Please note that this telephone conference contains certain forward-looking statements and other projected results which involve known and unknown risks delays, uncertainties and other factors not under the company's control, which may cause actual results, performance or achievements of the company to be materially different from the results, performance or other expectations implied by these projections. Such factors include economic and market conditions, political events and investor sentiments, liquidity of secondary markets, level and volatility of interest rate, currency exchange rates, security valuations, competitive conditions and size, number and timing of transactions. During the presentation from the company all the telephone lines are placed on a listening-mode only and a question-and-answer session will be held after the presentation. This conference call is being broadcasted live on the internet but only for a listening-mode. With that we would like to begin the conference. Mr. Christopher Hohman, please go ahead.

Thank you very much and thanks everyone for joining us today for this conference call for overseas investors to cover Takeda's financial results for the fiscal year 2012 and our mid-range growth strategy. My name is Christopher Hohman as introduced. I am Senior Vice President in Corporate Communications. I would like to quickly introduce the panel here today with me. First of all Mr. Yasuchika Hasegawa, President and CEO; Dr. Tadataka Yamada, Chief Medical and Scientific Officer: Dr. Frank Morich, Chief Commercial Officer; Mr. Masato Iwasaki, Senior Vice President of the Pharmaceutical Marketing Division; Mr. Iwaaki Taniguchi, Senior Vice President of the Corporate Finance and Controlling Department; and finally joining us from Cambridge Massachusetts is Anna Protopapas, President of Millennium: The Takeda Oncology Company. We will first have opening remarks from Mr. Hasegawa, followed by Mr. Taniguchi and Dr. Yamada. And then we will go into the QA session. I hope that you are aware of financial information was announced by Takeda today. If you go to takeda.com the investor section has all of the presentations and press releases that we issued today. So if possible please access these materials. So first of all as I mentioned I would like to get started with opening remarks from President Hasegawa.

Hi, this is Yasuchika Hasegawa, President and CEO of Takeda Pharmaceutical. Thank you for joining our annual earnings report conference call. Assuming you have reviewed our announcement materials I would like to just make two comments. One is related to the operating margin gap in the year 2012, between our original announcement of ¥1,600 billion and versus year end closure ¥1,225 billion. There are three key factors contributing to this gap. Number one is the long term investment based on the phantom stock option we offer to the oversea senior employees, management employees. Ever since second time Abe Administration started December 26 last year, all the situation macroeconomic policies and Japan Central Bank policies and stock market have changed dramatically. Due to this for example Takeda's stock prices increased significantly during the course of first quarter from beginning ¥3855 last year to ¥5030 per share, 30% increase in one quarter. That contributed more than ¥100 billion incremental PL hit due to the phantom stock option we offer to the overseas senior management employees. Secondly, accelerated generic penetration towards the end of the fiscal year, particularly happened in the first quarter due to the Abe Administration's encouragement for cost reduction in medical expenses to promote generic use, more so than before. And in February corporate side misjudgment on last quarter sales and spending based on the past historical pattern. We have accomplished. We made a judgment on the corporate side. There might be upside in the sales and there might be downside in spending but that judgment was incorrect. And in the end modest sales was as projected and the spending was as projected. So those three factors contributed a gap between the original announcement versus the year-end closure. So we have learned the lessons and we have had in-depth discussion…

This is Iwaaki Taniguchi, Head of Corporate Finance and Control at Headquarter. I will walk through our financial performance of the fiscal year '12 and outlook for fiscal year '13 together with the guidance for the sustainable future growth. Please move to the presentation page two which presents results of the fiscal year '12. Let me quickly introduce key figures for '12. First of all our net sales is ¥ 1.557 trillion, which is a 3.2% increase from previous year. Then operating income is ¥122.5 billion which is a 53.8 decrease. For your information our operating income excluding special factors is ¥267.5 billion which is 35.5 decrease. Finally net income is ¥131.2 billion which is a 7.1 billion increase from previous year. Let me deep dive into each component of the financial from the next page. Here I want to explain the breakdown of sales increase by business segment. First one is ethical drugs segment in Japan. Also our net products line including Nesina and Azilva have made a good contribution. It was not sufficient to offset a decrease of a major existing product like Actos and Blopress, which were impacted by late 5% cutting in the listing price by Japanese government. Overall reserve is a ¥3.8 billion decrease from previous year for this segment. And for overseas ethical drug segment we recorded ¥46.8 billion increase due to 12 months counting of legacy Nycomed product portfolio as well as new acquisitions such URL and Multilab in Brazil. Please move onto the next page. This page shows breakdown of net sales increase by products. As you can see although we experienced decrease in Actos and other three major products we had a significant increase of ¥94.4 billion in new product category which were launched after 2009. Plus we have a benefit…

