The restructuring of

Management Topic
1
By successfully integrating its marketing and
development functions in the U.S., Takeda can
focus on promoting further efficiencies in its
business operations as well as strengthening its
flexibility when responding to meet market needs.
The Restructuring of U.S.
Operations
Strengthening Business Infrastructure in the U.S.
—the World's Largest Pharmaceutical Market
In 1977, Takeda established a 50-50 partnership with
Abbott Laboratories in the U.S. for research and development of new drugs. TAP Pharmaceutical Products Inc.
was established in 1985 as a joint venture with Abbott
in conjunction with the launch of the prostate cancer
treatment Lupron (generic name: leuprorelin acetate).
Since then TAP has greatly contributed to the growth of
Takeda's ethical pharmaceutical business in the U.S.
market through the expanding sales of Lupron Depot
(sustained release formulation of leuprorelin acetate)
and the peptic ulcer treatment Prevacid (generic name:
lansoprazole). In April 2008, Takeda implemented the
division of TAP upon agreement with Abbott and TAP
became a wholly-owned subsidiary of Takeda.
In July 2008, TAP was merged into Takeda Pharmaceuticals
North America, Inc. (TPNA), and subsequently TAP's
development function was integrated into Takeda Global
Research & Development Center Inc. (TGRD). Through
this restructuring, Takeda reinforced its marketing and
development functions in the U.S., as well as further
promoted efficiencies throughout its business operations.
The former assets of TAP have primarily been distributed
as shown in the table on the right.
In addition to the peptic ulcer treatment Prevacid, Takeda
obtained TAP's pipeline, including the peptic ulcer treatFlow of Restructuring of U.S. Operations
Before restructuring of U.S. operations
Takeda
Abbott
ment TAK-390MR for which a New Drug Application was
submitted in December 2007, IY-81149 and also TMX67, a treatment of hyperuricemia in patients with gout.
Takeda will continue to supply product for the prostate
cancer and endometriosis treatment Lupron Depot to
Abbott, while Abbott will conduct sales and marketing
activities in the U.S. market.
TAP has established an outstanding customer marketing
network with general practitioners and have extensive
experience in the area of gastroenterological diseases.
By incorporating this outstanding resource Takeda aims
to further enhance its sales and marketing capabilities in
the U.S. market, thereby maximizing the product potential of Actos (generic name: pioglitazone hydrochloride),
Prevacid and Amitiza (generic name:lubiprostone), and
also rapidly maximizing the potential of next-generation
core products such as the diabetes treatment SYR-322
(generic name: alogliptin) and TAK-390MR.
Distribution of Core Assets from TAP:
■Takeda Group
Prevacid (peptic ulcer treatment)
TAK-390MR (peptic ulcer treatment)
IY-81149 (peptic ulcer treatment)
TMX-67 (treatment for hyperuricemia in patients with gout)
■Abbott Group
Lupron Depot (treatment for prostate cancer and endometriosis)
TAH: Takeda America Holdings, Inc. (holding company) * Numerical value represents the ratio of capital contribution
After restructuring of U.S. operations
Takeda
100%
100%
TAH
TAH
100%
50%
50%
TAP
TAP
The restructuring of
10
100%
100%
TPNA
Merger
TGRD
Transferring the development
function of TAP
U.S.operations
Management Topic 1
The Restructuring of U.S. Operations
Message
Takeda finds itself with the unique opportunity to build on the
past successes of three of its successful organizations
in the United States (U.S.) and create a new foundation for
Takeda's continued growth in the U.S.
In March 2008, Takeda announced plans to evenly divide its
joint venture with Abbott Laboratories—TAP—and
integrate it into its two U.S. subsidiaries,
Takeda Pharmaceuticals North America, Inc. (TPNA) and
Takeda Global Research & Development Center, Inc. (TGRD)
Fully integrating the operations of these successful
organizations creates a top 15 pharmaceutical company in the U.S.
