{"url_path":"/sec/tak/10-k/2026/item-19","section_key":"item-19","section_title":"Item 19 Exhibits","topic":"sec","document":{"doc_type":"20-F","doc_date":"2026-06-17","source_url":"https://www.sec.gov/Archives/edgar/data/1395064/0001395064-26-000177-index.html","accession_number":"0001395064-26-000177","cik":"0001395064","ticker":"TAK","issuer_name":"TAKEDA PHARMACEUTICAL CO LTD","edgar_url":"https://www.sec.gov/Archives/edgar/data/1395064/0001395064-26-000177-index.html","primary_entity_key":"0001395064","primary_entity_name":"TAKEDA PHARMACEUTICAL CO LTD"},"word_count":36139,"has_tables":true,"body_markdown":"Item 19. Exhibits\n\nExhibit\nNo.Exhibit\n\nExhibit 1.1\n[Articles of Incorporation of Takeda Pharmaceutical Company Limited (English Translation) (incorporated by reference to Exhibit 99.1 to the](https://www.sec.gov/Archives/edgar/data/1395064/000139506423000021/exhibit991_030123.htm)[Current Report](https://www.sec.gov/Archives/edgar/data/1395064/000139506423000021/exhibit991_030123.htm)[on Form 6-K of the registrant furnished on March 1, 2023)](https://www.sec.gov/Archives/edgar/data/1395064/000139506423000021/exhibit991_030123.htm)\n\nExhibit 1.2*\n\n[Board of Directors Charter of Takeda Pharmaceutical Company Limited (English Translation)](exhibit12_061726.htm)\n\nExhibit 1.3\n[Company Share Policy of Takeda Pharmaceutical Company Limited (English Translation) (incorporated by reference to Exhibit 1.3 to the Annual Report for the Fiscal Year Ended March 31, 2022 on Form 20-F of the registrant, filed on June 29, 2022).](https://www.sec.gov/Archives/edgar/data/1395064/000139506422000107/exhibit13_062922.htm)\n\nExhibit 2.1\n[Form of Amended and Restated Deposit Agreement among the Takeda Pharmaceutical Company Limited, The Bank of New York Mellon, as Depositary, and all Owners and Holders from time to time of American Depositary Shares issued thereunder (incorporated by reference to Exhibit 2.1 to Amendment No. 1 to the Registration Statement on Form 20-F of the registrant, filed on December 17, 2018).](https://www.sec.gov/Archives/edgar/data/1395064/000119312518350381/d608344dex21.htm)\n\nExhibit 2.2*\n\n[Description of the rights of each class of securities that is registered under Section 12 of the Exchange Act as of the end of the period covered by this report.](exhibit22_061726.htm)\n\nExhibit 4.1+\n\n[Collaboration Agreement dated December 14, 2009 by and between Seagen Inc. (f/k/a Seattle Genetics, Inc.) and Takeda Manufacturing U.S.A., Inc. (as successor in interest to Millennium Pharmaceuticals, Inc) (incorporated by reference to Exhibit 4.1 to the Annual Report for the Fiscal Year Ended March 31, 2021 on Form 20-F of the registrant, filed on June 29, 2021).](https://www.sec.gov/Archives/edgar/data/1395064/000139506421000140/exhibit41_062921.htm)\n\nExhibit 4.2+\n\n[Amendment to Collaboration Agreement dated November 7, 2022 by and between Seagen Inc. and Takeda Manufacturing U.S.A., Inc. (incorporated by reference to Exhibit 10.2 to the](https://www.sec.gov/Archives/edgar/data/1060736/000106073623000009/ex102-amendmenttocollabo.htm)[Annual](https://www.sec.gov/Archives/edgar/data/1060736/000106073623000009/ex102-amendmenttocollabo.htm)[Report of Seagen Inc. on Form 10-K filed on February 15, 2023).](https://www.sec.gov/Archives/edgar/data/1060736/000106073623000009/ex102-amendmenttocollabo.htm)\n\nExhibit 4.3\n[Takeda Pharmaceutical Company Limited Long](https://www.sec.gov/Archives/edgar/data/1395064/000139506420000113/exhibit991.htm)[-](https://www.sec.gov/Archives/edgar/data/1395064/000139506420000113/exhibit991.htm)[Term Incentive Plan (incorporated by reference to Exhibit 99.1 to the Registration Statement on Form S-8 of the registrant filed on June 25, 2020).](https://www.sec.gov/Archives/edgar/data/1395064/000139506420000113/exhibit991.htm)\n\nExhibit 4.4+\n\n[Stock Purchase Agreement dated December 13, 2022 by and between Takeda Pharmaceuticals U.S.A., Inc. and Nimbus Therapeutics, LLC (incorporated by reference to Exhibit 4.4 to the Annual Report for the Fiscal Year Ended March 31, 2024 on Form 20-F of the registrant, filed on June 26, 2024)](https://www.sec.gov/Archives/edgar/data/1395064/000139506423000072/exhibit44_062823.htm)\n\nExhibit 8.1\n[List of subsidiaries of Takeda Pharmaceutical Company Limited, as of March  31, 202](#i89761be648564855b53fa24df8e6ee90_106)[6](#i89761be648564855b53fa24df8e6ee90_106)[: See “Item 4. Information on the Company—C. Organizational Structure.”](#i89761be648564855b53fa24df8e6ee90_106)\n\nExhibit 11.1\n[Global Insider Trading Policy of Takeda Pharmaceutical Company Limited(incorporated by reference to Exhibit 11.1 to the Annual Report for the Fiscal Year Ended March 31, 2024 on Form 20-F of the registrant, filed on June 26, 2024)](https://www.sec.gov/Archives/edgar/data/1395064/000139506424000086/exhibit111_062624x.htm)\n\nExhibit 12.1*\n\n[Certification of the principal executive officer required by 17 C.F.R. 240. 13a-14(a).](exhibit121_061726.htm)\n\nExhibit 12.2*\n\n[Certification of the principal financial officer required by 17 C.F.R. 240. 13a-14(a).](exhibit122_061726.htm)\n\nExhibit 13.1*\n\n[Certification of the chief executive officer required by 18 U.S.C. Section 1350.](exhibit131_061726.htm)\n\nExhibit 13.2*\n\n[Certification of the chief financial officer required by 18 U.S.C. Section 1350.](exhibit132_061726.htm)\n\nExhibit 15.1*\n\n[Consent of Independent Registered Public Accounting Firm](exhibit151_061726.htm)\n\nExhibit 15.2*\n\n[Consent of Independent Registered Public Accounting Firm](exhibit152_061726.htm)\n\nExhibit 97.1\n[Compensation Recoupment Policy of Takeda Pharmaceutical Company Limited (incorporated by reference to Exhibit 97.1 to the Annual Report for the Fiscal Year Ended March 31, 2024 on Form 20-F of the registrant, filed on June 26, 2024).](https://www.sec.gov/Archives/edgar/data/1395064/000139506424000086/exhibit971_062624.htm)\n\n101.INS*\nInline XBRL Instance Document—the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document\n\n101.SCH*\nInline XBRL Taxonomy Extension Schema Document\n\n101.CAL*\nInline XBRL Taxonomy Extension Calculation Linkbase Document\n\n101.DEF*\nInline XBRL Taxonomy Extension Definition Linkbase Document\n\n101.LAB*\nInline XBRL Taxonomy Extension Label Linkbase Document\n\n101.PRE*\nInline XBRL Taxonomy Extension Presentation Linkbase Document\n\n104*\nThe cover page for the registrant’s Annual Report on Form 20-F for the year ended March 31, 2026, has been formatted in Inline XBRL\n\n146\n\n[Table of Contents](#i89761be648564855b53fa24df8e6ee90_10)\n\n*    Filed herewith.\n\n+ Certain confidential information contained in this exhibit, marked by brackets therein, has been omitted, because it is both not material and would likely cause competitive harm if publicly disclosed.\n\nWe have not included as exhibits certain instruments with respect to our long-term debt where the amount of debt authorized under each such debt instrument does not exceed 10% of our total assets on a consolidated basis. We will furnish a copy of any such instrument to the SEC upon request.\n\n147\n\n[Table of Contents](#i89761be648564855b53fa24df8e6ee90_10)\n\nSIGNATURES\n\nThe registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.\n\nTAKEDA PHARMACEUTICAL COMPANY LIMITED\n\nBy:/s/ Milano Furuta\n\nName: Milano Furuta\n\nTitle: Director and Chief Financial Officer\n\nDate: June 17, 2026\n\n148\n\nTAKEDA PHARMACEUTICAL COMPANY LIMITED AND ITS SUBSIDIARIES\n\nIndex\n\nPage\n\n[Report of Independent Registered Public Accounting Firm](#i89761be648564855b53fa24df8e6ee90_346) (PCAOB ID 1009)\n\n[F-2](#i89761be648564855b53fa24df8e6ee90_346)\n\n[Consolidated Statements of Profit or Loss for the years ended March 31, 2024, 2025 and 2026](#i89761be648564855b53fa24df8e6ee90_358)\n\n[F-5](#i89761be648564855b53fa24df8e6ee90_358)\n\n[Consolidated Statements of Comprehensive Income for the years ended March 31, 2024, 2025 and 2026](#i89761be648564855b53fa24df8e6ee90_361)\n\n[F-6](#i89761be648564855b53fa24df8e6ee90_361)\n\n[Consolidated Statements of Financial Position as of March 31, 2025 and 2026](#i89761be648564855b53fa24df8e6ee90_364)\n\n[F-7 - F-8](#i89761be648564855b53fa24df8e6ee90_364)\n\n[Consolidated Statements of Changes in Equity for the years ended March 31, 2024, 2025 and 2026](#i89761be648564855b53fa24df8e6ee90_367)\n\n[F-9 - F-11](#i89761be648564855b53fa24df8e6ee90_367)\n\n[Consolidated Statements of Cash Flows for the years ended March 31, 2024, 2025 and 2026](#i89761be648564855b53fa24df8e6ee90_370)\n\n[F-12](#i89761be648564855b53fa24df8e6ee90_370)\n\n[Notes to Consolidated Financial Statements](#i89761be648564855b53fa24df8e6ee90_373)\n\n[1. Reporting Entity](#i89761be648564855b53fa24df8e6ee90_376)\n\n[F-13](#i89761be648564855b53fa24df8e6ee90_376)\n\n[2. Basis of Preparation](#i89761be648564855b53fa24df8e6ee90_379)\n\n[F-13](#i89761be648564855b53fa24df8e6ee90_379)\n\n[3. Material Accounting Policies](#i89761be648564855b53fa24df8e6ee90_382)\n\n[F-15](#i89761be648564855b53fa24df8e6ee90_382)\n\n[4. Operating Segment and Revenue Information](#i89761be648564855b53fa24df8e6ee90_385)\n\n[F-24](#i89761be648564855b53fa24df8e6ee90_385)\n\n[5. Other Operating Income and Expenses](#i89761be648564855b53fa24df8e6ee90_388)\n\n[F-28](#i89761be648564855b53fa24df8e6ee90_388)\n\n[6. Finance Income and Expenses](#i89761be648564855b53fa24df8e6ee90_391)\n\n[F-29](#i89761be648564855b53fa24df8e6ee90_391)\n\n[7. Income Taxes](#i89761be648564855b53fa24df8e6ee90_394)\n\n[F-30](#i89761be648564855b53fa24df8e6ee90_394)\n\n[8. Earnings per Share](#i89761be648564855b53fa24df8e6ee90_397)\n\n[F-34](#i89761be648564855b53fa24df8e6ee90_397)\n\n[9. Other Comprehensive Income (Loss)](#i89761be648564855b53fa24df8e6ee90_400)\n\n[F-35](#i89761be648564855b53fa24df8e6ee90_400)\n\n[10. Property, Plant and Equipment](#i89761be648564855b53fa24df8e6ee90_403)\n\n[F-36](#i89761be648564855b53fa24df8e6ee90_403)\n\n[11. Goodwill](#i89761be648564855b53fa24df8e6ee90_406)\n\n[F-39](#i89761be648564855b53fa24df8e6ee90_406)\n\n[12. Intangible Assets](#i89761be648564855b53fa24df8e6ee90_409)\n\n[F-40](#i89761be648564855b53fa24df8e6ee90_409)\n\n[13. Collaborations and Licensing Arrangements](#i89761be648564855b53fa24df8e6ee90_412)\n\n[F-42](#i89761be648564855b53fa24df8e6ee90_412)\n\n[14. Other Financial Assets](#i89761be648564855b53fa24df8e6ee90_418)\n\n[F-44](#i89761be648564855b53fa24df8e6ee90_418)\n\n[15. Inventories](#i89761be648564855b53fa24df8e6ee90_421)\n\n[F-44](#i89761be648564855b53fa24df8e6ee90_421)\n\n[16. Trade and Other Receivables](#i89761be648564855b53fa24df8e6ee90_424)\n\n[F-45](#i89761be648564855b53fa24df8e6ee90_424)\n\n[17. Cash and Cash Equivalents](#i89761be648564855b53fa24df8e6ee90_427)\n\n[F-45](#i89761be648564855b53fa24df8e6ee90_427)\n\n[18. Assets and Disposal Groups Held for Sale](#i89761be648564855b53fa24df8e6ee90_430)\n\n[F-45](#i89761be648564855b53fa24df8e6ee90_430)\n\n[19. Bonds and Loans](#i89761be648564855b53fa24df8e6ee90_433)\n\n[F-47](#i89761be648564855b53fa24df8e6ee90_433)\n\n[20. Other Financial Liabilities](#i89761be648564855b53fa24df8e6ee90_436)\n\n[F-49](#i89761be648564855b53fa24df8e6ee90_436)\n\n[21. Employee Benefits](#i89761be648564855b53fa24df8e6ee90_439)\n\n[F-49](#i89761be648564855b53fa24df8e6ee90_439)\n\n[22. Provisions](#i89761be648564855b53fa24df8e6ee90_442)\n\n[F-55](#i89761be648564855b53fa24df8e6ee90_442)\n\n[23. Other Liabilities](#i89761be648564855b53fa24df8e6ee90_445)\n\n[F-56](#i89761be648564855b53fa24df8e6ee90_445)\n\n[24. Trade and Other Payables](#i89761be648564855b53fa24df8e6ee90_448)\n\n[F-57](#i89761be648564855b53fa24df8e6ee90_448)\n\n[25. Equity and Other Equity