 and 2) before 2035 and across our entire value chain before 2040. Accelerating our eforts to achieve this goal, we are working closely with our suppliers to secure science-based GHG emissions reduction goals from suppliers representing 67% of our Scope 3 emissions [Categories 1, 2 and 4] by December 2024. As a science-driven company, Takeda recognizes that preserving natural resources and promoting biodiversity are critically important to the environment, for human health, and the economy. Mankind depends on healthy ecosystems to provide the air we breathe, the food we eat, the water we drink, and the medicines on which we rely. We measure our progress on two aspects which have signifcant impact on human well-being: committing to achieve zero waste-to-landfll status for all major locations by 2030 and committing to reduce our freshwater withdrawal by 5% while growing our business by 2025. Making Paper and Paperboard Packaging from Sustainable Forest Certified or Recycled Content3 % of the company’s secondary and tertiary packaging paper/ paperboard by weight that is recycled content or sustainable forest certifed One of the primary materials used in our packaging is paper and paperboard related products. Using certifed, sustainable and recycled packaging helps to preserve natural resources and contribute to resource circularity. We measure our progress by committing to having 50% of our secondary and tertiary paper and paperboard product packaging by weight to be either recycled content or sustainable forest certifed by 2025. 18 100% 99.3% 100% ALUNBRIG 9 TAKHZYRO 9 4 ALOFISEL 2 EXKIVITY LIVTENCITY 2 1,366 82% 37% 70% 48.0% (Male) 51.8% (Female) 0.2% (Other / Non-binary) 34% 45% 78% 7.9% 42% B U S I N E S S Global Growth Products + New Product Incremental Core Revenue % of year-over-year core revenue growth in global growth products + new product vs target Both are indicators of strong business success and potential revenue growth: Global Growth Products + New Product are the key driver of future revenue growth, key indicator of driving pipeline growth and commercial revenue success. 96.1% 1 Unless otherwise indicated, our corporate philosophy metrics have been assured by KPMG AZSA Sustainability Co., Ltd. (KPMG). Details on assurance methodology are available on our website. 2 This metric is not assured by KPMG, and details of background, definition and calculation method are available here. 3 The reporting period for this metric is the fiscal year 2021. The data collection process for fiscal year 2022 will be concluded in fall of 2023 and the metric will be reported in the following year. x i d n e p p A R S C l a b o G l s l a i c n a n i F t e n a l P e l p o e P t n e i t a P e c n a n r e v o G t u o b A 15 2023 Annual Integrated Report x i d n e p p A R S C l a b o G l s l a i c n a n i F t e n a l P e l p o e P t n e i t a P e c n a n r e v o G t u o b A 16 VAL U E S - B A S E D GOVE RNANCE W E U N D E R S TA N D our responsibility to always meet the highest standards of ethical behavior, because our business impacts the most vital aspect of people’s lives — their health. Our governance sets the foundation for us to make better decisions, living our values at every level, in every country in which we operate. 2023 Annual Integrated Report x i d n e p p A R S C l a b o G l s l a i c n a n i F t e n a l P e l p o e P t n e i t a P e c n a n r e v o G t u o b A 17 17 OUR LEADERSHIP O U R L E A D E R S H I P , comprised of our Board of Directors (Board) and the Takeda Executive Team (TET), is accountable to our stakeholders and responsible for Takeda’s sustained business growth by delivering our commitments to patients, people and the planet. As a global values-based, R&D-driven biopharmaceutical company, we are built to operate on a worldwide scale with robust and transparent corporate governance. Board of Directors The primary function of the Board is to provide oversight to ensure we execute a sound strategy, monitor and address risks, and instill efective governance for Takeda to create long-term value for its stakeholders. It discusses and makes decisions on strategic matters regarding company management, mid- to long-term strategies and management policies. Composition of the Board As of June 28, 2023, the Board has 15 directors with diverse global experiences. Miki Tsusaka joined the Board as an independent director also on the same day, bringing the total number of independent external directors, including the Chair of the Board Meeting, to 12. For more information on our executive leadership, visit our website. The Board is comprised of directors who have the knowledge, experience and capability needed for leading and overseeing the company’s management on a global scale. In nominating candidates for director roles, the Board considers diverse criteria, including gender, age, work experience, race, ethnicity and cultural background. Current Board members represent a broad array of skills in areas such as global business and strategy; science and medicine; legal, regulation and public policy; corporate governance and sustainability; fnance and accounting; health care industry; data and digital; and management, leadership and human capital. See our Board skills matrix. 2023 Annual Integrated Report CORP OR ATE GO VERN ANCE STR UCTURE T E T includes 16 members diverse in nationality (nine countries), age (30s-60s) and gender (10 men and six women). Women make up more than 37% of the TET. As of June 28, 2023. Committees Takeda is a “Company with an Audit and Director and Executive Compensation Supervisory Committee” as stipulated in the Takeda’s director compensation is Japanese Company Act. Takeda voluntarily designed to attract, retain and motivate establishes Nomination and Compensation managerial talent to realize our vision, Committees as advisory committees of the Board. Each committee consists entirely of enhance corporate value by optimizing the company’s mid- and long-term independent external directors, including performance, and support a strong the committee chairpersons, which ensures independence and objectivity of the committee. alignment with shareholders. Please refer to our Directors’ Compensation Policy for further details. We disclose charters including the Board of Directors Charter and committee Charters on our website. Takeda’s executive compensation structure refects our position as a patient- focused, values-based, R&D-driven biopharmaceutical company. Our executive compensation programs are designed to be globally competitive and performance- oriented, while also considering local market factors. We closely link pay with performance and long-term shareholder value creation, while minimizing excessive risk-taking. Please refer to Takeda’s Executive Compensation Overview for further details. x i d n e p p A R S C l a b o G l s l a i c n a n i F t e n a l P e l p o e P t n e i t a P e c n a n r e v o G t u o b A 18 2023 Annual Integrated Report Nomination Committee: Examines the Board diversity and the skills of directors, the criteria and process for Board members’ appointment/reappointment, succession plans and its implementation status. Compensation Committee: Examines the Director’s Compensation Policy and the appropriateness of each director’s compensation and bonus amount based on performance results and evaluation. In addition, to ensure the objectivity and transparency of compensation determinations, the Compensation Committee decides the amount of compensation for individual internal directors. M A N A G E M E N T S T R U C T U R E Shareholders’ Meeting A D V I S O R Y C O M M I T T E E Nomination Committee Compensation Committee Board of Directors Audit and Supervisory Committee T A K E D A E X E C U T I V E T E A M Business and Sustainability Committee Portfolio Review Committee Risk, Ethics and Compliance Committee Global Portfolio Division & Business Units/Business Functions/Business Partners Audit and Supervisory Committee: Ensures its independence and efectiveness in line with the Audit and Supervisory Committee Charter. This committee conducts audits of directors’ performance of duties and performs any other duties stipulated in applicable laws and regulations and the Articles of Incorporation, including supervision of the integrity of the company’s fnancial reporting and risk management system. Takeda Executive Team: Consists of the President and CEO and function heads, to ensure the agility of business execution. The Board delegates several responsibilities for decision-making to certain directors, carried out through three management committees consisting mainly of TET members including the directors. See more in Takeda’s Corporate Governance Report. For more information on our executive leadership, visit our website. x i d n e p p A R S C l a b o G l s l a i c n a n i F t e n a l P e l p o e P t n e i t a P e c n a n r e v o G t u o b A 19 2023 Annual Integrated Report x i d n e p p A R S C l a b o G l s l a i c n a n i F t e n a l P e l p o e P t n e i t a P e c n a n r e v o G t u o b A 20 ETHICAL GOV ERNANCE Enterprise Risk Management (ERM) Risk management helps protect the company’s people, assets and reputation while supporting Takeda’s long-term strategy for growth and success. The overall ERM process is the responsibility of the Chief Ethics & Compliance Ofcer, with oversight from the Board of Directors. We incorporate our values into our risk Human Rights management methodology. It identifes and assesses the company’s risks, mapped against our Patient-Trust-Reputation- Business impact scale and fve-year likelihood scale, to create an enterprise risk heatmap. Taxation We are committed to respecting and promoting internationally recognized human rights within every aspect of our business, across our supply chain and in the communities where we operate. We expect the same from suppliers and third parties operating on our behalf. We do this in accordance with the United Principal enterprise risks and their Takeda is committed to responsible Nations Guiding Principles on Business mitigation efectiveness are approved by corporate citizenship; we comply with and Human Rights, the International the Risk, Ethics and Compliance Committee the tax laws in the jurisdictions in which Bill of Human Rights, comprised of the (RECC) and Board of Directors on an we do business, and we engage in open Universal Declaration of Human Rights, annual basis. In addition to the continuous day-to-day assessment and mitigation of risk, which we expect from all our leaders, we also conduct an annual enterprise risk assessment process. It is designed to generate a holistic view of risks for the company and drive a culture of risk-based decision-making. Each relevant functional area within the business is responsible for managing its key risks and responses to them. and transparent dialogue with relevant tax authorities. As stated in our Position on Taxation, Takeda supports the Organization for Economic Co-operation the International Covenants on Civil and Political Rights, and Economic, Social and Cultural Rights, and the International Labour Organization Core Labor and Development’s Base Erosion and Proft Conventions. Shifting initiative concerning international tax reform and opposes the use of artifcial tax arrangements that do not have sufcient business or economic substance. Our values provide a foundation for policies and governance, which support our compliance with tax laws and regulations where we operate and require us to identify and mitigate material tax risks. In fscal year 2021, we conducted a human rights impact assessment in which we identifed our most salient human rights impacts. Our eforts to address them are referenced throughout this report. F O R M O R E I N F O R M A T I O N on Ethical Governance, visit our website. 2023 Annual Integrated Report x i d n e p p A R S C l a b o G l s l a i c n a n i F t e n a l P e l p o e P t n e i t a P e c n a n r e v o G t u o b A 21 21 C O M M I T M E N T T O T H E PATIE NT W E B E L I E V E in responsible innovation for all. We deliver this through our life-transforming medicines and vaccines that provide real-world health benefts and measurable value to patients and society while increasing availability of our innovative products to people around the world through our global presence and commitment to access. 