Over the past 30 years, Takeda has significantly increased its
presence in the U.S. I have had the fortune to work at both
TAP and TPNA and witness their successes first hand.
In I998, I was honored to take part in the creation of TPNA and
helped launch Actos—an important drug that has benefited
many people with type 2 diabetes.
As we work toward integrating all elements of these successful
organizations we have a significant opportunity.
We can strengthen Takeda's presence in the world's largest
pharmaceutical market, and help build Takeda for the future.
With that comes a tremendous responsibility.
The focus of our efforts needs to be centered on balancing
the needs of our shareholders, employees and
most importantly the patients we serve.
We will work together to build an organization
based on integrity, so each interaction and each decision
has this important foundation.
We believe we have the pieces in place to make this happen and
become one of the world's leading pharmaceutical companies.
Alan MacKenzie
EVP, Takeda America Holdings, Inc.
CEO, Takeda Pharmaceuticals North America, Inc.
11
Management Topic
2
Strengthening
Strategy in
Oncology Area
Takeda's focus is on becoming a
top three global oncology company that
responds to the unmet needs of patients and
medical professionals worldwide.
Message
Kiyoshi Kitazawa, Ph.D.
Managing Director
Takeda has established for itself a new vision of "becoming a top three global
oncology company." In order to accomplish this vision, Takeda is implementing
a wide range of initiatives to strengthen Takeda Group's activities in the oncology area, including the establishment of Takeda San Francisco, Inc., the acquisition of the Japanese subsidiary of U.S. Amgen Inc. (currently named Takeda Bio
Development Center Limited) and the acquisition of Millennium Pharmaceuticals,
Inc, one of the world's leading biopharmaceutical companies. For Takeda to
leap forward in becoming a world-class pharmaceutical company and ensure
sustainable growth into the future, a key initiative for the company is to establish
itself as a leading company in the oncology area, which has considerable unmet
needs and for which further market growth is anticipated in the future. In particular,
by leveraging Millennium's excellence in the research and development of oncology products, as well as their sales force—which is highly respected by
oncology specialists in the U.S. due to their sales efforts for the multiple myeloma
treatment, VELCADE—we anticipate that the acquisition of Millennium will make
significant contributions over the medium- and long-term to Takeda's ability to
continually launch new products into the oncology market.
Above all else, Takeda is focused on responding to the unmet needs of patients
and medical professionals worldwide through the rapid development of superior
pharmaceutical products. Takeda is dedicated to "establishing a full-line operational infrastructure—from the research stage to distribution—in the oncology area."
Establishment of Takeda San Francisco, Inc.
to Further Enhance Research on Antibody Drugs
Antibody-based pharmaceuticals take advantage of the
human immune system to attach to pathogens (antigens)
and are produced through biotechnology techniqueswith the market for them forecast to continue growing
rapidly into the future. Antibody-based pharmaceuticals
are considered to be particularly suited to cancer treatments, as evidenced by the fact that about half of the
approved antibody-based products are indicated for
cancer. In November 2007, Takeda established Takeda
San Francisco, Inc. (TSF)—which is located in San Francisco amongst one of the biopharmaceutical industries
bio-clusters—with the aim of strengthening the Company's antibody drug development capabilities. Through
such initiatives, Takeda aims to establish a world-leading
infrastructure for the discovery, development, and production of superior antibody-based pharmaceuticals, as
well as their earliest possible launch.
12
Takeda Bio Development Center Limited
—an Integral Part in the Development of
Biopharmaceuticals
In February 2008, Takeda acquired the Japanese
subsidiary of U.S. Amgen Inc. and then in April established it as Takeda Bio Development Center Limited
(Takeda Bio). Along with this acquisition, Takeda entered
into a licensing agreement with Amgen for thirteen
molecules from Amgen's pipeline in therapeutic areas
including oncology, inflammation and pain. Takeda Bio
is positioned as Takeda's domestic development
center of excellence for antibody-based pharmaceuticals
and is mainly pursuing the development of the products
in-licensed from Amgen. Of those in-licensed projects,
a New Drug Application for the colon and rectal cancer treatment, Vectibix (generic name: panitumumab)
was submitted in Japan in June 2008. Takeda is also
striving to accelerate efforts that will lead to the stageup of the other products in the pipeline also.