Items](#i89761be648564855b53fa24df8e6ee90_451)\n\n[F-57](#i89761be648564855b53fa24df8e6ee90_451)\n\n[26. Financial Instruments](#i89761be648564855b53fa24df8e6ee90_454)\n\n[F-59](#i89761be648564855b53fa24df8e6ee90_454)\n\n[27. Share-based Payments](#i89761be648564855b53fa24df8e6ee90_478)\n\n[F-74](#i89761be648564855b53fa24df8e6ee90_478)\n\n[28. Subsidiaries and Associates](#i89761be648564855b53fa24df8e6ee90_484)\n\n[F-78](#i89761be648564855b53fa24df8e6ee90_484)\n\n[29. Related Party Transactions](#i89761be648564855b53fa24df8e6ee90_487)\n\n[F-79](#i89761be648564855b53fa24df8e6ee90_487)\n\n[30. Business Combinations](#i89761be648564855b53fa24df8e6ee90_490)\n\n[F-79](#i89761be648564855b53fa24df8e6ee90_490)\n\n[31. Commitments and Contingent Liabilities](#i89761be648564855b53fa24df8e6ee90_493)\n\n[F-80](#i89761be648564855b53fa24df8e6ee90_493)\n\n[32. Subsequent Events](#i89761be648564855b53fa24df8e6ee90_496)\n\n[F-82](#i89761be648564855b53fa24df8e6ee90_496)\n\nF-1\n\nTAKEDA PHARMACEUTICAL COMPANY LIMITED AND ITS SUBSIDIARIES\n\nReport of Independent Registered Public Accounting Firm\n\nTo the Shareholders and Board of Directors\nTakeda Pharmaceutical Company Limited:\n\nOpinion on the Consolidated Financial Statements\n\nWe have audited the accompanying consolidated statements of financial position of Takeda Pharmaceutical Company Limited and its subsidiaries (the Company) as of March 31, 2026 and 2025, the related consolidated statements of profit or loss, comprehensive income, changes in equity, and cash flows for each of the years in the three‑year period ended March 31, 2026, and the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of\n\nMarch 31, 2026 and 2025, and the results of its operations and its cash flows for each of the years in the three‑year period ended March 31, 2026, in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.\n\nWe also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of March 31, 2026, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated June 17, 2026 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.\n\nBasis for Opinion\n\nThese consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.\n\nWe conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.\n\nCritical Audit Matters\n\nThe critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.\n\nEvaluation of the provisions for U.S. Medicaid and U.S. commercial managed care rebates\n\nAs discussed in Notes 3 and 22 to the consolidated financial statements, the Company recorded provisions for contractual and statutory rebates payable under Commercial healthcare provider contracts and U.S. State and Federal government health programs (collectively, “U.S. rebates”) of 291,232 million JPY which included U.S. Medicaid and U.S. commercial managed care programs as a reduction to gross sales to arrive at net sales as of March 31, 2026. The provisions for U.S. rebates are recorded in the same period that the corresponding revenues are recognized; however, the U.S. rebates are not fully paid until subsequent periods.\n\nWe identified the evaluation of the provisions for U.S. Medicaid and U.S. commercial managed care rebates as a critical audit matter. A high degree of auditor judgement was required to evaluate the expected product specific assumptions used to estimate the provisions for the U.S. Medicaid and U.S. commercial managed care rebates. The expected product specific assumptions relate to estimating which of the Company’s revenue transactions will ultimately be subject to the U.S. Medicaid and U.S. commercial managed care programs.\n\nThe following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested operating effectiveness of certain internal controls over the Company’s U.S. Medicaid and U.S. commercial managed care programs provision process. This included controls related to the determination of the expected product specific assumptions used to estimate the provisions for U.S. Medicaid and U.S. commercial managed care programs. We developed independent expectations of U.S. Medicaid and U.S. commercial managed care programs provisions based on the ratios of historical U.S. Medicaid and U.S. commercial managed care programs claims paid to historical gross sales and compared the results to the Company’s estimated U.S. Medicaid and U.S. commercial managed care programs provisions. We compared a selection of U.S. Medicaid and U.S. commercial managed care programs claims paid by the Company for consistency with the contractual terms of the Company’s rebate agreements. We evaluated the Company’s ability to accurately estimate the provisions for U.S. Medicaid and U.S. commercial managed care programs by comparing historically recorded provisions to the actual amounts that were ultimately paid by the Company.\n\nF-2\n\nValuation of goodwill\n\nAs discussed in Notes 3 and 11 to the consolidated financial statements, the Company recorded goodwill of 5,809,010 million JPY as of March 31, 2026. Goodwill was tested for impairment at the single operating segment level (one cash generating unit (CGU)), which was the level at which goodwill was monitored for internal management purposes. Goodwill was tested for impairment annually and whenever there is any indication of impairment. Impairment loss for goodwill is recognized if the recoverable amount of goodwill is less than the carrying amount. The recoverable amount of goodwill was assessed based on fair value less costs of disposal. The fair value less costs of disposal was determined by discounting the estimated future cash flows based on a 10-year projection using a terminal growth rate and a discount rate as well as deducting the estimated costs of disposal. The projection included the sales forecast related to certain products in the U.S. as the significant assumption. The Company did not record an impairment loss for goodwill as a result of the impairment testing.\n\nWe identified the valuation of goodwill as a critical audit matter. Subjective and challenging auditor judgment was required to evaluate the sales forecast related to certain products in the U.S. used to determine the fair value in the impairment testing of goodwill.\n\nThe following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of the internal control over the sales forecast related to certain products in the U.S. in the Company’s fair value measurement process for the annual goodwill impairment test. We evaluated the reasonableness of the Company’s sales forecast related to certain products in the U.S. We compared such sales forecast with a sales forecast independently developed using forecasted revenue growth rates from external information such as analysts’ expectations, industry trends and market trends based on the most recent actual sales. We evaluated the Company’s ability to accurately forecast sales related to certain products in the U.S. by comparing the Company’s previous sales forecast to the actual sales.\n\n/s/ KPMG AZSA LLC\n\nWe have served as the Company’s auditor since 2007.\n\nTokyo, Japan\nJune 17, 2026\n\nF-3\n\nReport of Independent Registered Public Accounting Firm\n\nTo the Shareholders and Board of Directors\nTakeda Pharmaceutical Company Limited:\n\nOpinion on Internal Control Over Financial Reporting\n\nWe have audited Takeda Pharmaceutical Company Limited and its subsidiaries’ (the Company) internal control over financial reporting as of March 31, 2026, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of March 31, 2026, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.\n\nWe also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated statements of financial position of the Company as of March 31, 2026 and 2025, the related consolidated statements of profit or loss, comprehensive income, changes in equity, and cash flows for each of the years in the three-year period ended March 31, 2026, and the related notes (collectively, the consolidated financial statements), and our report dated June 17, 2026 expressed an unqualified opinion on those consolidated financial statements.\n\nBasis for Opinion\n\nThe Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.\n\nWe conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.\n\nDefinition and Limitations of Internal Control Over Financial Reporting\n\nA company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.\n\nBecause of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.\n\n/s/ KPMG AZSA LLC\n\nTokyo, Japan\nJune 17, 2026\n\nF-4\n\n( TAKEDA PHARMACEUTICAL COMPANY LIMITED AND ITS SUBSIDIARIES\n\nConsolidated Statements of Profit or Loss for the Year Ended March 31,\n\nJPY (millions, except per share data)\n\nNote202420252026\n\nRevenue4¥4,263,762 ¥4,581,551 ¥4,505,720 \n\nCost of sales(1,426,678)(1,580,217)(1,571,588)\n\nSelling, general and administrative expenses(1,053,819)(1,104,766)(1,084,215)\n\nResearch and development expenses(729,924)(730,227)(675,924)\n\nAmortization and impairment losses on intangible assets associated with products12(652,117)(643,233)(633,544)\n\nOther operating income519,379 26,212 24,747 \n\nOther operating expenses5(206,527)(206,733)(558,979)\n\nOperating profit214,075 342,586 6,217 \n\nFinance income652,093 46,549 211,177 \n\nFinance expenses6(219,850)(210,065)(357,572)\n\nShare of profit (loss) of investments accounted for using the equity method6,473 (3,986)(2,177)\n\nProfit (loss) before tax52,791 175,084 (142,355)\n\nIncome tax (expenses) benefit791,406 (66,941)(9,770)\n\nNet profit (loss) for the year¥144,197 ¥108,143 ¥(152,125)\n\nAttributable to:\n\nOwners of the Company8¥144,067 ¥107,928 ¥(152,390)\n\nNon-controlling interests130 215 264 \n\nNet profit (loss) for the year¥144,197 ¥108,143 ¥(152,125)\n\nEarnings per share (JPY)\n\nBasic earnings (loss) per share8¥92.09 ¥68.36 ¥(96.75)\n\nDiluted earnings (loss) per share891.16 67.23 (96.75)\n\nSee accompanying notes to consolidated financial statements.\n\nF-5\n\nTAKEDA PHARMACEUTICAL COMPANY LIMITED AND ITS SUBSIDIARIES\n\nConsolidated Statements of Comprehensive Income for the Year Ended March 31,\n\nJPY (millions)\n\nNote202420252026\n\nNet profit (loss) for the year¥144,197 ¥108,143 ¥(152,125)\n\nOther comprehensive income (loss)\n\nItems that will not be reclassified to profit or loss:\n\nChanges in fair value of financial assets measured at fair value through other comprehensive income92,309 (12,311)(4,976)\n\nRemeasurement of defined benefit pension plans9(5,002)(7,046)1,914 \n\n(2,693)(19,357)(3,062)\n\nItems that may be reclassified subsequently to profit or loss:\n\nExchange differences on translation of foreign operations9968,842 (153,345)903,895 \n\nCash flow hedges923,456 (956)28,950 \n\nHedging cost97,197 7,963 3,159 \n\nShare of other comprehensive loss of investments accounted for using the equity method\n\n9\n(1,793)(145)(541)\n\n997,702 (146,484)935,463 \n\nOther comprehensive income (loss) for the year, net of tax9995,009 (165,841)932,401 \n\nTotal comprehensive income (loss) for the year¥1,139,206 ¥(57,698)¥780,275 \n\nAttributable to:\n\nOwners of the Company¥1,139,033 ¥(57,852)¥779,963 \n\nNon-controlling interests173 154 313 \n\nTotal comprehensive income (loss) for the year¥1,139,206 ¥(57,698)¥780,275 \n\nSee accompanying notes to consolidated financial statements.