2023 Annual Integrated Report 2023 Annual Integrated Report PUTTING PATIENT S FIRST the materials and active pharmaceutical ingredients required to manufacture our products. We also consider geopolitical risks in our sourcing approach. Takeda implements robust strategies to facilitate access and supports policies that foster value-based health care that can help deliver greater benefts to patients and society. We advocate for creating ecosystems that bolster equitable patient W E A R E P U S H I N G boundaries to accelerate access to health care for access to treatments and reward medical innovation fairly, based on proven clinical patients worldwide. and societal value. We are developing and advancing our pipeline through expert R&D capabilities within our laboratories and external As a part of our strategy to provide timely and broad access to our products worldwide, including in underserved communities with partnerships. We also collaborate with evolving health systems, we follow a tiered patient communities to address health pricing approach. This helps us ensure that equity and access challenges. We recognize that delivering life- transforming medicines and vaccines with valued health benefts requires more than breakthrough innovation. No treatment or vaccine can reach those in need without trained and motivated health workers, well- maintained technology and infrastructure, local prices are based on a country’s specifc level of economic development and the maturity of its health system. (Read more about our pricing approach in the QDENGA story on page 7.) We also ofer patient assistance programs to provide medicines to patients who may be unable to aford the treatments they need. a reliable supply chain and policies that Delivering on our ambition to facilitate support sustainable and equitable access. access requires a holistic and collaborative We also build resiliency into our global supply chain to support the goal of uninterrupted supply of our products. Among our strategies, Takeda implements a dual-source/multi-source approach for approach. Together with Duke University, we have developed an Access to Health Framework Guidebook that enables collective measurement and action through continuous feedback and engagement. W H I L E O U R P R O D U C T S A R E G L O B A L , we act locally. Our employees, guided by our values, are empowered to work with local communities to deliver tailored solutions that provide timely access to our treatments. x i d n e p p A R S C l a b o G l s l a i c n a n i F t e n a l P e l p o e P t n e i t a P e c n a n r e v o G t u o b A 222222 2023 Annual Integrated Report x i d n e p p A R S C l a b o G l s l a i c n a n i F t e n a l P e l p o e P t n e i t a P e c n a n r e v o G t u o b A S P O T L I G H T DEL IVE RING VALUE VEI N -TO-VEIN WITH OU R PLASMA-DERIVE D THER APIES P L A S M A - D E R I V E D therapies (PDTs) are critical life-transforming medicines that people with rare and complex chronic diseases around the world In fscal year 2022, we continued to make progress toward this goal. We reported positive data from our Phase III clinical trial for HYQVIA® (Immunoglobulin (IG) Infusion rely on every day. For many, these therapies 10% (Human) with Recombinant Human represent their only efective treatment option.1 Today, Takeda supplies more than 20 plasma medicines to patients in more than 80 countries and regions. While we currently ofer one of the broadest portfolios of PDTs, we aim to do much more — for the patients we serve today and for those who can beneft from our therapies in the future. Core to our approach is applying patient and caregiver insights and novel technologies to bring forward next- generation products, new formulations, new indications and new solutions that can ease the burden of disease and treatment. Hyaluronidase) in chronic infammatory demyelinating polyneuropathy, a debilitating neurological disorder that targets the body’s nerves, and submitted applications for registration in the U.S. and EU. HYQVIA is the only immunoglobulin therapy that can be administered subcutaneously at home every three to four weeks. We also continued to advance the next generation of PDTs by in-licensing an investigational hyper-sialylated immunoglobulin TAK-441, which has the potential to signifcantly reduce the volume of medicine required to treat autoimmune indications. 23 23 1 Wasserman R, et al. Immunotherapy 2017; 9(12):1035–1050. M A I N T A I N I N G C O N T I N U I T Y O F P A T I E N T S U P P LY When the supply of our PDTs is constrained, we follow our values, prioritizing patients already on therapy who require continuity of care. We do this ahead of pursuing new business opportunities. We have met every planned commitment to patients on our plasma therapies throughout and since the pandemic despite signifcant impact on plasma donations. See the Planet section to learn how we are using fewer resources to produce more PDTs. 2023 Annual Integrated Report Helping Ensure Global, Continuous and Equitable Access PDTs are not just among the most vital therapies, but also the most difcult and costly in the world to produce. They can only be made with human plasma. Through a dual focus on expansion and transformation of our operations, we are working to improve our ability to sustainably deliver our growing portfolio of plasma medicines and integrated care solutions to more patients. In 2019, we set a target of increasing our plasma supply and manufacturing capacity by more than 65% by the end of fscal year 2023. Through investments, agility and industry-leading operational resilience throughout the COVID-19 pandemic, we met this goal one year we use AI tools to optimize stafng and early. Our commitment to long-term sustainable growth in an area of high unmet maximize appointment scheduling to help ensure every donor can be attended to patient need continues. We’ve also begun construction of a $300 million brownfeld1 manufacturing site in Belgium. Additionally, we are planning a new global plasma manufacturing facility in Japan, expected to be operational by 2030. promptly upon arrival. This eliminates the need for waiting rooms and better uses available space. “Transformation across our entire end-to- end operations is making us bigger, better and faster — good news for donors, patients We are also driving transformational and our business,” said Rob de With, head changes through data, digital and of Strategy & Program Execution, Plasma- technological disruption. Use of data plays Derived Therapies Business Unit. “And our a key role in attracting more plasma donors patient-led innovation means therapies and helping ensure they have the best are just the beginning. Our aspiration is to possible donation experience across our leverage cutting-edge technology to create 230+ BioLife donation centers. Our goal is a fully integrated ecosystem of support to increase the number of plasma donors that helps patients manage all aspects of who walk through our doors and encourage their disease throughout their lives.” them to donate regularly. For example, P R O D U C I N G P L A S M A - D E R I V E D T H E R A P I E S Donor and plasma screening, virus inactivation and removal and testing are crucial steps in the overall production process that can take up to 12 months1, 2 Plasma collection Plasma collection 30 to 60-day holding period required for testing 30- to 60-day holding period required for testing Fractionation Purifcation Fractionation Purifcation Filling Filling Start 3 months 3 months 6 months 6 months 9 months 9 months Packaging and distribution Packaging, Quality Release and Distribution Administration Administration 12 months 12 months x i d n e p p A R S C l a b o G l s l a i c n a n i F t e n a l P e l p o e P t n e i t a P e c n a n r e v o G t u o b A 1 A brownfeld is a property, the expansion, redevelopment, or reuse of which may be complicated by the presence or potential presence of a hazardous substance, pollutant or contaminant. 24 2 PPTA. Uniquely Saving Lives. January 2020. 2023 Annual Integrated Report x i d n e p p A R S C l a b o G l s l a i c n a n i F t e n a l P e l p o e P t n e i t a P e c n a n r e v o G t u o b A 25 25 DELIVE RING INNOVATIVE LIFE -TR ANSFORMING MEDICINES AND VACCINES O U R R E S E A R C H E R S translate science into life-transforming medicines Developing Potential Treatment for a Devastating Diagnosis and vaccines for people around the world facing serious, debilitating diseases. In addition to our own research, we collaborate with world-class partners to advance cutting-edge science wherever it originates, helping us build a modality- diverse and innovative pipeline. O U R P I P E L I N E C O N T A I N S approximately 40 new molecular entities, many with the potential to become life-transforming treatments in the next decade. You can learn more about our pipeline here. Congenital thrombotic thrombocytopenic purpura (cTTP) is an ultra-rare sub-type of thrombotic thrombocytopenic purpura (TTP), a rare, chronic and debilitating blood clotting disorder caused by a defciency in an enzyme known as ADAMTS13 protease.1 TTP can lead to life-threatening conditions, including acute episodes characterized by a reduction in platelets, hemolytic anemia and ischemic organ damage. The current standard of care for cTTP does not always fully address the condition and for many, health outcomes remain sub-optimal. 1 ADAMTS13 is a constitutively active enzyme that catalyses the breakdown of a large protein involved in blood clotting into smaller multimers, reducing their thrombogenic potential. 2023 Annual Integrated Report We are working to change this with TAK-755 (apadamtase alfa/cinaxadamtase alf),1 the frst and only recombinant ADAMTS13 replacement investigational therapy targeting the underlying cause of TTP. Results from a pre-planned interim analysis of a pivotal Phase III study support the efcacy and safety of TAK-755 as a treatment for cTTP. If approved, it has the potential to transform TTP treatment. Recognizing the potential TAK-755 could have on patient health, the U.S. Food and Drug Administration (FDA) has granted the investigational molecule both Orphan Drug and Fast Track Designation for the treatment and prevention of TTP including its congenital, acquired idiopathic and secondary forms. “The development of recombinant ADAMTS13 (TAK-755) will likely have immediate and long-term benefits for patients. The increased ease of administration, paired with the ability to achieve sustained improvements in the ADAMTS13 activity, also has the potential to treat and prevent numerous long-term vascular complications of TTP that we are just now beginning to recognize.” — D R . S P E R O C A T A L A N D Director of Benign Hematology at the Ohio State University Comprehensive Cancer Center and an expert in the management of TTP x i d n e p p A R S C l a b o G l s l a i c n a n i F t e n a l P e l p o e P t n e i t a P e c n a n r e v o G t u o b A 1 TAK-755 has not been approved for the use or indications under investigation in clinical trials and there is no guarantee it will be approved for such use or indication. 