By Sam Nussey
TOKYO (Reuters) - Japan's Takeda Pharmaceutical Co Ltd on Monday forecast a 17 percent drop in operating profit for the year through March 2019 as blood cancer drug Velcade looks set to face generic competition in the United States.
The loss of Velcade's exclusivity will be partly offset by growing sales of bowel disease treatment Entyvio and heartburn and ulcer drug Takecab, but Takeda's lower overall profitability underscores the firm's need to bolster its drug pipeline.
While Takeda's record-breaking $62 billion deal to buy Shire is expected to buoy the Japanese firm's pipeline in the long run, the more imminent generic threat to Velcade is expected to hit the company's sales this year.
Generic competition for Velcade, used to treat multiple myeloma, a type of blood cancer, will likely slash the drug's sales by half this year, the company said.
This compares to a profit of 241.8 billion yen for the year ended March 2018, up 55 percent and the highest in six years.
The Shire acquisition, expected to close by the end of the year, will increase Takeda's pipeline of phase III programmes to ten from three. After the deal, the U.S. market will account for almost half of Takeda's sales, versus a third currently.
In addition to Takeda's core areas of gastroenterology, oncology and neuroscience, Shire will add strength in blood-derived therapies and rare diseases, which are seen as being more sheltered from U.S. price pressures.
The Japanese drugmakers' net debt to earnings before interest, taxes, depreciation and amortization was 1.8 times at the end of March.
That ratio could jump to more than 5 times after the Shire deal closes, according to analysts. Takeda has said it will use increased cash flow from the combined company to bring the ratio down to 2 times or less in three to five years.
Assuming the deal wins regulatory approval and the backing of shareholders, it will be the largest overseas purchase by a Japanese company and propel Takeda into the top 10 rankings of global drugmakers.
($1 = 109.5200 yen)
(Reporting by Sam Nussey; Editing by Edwina Gibbs and Himani Sarkar)
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