Management Topic 2
Strengthening Strategy in Oncology Area
By transitioning Millennium Pharmaceuticals, Inc.—one of the
world's leading biopharmaceutical company—into Takeda Group,
Takeda takes a leap forward in its strategy to
establish oncology as a next generation core therapeutic area.
Consolidation of a Leading Oncology
Biopharmaceutical Company
as a Wholly-owned Subsidiary
On May 8, 2008 (U.S. Time), Takeda successfully completed a tender offer for Millennium Pharmaceuticals,
Inc.; thus it became a 100% owned subsidiary of
Takeda on May 14, 2008 (U.S. Time). Millennium is
now positioned as Takeda's center of excellence in
oncology.
Millennium is one of the world's leading biopharmaceutical companies, possessing a strong R&D pipeline
in the oncology area. The company is a pioneer in the
field of protein homeostasis* research and has proven
excellence in its development function as well—having
developed VELCADE, a multiple myeloma treatment,
from IND to market launch within four and a half years.
Additionally, the excellence of the company's marketing
function is evidenced by US hematologists and oncologists evaluating them as "high quality sales representatives." By leveraging the complementary strengths of
Millennium and Takeda, the Takeda Group will benefit
from considerable synergies, both from Millennium's
excellence in knowledge, technology and experience in
the oncology area and also in the earliest possible
launch of superior new oncology products that respond
to the unmet needs of patients and medical professionals
worldwide.
homeostasis refers to the cycle of synthesis, folding, exertion of function and de* Protein
composition of proteins that are developed within the cell and by keeping this process
well-balanced, the cell multiplies and functions. Millennium's research focuses on controlling the progression of cancer by inducing apotosis (a form of programmed cell death), as
well as hindering cancer growth by inhibiting the decomposition process of the of protein.
Positive impacts for acquiring Millennium are summarized
as follows:
1. Contribution to financial results through the
sales the anti-cancer drug, VELCADE, which has
high growth potential for the future
2. Rapid enhancement of the oncology pipeline
3. Through Millennium's close coordination with
other Takeda Group members, establish an infrastructure for high-quality research, development and marketing in the oncology area
4. Further enhancement of inflammatory diseases
pipeline and strengthening of the gastroenterological diseases area
5. Strengthened infrastructure for U.S. operations
through the addition of specialty care to primary
care.
6. Establishment of a stronger IND engine structure
due to mutually complementary R&D platforms
7. Acquisition of outstanding professional personnel
Overview of Millennium
■ Established in 1993
■ A leading company in the oncology area
With excellent research and development capabilities, a high
presence in the U.S. market, and high growth potential is
anticipated for its anti-cancer drugs
■ Business performance for the business term ending
in December 2007
Net sales: $528 million Net income: $14.9 million
■ Possesses a promising pipeline in the oncology and
inflammatory diseases areas
■ High quality full-line functions from research and
development to marketing
Strengthening strategy in
Oncology Area
13
Management Topic
2
Strengthening
Strategy in
Oncology Area
Millennium acquisition instantly enriches
oncology pipeline.
And dramatically enhances overall capabilities
in the U.S. operations, too.
Millennium, The Takeda Oncology Company
A Strong and Broad Pipeline Centering
on the Oncology Area
The excellence of Millennium's research and development
capabilities are evident in its strong and broad pipeline of
drug candidates in the oncology and inflammatory disease areas. Beginning with the multiple myeloma treatment, VELCADE, for which high growth is anticipated,
and then with Millennium's focus
on the oncology area where there
are considerable unmet needs,
Millennium provides strong
support to Takeda's vision for
the oncology area.
The development of VELCADE
was based on a novel approach stemming from Nobel
Prize winning research on
protein homeostasis.