26 2023 Annual Integrated Report PRO VID ING HE A LT H BEN EFITS VA LUE D B Y PATIENTS AND SOCIE TY H E A LT H C A R E S Y S T E M S face increasingly limited and fxed budgets for the purchase of health care treatments and services, while demand is ever increasing. This requires that we demonstrate the value of our medicines in new and innovative ways. Outcomes that Matter For patients living with the rare and potentially life-threatening genetic condition known as hereditary angioedema (HAE), life can often be difcult. HAE causes recurrent attacks of severe swelling in various parts of the body. If untreated, We work early, before product attacks can last for three days, and can authorization, with patient organizations, occur multiple times a month. When they payers and other stakeholders to determine do, they often interrupt work, caregiving what meaningful and measurable value and school. looks like to them. Together, we identify current gaps and opportunities for improved outcomes in terms of care, budget or system efciencies. We then develop metrics to measure the outcome — or “value” — that our products deliver when the right patient is treated at the right TAKHZYRO helps patients better manage HAE and prevents attacks. As the frst approved monoclonal antibody to treat patients with types I and II HAE, it marks a signifcant advance over the existing standard of care. time. Value-based payments based on the To achieve broader and more timely access achievement of these metrics form the basis to this innovative and efective treatment, of what we call value-based health care. we designed a scalable framework of value-based contracting, which can be used in multiple health delivery systems around the world. The framework allows us to engage with local stakeholders to address uncertainties and create shared understanding around value at a local level. For example, based on local factors, some countries may fnd increasing access to new patient segments most meaningful. Others may value data showing that a high percentage of patients can maintain efcacy even at less-frequent dosing after the frst six months of treatment. Using a value-based approach, Takeda has achieved broad access for TAKHZYRO in 29 countries in just over three years post-launch. Learn more about why Takeda believes health systems must shift away from the traditional fee-for- service approach toward a value-based health care model: Value-based Health Care Position Statement. T R A N S F O R M I N G H E A L T H S Y S T E M S Takeda is working to accelerate change through the World Economic Forum’s Global Coalition for Value in Healthcare. In January 2023, the Coalition launched its latest report, “The Moment of Truth for Healthcare Spending: How Payment Models Can Transform Healthcare Systems.” Takeda contributed to the publication highlighting outcomes that matter for patients living with HAE and the Health Outcomes Observatory (H2O). We co-founded H2O, a public-private consortium across the EU, which is striving to improve the quality and sustainability of care based on outcomes data provided by patients. Learn more in our 2022 Annual Integrated Report, page 33. x i d n e p p A R S C l a b o G l s l a i c n a n i F t e n a l P e l p o e P t n e i t a P e c n a n r e v o G t u o b A 27 2023 Annual Integrated Report ACC ELERAT ING GLOB AL, EQUITAB LE ACC ES S A L L P E O P L E should have access to quality health care. However, this is not the case for many. While the underlying factors that lead to this reality are complex, deep- rooted and difer by region, we believe that by partnering with diverse stakeholders we can help address barriers to access and strengthen health systems globally. F O R M O R E I N F O R M A T I O N , see our position on health equity. A W O R L D W I T H Z E R O H E A L T H G A P S We were among the first of 39 companies to sign the Global Health Equity Network Zero Health Gaps Pledge at the 2023 World Economic Forum Annual Meeting. To help ensure everyone has a fair and just opportunity to be as healthy as possible, Takeda’s Center for Health Equity and Patient Affairs works with our global network of teams and partners to embed health equity principles into every aspect of our business. It also builds trust with local partners, allowing us to better understand the underlying causes of health inequities and how we can co-create solutions with communities to drive sustainable change. x i d n e p p A R S C l a b o G l s l a i c n a n i F t e n a l P e l p o e P t n e i t a P e c n a n r e v o G t u o b A 28 28 2023 Annual Integrated Report x i d n e p p A R S C l a b o G l s l a i c n a n i F t e n a l P e l p o e P t n e i t a P e c n a n r e v o G t u o b A Advocating for Equitable Access part of an advisory committee at the Czech A rare disease is one that afects less than 1 in 2,000 people,1 yet, around the world, more than 300 million patients, families, friends and caregivers are impacted by one.2 A common hurdle for these patients and families is the lengthy diagnostic journey and lack of reimbursement for medicines to treat many rare diseases. In the Czech Republic, we supported local patient advocacy groups and professional societies to help raise awareness of these challenges through roundtables, whitepapers and educational events. This, along with the eforts of others, contributed to the passage of legislation that took efect in 2022 providing a pathway for reimbursement of medicines for rare diseases. In addition, patient advocacy groups now have a seat at the table for reimbursement decisions as Ministry of Health. In Japan, we are working with patient advocacy groups, medical organizations and our sector peers to drive discussion around regional disparities in access to genomic medicines to treat cancer. In fscal year 2022, we jointly published a discussion paper Towards the Tomorrow of Cancer Genomic Medicine (Japanese only), which shines a light on the disparities and possible solutions. In addition, we collaborated with the Health and Global Policy Institute to issue a policy proposal3 to integrate personalized cancer medicine into the medical system. In fscal year 2023, we will continue to bring stakeholders together as well as support the collection and analysis of real-world data to help develop a pathway for patient-oriented equitable cancer care in Japan. B U I L D I N G C O M M U N I T Y - L E V E L P A R T N E R S H I P S Since 2017, Takeda has worked with Seeding Labs, a non-profit that supports scientists in developing countries. By sharing knowledge, clinical expertise and medical and scientific equipment, we are helping advance the diagnostic and clinical trials capabilities of community-based research institutions. Together, we have facilitated the donation of more than 2,000 pieces of equipment from Takeda labs and supported training at 98 institutions in 39 countries. One of these is the Universidad Iberoamericana (UNIBE) in the Dominican Republic. With Takeda and Seeding Labs’ support, UNIBE established the Institute of Tropical Medicine and Global Health and UNIBE Diagnostic Center. The frst-of-its-kind in the country, the center has trained nearly 30 lab personnel in molecular testing techniques and more than 100 health community workers on disease education and diagnosis from April 2020 through December 2021. As of the end of fscal year 2022, it performed approximately 55,000 diagnostic tests in a community that previously had limited access to such services. “It has been an incredible partnership,” said Dr. Robert Paulino-Ramirez, principal investigator at the institute. “With the resources we now have, we are able to address health inequities in the Dominican Republic and help reduce barriers to scientific discovery and delivery.” 1 EURODIS. Press Release. 21 Member States endorse Czech EU Presidency’s Call to Action on rare diseases at EPSCO Council Meeting.” December 2022. “ 2 EURODIS. Rare Disease Day 2022: Information Pack. 3 Source: Health and Global Policy Institute. 29 2023 Annual Integrated Report Supporting Patients Throughout Their Lives Once diagnosed through testing, patients face similar challenges paying for Providing patients with equitable access to health care is not a one-step process but requires ongoing support, from awareness and diagnosis to treatment and sustained care. This is especially true for patients facing the threat of cancer in under- resourced settings. In the Philippines, we work closely with the Philippine Cancer Society to provide support and fnancial assistance to Hodgkin lymphoma patients, starting with CD30 testing. As the frst step to detect rarer forms of the condition, CD30 testing is usually paid for out of pocket in the Philippines. In a country with a per capita income of $3,460,1 this can be an insurmountable barrier for many. Over the past two years, we have made testing available to 62 patients from 24 hospitals. treatments, many of which are not covered under national insurance schemes. Through Takeda’s Patient Assistance Program (PAP) in the Philippines, we provide access to our oncology medicines to eligible patients. This allows them to complete the full course of treatment at the intervals prescribed by their physician. Since 2017, more than 300 Filipino patients have been able to access and complete their course of treatment for Hodgkin lymphoma through our PAP. Jho-Ann Pulgo was one of them. With limited savings, she could only aford one of the 16 rounds of treatment. Through our PAP, she was able to complete treatment and focus on getting better. “Being able to have more time with my family, especially my four young nieces, and watching them grow up, is more than I dreamed of,” she says. Moving forward, we plan to broaden our partnership approach in the Philippines by establishing a Blueprint for Innovative Access program, which is based on a model we frst piloted in Kenya. For more information, see the Takeda Access to Medicines Progress Report 2022. x i d n e p p A R S C l a b o G l s l a i c n a n i F t e n a l P e l p o e P t n e i t a P e c n a n r e v o G t u o b A 30 1 World Bank Data. 2023 Annual Integrated Report 2023 Annual Integrated Report C OM M I T M E N T T O PE OP L E x i d n e p p A R S C l a b o G l s l a i c n a n i F t e n a l P e l p o e P t n e i t a P e c n a n r e v o G t u o b A 31 31 O U R P E O P L E create Takeda’s unique culture and put the patient at the center of everything they do. We recognize that no matter how far science and technology advance, meaningful change is always driven by people. We develop talent and invest in diversity, equity and inclusion, well-being and lifelong learning to help our people thrive personally and professionally. 2023 Annual Integrated Report CREATING AN EXC E PTION AL PEOP LE EXPE RIENCE T H E K E Y to harnessing the power of our people is actively and continuously listening to them. Through employee surveys, • Investing in more eforts to help employees feel a stronger sense of belonging. town halls, employee resource groups Becoming More Agile and team discussions, our people take an active role in shaping our workplace. Their engagement and feedback on how we can better support them leads to continuous improvements and enables us to carry out our purpose for patients. To deliver on our corporate purpose, employees must be able to get the information they need, make decisions and execute priorities quickly without undue complexity. Based on the Employee Experience Survey, we learned this was a In 2022, we received feedback from our priority for improvement across Takeda. people through our annual Employee Experience Survey. While we saw improvement in many areas, including diversity, equity and inclusion (DE&I) and manager support, we also heard that we could do more in several areas, including: • Increasing opportunities and tools to help employees build successful careers at Takeda. • Helping employees achieve better alignment between work and life. In fscal year 2022 and continuing in 2023, we are simplifying systems, redesigning processes and introducing new tools — from new technology solutions that enhance how we collaborate across the globe, to a streamlined procurement process to reduce cycle time. We also invest in building the skills of our people leaders to foster agility. While we are not done yet, already our employees are telling us we are on the right track with an eight-point increase in our 2022 Employee Experience Survey score for agility. x i d n e p p A R S C l a b o G l s l a i c n a n i F t e n a l P e l p o e P t n e i t a P e c n a n r e v o G t u o b A 32 32 T A K I N G P R I D E I N O U R P U R P O S E Results from our 2022 Employee Experience Survey show increasing employee engagement — 87% completed the survey, up from 82% in 2021. Of respondents: 92% understand how our 90% agree our decisions are 87% take pride in working work impacts patients aligned with our values at Takeda 2023 Annual Integrated Report x i d n e p p A R S C l a b o G l s l a i c n a n i F t e n a l P e l p o e P t n e i t a P e c n a n r e v o G t u o b A 33 33 EMPO WERING OUR PEO PLE TO THRIVE AND GRO W T O P E R F O R M and lead well, we must be well. Well-being and lifelong To kick of our eforts, we introduced the global platform, Thrive, to everyone at