\n\nF-6\n\nTAKEDA PHARMACEUTICAL COMPANY LIMITED AND ITS SUBSIDIARIES\n\nConsolidated Statements of Financial Position as of March 31,\n\nJPY (millions)\n\nNote20252026\n\nAssets\n\nNon-current assets:\n\nProperty, plant and equipment10¥1,968,209 ¥2,120,639 \n\nGoodwill115,324,430 5,809,010 \n\nIntangible assets123,631,560 3,419,348 \n\nInvestments accounted for using the equity method10,802 8,796 \n\nOther financial assets14351,124 439,941 \n\nOther non-current assets70,282 77,010 \n\nDeferred tax assets7370,745 546,260 \n\nTotal non-current assets11,727,152 12,421,004 \n\nCurrent assets:\n\nInventories151,217,349 1,396,620 \n\nTrade and other receivables16709,465 844,312 \n\nOther financial assets1420,476 41,888 \n\nIncome taxes receivable15,789 32,036 \n\nOther current assets159,603 162,638 \n\nCash and cash equivalents17385,113 595,054 \n\nAssets held for sale1813,397 17,955 \n\nTotal current assets2,521,192 3,090,503 \n\nTotal assets¥14,248,344 ¥15,511,506 \n\nSee accompanying notes to consolidated financial statements.\n\nF-7\n\nJPY (millions)\n\nNote20252026\n\nLiabilities and Equity\n\nLiabilities:\n\nNon-current liabilities:\n\nBonds and loans19¥3,966,326 ¥4,369,681 \n\nOther financial liabilities20550,900 571,248 \n\nNet defined benefit liabilities21135,429 143,683 \n\nProvisions2235,177 37,550 \n\nOther non-current liabilities2382,859 99,818 \n\nDeferred tax liabilities735,153 26,804 \n\nTotal non-current liabilities4,805,844 5,248,784 \n\nCurrent liabilities:\n\nBonds and loans19548,939 512,157 \n\nTrade and other payables24475,541 491,345 \n\nOther financial liabilities20219,120 141,220 \n\nIncome taxes payable133,497 97,880 \n\nProvisions22533,140 998,501 \n\nOther current liabilities23596,283 590,152 \n\nLiabilities held for sale18— 818 \n\nTotal current liabilities2,506,521 2,832,074 \n\nTotal liabilities7,312,365 8,080,858 \n\nEquity:\n\nShare capital1,694,685 1,695,277 \n\nShare premium1,775,713 1,776,352 \n\nTreasury shares(74,815)(49,128)\n\nRetained earnings1,187,586 712,381 \n\nOther components of equity2,351,915 3,297,407 \n\nOther comprehensive income associated with assets held for sale18— (2,848)\n\nEquity attributable to owners of the Company6,935,084 7,429,441 \n\nNon-controlling interests895 1,208 \n\nTotal equity6,935,979 7,430,649 \n\nTotal liabilities and equity¥14,248,344 ¥15,511,506 \n\nSee accompanying notes to consolidated financial statements.\n\nF-8\n\nTAKEDA PHARMACEUTICAL COMPANY LIMITED AND ITS SUBSIDIARIES\n\nConsolidated Statements of Changes in Equity\n\nJPY (millions)\n\nEquity attributable to owners of the Company\n\nShare\ncapitalShare\npremiumTreasury\nsharesRetained\nearningsOther components of equity\n\nNoteExchange\ndifferences\non translation\nof foreign\noperationsChanges in fair value of financial assets measured at fair value through other comprehensive income\n\nAs of April 1, 2023¥1,676,345 ¥1,728,830 ¥(100,317)¥1,541,146 ¥1,606,128 ¥12,470 \n\nNet profit (loss) for the year144,067 \n\nOther comprehensive income (loss)967,279 2,036 \n\nComprehensive income (loss) for the year— — — 144,067 967,279 2,036 \n\nTransactions with owners:\n\nIssuance of new shares25251 251 \n\nAcquisition of treasury shares(2,367)\n\nDisposal of treasury shares0 0 \n\nDividends25(287,785)\n\nChanges in ownership\n\nTransfers from other components of equity(6,226)1,224 \n\nShare-based compensation2769,836 \n\nExercise of share-based awards27(51,503)51,426 \n\nTotal transactions with owners251 18,584 49,059 (294,011)— 1,224 \n\nAs of March 31, 2024¥1,676,596 ¥1,747,414 ¥(51,259)¥1,391,203 ¥2,573,407 ¥15,729 \n\n Equity attributable to owners of the Company  \n\n Other components of equityOther\ncomprehensive\nincome related\nto assets held\nfor sale   \n\n NoteCash flow\nhedgesHedging\ncostRemeasurements of defined benefit pension plansTotal\nother components of equityTotal\nequity attributable to owners of the CompanyNon-\ncontrolling\ninterestsTotal\nequity\n\nAs of April 1, 2023¥(87,352)¥(23,127)¥— ¥1,508,119 ¥— ¥6,354,122 ¥549 ¥6,354,672 \n\nNet profit (loss) for the year— 144,067 130 144,197 \n\nOther comprehensive income (loss)23,456 7,197 (5,002)994,966 994,966 44 995,009 \n\nComprehensive income (loss) for the year23,456 7,197 (5,002)994,966 — 1,139,033 173 1,139,206 \n\nTransactions with owners:\n\nIssuance of new shares25— 502 502 \n\nAcquisition of treasury shares— (2,367)(2,367)\n\nDisposal of treasury shares— 1 1 \n\nDividends25— (287,785)(287,785)\n\nChanges in ownership— — 18 18 \n\nTransfers from other components of equity5,002 6,226 — — \n\nShare-based compensation27— 69,836 69,836 \n\nExercise of share-based awards27— (77)(77)\n\nTotal transactions with owners— — 5,002 6,226 — (219,892)18 (219,873)\n\nAs of March 31, 2024¥(63,896)¥(15,930)¥— ¥2,509,310 ¥— ¥7,273,264 ¥741 ¥7,274,005 \n\nSee accompanying notes to consolidated financial statements.\n\nF-9\n\nTAKEDA PHARMACEUTICAL COMPANY LIMITED AND ITS SUBSIDIARIES\n\nConsolidated Statements of Changes in Equity\n\nJPY (millions)\n\nEquity attributable to owners of the Company\n\nShare\ncapitalShare\npremiumTreasury\nsharesRetained\nearningsOther components of equity\n\nNoteExchange\ndifferences\non translation\nof foreign\noperationsChanges in fair value of financial assets measured at fair value through other comprehensive income\n\nAs of April 1, 2024¥1,676,596 ¥1,747,414 ¥(51,259)¥1,391,203 ¥2,573,407 ¥15,729 \n\nNet profit (loss) for the year107,928 \n\nOther comprehensive income (loss)(153,429)(12,311)\n\nComprehensive income (loss) for the year— — — 107,928 (153,429)(12,311)\n\nTransactions with owners:\n\nIssuance of new shares2518,089 18,089 \n\nAcquisition of treasury shares25(20)(51,905)\n\nDisposal of treasury shares0 0 \n\nDividends25(303,160)\n\nTransfers from other components of equity(8,385)1,339 \n\nShare-based compensation2774,707 \n\nExercise of share-based awards27(64,476)28,348 \n\nTotal transactions with owners18,089 28,300 (23,557)(311,545)— 1,339 \n\nAs of March 31, 2025¥1,694,685 ¥1,775,713 ¥(74,815)¥1,187,586 ¥2,419,978 ¥4,757 \n\n Equity attributable to owners of the Company  \n\n Other components of equityOther\ncomprehensive\nincome related\nto assets held\nfor sale   \n\n NoteCash flow\nhedgesHedging\ncostRemeasurements of defined benefit pension plansTotal\nother components of equityTotal\nequity attributable to owners of the CompanyNon-\ncontrolling\ninterestsTotal\nequity\n\nAs of April 1, 2024¥(63,896)¥(15,930)¥— ¥2,509,310 ¥— ¥7,273,264 ¥741 ¥7,274,005 \n\nNet profit (loss) for the year— 107,928 215 108,143 \n\nOther comprehensive income (loss)(956)7,963 (7,046)(165,780)(165,780)(61)(165,841)\n\nComprehensive income (loss) for the year(956)7,963 (7,046)(165,780)— (57,852)154 (57,698)\n\nTransactions with owners:\n\nIssuance of new shares25— 36,178 36,178 \n\nAcquisition of treasury shares25— (51,925)(51,925)\n\nDisposal of treasury shares— 0 0 \n\nDividends25— (303,160)(303,160)\n\nTransfers from other components of equity7,046 8,385 — — \n\nShare-based compensation27— 74,707 74,707 \n\nExercise of share-based awards27— (36,129)(36,129)\n\nTotal transactions with owners— — 7,046 8,385 — (280,328)— (280,328)\n\nAs of March 31, 2025¥(64,852)¥(7,967)¥— ¥2,351,915 ¥— ¥6,935,084 ¥895 ¥6,935,979 \n\nSee accompanying notes to consolidated financial statements.\n\nF-10\n\nTAKEDA PHARMACEUTICAL COMPANY LIMITED AND ITS SUBSIDIARIES\n\nConsolidated Statements of Changes in Equity\n\n  JPY (millions)\n\nEquity attributable to owners of the Company\n\nShare\ncapitalShare\npremiumTreasury\nsharesRetained\nearningsOther components of equity\n\nNoteExchange\ndifferences\non translation\nof foreign\noperationsChanges in fair value of financial assets measured at fair value through other comprehensive income\n\nAs of April 1, 2025¥1,694,685 ¥1,775,713 ¥(74,815)¥1,187,586 ¥2,419,978 ¥4,757 \n\nNet profit (loss) for the year(152,390)\n\nOther comprehensive income (loss)903,306 (4,976)\n\nComprehensive income (loss) for the year— — — (152,390)903,306 (4,976)\n\nTransactions with owners:\n\nIssuance of new shares25593 593 \n\nAcquisition of treasury shares25(20)(51,618)\n\nDividends25(312,524)\n\nTransfers from other components of equity(10,292)12,205 \n\nShare-based compensation2777,371 \n\nExercise of share-based awards27(77,305)77,305 \n\nTransfer to other comprehensive income associated with assets held for sale182,848 \n\nTotal transactions with owners593 638 25,687 (322,815)2,848 12,205 \n\nAs of March 31, 2026¥1,695,277 ¥1,776,352 ¥(49,128)¥712,381 ¥3,326,132 ¥11,986 \n\n Equity attributable to owners of the Company  \n\n Other components of equityOther\ncomprehensive\nincome related\nto assets held\nfor sale   \n\n NoteCash flow\nhedgesHedging\ncostRemeasurements of defined benefit pension plansTotal\nother components of equityTotal\nequity attributable to owners of the CompanyNon-\ncontrolling\ninterestsTotal\nequity\n\nAs of April 1, 2025¥(64,852)¥(7,967)¥— ¥2,351,915 ¥— ¥6,935,084 ¥895 ¥6,935,979 \n\nNet profit (loss) for the year— (152,390)264 (152,125)\n\nOther comprehensive income (loss)28,950 3,159 1,914 932,352 932,352 48 932,401 \n\nComprehensive income (loss) for the year28,950 3,159 1,914 932,352 — 779,963 313 780,275 \n\nTransactions with owners:\n\nIssuance of new shares25— 1,186 1,186 \n\nAcquisition of treasury shares25— (51,638)(51,638)\n\nDividends25— (312,524)(312,524)\n\nTransfers from other components of equity(1,914)10,292 — — \n\nShare-based compensation27— 77,371 77,371 \n\nExercise of share-based awards27— — — \n\nTransfer to other comprehensive income associated with assets held for sale182,848 (2,848)— — \n\nTotal transactions with owners— — (1,914)13,140 (2,848)(285,606)— (285,606)\n\nAs of March 31, 2026¥(35,903)¥(4,808)¥— ¥3,297,407 ¥(2,848)¥7,429,441 ¥1,208 ¥7,430,649 \n\nSee accompanying notes to consolidated financial statements.\n\nF-11\n\nTAKEDA PHARMACEUTICAL COMPANY LIMITED AND ITS SUBSIDIARIES\n\nConsolidated Statements of Cash Flows for the Year Ended March 31,\n\nJPY (millions)\n\nNote202420252026\n\nCash flows from operating activities:\n\nNet profit (loss) for the year¥144,197 ¥108,143 ¥(152,125)\n\nDepreciation and amortization728,002 761,396 721,127 \n\nImpairment losses150,017 106,529 145,716 \n\nEquity-settled share-based compensation2770,871 72,867 72,775 \n\nLoss on sales and disposal of property, plant and equipment6,052 4,495 3,068 \n\nGain on divestment of business and subsidiaries(7,832)(10,198)(18,265)\n\nChange in fair value of financial assets and liabilities associated with contingent consideration arrangements, net520,757 (602)1,006 \n\nFinance (income) and expenses, net167,757 163,516 146,395 \n\nShare of loss (profit) of investments accounted for using the equity method(6,473)3,986 2,177 \n\nIncome tax expenses (benefit)(91,406)66,941 9,770 \n\nChanges in assets and liabilities:\n\nDecrease (increase) in trade and other receivables15,104 (58,959)(70,166)\n\nIncrease in inventories(115,743)(34,973)(61,293)\n\nDecrease in trade and other payables(9,895)(7,118)(3,150)\n\nIncrease (decrease) in provisions(126,901)45,166 416,120 \n\nDecrease in other financial liabilities(18,568)(3,488)(81,606)\n\nSettlement of forward exchange contracts, net2(46,572)5,945 129,727 \n\nOther, net39,016 (16,052)(47,282)\n\nCash generated from operations918,383 1,207,595 1,213,993 \n\nIncome taxes paid(219,941)(170,589)(180,405)\n\nTax refunds and interest on tax refunds received17,902 20,176 7,843 \n\nNet cash from operating activities716,344 1,057,182 1,041,431 \n\nCash flows from investing activities:\n\nInterest received11,161 17,660 17,359 \n\nDividends received13,191 635 1,298 \n\nAcquisition of property, plant and equipment(175,420)(200,795)(176,003)\n\nProceeds from sales of property, plant and equipment8,606 78 6,454 \n\nAcquisition of intangible assets(305,310)(147,046)(234,930)\n\nAcquisition of option to license— (31,784)(3,726)\n\nAcquisition of investments(6,766)(97,536)(15,895)\n\nProceeds from sales and redemption of investments8,021 29,442 7,031 \n\nAcquisition of shares in associates— (1,004)(623)\n\nProceeds from sales of shares in associates18— 57,691 880 \n\nProceeds from sales of business, net of cash and cash equivalents divested1819,959 20,556 33,325 \n\nSettlement of forward exchange contracts designated as net investment hedges, net(33,300)(13,847)(1,536)\n\nOther, net(4,003)(1,111)(2,775)\n\nNet cash used in investing activities(463,862)(367,060)(369,141)\n\nCash flows from financing activities:\n\nNet increase (decrease) in short-term loans and commercial papers26277,000 27,490 (341,780)\n\nProceeds from issuance of bonds and long-term loans26100,000 1,024,460 586,060 \n\nRepayments of bonds and long-term loans26(320,901)(1,321,090)(200,432)\n\nSettlement of cross currency interest swaps related to bonds and loans2660,063 46,880 — \n\nAcquisition of treasury shares(2,326)(51,860)(51,603)\n\nInterest paid(100,375)(112,984)(121,380)\n\nDividends paid(287,188)(302,498)(311,901)\n\nRepayments of lease liabilities26(54,586)(45,174)(42,772)\n\nOther, net(26,102)(16,647)(13,011)\n\nNet cash used in financing activities(354,416)(751,425)(496,820)\n\nNet increase (decrease) in cash and cash equivalents(101,934)(61,303)175,469 \n\nCash and cash equivalents at the beginning of the year17533,530 457,800 385,113 \n\nEffects of exchange rate changes on cash and cash equivalents26,204 (11,385)34,472 \n\nCash and cash equivalents at the end of the year17¥457,800 ¥385,113 ¥595,054 \n\nSee accompanying notes to consolidated financial statements.