Thank you. And finally Dr. Yamada will give an update on R&D activities.

Thank you very much Chris and thank you all for listening in. I know you have a copy of the presentation so I am going to truncate my presentation somewhat and jump around a little bit. Going to page three; page three points out that we had a very good year in FY12. We had many important approvals and filings. Just on the approval side I should point Nesina was approved in U.S., ADCETRIS was approved for relapsed refractory Hodgkins in (pharma) and ALCL in Europe and what is not shown on this page is the recent approval of (culpasidnib) which we have end license to Pfizer in Japan. On the registration and filing side there are four products that I would just like to highlight that will represent important launches in FY'13 going into FY'14. One is BRINTELLIX our multi-modal anti-depressant partnered with Lundbeck; Contrave, which is a obesity product; vedolizumab which is monoclonal antibody against alpha 4 beta 7 integrin for ulcerative colitis in Crohn's disease; and lurasidone for treatment of schizophrenia, lurasidone being launched in Europe. One other item on the filing side just to take note of is BLB-750 which is our pandemic influenza vaccine. This is important given its potential adaptation to H7 N9 vaccine should that be required. Moving to page four, in the next page we have a very strong phase III program. You have heard much about this. So I won't comment more other than to say that important revolutionary products here; TAK-875 for diabetes chief amongst them but in addition, orteronel, TAK-700, MLN9708, that's called ixazomib. And an interesting compound called vonoprazan or TAK-438, potassium-competitive acid blocker primarily developed in Japan. On page five we note some important partnerships that we have developed in the past year. I would like to…

Thank you. So with that we would like to commence the Q&A session. So I request the callers limit themselves to two questions each and to ask a question please follow the instructions of the operator. Operator please?

We have a question-and-answer session now. (Operator Instructions) The first question is from Ms. Salva Gilotti from Platinum. Please go ahead.

Yeah hi, I first wanted to clarify the 20% operating profit growth which you forecast for '13 to 17, is that based on reported Japanese GAAP, the adjusted GAAP or on IFRS? And the second question is the new core earnings, is the new core earnings the same as the old operating income excluding special factors or is that the new adjusted net earnings number?

Let me answer to your question. So 25% increase per year, average year is related to our core earnings from -- no, no. 25% operating margin to be achieved by 2017 for core earnings but we also expect the increase over operating income at the rate of 25% for next five years as well.

25% operating margin on the core also based on all adjusted and also 25% gross on average per year on core earnings?

No, no, no. 20% annual gross operating income for next five years on average basis.

But what operating profit is that?

It's Japan GAAP. But we are migrating to IFRS from the March next year but for 2013 we will make announcement under Japan GAAP. So operating income was -- please understand this is the Japan GAAP based number 20% CAGR.

Okay.

25% the core earnings, the ratio against sales is to be achieved by 2017.

Okay, thank you.

Core earnings is same concept, very close concept as the operating income results special factors.

Okay. That makes sense.

Thank you very much. Next caller please.

The next question is from Ms. Amelia Sancheti from Hunter Fitzgerald. Please go ahead.

Hi, good evening. I was actually going to ask about the profitability margin for your emerging market business, and you previously said that it stands at around 30% and you are looking to be in line you said around 40%. I was just wondering if you could give us an update where it stands now and whether that guidance still holds. And then secondly I am might have missed this during the presentation so wondering what sort of extraordinary related expense we need to expect for Omontys and next year?