learning create a virtuous cycle, unleashing Takeda. This online platform embeds well- people’s creativity, productivity and an increased sense of purpose. At Takeda, we are focused on creating a culture that fosters both well-being and lifelong learning in all areas of our business. Prioritizing Employee Well-being We believe it is vital to take care of ourselves and each other so we can continue to create better health for people and a brighter future for the world. Based on insights from our 2021 and 2022 Employee Experience Surveys, we introduced Well-Being@Takeda, a new approach focused on improving our people’s emotional, physical, social and fnancial well-being. being directly into people’s daily lives. It ofers content such as “micro steps” — too- small-to-fail behavior change goals that can be personalized. Another tool the platform ofers is how to incorporate "resets” — 60-90 second mindfulness and stretch breaks designed to reduce cumulative stress. The platform is available to our employees in 10 languages and with closed captions to increase accessibility. Given our diverse employee base, we know that challenges to well-being can be diferent based on the employees’ role, location and personal situation. To create an inclusive workplace on a global scale, we strive to ensure that all employees have access to our global well-being programs and that those programs can be customized to accommodate the diverse needs of our people — no matter where, when or how they work. 2023 Annual Integrated Report Based on our 2022 Employee Experience Survey results, we know we can do more to provide equitable access to tools such as Thrive for employees at our manufacturing sites and BioLife donation centers who have less access in their workdays to email and digital tools. Many also work diferent hours than our ofce-based hybrid and remote staf. To better understand employee needs and how to deliver tools to them most efectively, we invited leaders from Thrive to visit our manufacturing operations in Covington, Georgia. During the visit, they met with every shift of worker, introduced them to Thrive and listened to their feedback. Our people told us they need additional resources to help manage stress, improve sleep and incorporate more healthy movements into their day. We also discussed ways to deliver content in new ways, such as podcasts, so people can enjoy and listen on their commute to and from work. In 2023, we will work to develop these additional resources. x i d n e p p A R S C l a b o G l s l a i c n a n i F t e n a l P e l p o e P t n e i t a P e c n a n r e v o G t u o b A 34 P R O M O T I N G E M P L O Y E E S A F E T Y A safe and healthy workplace is foundational for employee well-being. Our manufacturing sites share a strong safety culture focused on preventing serious injuries and fatalities (SIFs). We complete SIF risk assessments annually at our manufacturing sites worldwide to proactively identify areas that can be strengthened. Each quarter, we share lessons learned across our manufacturing network and discuss actions to mitigate re- occurrence of any identified safety events. Our manufacturing leadership teams also participate in safety leadership coaching to help prevent SIFs and develop site-level improvements. For more information on employee safety, see our online sustainability disclosures. 2023 Annual Integrated Report I NV ESTING IN LI FE LONG LE AR NING R O O T E D I N O U R corporate philosophy, we aspire to foster an environment that encourages a growth mindset, enabling our people to thrive inside and outside of Takeda through lifelong learning. just in time and just for me.” Within this platform, our people can: • Select topics relevant to them. • Explore everyday learning opportunities as well as learning experiences and Our approach to personal and professional resources. development is owned by the individual and supported by our people leaders. We empower this growth through opportunities that enable individuals to learn skills they • Share what they have learned with one another to create a community of learners. need for today and tomorrow informally, Feedback from our people has led to in the fow of work and formally through new approaches to how we ofer learning programs and courses. We also encourage resources. From web-based courses and people to actively contribute to the mentoring to short articles on targeted development of others. In 2022, we introduced Bloom. It is our cornerstone digital solution to help enable a culture where our people can continuously learn and discover opportunities for personal growth and career development. Bloom is an online learning experience platform, which provides a single-entry point for learning that is “just enough, topics and job shadowing, we are committed to making resources available to our people in ways that best meet their needs. “Since I have a family and three kids, my family time is my priority. I try to find spare time in between tasks and use that time to learn.” – M A S AYA S U T E R A J I M A Lead, Financial Planning and Analysis, PDT Business Unit x i d n e p p A R S C l a b o G l s l a i c n a n i F t e n a l P e l p o e P t n e i t a P e c n a n r e v o G t u o b A 35 35 2023 Annual Integrated Report x i d n e p p A R S C l a b o G l s l a i c n a n i F t e n a l P e l p o e P t n e i t a P e c n a n r e v o G t u o b A 36 AC CELERATING DIV ERSITY, EQUITY AN D INCL USION A C R O S S T A K E D A , we embrace and celebrate diversity and strive to give Our culture is enhanced by the diversity of our people who represent more than patients and our people equitable access to opportunities so they can achieve their full 80 countries and regions and a wide range of backgrounds, perspectives potential. We take a values-based approach and experiences. We continue to build a to inclusive patient experiences, inclusive workforce as diverse as the communities work environments, workforce diversity and we serve and are committed to providing sustainable societal impact. O U R D E I C O M M I T M E N T S Inclusive Patient Experience For more information, see the Patient section Sustainable Societal Impact For more information, see the CSR section Workforce Diversity Inclusive Work Environment compensation opportunities that are competitive and equitable. We aspire to achieve 50% diverse gender representation at our senior-most levels — including women and non-binary individuals — by fscal year 2027. In fscal year 2022, we achieved 42% (which marked a two percent increase from the previous year). Ensuring we have a diverse slate of qualifed candidates for all senior positions is one of many actions we are taking. 2023 Annual Integrated Report E M B R A C I N G A N I N C L U S I V E C U L T U R E I N J A P A N Someone's Day is an innovative app we are leveraging to help build inclusion through understanding the experiences of others. Developed by our people in Japan, Someone’s Day was inspired by an app Takeda launched called In Their Shoes that helps health care providers and other stakeholders better understand what it is like to live with infammatory bowel disease. — Someone’s Day embeds users into three immersive real-life experiences parenting, providing elder care and supporting ill family members. Each demonstrates the pressures many of us face. The use of the app is coupled with team discussion as part of a two-week program. In just a few months since launch, more than 500 people participated in Someone's Day, of which 94% responded positively about their experience in a post-program survey. “Someone’s Day is a powerful experience that helps users understand challenges that many colleagues face, which may be diferent than your own,” said Tsuyoshi Yurita, head of Rare Hematology Franchise, Japan Pharma Business Unit. “I do not have children myself, but, with this app, I received a message notifying me of an emergency with ‘my child’ during a meeting and I had to leave to take care of the situation. This experience put me in the shoes of parents. “As a team leader, having a greater understanding of people’s lived experiences can help create a supportive environment where, for example, our team members don’t need to apologize for having to step out to care for their children. I want my team to feel comfortable bringing their whole selves to work, including instances where life intersects with work.” x i d n e p p A R S C l a b o G l s l a i c n a n i F t e n a l P e l p o e P t n e i t a P e c n a n r e v o G t u o b A 37 2023 Annual Integrated Report     x i d n e p p A R S C l a b o G l s l a i c n a n i F t e n a l P e l p o e P t n e i t a P e c n a n r e v o G t u o b A 38 38 C O M M I T M E N T T O T H E PLAN E T W E R E C O G N I Z E that people and the planet have a huge impact on one another. Risks to the health of the environment pose risks to human health. We are working with our suppliers, peers and strategic partners to foster responsible innovation to protect the planet. 2023 Annual Integrated Report HEL PING THE PLA N ET TO HEL P PATIENTS T H E H E A L T H of the planet is inextricably linked with human health. This is particularly true relative to climate change, which threatens global health through diminished biodiversity, declining food security and increased exposure to heat waves, extreme weather and vector- borne diseases. Takeda has the knowledge and experience to help address critical environmental health issues, such as the disease-related impacts of climate change, through our core mission of developing life- transforming medicines and vaccines for people around the world. (See the example of QDENGA on page 7.) In addition, guided by our purpose, we are taking focused climate action within our operations and extended value chain to do our part to minimize the harmful efects of climate change. O U R A P P R O A C H Our commitment to the planet consists of three interrelated focus areas — climate action, natural resource conservation and sustainability by design — around which we structure our activities and actions. Guided by a holistic global approach, site teams implement local activities to identify and tackle specifc risks and opportunities: • Climate Action Program works to fundamentally change how we power our operations by maximizing efciencies and steadily transitioning to low-carbon and renewable energy sources. We are also working closely with our suppliers to help them set and achieve science-based targets. • Natural Resources Conservation Program works to identify and adopt innovative approaches to conserve natural resources in our operations and beyond and minimize our impacts on the natural environment. A healthy ecosystem not only contributes to business continuity but also supports our net-zero ambition. For example, by using less resources like water and generating less waste, we can reduce our energy use and greenhouse gas (GHG) emissions. • Sustainability by Design Program aims to signifcantly reduce and minimize the environmental impacts of our products and services right from the start. This program works to embed sustainability considerations into our decision-making for all aspects of a product’s lifecycle. It also sets a foundation for reducing GHG emissions, waste, ecotoxicity and energy and materials consumption. x i d n e p p A R S C l a b o G l s l a i c n a n i F t e n a l P e l p o e P t n e i t a P e c n a n r e v o G t u o b A 39 2023 Annual Integrated Report x i d n e p p A R S C l a b o G l s l a i c n a n i F t e n a l P e l p o e P t n e i t a P e c n a n r e v o G t u o b A 40 TA KING CLIMATE AC TION NOW I N 2 0 2 2 , we announced our accelerated goal to achieve net-zero GHG emissions related to our operations, including Scopes 1 and 2, by 2035 and for our entire value chain, including currently estimated1 Scope 3 GHG emissions, by 2040. Our goals support the Paris Climate Agreement to limit global warming to 1.5 improve resource circularity. We have taken the next step in our journey by starting work on a comprehensive net-zero strategy. It will incorporate global best practices for decarbonization and defne the actions and timing necessary to achieve our net-zero ambitions. Executed through our Climate Action Program, our strategy includes four degrees Celsius and meet the criteria set by approaches: reduce, embed, invest and the Science-based Targets initiative (SBTi) infuence. Net Zero Standard. We have a long history of investing in projects that reduce our emissions, See our online sustainability disclosures for more information about our Scope 1, 2 and 3 GHG emissions for FY2022 and minimize our reliance on fossil fuels and other key performance indicators, including methodologies and results. 