\n\nF-12\n\nTAKEDA PHARMACEUTICAL COMPANY LIMITED AND ITS SUBSIDIARIES\n\nNotes to Consolidated Financial Statements\n\n1. Reporting Entity\n\nTakeda Pharmaceutical Company Limited (the “Company”) is a public company incorporated in Japan. The Company and its subsidiaries (collectively, “Takeda”) has a diverse portfolio, engaged primarily in the research, development, production and global commercialization of pharmaceutical products. Takeda is a global R&D-driven biopharmaceutical company focused on discovering and delivering life-transforming treatments in our core therapeutic areas of gastrointestinal and inflammation, neuroscience and oncology, and through our plasma-derived therapies and vaccine business. Takeda’s principal pharmaceutical products are grouped into the following categories: Gastroenterology (“GI”), Rare Diseases, Plasma-Derived Therapies (“PDT”), Oncology, Vaccines and Neuroscience.\n\n2. Basis of Preparation\n\nCompliance with International Financial Reporting Standards\n\nTakeda’s consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”), as issued by the International Accounting Standards Board (“IASB”). The term IFRS also includes International Accounting Standards (“IASs”) and the related interpretations of the interpretation’s committees (Standard Interpretations Committee (“SIC”) and International Financial Reporting Interpretations Committee (“IFRIC”)).\n\nApproval of Financial Statements\n\nThe Company’s consolidated financial statements presented were approved on June 17, 2026 by Representative Director, President & Chief Executive Officer (“CEO”) Christophe Weber and Director & Chief Financial Officer (“CFO”) Milano Furuta.\n\nBasis of Measurement\n\nThe consolidated financial statements have been prepared on a historical cost basis, except for certain assets and liabilities recorded at fair value including equity investments, derivative financial instruments, financial assets and liabilities associated with contingent consideration arrangements, and the application of hyperinflationary accounting at subsidiaries.\n\nFunctional and Presentation Currency\n\nThe consolidated financial statements are presented in Japanese Yen (“JPY”), which is the functional currency of the Company. All financial information presented in JPY has been rounded to the nearest million JPY, except when otherwise indicated. In tables with rounded figures, sums may not add up due to rounding.\n\nNew Accounting Standards and Interpretations Adopted\n\nDuring the year ended March 31, 2026, there were no new accounting standards applied by Takeda that had a significant impact on Takeda’s consolidated financial statements.\n\nNew Accounting Standards and Interpretations Issued and Not Yet Adopted\n\nOn April 9, 2024, the IASB has issued IFRS 18 Presentation and Disclosure in Financial Statements (“IFRS 18”), which replaces IAS 1 Presentation of Financial Statements.\n\nIFRS 18 introduces certain new requirements to improve the reporting of companies’ financial performance and comparability in the statement of profit or loss between entities. The accounting standard introduces three new defined categories for income and expenses-operating, investing and financing, and requires all companies to provide certain new defined subtotals. IFRS 18 also requires companies to disclose explanations of company-specific measures that are related to the income statement, referred to as management-defined performance measures. Furthermore, the accounting standard sets out enhanced guidance on how to organize information and whether to provide it in primary financial statements or in the notes and requires companies to provide more transparency about operating expenses. IFRS 18 will not impact the recognition or measurement of items in the financial statements. However, it may affect the presentation of certain income and expense items in the consolidated statement of profit or loss as a result of changes in their classification. In particular, the definition of operating profit may change due to the revised principles for classifying income and expenses between operating, investing and financing categories. Such changes may result in the reclassification of certain foreign exchange differences and other income or expenses currently presented within finance income or expenses being reclassified to operating profit. The accounting standard is effective for annual reporting periods beginning on or after January 1, 2027, with early adoption permitted.\n\nTakeda is currently in the process of assessing the impact from meeting the new disclosure requirements and will adopt the standard from the fiscal year beginning April 1, 2027.\n\nF-13\n\nUse of Judgments, Estimates, and Assumptions\n\nThe preparation of consolidated financial statements in accordance with IFRS requires management to make certain judgments, estimates, and assumptions that affect the application of accounting policies and the reported amount of assets, liabilities, revenues and expenses, and the disclosure of contingent assets and liabilities. Actual results could differ from these estimates.\n\nThese estimates and underlying assumptions are reviewed on a continuous basis. Changes in these accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.\n\nInformation about judgments and estimates that have been made in the process of applying accounting policies and that have significant effects on the amounts reported in the consolidated financial statements, and information about accounting estimates and assumptions that have significant effects on the amounts reported in the consolidated financial statements, are as follows:\n\n•Recognition and measurement of taxes based on uncertain tax positions (Note 7)\n\n•Recoverability of deferred tax assets (Note 7)\n\n•Impairment of goodwill and intangible assets (Note 11 and Note 12)\n\n•Measurement of provisions (Note 22)\n\n•Estimation of rebates and return reserves associated with Takeda’s product sales (Note 3 and Note 22)\n\n•Probability of an outflow of resources embodying economic benefits on contingent liabilities (Note 31)\n\nChanges in Presentation\n\n(Consolidated Statements of Financial Position)\n\"Income taxes payable\", which had been presented separately under \"Non-current liabilities\" in the fiscal year ended March 31, 2025, has been included in \"Other non-current liabilities\" from the fiscal year ended March 31, 2026 due to its immateriality. To reflect this change in presentation, the Consolidated Statements of Financial Position as of March 31, 2025 have been reclassified on a consistent basis.\n\nAs a result, the amounts previously reported as \"Income taxes payable\" within non-current liabilities of JPY 317 million and \"Other non-current liabilities\" of JPY 82,542 million in the Consolidated Statements of Financial Position as of March 31, 2025 have been reclassified and presented as \"Other non-current liabilities\" totaling JPY 82,859 million.\n\n(Consolidated Statements of Cash Flows)\n\nCash flows arising from the settlement of forward exchange contracts, which had been included in “Other (net)” within cash flows from operating activities in the fiscal year ended March 31, 2024 and March 31, 2025 have been presented separately as “Settlement of forward exchange contracts, net” from the fiscal year ended March 31, 2026 due to its increased materiality. To reflect this change in presentation, the Consolidated Statements of Cash Flows in the fiscal year ended March 31, 2024 and March 31, 2025 have been reclassified on a consistent basis.\n\nAs a result, in the Consolidated Statements of Cash Flows for the fiscal year ended March 31, 2024, an amount of JPY (7,556) million previously presented within “Other (net)” under “Cash flows from operating activities” has been reclassified and presented as JPY (46,572) million in “Settlement of forward exchange contracts, net” and JPY 39,016 million in “Other (net).” In the Consolidated Statements of Cash Flows for the fiscal year ended March 31, 2025, an amount of JPY (10,107) million previously presented within “Other (net)” under “Cash flows from operating activities” has been reclassified and presented as JPY 5,945 million in “Settlement of forward exchange contracts, net” and JPY (16,052) million in “Other (net).”\n\nThis change represents a reclassification within cash flows from operating activities and has no impact on the total amount of net cash flows from operating activities.\n\nF-14\n\n3. Material Accounting Policies\n\nBasis of Consolidation\n\nThe consolidated financial statements include the accounts of the Company and its subsidiaries that are directly or indirectly controlled by the Company. Intercompany balances and transactions have been eliminated in consolidation.\n\nTakeda controls an entity when it is exposed or has rights to variable returns from involvement with the entity and has the ability to affect those returns using its power, which is the current ability to direct the relevant activities, over the entity. To determine whether Takeda controls an entity, status of voting rights or similar rights, contractual agreements and other specific factors are considered.\n\nThe financial statements of the subsidiaries are included in the consolidated financial statements from the date when control is obtained until the date when control is lost. The financial statements of subsidiaries have been adjusted in order to ensure consistency with the accounting policies adopted by the Company as necessary.\n\nChanges in ownership interest in subsidiaries that do not result in loss of control are accounted for as equity transactions. Any difference between the adjustment to non-controlling interests and the fair value of consideration transferred or received, is recognized directly in equity attributable to owners of the Company. When control over a subsidiary is lost, the investment retained after the loss of control is re-measured at fair value as of the date when control is lost, and any gain or loss on such re-measurement and disposal of the interest sold is recognized in profit or loss.