I am answering your first question about the profitability of emerging market. We have emerging markets that have profitabilities which in the area of 40%, and for our business we can say that it seems to be relationship between market share and profitability. And we have of course strongholds where we have pretty strong market positions, and in other areas so we still focusing on growth and do heavily invest in growth. We for the time being accept lower margins but the goal is to bring the emerging markets business as a whole into the range of 35% to 40% which according to our understanding is in line with best practices. And the second question regarding to Omontys I will hand over to Iwaaki again.

So as for Omontys we accrued all related in 2012 already, and there is no more expense related to this product in 2013.

Okay, great. And then just sort of trying to go back to the emerging market question? Not to be annoying but I was just wondering sort of on the whole where we are standing now and given your goals is 35 to 40. I am just wondering sort of that merged average where we are at the moment. I do understand that some are probably sort of already there.

We normally don't give away these numbers, but I don't think you make a big mistake if you just use the middle ground between the 40 and something that is between 20 and 30 then I think you will see…

Great, thanks

Do we have another caller with the question?

(Operator Instructions).

I am showing there is one more question, so please go ahead.

… from stock option and they have been taking in the operating profit and this is not a special item, they are basically taking in the reported, is that correct?

That's correct. Yeah, all those stocks, phantom option related expense is accrued within the category R&D expense for R&D people in the category of admin general and marketing for marketing and general staff, but not in the special category.

So basically this is also going forward. This is not only one off that is basically also in the forecast over the next year so that's stable number

Not necessarily depending on the behavior of exercising pattern of exercising and granting and those situations that could be affected by those factors.

Okay so the other delta is kind of higher SG&A cost which continues in the next years, can you just explain why the SG&A cost is so much higher, can you anticipate it?

Because as I mentioned in my presentation we continue to make necessary investments for future growth such as new product launch preparation and expansion in the emerging country. But as I mentioned also we try to maintain cost as much as possible so we don't expect significantly increased results for ex-FX basis from current level.

But you invested last year than much more than you thought so basically so you start off at a higher base but you continue it.

We expect to have same level SG&A at least next year. After 2014 it depends on the situation in product launch and emerging country situation as well.

And can I just understand a bit more what's going on in the gross margins? So basically the gross margins will change significantly from here going forward or should they stay the same?

In terms of cost of goods sold which is important (competitor) of gross margin, we try to maintain our cost of goods sold as much as possible, although there is necessary increase in consistent with sales increase but the percentage of core cost of the goods sold against sales will decline so that we can increase our operating margin and gross profit as well.

So the gross margin should go up over the next year is what you are saying?

Of course gross margin should go up because sales increase will absorb the increase of cost of goods sold so gross margin should increase for next at least three years.

Do we have any other questions?

Can I just maybe ask another question?

Sure. I think we have time for one more question.

Do you have a feel for what the tax rate will be this year? What is the assumption in your numbers?

Yeah tax rate this year is very unique because we received a huge refund from Japanese government related to (inaudible) operating settlement. From next year we are coming back to the normal tax rate, corporate tax rate marginal and corporate tax rate like 40%, lower 40% reflecting Japanese corporate tax rate, for some non-tax deductible items.

So this is much higher than most people think because the tax rate should go down in Japan in general you know. In your forecast you have got higher than 40% tax rate?

Because of the amortization of the goodwill. So this will negatively impact the corporate tax rate because this amortization of the goodwill is not tax deductible item. It will on surface negatively impact corporate tax rate as a consolidation basis.

Okay.

I understand. There is one more question on the line from the investors? Operator?

That question was from Ms. Salva Gilotti from Platinum. The next question is from Mr. Rogers from Private Investors. Please go ahead.

Hi, I have a quick question. I was just wondering if you could give us an update on Omontis. Thanks.

This is Tachi Yamada. Omontis the NDA and IND -- the IND and NDA have been transferred Affymax to Takeda and Takeda have assumed all responsibility for subsequent investigation and recall of the distributed product. We are working directly with the FDA on this.

And just as a follow-up, do you think it will make it back to market?

I wish I knew the answer to that. I can't say.

Okay, thanks a lot

Okay, so with that brings us to the end of the call today. I would like to thank everyone for participating and for your interest in Takeda. Thank you very much.

Thank you for taking time to join us today. That concludes today's conference call. You may now disconnect your line.