1 A lack of transparency into, and a difficulty measuring, actual Scope 3 emissions remains an important challenge to overcome as Takeda works toward net-zero GHG emissions across its entire value chain. 2023 Annual Integrated Report W E A R E T A K I N G A C O M P R E H E N S I V E A P P R O A C H T O R E A C H N E T - Z E R O Energy Efficiency Fuel Switch Reduce emissions by optimizing processes to reduce energy usage Electrify equipment or switch to lower carbon emission fuels Fleet Electrification Transition to electric vehicles Renewable Power Generation Renewable Power Sourcing Install on-site renewable energy where feasible Secure renewable energy sourcing contracts S C O P E 1 P R I O R I T I E S S C O P E 2 P R I O R I T I E S Product and Process Value Chain S C O P E 3 P R I O R I T I E S Optimize product design and business processes to reduce emissions Collaborate with suppliers to decarbonize their operations and engage in industry collaborations to reduce supply chain emissions Transport and Travel Optimize and reduce product transport and business travel to reduce emissions Ownership Data and Digital Incentives and Funding Communications E N A B L E R S Empower initiative owners to take action Maximize accuracy, efciency, management and transparency of data and reporting Align internal investments with net-zero goals and invest in credible and high- impact carbon removal projects Engage internal and external stakeholders on net-zero eforts and the connection between climate change and health Y G E T A R T S E T A M I L C S ’ A D E K A T F O S T N E M E L E x i d n e p p A R S C l a b o G l s l a i c n a n i F t e n a l P e l p o e P t n e i t a P e c n a n r e v o G t u o b A 41 2023 Annual Integrated Report x i d n e p p A R S C l a b o G l s l a i c n a n i F t e n a l P e l p o e P t n e i t a P e c n a n r e v o G t u o b A 42 Pioneering New Approaches to Reduce Emissions Pharmaceutical production is typically energy intensive and, to date, most of the energy required has been derived from natural gas. We are pursuing several avenues to eliminate this dependency. One example is in Austria where we are working through a public-private partnership at our largest manufacturing site in Vienna to develop a ground-breaking process that would replace natural gas with steam- generating heat pumps. What will make this project innovative is the use of steam-generating heat pumps. They will be operated exclusively with 100% natural refrigerants in combination with electricity from renewable sources. These refrigerants are highly efcient and will not emit emissions contributing to climate change. The heat pumps work by repurposing heat waste from on-site chiller systems, but which can currently only heat to about 120 degrees Celsius. By combining them with steam compressors, the pumps will be able to generate steam at 184 degrees Celsius, hot enough to meet the Known as AHEAD (Advanced Heat Pump site’s production requirements. AHEAD is Demonstrator), the project is expected to intended to serve as a practical example for reduce GHG emissions by up to 90% within the entire pharmaceutical industry, as well one operation at the site. It will mark the frst as other industries aiming to reduce their time that natural gas-free, steam-generating GHG emissions. heat pumps will be integrated into industrial operation when in use in 2024. A H E A D P A R T N E R S Powering Our U.S. Operations with Renewable Energy In 2022, we signed a virtual power purchase agreement to purchase approximately 350,000 megawatt hours (MWh) of renewable energy certifcates (RECs) annually from Enel’s North America’s Seven Cowboy Wind Project in Oklahoma. We will apply these RECs to our global GHG reduction goals. The project, which became operational in April 2023, will generate enough clean, renewable energy to power our anticipated electricity needs for our facilities throughout the United States. This agreement accounts for more than 100,000 tons of the company’s current total GHG emissions or approximately 22% of our current annual enterprise Scope 1 and 2 emissions. 2023 Annual Integrated Report O U R G H G E M I S S I O N S T C F D 2 0 2 2 P R O G R E S S 91% Addressing Our Main Source of Emissions: Scope 3 Currently, more than 90% of our estimated GHG emissions are from our value chain Scope 3 emissions. We are helping our highest-emitting suppliers switch to renewable energy and develop emissions goals that are aligned with the SBTi by 2024 — as well as strategies to achieve them. In 2022, we hosted our annual Partner Value Summit for 175 suppliers (representing approximately 40% of our Scope 3 emissions) to share our journey, our expectations and best practices for decarbonization. Following the event, nearly 10% of participating suppliers submitted GHG reduction targets to SBTi for approval, while many others have indicated they plan to do so in the months ahead. We also updated our Supplier Code of Conduct to include expectations for the reporting of GHG emissions and the 3% 6% Scope 1 Scope 2 Scope 3 91% Optimizing Product Distribution One way we are working to reduce Scope 3 emissions is by changing how we Aligning with the Task Force on Climate-Related Financial Disclosures G O V E R N A N C E • Every member of the TET now has goals for their functions related to our commitment to the planet, beginning in fscal year 2023. S T R A T E G Y • We are focusing our eforts on developing vaccines to help mitigate the spread of vector-borne diseases such as dengue and Zika virus. In August 2022, Takeda succeeded in securing its first approval for our new dengue vaccine, QDENGA. R I S K M A N A G E M E N T • As climate change has progressed, we have responded by continuing to integrate the assessment of climate risks and opportunities throughout our existing ERM process to help ensure a consistent approach to risk assessment and mitigation within our business. adoption of energy efciency measures. distribute our products. Globally, we are As a supporter of the Financial Stability To help suppliers understand these implementing more efcient transport Board’s Task Force on Climate-Related expectations, we are developing associated modes for some products, including training and a toolkit. Moving forward, we transitioning from truck to rail or from will integrate consideration of a supplier’s air to sea. In 2022, our sea freight ratio Financial Disclosures (TCFD), we issued our frst comprehensive assessment of Takeda’s climate change resilience in 2022.  • We announced our accelerated goals M E T R I C S A N D T A R G E T S to achieve net-zero GHG emissions climate program into our supplier selection versus air stabilized at 47.5%, avoiding an We are pleased to provide the following process. We are also working with others in estimated 42,000 tons of GHG emissions update to our TCFD disclosure. Integrating our industry through the Energize Program, for our entire product portfolio. At the our environmental targets into our related to our operations by 2035 and for our entire value chain by 2040. which aims to accelerate the adoption local level, small changes can also make business strategy is critical to achieving of renewable energy and reduce GHG a big diference. For example, in Japan, our ambitious GHG reduction goals. We • We are working toward a comprehensive strategy in emissions among pharmaceutical suppliers. we shifted from three to two warehouses are committed to making steady progress support of our net-zero transition. and increased the number of products toward them. transported per truck. x i d n e p p A R S C l a b o G l s l a i c n a n i F t e n a l P e l p o e P t n e i t a P e c n a n r e v o G t u o b A 43 2023 Annual Integrated Report x i d n e p p A R S C l a b o G l s l a i c n a n i F t e n a l P e l p o e P t n e i t a P e c n a n r e v o G t u o b A 44 CONSERVING NATURAL RE SOURCE S T A K E D A I S W O R K I N G to use less water and other natural resources, technology will also help us ensure waste bins are fully utilized to reduce pick-up send less waste to landfll and protect biodiversity. Doing so not only supports the health of our communities and nature, but also our eforts to reach net-zero. Optimizing Waste Landflls are a major source of groundwater frequency, which, in turn, can help reduce Scope 3 emissions. (See the Patient section to learn more about our BioLife donation centers and how we are transforming lives through our plasma-derived treatments.) Reducing Fresh Water Use pollution and contributor of GHG The production of many types of emissions (methane), which will last in the medicines, including biologics, requires Employee-driven Innovation Sparks Water Savings When we invited employees at our Los Angeles manufacturing facility to join our Water Use Reduction Innovation Challenge, Tyler Calamoneri, senior automation engineer, already had an idea. In his building, distilled water was employed to sterilize equipment used in manufacturing. The sterilized distilled water was stored in a tank. After each cleaning, the unused distilled water was fushed into the drain. Tyler realized that the unused water being fushed could be stored in the tank for up to 24 hours and still retain its sterility. "The system was unnecessarily fushing the tank after every cleaning — wasting more than 220 liters every time,” he noted. Knowing how important sterility is to the quality of the product, Tyler analyzed the average number of cleanings and cycle times to determine that the site could save more than 6.8 million liters of water annually by adjusting the fushing and atmosphere for decades. Like our water conservation eforts, we support our signifcant amounts of water at the highest standards of purity. We recognize that Climate Action Program to drive and track water is a fnite resource that we share with cleaning cycles — and it could be done at no additional expense to the site. This would save water while also reducing the site’s progress at our major sites toward our zero-waste-to-landfll goal. This includes setting local goals and taking action to reduce, reuse and recycle waste. In fscal year 2022, we diverted more than 80% of our waste from landfll. For example, we implemented AI technology at our BioLife donation centers to better understand our impact and identify reduction opportunities. This the communities near our sites and are GHG emissions. working to conserve it. While we have active programs to reduce and conserve our fresh water use globally, we are prioritizing our eforts at six of our manufacturing sites in areas considered to have “high” or “extremely high” water risk. For more information, see our 2022 Annual Integrated Report, page 54. Tyler’s idea became reality after implementation in 2022. F O R M O R E I N F O R M A T I O N see our position on water stewardship. 