\n\nBusiness Combinations\n\nBusiness combinations are accounted for using the acquisition method. The identifiable assets acquired and the liabilities assumed are measured at the fair values at the acquisition date. Goodwill is measured as the excess of the sum of the fair value of consideration transferred, the amount of any non-controlling interests in the acquiree and the fair value of the acquirer’s previously held equity interest in the acquiree less the fair value of identifiable assets acquired, net of liabilities assumed at the acquisition date. As part of business combinations, when the acquired entity consists of foreign operations with multiple functional currencies, Takeda allocates goodwill recognized upon the acquisition to the foreign operations based on the estimated cash flows of the acquired foreign operations.\n\nThe consideration transferred for the acquisition of a subsidiary is measured as the fair value of the assets transferred, the liabilities incurred to former owners of the acquiree, and the equity interests issued by Takeda at the acquisition date. Non-controlling interests is initially measured either at fair value or at the non-controlling interests’ proportionate share of the recognized amounts of the acquiree’s identifiable net assets on a transaction-by-transaction basis. The consideration for certain acquisitions includes amounts contingent upon future events, such as the achievement of development milestones and sales targets.\n\nAny contingent consideration included in the consideration payable for a business combination is recorded at fair value at the date of acquisition. These fair values are generally based on risk-adjusted future cash flows discounted using appropriate discount rates. The fair values are reviewed at the end of each reporting period. The changes in the fair value based on the time value of money are recognized in finance expenses and the other changes are recognized in other operating income or other operating expenses in the consolidated statements of profit or loss.\n\nAcquisition related costs are recognized as expenses in the period they are incurred. Changes in Takeda’s ownership interests in subsidiaries arising from transactions between Takeda and non-controlling interests that do not result in Takeda losing control over a subsidiary are treated as equity transactions and therefore, do not result in adjustments to goodwill.\n\nF-15\n\nForeign Currency Translations\n\nForeign Currency Transactions\n\nForeign currency transactions are remeasured into the functional currency of each entity within Takeda using the exchange rates at the dates of the transactions or rates that approximate the exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies are remeasured into the functional currency using the spot rates of exchange at the end of each reporting period. Non-monetary assets and liabilities that are measured at fair value in foreign currencies are remeasured using historical exchange rates at the date when the fair value was determined. Non-monetary assets and liabilities measured based on historical cost that are denominated in foreign currencies are remeasured at the exchange rate at the date of the initial transaction. Exchange differences arising from the remeasurement or settlement are recognized in profit or loss except when related to financial assets measured at fair value through other comprehensive income, as well as financial instruments designated as hedges of net investments in foreign operations and cash flow hedges subsequently recognized as other comprehensive income. The gain or loss arising from remeasurement of non-monetary items measured at fair value is treated in line with the recognition of the gain or loss on the change in fair value of the item. Translation differences on items whose fair value gain or loss is recognized in other comprehensive income or profit or loss, are also recognized in other comprehensive income or profit or loss, respectively.\n\nForeign Operations\n\nThe assets and liabilities of foreign operations are translated using the spot exchange rates at the end of the reporting period, while income and expenses of foreign operations presented in profit or loss and other comprehensive income are translated using the exchange rates at the dates of the transactions or rates that approximate the exchange rates at the dates of the transactions. When a foreign operation’s functional currency is the currency of a hyperinflationary economy, adjustments are made to its separate financial statements to reflect current price levels, and income and expenses of the foreign operation are translated into the presentation currency at the exchange rate at the end of the reporting period. The impact of the restatement of the non-monetary assets and liabilities with the general price index at the beginning of the period is recorded in other comprehensive income. The subsequent gains and losses resulting from the restatement of non-monetary assets and liabilities are recorded in finance income or finance expenses in the consolidated statements of profit or loss. Exchange differences arising from translation are recognized as other comprehensive income.\n\nIn cases in which foreign operations are disposed of, the cumulative amount of exchange differences related to the foreign operations is recognized as part of the gain or loss on disposal.\n\nRevenue\n\nTakeda’s revenue is primarily related to the sale of pharmaceutical products and is generally recognized when control of the products is passed to the customer in an amount that reflects the consideration to which Takeda expects to be entitled in exchange for those products. Control is generally transferred at the point in time of shipment to or receipt of the products by the customer, or when the services are performed. The amount of revenue to be recognized is based on the consideration Takeda expects to receive in exchange for its goods or services. If a contract contains more than one contractual promise to a customer (performance obligation), the consideration is allocated based on the standalone selling price of each performance obligation. The consideration Takeda receives in exchange for its goods or services may be fixed or variable. Variable consideration is only recognized to the extent it is highly probable that a significant reversal will not occur.\n\nTakeda’s gross sales are subject to various deductions, which are primarily composed of rebates and discounts to retail customers, government agencies, wholesalers, health insurance companies and managed healthcare organizations. These deductions represent estimates of the related obligations, requiring the use of judgment when estimating the effect of these sales deductions on gross sales for a reporting period. These adjustments are deducted from gross sales to arrive at net sales. Takeda monitors the obligation for these deductions on at least a quarterly basis and records adjustments when rebate trends, rebate programs and contract terms, legislative changes, or other significant events indicate that a change in the obligation is appropriate. Historically, adjustments to rebate accruals have not been material to net earnings. The United States (the “U.S.”) market has the most complex arrangements related to revenue deductions.\n\nThe following summarizes the nature of the most significant adjustments to revenue:\n\n•U.S. Medicaid: The U.S. Medicaid Drug Rebate Program is administered by state governments using state and federal funds to provide assistance to certain qualifying individuals and families, who cannot finance their own medical expenses. Calculating the rebates to be paid related to this program involves interpreting relevant regulations, which are subject to challenge or change in interpretative guidance by government authorities. Provisions for Medicaid rebates are estimated based upon identifying the products subject to a rebate, historical experience, patient demand, product pricing and the mix of contracts and specific terms in the individual state agreements. The provisions for Medicaid rebates are recorded in the same period that the corresponding revenues are recognized; however, the Medicaid rebates are not fully paid until subsequent periods. There is often a time lag of several months between Takeda recording the revenue deductions and Takeda’s final accounting for Medicaid rebates. These expected product specific assumptions relate to estimating which of Takeda’s revenue transactions will ultimately be subject to the U.S. Medicaid program.\n\n•U.S. Medicare: The U.S. Federal Medicare Program, which funds healthcare benefits to individuals age 65 or older and certain disabilities, provides prescription drug benefits under Part D section of the program. This benefit is provided and administrated through private prescription drug plans. Provisions for Medicare Part D rebates are calculated based on the terms of individual plan agreements, patient demand, product pricing and the mix of contracts. The provisions for Medicare Part D rebates are recorded in the same period that the corresponding revenues are recognized; however, the Medicare Part D rebates are not fully paid until subsequent periods. There is often\n\nF-16\n\na time lag of several months between Takeda recording the revenue deductions and Takeda’s final accounting for Medicare Part D rebates. These expected product specific assumptions relate to estimating which of the Takeda’s revenue transactions will ultimately be subject to the U.S. Medicare program.\n\n•Customer rebates: Customer rebates including commercial managed care in the U.S. are offered to purchasing organizations, health insurance companies, managed healthcare organizations, and other direct and indirect customers to sustain and increase market share, and to ensure patient access to Takeda’s products. Since rebates are contractually agreed upon, the related provisions are estimated based on the terms of the individual agreements, historical experience, and patient demand. The provisions for commercial managed care rebates in the U.S. are recorded in the same period that the corresponding revenues are recognized; however, commercial managed care rebates in the U.S. are not fully paid until subsequent periods. There is often a time lag of several months between Takeda recording the revenue deductions and Takeda’s final accounting for commercial managed care rebates in the U.S. These expected product specific assumptions relate to estimating which of Takeda’s revenue transactions will ultimately be subject to the commercial managed care in the U.S.\n\n•Wholesaler chargebacks: Takeda has arrangements with certain indirect customers whereby the customer is able to buy products from wholesalers at reduced prices. A chargeback represents the difference between the invoice price to the wholesaler and the indirect customer’s contractual discounted price. Provisions for estimating chargebacks are calculated based on the terms of each agreement, historical experience and product demand. Takeda has a legally enforceable right to set off the trade receivables and chargebacks and it intends either to settle them on a net basis or to realize the asset and settle the liability simultaneously. Thus the provision for chargebacks are recorded as a deduction from trade receivables on the consolidated statements of financial position.\n\n•Return reserves: When Takeda sells a product providing a customer with the right to return, Takeda records a provision for estimated sales returns based on its sales return policy and historical return rates. Takeda estimates the proportion of recorded revenue that will result in a return by considering relevant factors, including past product returns activity, the estimated level of inventory in the distribution channel and the shelf life of products.