Approved in May 2003, VELCADE was the first new
drug therapy in more than a decade for multiple myeloma and was cleared for marketing by the FDA on an
expedited review basis. VELCADE quickly became a
standard of care in second- and third-line multiple myeloma. In June 2008, VELCADE was approved for use in
previously untreated patients with multiple myeloma.
VELCADE has also shown significant potential in treating non-Hodgkin's lymphoma (NHL), a diverse group of
cancers that affect the white blood cells in the immune
system. VELCADE is thought to have the potential to
become a blockbuster drug, implying net peak sales of
over ¥100 billion, in the U.S. alone.
In addition to an excellent pipeline in the oncology area,
Millennium also possesses an outstanding pipeline in
the inflammatory diseases area. MLN0002 is entering
VELCADE, a novel treatment for
multiple myeloma and
non-Hodgkin's lymphoma
R&D Pipeline of Millennium
Development Code
Indication/Formulation
Stage of Development Preclinical Trial
PhaseⅠ
PhaseⅡ
Phase Ⅲ
NDA Submission NDA Approval
Oncology
VELCADE
First line multiple myeloma
Follicular NHL
Several tumors
MLN0518
Glioma, Acute myelocytic leukemia
MLN8237/8054
Advanced cancer
MLN4924
Advanced cancer
MLN9708
Advanced cancer
MLN3897/3701
Multiple myeloma
Inflammatory Diseases
14
MLN0002
Ulcerative colitis, Crohn's disease
MLN3126
Crohn's disease
MLN0415
Various inflammatory diseases
MLN6095
Asthma, Allergic rhinitis
2008.06
Management Topic 2
Strengthening Strategy in Oncology Area
late-stage clinical trials to treat ulcerative colitis and
Crohn's disease. Thus far, MLN0002 has shown very
promising safety and efficacy benefits as well as a
manageable side-effect profile.
The Millennium acquisition has considerably strengthened Takeda's oncology pipeline. For further information, please refer to pages 32-35.
Synergistic Effects in U.S. Operations
Takeda has had a desire to establish a strong franchise
in the oncology area, and Millennium's outstanding
sales force, strong relationship with oncologists and
high-quality information service functions will greatly
contribute to Takeda's competitive presence. In addition, Takeda anticipates prompt information collection
in terms of cutting-edge science and technology, as
well as the ability to recruit world-class talent, based
on Millennium's outstanding reputation as one of the
best places to work, as ranked by Science magazine
in 2007 and 2008. Millennium also has the advantage
of being based in Boston—a city known for having
one of the best and highest concentration of biotech
companies, academic institutions and pharmaceutical
companies worldwide.
Furthermore, in the gastroenterological diseases area,
maximizing the product value of MLN0002 and MLN3126
will be possible by utilizing strengthened TPNA's seasoned human resources and expertise. The acquisition of
Millennium, which represents the largest ever investment
for Takeda, strengthened the compounds presence in the
oncology area and provide synergy effects in U.S. operations, which we believe will contribute significantly to the
sustained growth of the company.
Deborah Dunsire, M.D.
President and CEO
Millennium, The Takeda Oncology Company
Advantages of Millennium
Research Function
Development Function
Marketing Function
• Strength in oncology biology attacking cancer growth and survival
pathways
• Innovative strategy to develop new
drugs and commercialize at an early
stage in the oncology diseases area
• Launched in May 2003, VELCADE
achieved $265 million in the U.S. in
fiscal 2007
• Pioneer in the field of protein homeostasis
• Pipeline of innovative molecules to
novel targets
• World-class, highly productive discovery engine
• Strong regulatory relationship and
track record (four U.S. regulatory
approvals for VELCADE in five years)
• Recognized as the company with
the 7th best sales representatives
by hematologists and oncologists*
•Outstanding medical affairs department
• Successful execution of large-scale
global Phase Ⅲ clinical trials
* Reference: Verispan Physician Ranking Table; Oncology and Hematology 2006
Strengthening strategy in
Oncology Area
15