2023 Annual Integrated Report P R O M O T I N G L O C A L I N I T I A T I V E S At our Lessines, Belgium, site we are working to protect three rare local species identified on-site: the Blue-winged Oedipodid (cricket), the Wandering Andrene (solitary bee) and the Heleborine Epipactis (flowering plant). Efforts include planting melliferous plants and indigenous trees, creating ponds and installing beehives and a flower meadow. Preserving and Restoring Biodiversity Biodiversity loss will have profound consequences for human health if impaired ecosystems can no longer provide clean water, energy, food, recreation and other services that contribute to well-being. We seek to support biodiversity through responsible business practices and conservation eforts, many of which are employee-led. We have conducted biodiversity assessments at all Takeda manufacturing eforts. We are also evaluating methods to assess our biodiversity footprint throughout sites globally. Assessments included our value chain. screening of risks based on the potential presence of threatened or protected biodiversity areas in proximity to our facilities and the potential pressures on biodiversity from our activities. Based on the results of these initial assessments, we conducted in-depth studies at fve high- priority sites. Results did not identify any site activities that materially contribute to the pressure on biodiversity. They did, however, surface opportunities for improvement, which we are evaluating in 2023. Opportunities include improving onsite wastewater pre-treatment and reducing freshwater withdrawal, which we will incorporate into our water optimization We are working beyond our sites to preserve biodiversity. Established in 1933 as a cultivation area for medicinal plants, the Takeda Garden for Medicinal Plant Conservation in Kyoto, Japan, has gathered numerous medicinal and other useful plants from around the world for experimental purposes. The garden includes approximately 3,200 species of plants on its 94,000-square-meter site. Of these, about 1,900 are medicinal plants and about 240 are endangered or near- endangered species on the Ministry of the Environment's Red List. F O R M O R E I N F O R M A T I O N see our position on biodiversity and the responsible use of plastics. x i d n e p p A R S C l a b o G l s l a i c n a n i F t e n a l P e l p o e P t n e i t a P e c n a n r e v o G t u o b A 45 2023 Annual Integrated Report x i d n e p p A R S C l a b o G l s l a i c n a n i F t e n a l P e l p o e P t n e i t a P e c n a n r e v o G t u o b A DESIGNING WITH SUS TA INABILITY IN MIND M O R E T H A N 8 0 % of a product’s environmental impact is locked in before it even reaches the market.1 to assess the environmental performance of our products during three phases of product development to identify and report Through our Sustainability by Design framework, we are integrating processes on improvements for all new pipeline products by the end of 2023. Delivery Raw Materials Reducing Environmental Impacts of Existing Medicines We are also looking for opportunities to R&D and Manufacturing improve the sustainability of our medicines already available to patients. One example and building strategies to minimize lifecycle Tracking Sustainability Throughout environmental impacts of our products, Development including supporting our net-zero GHG emissions goal across our value chain. Developing Product-Level Sustainability Metrics In 2022, we identifed four product-level sustainability metrics: GHG emissions, waste generation, water use and hazardous substance use. We are using TAK-755, our investigational product for Congenital Thrombotic thrombocytopenic purpura (cTTP) (see page 25), to pilot how we calculate the metrics and develop a Phase I: Complete baseline life-cycle assessments using sustainability metrics before an investigational product begins clinical trials and conduct scenario analysis. Phase II: Update product report card; develop further mitigation opportunities and resource investment in process improvements. Phase III: Complete a second life-cycle assessment before launch to report on improvements against baseline and inform post-approval decisions for further product product “report card” that will live with the improvements. product throughout its lifecycle. We plan Sustainability in the Product Lifecycle Packaging Reuse or Recycling End-of-Life Distribution Use is PANTOLOC® (pantoprazole), frst approved for use in Europe in 2009 to treat heartburn, acid refux and gastro- oesophageal refux disease. In 2022, we introduced alternative packaging for PANTOLOC made from 100% recycled cardboard. When fully implemented, we expect to save an estimated 87,000 kg of virgin fber board annually. “We want to deliver products to patients that transform their lives, while minimizing the impact on the environment. Research and development play a key role in this equation by building environmental sustainability in from the start.” – E S T E R L O V S I N B A R L E Global Head, Product Sustainability and Stewardship 46 1 Product sustainability: Back to the drawing board | McKinsey 2023 Annual Integrated Report 2023 Annual Integrated Report x i d n e p p A R S C l a b o G l s l a i c n a n i F t e n a l P e l p o e P t n e i t a P e c n a n r e v o G t u o b A 47 47 FIN AN CIAL P E R F O R M A N C E W E A R E P O S I T I O N E D for long-term growth through our actions based on patient, trust, reputation and business, in that order. By focusing on our corporate philosophy imperatives (Patient, People & Planet), we are confdent in our ability to deliver better health for people and a brighter future for the world as well as sustainable returns for our shareholders. 2023 Annual Integrated Report TAKED A’S FISC AL YE AR 202 2 FI NANCIAL PERF ORMA NCE R E S U L T S F O R F I S C A L Y E A R 2 0 2 2 (Billion yen, except percentages and per share amounts) IFRS Metrics Revenue Operating Proft Margin Net Proft EPS (yen) Non-IFRS1, 3 Core Revenue Core Operating Proft Margin Core Net Proft Core EPS (yen) Cash Flows and Dividend Operating Cash Flow Free Cash Flow2 Dividend Leverage Metrics Net Debt (Cash) Adjusted EBITDA (last 12 months) Net Debt/Adjusted EBITDA Ratio FY2021 FY2022 Change vs. Prior Year Actual % change CER % change4 -0.8% -1.8% -0.1pp +23.3% +24.3% +3.5% +9.1% +1.5pp +13.1% +13.9% +12.8% +6.4% -0.7pp +37.7% +38.8% +17.7% +24.4% +1.6pp +30.5% +31.5% -13.0% -52.7% - 3,569.0 4,027.5 460.8 490.5 12.9% 230.2 147 12.2% 317.0 204 3,420.5 4,027.5 955.2 27.9% 663.8 425 1,188.4 29.5% 866.4 558 1,123.1 943.7 180 977.2 446.2 180 3,233.8 3,716.1 1,168.0 1,421.8 2.8x 2.6x I N F I S C A L Y E A R 2 0 2 2 , Takeda delivered on or exceeded management guidance, with Core Revenue growing +3.5% on a CER basis to 4,027.5 billion yen (US$30.3 billion5). Our Core Operating Proft grew at 9.1% on a CER basis to reach 1,188.4 billion yen (US$9.0 billion5), a record high for Takeda, and Core EPS grew at +13.9% on a CER basis to 558 yen per share. In addition, our Core Operating Proft margin increased by 1.6 percentage points to 29.5%. This year-on-year margin improvement is an indicator of our fnancial resilience and our ability to control costs — in fact, on a CER basis, our selling, general and administrative (SG&A) spend was lower than fscal year 2021. A key driver for our revenue growth was the performance of our Growth & Launch Products. They contributed around 40% of revenue and grew at 19% year over year at CER. With strong fundamentals and fnancial discipline, we invested in our future growth, generated free cash fow of 446.2 billion yen, and continued to deleverage, reaching a net-debt-to-adjusted EBITDA of 2.6x as of March 31, 2023. Excluding the approximately 400 billion yen upfront cash payment we made to acquire TAK-279, our free cash fow would have been 837.3 billion yen, and the leverage ratio would have reached 2.3x. This achievement in deleveraging closes the chapter on our last major fnancial target from the Shire integration. x i d n e p p A R S C l a b o G l s l a i c n a n i F t e n a l P e l p o e P t n e i t a P e c n a n r e v o G t u o b A 48 48 See page 51 for footnotes. 2023 Annual Integrated Report Growth and Launch Products Our FY2022 revenue growth was largely driven by our Growth & Launch Products, which generated around 40% of total revenue, and grew at 19% on a constant exchange rate basis. x i d n e p p A R S C l a b o G l s l a i c n a n i F t e n a l P e l p o e P t n e i t a P e c n a n r e v o G t u o b A 49 See page 51 for footnotes. 2023 Annual Integrated Report BUSINESS AREAGROWTH & LAUNCH PRODUCTSINDICATIONREVENUE (BN JPY)CER % CHANGE4Gastroenterology (GI)Moderate to severe ulcerative colitis or Crohn’s disease702.7+15.2%Refractory complex perianal fistulas with Crohn’s disease2.7+35.6%Rare DiseasesPrevention of hereditary angioedema attacks151.8+25.0%Post-transplant CMV infection (refractory, with or without resistance)10.5+561.7%PDT immunologyPrimary and secondary immunodeficiencies and multifocal motor neuropathy522.2+16.0%Hypovolemia, hypoalbuminemia, for use during cardiopulmonary bypass surgery, and hemolytic disease of the newborn121.4+19.0%OncologyALK-positive non-small cell lung cancer20.6+35.2%Previously treated non-small cell lung cancer with EGFR exon 20 insertion3.7+228.4%OtherPrevention of dengue diseaseNot DisclosedNew LaunchActive immunization for the prevention of COVID-19 (primary and booster)Total coronavirus vaccines revenue of 58.9Not DisclosedActive immunization for the prevention of COVID-19 (primary and booster)Not Disclosed NEAR -TE RM HE A DWINDS, BUT CO N FID E NT I N O UR GROWTH OUTLOOK O U T L O O K F O R F I S C A L Y E A R 2 0 2 3 (Billion yen, except percentages and per share amounts) Results FY2022 Forecast FY2023 Change vs. Prior Year FY2023 Management Guidance CER % Change4 W E A N T I C I P A T E signifcant headwinds in fscal year 2023 from the loss of high-margin VYVANSE® (lisdexamfetamine dimesylate) to generic erosion in the United States and AZILVA® IFRS Metrics Revenue (azilsartan) in Japan. We expect revenue Operating Proft to decline by low single-digit percent on a CER basis as a result, and Core EPS to decline at low-20s% CER. Net Proft EPS (yen) Nevertheless, based on our current assumptions, we expect to return to revenue, proft and margin growth in the near-term driven by continued expansion Non-IFRS1, 3 Core Revenue Core Operating Proft of our Growth & Launch Products, such as Core EPS (yen) ENTYVIO, TAKHZYRO, LIVTENCITY and our Immunoglobulin and Albumin portfolio. We also expect to see meaningful contribution from QDENGA as it continues to roll-out. Cash Flows and Dividend Free Cash Flow2 Dividend (per share) 4,027.5 490.5 317.0 204 4,027.5 1,188.4 558 3,840.0 349.0 142.0 91 3,840.0 1,015.0 434 -187.5 -141.5 -175.0 -114 -187.5 -173.4 -124 -4.7% -28.8% -55.2% -55.6% -4.7% -14.6% -22.2% 446.2 400.0-500.0 180 188 +8 +4.4% Low single-digit % decline Low-10s% decline Low-20s% decline x i d n e p p A R S C l a b o G l s l a i c n a n i F t e n a l P e l p o e P t n e i t a P e c n a n r e v o G t u o b A 50 See page 51 for footnotes. 2023 Annual Integrated Report Following the temporary generic headwinds we will face this year, we expect limited loss-of-exclusivity exposure until the launch of ENTYVIO biosimilars, which could be as late as 2032. We expect that the momentum from our Growth & Launch Products, coupled with new launches from our pipeline, will return us to growth in the near term and form the cornerstone of our future growth profle. As we look to the future, we remain committed to returning to a Core Operating Proft margin in the low-to-mid 30%, supported by productivity improvements driven by data, digital and technology. As we prepare for our next phase of growth, we will continue to maintain a solid investment grade credit rating, while allocating more capital toward our growth drivers and shareholder returns. Investing for growth will continue to consist of strategic investments in internal and external opportunities to enhance our pipeline, as well as investment in new product launches, our PDT business and data, digital and technology. We also plan to raise our dividend from 180 yen to 188 yen per share in fscal year 2023 — Takeda’s frst dividend increase in 15 years. Moving forward, we are committed to a progressive dividend policy. x i d n e p p A R S C l a b o G l s l a i c n a n i F t e n a l P e l p o e P t n e i t a P e c n a n r e v o G t u o b A 51 Near-term (FY2024-2025) Medium-term (FY2026-early 2030s) Long-term (FY2030s and beyond) Return to sales, proft and margin growth Continued expansion of Growth & Launch products Further launches from innovative late-stage pipeline Limited loss of exclusivity exposure until ENTYVIO biosimilars launch Additional contribution from robust R&D strategy, including clinical pipeline of ~40 NMEs • Returning to low-to-mid 30% Core Operating Profit margins • Increasing productivity enabled by data, digital and technology • Continuing to pursue asset-specific business development to enhance pipeline • Progressive dividend policy of increasing or maintaining dividend each year 1 Further information regarding certain of Takeda’s Non-IFRS measures is posted on Takeda’s investor relations website. 