\n\nBecause the amounts are estimated, they may not fully reflect the final outcome, and the amounts are subject to change dependent upon, amongst other things, expected product specific assumptions used in estimating which of Takeda’s revenue transactions will ultimately be subject to the respective programs.\n\nTakeda generally receives payments from customers within 90 days after the point in time when goods are delivered to the customers. Takeda usually performs those transactions as a principal, but Takeda also sells products on behalf of others in which case revenue is recognized at an amount of sales commission that Takeda expects to be entitled as an agent.\n\nTakeda also generates revenue in the form of royalty payments, upfront payments, and milestone payments from the out-licensing and sale of intellectual property (“IP”). Royalty revenue earned through a license is recognized when the underlying sales have occurred. Revenue from upfront payment is generally recognized when Takeda provides a right to use IP. Revenue from milestone payments is recognized at the point in time when it is highly probable that the respective milestone event criteria are met, and a significant reversal in the amount of revenue recognized will not occur. Revenue from other services such as R&D of therapeutic candidates that are out-licensed is recognized over the service period.\n\nTakeda generally receives payments from customers within 60 days after entering into out-licensing contracts or confirmation by customers that conditions for the milestone payments are met. Takeda licenses its own intellectual property rights to customers and performs those transactions as a principal. Takeda also provides other services as a principal or an agent.\n\nTakeda identifies a contract modification in case of a change in the scope or price (or both) of a contract. If a contract modification is not accounted for as a separate contract, both of the revenue recognized before and after contract modification is presented in the same categories of the disaggregation of revenue information.\n\nGovernment Grants\n\nGovernment grants are recognized when there is reasonable assurance that Takeda will comply with the conditions attached to them and receive the grants. Government grants for the purchasing of property, plant and equipment are recognized as deferred income and then recognized in profit or loss and offset the related expenses on a systematic basis over the useful lives of the related assets. Government grants for expenses incurred are recognized in profit or loss and offset the related expenses over the periods in which Takeda recognizes costs for which the grants are intended to compensate.\n\nResearch and Development Expenses\n\nResearch costs are expensed in the period incurred. Internal development expenditures are capitalized when the criteria for recognizing an asset are met in accordance with IAS 38 Intangible Assets, usually when a regulatory filing has been made in a major market and approval is considered highly probable. Where regulatory and other uncertainties are such that the criteria are not met, the expenditures are recognized in profit or loss in the consolidated statements of profit or loss. Property, plant and equipment used for R&D is capitalized and depreciated over the estimated life of the asset.\n\nF-17\n\nIncome Taxes\n\nIncome taxes consist of current taxes and deferred taxes. Current and deferred taxes are recognized in profit or loss, except for income taxes resulting from business combinations, and income taxes recognized in either other comprehensive income or equity related to items that are recognized, in the same or different period, outside of profit or loss.\n\nCurrent Taxes\n\nCurrent tax assets and liabilities represent the amount of income taxes expected to be paid to or recovered from authorities in respect of taxable profit (loss) for the period and for prior periods. Taxable profit differs from reported profit because taxable profit excludes items that are either never taxable or tax deductible or items that are taxable or tax deductible in a different period. Income taxes payable and income taxes receivable, including those from prior fiscal years, are measured at the amount that is expected to be paid to or received from the taxation authorities using tax rates and tax law that have been enacted or substantively enacted by the reporting date, reflecting uncertainty related to income taxes when relevant.\n\nThe measurement of the amount of income tax reflects uncertainty over income tax treatments when it is probable that the tax authority will examine the amounts reported and that the examination could affect the amount of tax payable or recoverable. Inherent uncertainties exist in the evaluation of many uncertain tax positions due to changes in tax law resulting from legislation, regulation, as concluded through the various jurisdictions’ tax court systems. When Takeda concludes that it is not probable that a tax authority will accept an uncertain tax position, Takeda recognizes the best estimate of the expenditure required to settle a tax uncertainty. This is measured either based on the most likely amount or the expected value amount, depending on which method provides a better prediction of the resolution of the uncertainty. The amount of unrecognized tax benefits is adjusted for changes in facts and circumstances.\n\nDeferred Taxes\n\nDeferred taxes are calculated based on the temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes at the end of the reporting period. Deferred tax assets are measured to reflect the tax consequences that would follow from the manner in which Takeda expects, at the end of the reporting period , to recover or settle the carrying amount of its assets and liabilities. Deferred tax assets are recognized for deductible temporary differences, unused tax credits and unused tax losses to the extent that it is probable that future taxable profit will be available against which the assets can be utilized. This requires Takeda to evaluate and assess the probability of future taxable profit and Takeda’s business plan, which are inherently uncertain. The change in judgment upon determining the revenue forecast used for Takeda's business plan could have a significant impact on the amount of the deferred tax assets to be recognized. Uncertainty of estimates of future taxable profit could increase due to changes in markets in which Takeda operates, changes in market conditions, effects of currency fluctuations, or other factors. Takeda’s deferred taxes also include liabilities related to uncertain tax positions. Deferred tax liabilities are generally recognized for taxable temporary differences.\n\nDeferred tax assets and liabilities are not recognized for the following temporary differences:\n\n•Taxable temporary differences arising on the initial recognition of goodwill\n\n•The initial recognition of assets and liabilities in transactions that are not business combinations and affect neither accounting profit nor taxable profit (loss) at the time of the transaction\n\n•Deductible temporary differences arising from investments in subsidiaries and associates, when it is not probable that the temporary differences will reverse in the foreseeable future and that taxable profit will be available against which the temporary differences can be utilized\n\n•Taxable temporary differences arising from investments in subsidiaries and associates when the timing of the reversal of the temporary differences is controllable and it is not probable that they will reverse in the foreseeable future\n\nFurther, Takeda has not recognized nor disclosed deferred tax assets and liabilities of income taxes relating to the Pillar Two model’s rules published by the Organization for Economic Cooperation and Development (“OECD”), as required by IAS 12 as amended on May 23, 2023.\n\nDeferred tax assets and liabilities are measured at the tax rates that are expected to apply to the periods in which the temporary differences are expected to reverse based on the tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period. Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and the deferred tax assets and liabilities for those related to income taxes levied by the same taxation authority on the same taxable entity.\n\nEarnings per Share\n\nBasic earnings per share is calculated by dividing profit or loss for the year attributable to owners of ordinary shares of the Company, by the weighted-average number of ordinary shares outstanding during the reporting period, adjusted by the number of treasury shares. Diluted earnings per share is calculated by adjusting all the effects of dilutive potential ordinary shares.\n\nF-18\n\nProperty, Plant and Equipment\n\nProperty, plant and equipment are measured using the cost model and is stated at cost less accumulated depreciation and accumulated impairment loss. Acquisition cost includes mainly the costs directly attributable to the acquisition and the initial estimated dismantlement, removal, and restoration costs associated with the asset. Except for assets that are not subject to depreciation, such as land and construction in progress, assets are depreciated mainly using the straight-line method over the estimated useful life of the asset. Right of use (“ROU”) assets are depreciated using the straight-line method over the shorter of the lease term or the estimated useful life unless it is reasonably certain that Takeda will obtain ownership by the end of the lease term. The depreciation of these assets begins when they are available for use.\n\nThe estimated useful life of major asset items is as follows:\n\n•Buildings and structures        3 to 50 years\n\n•Machinery and vehicles        2 to 20 years\n\n•Tools, furniture and fixtures        2 to 20 years\n\nGoodwill\n\nGoodwill arising from business combinations is stated at its cost less accumulated impairment losses. Goodwill is not amortized. Goodwill is allocated to cash-generating units (CGUs) or groups of cash-generating units that represent the lowest level within the entity for which information about goodwill is available and monitored for internal management purposes and are not larger than an operating segment. Goodwill is only allocated to CGUs or groups of CGUs that are expected to benefit from synergies related to the business combination from which goodwill arose and the method of allocation depends on the facts and circumstances of the business combination. Goodwill is tested for impairment annually and whenever there is any indication of impairment. Impairment losses on goodwill are recognized in the consolidated statements of profit or loss and no subsequent reversal will be made.\n\nIntangible Assets Associated with Products\n\nAmortization and impairment losses on intangible assets associated with products is separately stated in the consolidated statements of profit or loss because intangible assets associated with products have various comprehensive rights and contribute to our ability to sell, manufacture, research, market and distribute products, compounds and benefit multiple business functions.