2 We defne Free Cash Flow as cash fows from operating activities, subtracting acquisition of property, plant and equipment (“PP&E”), intangible assets and investments as well as removing any other cash that is not available to Takeda’s immediate or general business use, and adding proceeds from sales of PP&E, as well as from sales of investments and businesses, net of cash and cash equivalents divested. Free cash fow is a non-IFRS fnancial measure. 3 Core results adjust our reported results calculated and presented pursuant to IFRS to exclude the efect of items unrelated to Takeda’s core operations, such as, to the extent applicable for each line item, non-recurring items, purchase accounting efects and transaction related costs, as well as amortization and impairment of intangible assets and other operating income and expenses and the tax efect of each of the adjustments. 4 CER (constant exchange rate) change eliminates the efect of foreign exchange rates from year-over-year comparisons by translating Reported or Core results for the current period using corresponding exchange rates in the same period of the previous fscal year. 5 Convenience translations have been made at an exchange rate of 1USD = 132.75 JPY. 2023 Annual Integrated Report 2023 Annual Integrated Report x i d n e p p A R S C l a b o l G s l a i c n a n i F t e n a l P e l p o e P t n e i t a P e c n a n r e v o G t u o b A 52 52 C O M M I T T E D T O M A K I N G H E A L T H C A R E ACCESSIBLE TO ALL O U R G L O B A L C S R Program prioritizes partnerships that help expand access to quality health care for people in low- and middle-income countries. We encourage innovation beyond commercial products in support of sustainable health systems for all people, everywhere. Our long-term funding commitments recognize that there are no quick fxes to complex health system challenges and that equitable impact takes time. 2023 Annual Integrated Report G LO BAL CS R O U R E M P L O Y E E S P L AY a key role in our Global CSR Program. Our employee-led Application Review Committee helps select proposals from non-proft organizations before a company- wide vote determines the fnal programs we fund each year. Since the launch of our Global CSR program in 2016, we have provided $140.7 million to 24 programs in nearly 80 countries. In 2022, 45% of employees voted to select our fiscal year 2022 Global CSR partners: Ipas to improve access to and use of comprehensive Plan International to expand access to health Pure Earth to help protect children in Colombia, India, UNFPA to support survivors of gender-based violence sexual and reproductive services for marginalized Indonesia, Kyrgyzstan and in Azerbaijan, El Salvador, health services for hard- populations, especially girls Peru from lead poisoning. Indonesia, Madagascar and to-reach women and girls and women experiencing in Ethiopia, Indonesia and complications from female Pakistan. genital mutilation in Somalia. Zimbabwe. Read more about each partner and the programs on our website. You can also read impact stories from other partners including Save the Children, Jhpiego and Last Mile Health. x i d n e p p A R S C l a b o l G s l a i c n a n i F t e n a l P e l p o e P t n e i t a P e c n a n r e v o G t u o b A 53 2023 Annual Integrated Report U.S. CSR HELP Program In 2021, Takeda launched its U.S. CSR program to help reduce social disparities in health, environment, learning and providing (HELP). In 2022, we invested more than $19 million through 21 non- proft organizations, reaching more than 100,000 people. Japan CSR CARE Program Our Japan CSR CARE Program invests in eforts that support children with special needs and their families, vulnerable people working in informal economies, survivors of domestic violence and other marginalized populations. In 2022, we partnered with 18 non-proft organizations to help provide access to health care and nutrition to more than 4,200 people in Japan. E M P L O Y E E S S H A R E W H A T P A R T I C I P A T I N G I N T A K E D A ’ S G L O B A L C S R P R O G R A M M E A N S T O T H E M B E N Japan F A E Z E H United States A N D R E S Mexico R U T H Kenya “I love that we get to play such an important part in a decision with the potential to help thousands of people.” “The annual voting process means the voice and ideas of all employees matter.” “I want to contribute to improve the communities where I live and work, and I know by voting for the global initiatives I can get a little closer to this objective.” “Voting gave me a sense of responsibility and also a sense of ownership of the programs.” x i d n e p p A R S C l a b o l G s l a i c n a n i F t e n a l P e l p o e P t n e i t a P e c n a n r e v o G t u o b A 54 2023 Annual Integrated Report APP E ND IX x i d n e p p A R S C l a b o G l s l a i c n a n i F t e n a l P e l p o e P t n e i t a P e c n a n r e v o G t u o b A 55 55 2023 Annual Integrated Report LE GAL D I SCL AIMER Important Notice For the purposes of this notice, “Report” means this document, any oral presentation, any question and answer session and any written or oral material discussed or distributed by Takeda Pharmaceutical Company Limited (“Takeda”) regarding this Report. This Report (including any oral briefng and any question-and-answer in connection with it) is not intended to, and does not constitute, represent or form part of any ofer, invitation or solicitation of any ofer to purchase, otherwise acquire, subscribe provided to the recipient) on the condition that it is for use by the recipient for information purposes only (and not for the evaluation of any investment, acquisition, disposal or any other transaction). Any failure to comply with these restrictions may constitute a violation of applicable securities laws. The companies in which Takeda directly and indirectly owns investments are separate entities. In this Report, “Takeda” is sometimes used for convenience where references are made to Takeda and its subsidiaries in general. Likewise, the words for, exchange, sell or otherwise dispose of, “we”, “us” and “our” are also used to refer any securities or the solicitation of any vote to subsidiaries in general or to those who or approval in any jurisdiction. No shares work for them. These expressions are also or other securities are being ofered to the public by means of this Report. No ofering used where no useful purpose is served by identifying the particular company or of securities shall be made in the United States except pursuant to registration under the U.S. Securities Act of 1933, as amended, or an exemption therefrom. This Report is being given (together with any further information which may be companies. The product names appearing in this document are trademarks or registered trademarks owned by Takeda, or their respective owners. Forward-Looking Statements This Report and any materials distributed in connection with this Report may contain forward-looking statements, beliefs or opinions regarding Takeda’s future business, future position and results of operations, including estimates, forecasts, targets and plans for Takeda. Without limitation, forward-looking statements often include words such as “targets”, “plans”, “believes”, “hopes”, “continues”, “expects”, “aims”, “intends”, “ensures”, “will”, “may”, “should”, “would”, “could”, “anticipates”, “estimates”, “projects” or similar expressions or the negative thereof. These forward-looking statements are based on assumptions about many important factors, including the following, which could cause actual results to difer materially from those expressed or implied by the forward-looking statements: the economic circumstances surrounding Takeda’s global business, including general economic conditions in Japan and the United States; competitive pressures and developments; changes to applicable laws and regulations, including global health care reforms; challenges inherent in new product development, including uncertainty of clinical success and decisions of regulatory authorities and the timing thereof; uncertainty of commercial success for new and existing products; manufacturing difculties or delays; fuctuations in interest and currency exchange rates; claims or concerns regarding the safety or efcacy of marketed products or product candidates; the impact of health crises, like the novel coronavirus pandemic, on Takeda and its customers and suppliers, including foreign governments in countries in which Takeda operates, or on other facets of its business; the timing and impact of post-merger integration eforts with acquired companies; the ability to divest assets that are not core to Takeda’s operations and the timing of any such divestment(s); the extent to which our internal energy conservation measures and future advancements in renewable energy or low carbon energy technology will enable us to reduce our greenhouse gas emissions; and other factors identifed in Takeda’s most recent Annual Report on Form 20-F and Takeda’s other reports fled with the U.S. Securities and Exchange Commission, available on Takeda’s website at: https://www.takeda.com/investors/ sec-filings-and-security-reports/ or at www.sec.gov. Takeda does not undertake to update any of the forward-looking statements contained in this Report or any other forward-looking statements it may make, except as required by law or stock exchange rule. Past performance is not an indicator of future results and the results or statements of Takeda in this Report may not be indicative of, and are not an estimate, forecast, guarantee or projection of Takeda’s future results. x i d n e p p A R S C l a b o G l s l a i c n a n i F t e n a l P e l p o e P t n e i t a P e c n a n r e v o G t u o b A 56 2023 Annual Integrated Report Financial Information and Certain Non-IFRS Financial Measures Takeda’s fnancial statements are prepared in accordance with International Financial Reporting Standards (“IFRS”). This Report and materials distributed in connection with this Report include certain fnancial measures not presented in accordance with IFRS, such as Core Revenue, Core Operating Proft, Core Net Proft, Core EPS, Constant Exchange Rate (“CER”) change, Net Debt, EBITDA, Adjusted EBITDA and Free Cash Flow. Takeda’s management evaluates results and makes operating and investment decisions using both IFRS and non-IFRS measures included in this Report. These non-IFRS measures exclude certain income, cost and cash fow items which are included in, or are calculated diferently from, the most closely comparable measures presented in accordance with IFRS. By including these non-IFRS Exchange Rates Medical information measures, management intends to provide investors with additional information to further analyze Takeda’s performance and core results, including when controlling for the efect of fuctuations in exchange rates. Takeda’s non-IFRS measures are not prepared in accordance with IFRS and such non-IFRS measures should be considered a supplement to, and not a substitute for, measures prepared in accordance with IFRS (which we sometimes refer to as “reported” measures). Investors are encouraged to review the defnitions and reconciliations of non-IFRS fnancial measures to their most directly comparable IFRS measures, which are in the fnancial appendix appearing at the end of Takeda’s FY2022 investor presentation (available at takeda.com/investors/financial-results/ quarterly-results/). In this Report, certain amounts presented This Report contains information about in Japanese yen have been translated to products that may not be available in US dollars solely for the convenience of all countries, or may be available under the reader. Except where otherwise noted, diferent trademarks, for diferent these convenience translations have been indications, in diferent dosages, or in made at an exchange rate of 1USD = 132.75 diferent strengths. Nothing contained JPY, the Noon Buying Rate certifed by herein should be considered a solicitation, the Federal Reserve Bank of New York on promotion or advertisement for any March 31, 2023. The rate and methodologies prescription drugs including the ones under used for these convenience translations development. difer from the currency exchange rates and translation