\n\nMarketed Products\n\nAn intangible asset associated with a marketed product is amortized on a straight-line basis over the estimated useful life, which is based on expected patent life, and/or other factors depending on the expected economic benefits of the asset, ranging from 3 to 20 years, from marketing approval. These intangible assets are assessed for impairment if indicators of a potential impairment exist. An impairment is recorded if the carrying value exceeds the recoverable amount of the intangible assets. Intangible assets relating to marketed products of which Takeda recalls or ceases sales for any reason are written down to their recoverable amount. Amortization, impairment and reversal of impairment related to intangible assets associated with marketed products are included in amortization and impairment losses on intangible assets associated with products in the consolidated statements of profit or loss.\n\nIn-Process R&D\n\nTakeda enters into collaboration and in-license agreements with third parties for products and compounds for R&D projects. Payments for collaboration agreements generally take the form of subsequent development milestone payments. Payments for in-license agreements generally take the form of up-front payments and subsequent development milestone payments. Up-front payments for in-license agreements are capitalized upon commencement of the in-license agreements, and development milestone payments are capitalized when the milestone is achieved.\n\nThese intangible assets relating to products in development that are not yet available for use are not amortized. These intangible assets are assessed for impairment on an annual basis, and more frequently if indicators of a potential impairment exist. An impairment is recorded if the carrying value exceeds the recoverable amount of the intangible assets. Intangible assets relating to in-process R&D which fail during development or for which development ceases for any reason are written down to their recoverable amount which is typically nil. Impairment and reversal of impairment related to intangible assets associated with in-process R&D are included in amortization and impairment losses on intangible assets associated with products in the consolidated statements of profit or loss.\n\nIf and when Takeda obtains approval for the commercial application of a product in development, the related in-process R&D assets will be reclassified to intangible assets associated with marketed products.\n\nIntangible Assets – Software\n\nSoftware is recognized at cost and amortized on a straight-line basis over the expected useful life. The useful life used for this purpose is 3 to 10 years. Amortization of intangible assets – software is included in cost of sales, selling, general and administrative expenses, and research and development expenses in the consolidated statements of profit or loss.\n\nF-19\n\nLeases\n\nAs Lessee\n\nTakeda assesses whether a contract is or contains a lease at inception of a contract. As a lessee, Takeda recognizes a ROU asset and a corresponding lease liability for all contracts in which it is a lessee in the consolidated statements of financial position at the lease commencement date.\n\nThe ROU asset is initially measured at cost, being the initial amount of the lease liability adjusted, as applicable, for any lease payments made at or before the lease commencement date, lease incentives received, initial direct costs, and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, and subsequently measured at cost less any accumulated depreciation and impairment losses. The ROU asset is subsequently depreciated using the straight-line method over the shorter of the lease term or the estimated useful life of the underlying asset. The ROU asset is subject to impairment assessment.\n\nThe lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if not readily determinable, the Takeda’s incremental borrowing rate.\n\nGenerally, Takeda uses its incremental borrowing rate as the discount rate. The lease term comprises a non-cancellable period of lease contracts and periods covered by an option to extend or terminate the lease if Takeda is reasonably certain to exercise that option. After initial recognition, the lease liability is measured at amortized cost using the effective interest method. If there is a change in future lease payments, such as from reassessment of whether an extension or termination option will be exercised, the lease liability is remeasured. A corresponding adjustment is made to the ROU asset or is recorded in the consolidated statements of profit or loss when the right-of-use asset has been fully depreciated.\n\nTakeda has elected to apply recognition exemption for leases that have a lease term of 12 months or less and leases of low-value assets. The lease payments for such leases are recognized as an expense on a straight-line basis over the lease term.\n\nAs a practical expedient, Takeda has elected not to separate non-lease components from lease components, and instead accounts for each lease component and any associated non-lease components as a single lease component.\n\nImpairment of Non-Financial Assets\n\nTakeda assesses whether there is any indication of impairment for non-financial assets at the end of each reporting period, excluding inventories, deferred tax assets, assets held for sale, and net defined benefit assets. If any such indication exists, and in cases in which an impairment test is required to be performed each year, the recoverable amount of the asset is estimated. In cases the recoverable amount cannot be estimated for each asset, they are estimated at the cash-generating unit level. The recoverable amount of an asset or a cash-generating unit is determined at the higher of its fair value less costs of disposal and its value in use. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In determining the value in use, the estimated future cash flows are discounted to their present value using a discount rate that reflects the time value of money and the risks specific to the asset. If the carrying amount of the asset or cash-generating unit exceeds the recoverable amount, impairment loss is recognized in profit or loss and the carrying amount is reduced to the recoverable amount. An asset or a cash-generating unit other than goodwill, for which impairment losses were recognized in prior years, is assessed at the end of the reporting period to determine whether there is any indication that the impairment loss recognized in prior periods may no longer exist or may have decreased. If any such indication exists, the recoverable amount of the asset or cash-generating unit is estimated. In cases the recoverable amount exceeds the carrying amount of the asset or cash-generating unit, the impairment loss is reversed up to the lower of the estimated recoverable amount or the carrying amount, net of depreciation and amortization, that would have been determined if no impairment loss had been recognized in prior years. The reversal of impairment loss is immediately recognized in profit or loss.\n\nInventories\n\nInventories are measured at the lower of cost or net realizable value. The cost of inventories is determined mainly using the weighted-average cost formula. The cost of inventories includes purchase costs, costs of conversion, and other costs incurred in bringing the inventories to the present location and condition. Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale. Pre-launch inventory is held as an asset when there is a high probability of regulatory approval for the product. Before that point, a provision is made against the carrying value to its recoverable amount. The provision is then reversed at the point when a high probability of regulatory approval is determined.\n\nCash and cash equivalents\n\nCash and cash equivalents consist of cash on hand, demand deposits and short-term, highly liquid investments that are readily convertible to known amounts of cash and subject to insignificant risk of change in value and due within three months from the date of acquisition.\n\nAssets Held for Sale\n\nAn asset or disposal group for which the cash flows are expected to arise principally from sale rather than continuing use is classified as an asset held for sale when it is highly probable that the asset or disposal group will be sold within one year, the asset or disposal group is available for immediate sale in its present condition, and the management of Takeda is committed to the sale. In such cases, the asset held for sale is measured at the lower of its carrying amount and fair value less costs to sell.\n\nF-20\n\nProperty, plant and equipment and intangible assets classified as held for sale are not depreciated or amortized. Assets and liabilities classified as held for sale are presented separately as current items in the consolidated statements of financial position.\n\nPost-employment Benefit\n\nTakeda sponsors lump-sum payments on retirement, pensions and other plans such as post-retirement medical care as post-employment benefit plans. They are classified as defined benefit plans or defined contribution plans, depending on the characteristics of the plans.\n\nDefined Benefit Plans\n\nTakeda uses the projected unit credit method to determine the present value, the related current service cost, and the past service cost by each defined benefit obligation. The discount rate is determined by reference to market yields on high-quality corporate bonds at the end of the reporting period. The net defined benefit liabilities (assets) in the consolidated statements of financial position are calculated by deducting the fair value of the plan assets from the present value of the defined benefit obligations. If the defined benefit plan has a surplus, the net defined benefit asset is limited to the present value of any future economic benefits available in the form of refunds from the plan or reductions in future contributions to the plan. Past service cost defined as the change in the present value of the defined benefit obligation resulting from a plan amendment or curtailment is recognized in profit or loss upon occurrence of the plan amendment or curtailment.\n\nRemeasurement of net defined benefit plans is recognized in full in other comprehensive income and transferred to retained earnings in the period in which they are recognized.\n\nDefined Contribution Plans\n\nThe costs for defined contribution plans are recognized as expenses when employees render related services.\n\nProvisions\n\nTakeda recognizes rebates and return reserves if Takeda receives consideration from a customer and expects to refund some or all of that consideration to the customer. In addition, provisions are recognized when Takeda has present legal or constructive obligations as a result of past events, it is probable that outflows of resources embodying economic benefits will be required to settle the obligations and reliable estimates can be made of the amount of the obligations. Takeda’s provisions consist primarily of rebates and return reserves, as well as provisions for litigation and restructuring.\n\nFinancial Instruments\n\nTakeda’s financial instruments include financial instruments related to lease contracts, trade and other receivables and payables, financial assets and liabilities associated with contingent consideration arrangements, derivative instruments, and rights and obligations under employee benefit plans, which are dealt with in specific accounting policies.\n\nFinancial Assets\n\nInitial Recognition and Measurement\n\nFinancial assets are recognized in the consolidated statements of financial position when Takeda becomes a party to the contract of the instruments. Financial assets, except for investments in debt instruments measured at fair value through profit or loss (“FVTPL”), are initially measured at fair value plus transaction costs that are directly attributable to the acquisition.