methodologies under IFRS used for the preparation of Takeda’s consolidated fnancial statements. These translations should not be construed as a representation that the relevant Japanese yen amounts could be converted into U.S. dollars at this or any other rate. x i d n e p p A R S C l a b o G l s l a i c n a n i F t e n a l P e l p o e P t n e i t a P e c n a n r e v o G t u o b A 57 2023 Annual Integrated Report F INAN CIAL DEFINITIONS Definition of Core Financial Measures, Constant Exchange Rate change, and Free Cash Flow Core Revenue represents revenue adjusted to exclude signifcant items unrelated to Takeda’s core operations. Core Operating Profit represents net proft adjusted to exclude income tax expenses, the share of proft or loss of investments accounted for using the equity method, fnance expenses and income, other operating expenses and income, amortization and impairment losses on acquired intangible assets and other items unrelated to Takeda’s core operations, such as non-recurring items, purchase accounting efects and transaction related costs. Core EPS represents net proft adjusted to exclude the impact of items excluded in the calculation of Core Operating Proft, and other non-operating items (e.g. amongst other items, fair value adjustments and the imputed fnancial charge related to contingent consideration) that are unusual, non-recurring in nature or unrelated to Takeda’s ongoing operations and the tax efect of each of the adjustments, divided by the average outstanding shares We defne Free Cash Flow as cash fows activities or any other measure of liquidity (excluding treasury shares) of the reporting from operating activities, subtracting presented in accordance with IFRS. The periods presented. acquisition of property, plant and most directly comparable measure under CER (Constant Exchange Rate) change eliminates the efect of foreign exchange rates from year-over-year comparisons by translating Reported or Core results for the current period using corresponding exchange rates in the same period of the previous fscal year. We present Free Cash Flow because we believe that this measure is useful to investors as similar measures of liquidity are frequently used by securities analysts, investors and other interested parties in the evaluation of companies in our industry. Free Cash Flow is also used by our management to evaluate our liquidity and our cash fows, particularly as they relate to our ability to meet our liquidity requirements and to support our capital allocation policies. We also believe that Free Cash Flow is helpful to investors in understanding how our strategic divestitures of non-core businesses and of portions of our investment portfolio contribute to the cash fows and liquidity available to us. equipment (“PP&E”), intangible assets IFRS for Free Cash Flow is net cash from and investments as well as removing operating activities. any other cash that is not available to Takeda’s immediate or general business use, and adding proceeds from sales of PP&E, as well as from sales of investments and businesses, net of cash and cash equivalents divested. The usefulness of Free Cash Flow to investors has signifcant limitations including, but not limited to, (i) it may not be comparable to similarly titled measures used by other companies, including those in our industry, (ii) it does not refect the efect of our current and future contractual and other commitments requiring the use or allocation of capital and (iii) the addition of proceeds from sales and redemption of investments and the proceeds from sales of business, net of cash and cash equivalents divested do not refect cash received from our core ongoing operations. Free Cash Flow should not be considered in isolation and is not, and should not be viewed as, a substitute for cash fows from operating Definition of EBITDA/Adjusted EBITDA and Net Debt We present EBITDA and Adjusted EBITDA because we believe that these measures are useful to investors as they are frequently used by securities analysts, investors and other interested parties in the evaluation of companies in our industry. We further believe that Adjusted EBITDA is helpful to investors in identifying trends in its business that could otherwise be obscured by certain items unrelated to ongoing operations because they are highly variable, difcult to predict, may substantially impact our results of operations and may limit the ability to evaluate our performance from one period to another on a consistent basis. EBITDA and Adjusted EBITDA should not be considered in isolation or construed as alternatives to operating income, net proft for the year or any other measure of x i d n e p p A R S C l a b o G l s l a i c n a n i F t e n a l P e l p o e P t n e i t a P e c n a n r e v o G t u o b A 58 2023 Annual Integrated Report performance presented in accordance with We defne EBITDA as consolidated We defne Net Debt frst by calculating restrictions on our ability to prepay or IFRS. These non-IFRS measures may not net proft before income tax expenses, the sum of the current and non-current redeem any of our indebtedness, (iv) it be comparable to similarly-titled measures depreciation and amortization and net portions of bonds and loans as shown on does not refect any fees, costs or other presented by other companies. interest expense. We defne Adjusted our consolidated statement of fnancial expenses that we may incur in converting The usefulness of EBITDA and Adjusted EBITDA to investors has limitations including, but not limited to, (i) they may not be comparable to similarly titled measures used by other companies, including those in our industry, (ii) they exclude fnancial information and events, such as the efects of an acquisition or amortization of intangible assets, that some may consider important in evaluating our performance, value or prospects for the future, (iii) they EBITDA as EBITDA further adjusted position, which is then adjusted to refect (i) cash equivalents to cash, in converting to exclude impairment losses, other the use of prior 12-month average exchange cash from one currency into another or in operating income and expenses (excluding rates for non-JPY debt outstanding at moving cash within our consolidated group, depreciation and amortization), fnance the beginning of the period and the use (v) it applies to gross debt an adjustment income and expenses (excluding net of relevant spot rates for new non-JPY for average foreign exchange rates which, interest expense), our share of loss from debt incurred and existing non-JPY debt although consistent with our fnancing investments accounted for under the equity redeemed during the reporting period, agreements, does not refect the actual method and other items that management which refects the methodology our rates at which we would be able to convert believes are unrelated to our core management uses to monitor our leverage, one currency into another and (vi) it operations such as purchase accounting and (ii) a 50% equity credit applied to refects an equity credit due to the fact that efects and transaction related costs. our aggregate principal amount of 500.0 the amounts of our subordinated bonds, exclude items or types of items that may The most closely comparable measure continue to occur from period to period in presented in accordance with IFRS is net the future and (iv) they may not exclude proft for the period. Please refer to Net all items which investors may consider to Proft to Adjusted EBITDA Bridge for be unrelated to our long-term operations. a reconciliation to the respective most These non-IFRS measures are not, and closely comparable measures presented in should not be viewed as, substitutes for accordance with IFRS. IFRS reported net income (loss). We encourage investors to review our historical fnancial statements in their entirety and caution investors to IFRS measures as the primary means of evaluating our performance, value and prospects for the future, and EBITDA and Adjusted EBITDA as supplemental measures. We present Net Debt because we believe that it is useful to investors in that our management uses it to monitor and evaluate our indebtedness, net of cash and cash equivalents, and, in conjunction with Adjusted EBITDA, to monitor our leverage. We also believe that similar measures of indebtedness are frequently used by securities analysts, investors and other interested parties in the evaluation of companies in our industry. billion hybrid (subordinated) bonds issued although we believe it to be reasonable, do in June 2019 by S&P Global Rating Japan not afect the status of those instruments in recognition of the equity-like features as indebtedness. Net Debt should not be of those bonds pursuant to such agency’s considered in isolation and are not, and ratings methodology. From this fgure, we deduct cash and cash equivalents, excluding should not be viewed as, a substitute for bonds and loans or any other measure of cash that is temporarily held by Takeda on indebtedness presented in accordance with behalf of third parties related to vaccine IFRS. operations and the trade receivables sales program, to calculate Net Debt. The most directly comparable measures under IFRS for Net Debt is bonds and The usefulness of Net Debt to investors loans. Please refer to Net Debt to Adjusted has signifcant limitations including, but EBITDA for a reconciliation to this measure. not limited to, (i) it may not be comparable to similarly titled measures used by other companies, including those in our industry, (ii) it does not refect the amounts of interest payments to be paid on our indebtedness, (iii) it does not refect any x i d n e p p A R S C l a b o G l s l a i c n a n i F t e n a l P e l p o e P t n e i t a P e c n a n r e v o G t u o b A 59 2023 Annual Integrated Report T H I S R E P O R T O U T L I N E S Takeda’s fnancial and non-fnancial results - - from fscal year 2022 and the sustainability related focus areas we believe are most important for the stakeholders and communities we serve. The report includes the operations of Takeda Pharmaceutical Company Limited and its consolidated subsidiaries. The reporting period covers fscal year 2022 (April 1, 2022, to March 31, 2023), but this report may include We have prepared this report in consultation with additional frameworks and standards, including the: • Integrated Reporting Framework • The Sustainability Accounting Standards Board (SASB) Biotechnology & Pharmaceuticals Sustainability Accounting Standard. See 2023 SASB index report. information that refects events occurring • The Biopharma Investor ESG after March 31, 2023. Communications Guidance This report is published in addition to our regulatory disclosure documents: our Annual Securities Report fled with the Japanese Financial Services Agency and our Form 20-F fled with the U.S. Securities • Stakeholder Capitalism Metrics developed by the World Economic Forum (WEF) and its International Business Council. See 2023 WEF index report. and Exchange Commission. The fnancial statements included in those regulatory reports are prepared in accordance with • The 10 principles of the United Nations Global Compact (UNGC). See 2023 UNGC index report. • The Task Force on Climate-related Financial Disclosures (TCFD) framework. See TCFD report. For more information, visit our Investor Information International Financial Reporting Standards, as issued by the International Accounting Standards Board. Details of our annual reports can be found on our website. This report is supplemented by our online sustainability disclosures, which provides easy-to-navigate links to where Takeda discloses important information related to our ESG priorities, practices and data across our various reporting platforms. Our sustainability disclosures contain our latest fscal year 2022 sustainability performance indicators under the categories of Patient, People, Planet and Governance. Takeda Pharmaceutical Company Limited Takeda Global Headquarters 1-1, Nihonbashi-Honcho 2-chome, Chuo-ku, Tokyo 103-8668, Japan Tel: +81-3-3278-2111 Fax: +81-3-3278-2000 takeda.com © Copyright 2023 Takeda Pharmaceutical Company Limited. All rights reserved. Design by Addison.com 

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