\n\n•Investments in debt instruments measured at amortized cost: Assets such as trade and other receivables that are held within a business model whose objective is to hold financial assets in order to collect contractual cash flows and whose contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding are measured at amortized cost. Trade receivables are initially recognized at their invoiced amounts, including any related sales taxes less adjustments for deductions such as impairment loss allowance and cash discounts.\n\n•Investments in debt instruments measured at fair value through other comprehensive income (“FVTOCI”): Assets that are held within a business model objective whose objective is achieved by both collecting contractual cash flows and selling financial assets whose contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding are measured at FVTOCI.\n\n•Investments in debt instruments measured at FVTPL: Assets that do not meet the criteria for amortized cost or FVTOCI are measured at FVTPL.\n\n•Equity instruments measured at FVTOCI: On initial recognition, Takeda makes an irrevocable FVTOCI election (on an instrument-by-instrument basis) to present the subsequent changes in the fair value of equity instruments in other comprehensive income for certain equity instruments held for the long-term for strategic purposes. At the reporting date, Takeda designates all of its equity instruments as financial assets measured at FVTOCI.\n\nF-21\n\nSubsequent Measurement and Derecognition\n\nTakeda derecognizes a financial asset only when the contractual right to receive the cash flows from the asset expires or when Takeda transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity.\n\n•Investments in debt instruments measured at amortized cost: These assets are subsequently measured at amortized cost using the effective interest method. The amortized cost is reduced by impairment losses. Interest income, foreign exchange gains and losses and impairment are recognized in profit or loss. Any gain or loss on derecognition is recognized in profit or loss.\n\n•Investments in debt instruments measured at FVTOCI: These assets are subsequently measured at fair value. Interest income calculated using the effective interest method, foreign exchange gains and losses and impairment are recognized in profit or loss. Other net gains and losses arising from changes in fair value are recognized in other comprehensive income. Upon derecognition of the investments, the gains and losses accumulated in other comprehensive income related to the investment is reclassified to profit or loss.\n\n•Investments in debt instruments measured at FVTPL: These assets are subsequently measured at fair value, and a gain or loss on debt instruments that is subsequently measured at FVTPL is recognized in profit or loss.\n\n•Equity instruments measured at FVTOCI: These assets are subsequently measured at fair value. Dividends are recognized as income in profit or loss unless the dividend clearly represents a recovery of part of the cost of the investment. Other net gains and losses are recognized in other comprehensive income and are never reclassified to profit or loss. Upon derecognition of the investments, the amounts in other comprehensive income related to the investment is reclassified within equity to retained earnings.\n\nImpairment\n\nLoss allowances are established using an Expected Credit Loss (“ECL”) model. The provisions are based on a forward-looking ECL, which includes possible default events on the trade receivables over the entire holding period of the trade receivables. Takeda has elected to measure provisions for trade receivables, contract assets and lease receivables at an amount equal to lifetime ECL. Takeda uses a provisions matrix based on historical loss rates adjusted for forward-looking information to calculate ECL. These provisions represent the difference between the contractual amount of the trade receivables, the contract assets and the lease receivables in the consolidated statements of financial position and the estimated collectible net amount.\n\nFinancial Liabilities\n\nInitial Recognition and Measurement\n\nFinancial liabilities are recognized in the consolidated statements of financial position when Takeda becomes a party to the contract of financial instruments. Financial liabilities are classified, at initial recognition, as financial liabilities measured at FVTPL, bonds and loans, or payables.\n\nFinancial liabilities, except for those measured at FVTPL, are initially measured at fair value less transaction costs that are directly attributable to the issuance.\n\nSubsequent Measurement\n\n•Financial liabilities measured at FVTPL: Financial liabilities measured at FVTPL are subsequently measured at fair value, and any gains or losses arising on re-measurement are recognized in profit or loss. Financial liabilities measured at FVTPL include derivatives and financial liabilities associated with contingent consideration arrangements.\n\n•Other financial liabilities, including bonds and loans: Other financial liabilities are measured at amortized cost mainly using the effective interest method.\n\nDerecognition\n\nTakeda derecognizes a financial liability only when the obligation specified in the contract is discharged, canceled, or expires. On derecognition of a financial liability, the difference between the carrying amount and the consideration paid or payable is recognized in profit or loss.\n\nDerivatives\n\nTakeda hedges the risks arising mainly from its exposure to fluctuations in foreign currency exchange rates and interest rates using derivatives such as forward exchange contracts, currency options, interest rate swaps, cross currency interest rate swaps and forward interest rate contracts. In addition, Takeda hedges the risks arising from its exposure to fluctuations in prices of renewable energy using forward contracts. Takeda does not enter into derivative transactions for trading or speculative purposes. Derivatives are measured at FVTPL unless the derivative contracts are designated as hedging instruments. The gains and losses on derivatives that are not designed as hedging instruments are recognized in profit or loss. The treatment of the change in fair value for derivatives designated as hedging instruments varies based on the type of hedge as described below.\n\nF-22\n\nHedge Accounting\n\nFor foreign currency exposure as a result of translation risk, Takeda designates certain non-derivatives, such as foreign currency denominated bonds and loans and certain derivatives such as forward exchange contracts, as net investment hedges of foreign operations. For foreign currency exposure due to foreign currency denominated transactions, Takeda designates certain derivatives, such as forward exchange contracts, currency options and cross currency interest rate swaps, as cash flow hedges of forecasted transactions. For interest risk exposure, Takeda designates derivatives such as interest rate swaps, cross currency interest rate swaps and forward interest rate contracts, as cash flow hedges of forecasted transactions. Within the designation documentation at inception, Takeda documents the risk management objective, nature of the risk being hedged, and relationship between hedging instruments and hedged risk based on the strategy for undertaking the hedging relationships. At inception and on a quarterly basis, Takeda also assesses whether the hedging instruments are highly effective in offsetting changes in the hedged transactions or net investment.\n\n•Cash flow hedges: the effective portion of changes in the fair value of derivatives designated and qualifying as cash flow hedges is recognized in other comprehensive income. The gain or loss relating to the ineffective portion is recognized immediately in profit or loss. The cumulative gain or loss that was previously recognized in other comprehensive income is reclassified to profit or loss in the same period when the cash flows of the hedged items are recognized in profit or loss and in the same line item in the consolidated statements of profit or loss. The currency basis spread and the time value of the foreign currency options are accounted for and presented as hedging cost under other components of equity separately from cash flow hedges.\n\n•Net investment hedges in foreign operations: the gain or loss on hedging instruments in foreign operation is recognized in other comprehensive income. At the time of disposal of the foreign operations, the cumulative gain or loss recognized in other comprehensive income is reclassified to profit or loss.\n\nHedge accounting is discontinued when the hedging instrument expires or is sold, terminated or exercised, or when the hedge no longer qualifies for hedge accounting.\n\nThe cash flows of hedging instruments qualified for hedge accounting are classified in the same manner as the cash flows of the hedged items.\n\nTransaction costs of financial liabilities\n\nTransaction costs relating to the financial liabilities of debt issued are recorded against the corresponding debt and amortized to the consolidated statements of profit or loss over the period to the earliest redemption date of the debt, using the effective interest rate method. On extinguishment of the related debt, any unamortized deferred transaction costs are written off and charged to interest expense in the consolidated statements of profit or loss.\n\nShare-based Payments\n\nTakeda has implemented share-based payment programs and provides equity and cash-settled share-based payments.\n\nEquity-settled Share-based Payments\n\nEquity-settled share-based payments are granted based on the service performed by the employees, directors, and senior management. The service received and the corresponding increase in equity are measured at the fair value of the equity instruments at the grant date. The fair value of the equity instruments granted to employees, directors, and senior management are recognized as expense over the vesting period of the awards with a corresponding amount as an increase in equity.\n\nCash-settled Share-based Payments\n\nCash-settled share-based payments are granted based on the service performed by the employees, directors, and senior management. The service received and the corresponding liability are measured at the fair value of the corresponding liability. The fair value of the liability-classified awards granted to employees, directors, and senior management are recognized as expense over the vesting period of the awards with a corresponding amount as an increase in liability. Takeda re-measures the fair value of the liability at the end of each reporting period and at the date of settlement and recognizes any changes in fair value in profit or loss.\n\nCapital\n\nOrdinary Shares\n\nProceeds from the issuance of ordinary shares by Takeda are included in share capital and share premium.\n\nTreasury Shares\n\nWhen Takeda acquires treasury shares, the consideration paid is recognized as a deduction from equity. When Takeda sells the treasury shares, the difference between the carrying amount and the consideration received is recognized in share premium.\n\nF-23\n\n4. Operating Segment and Revenue Information\n\nTakeda comprises a single operating segment and is engaged in the research, development, manufacturing, marketing and out-licensing of pharmaceutical products. This is consistent with how the financial information is viewed in allocating resources, measuring performance, and forecasting future periods by the CEO who is Takeda’s Chief Operating Decision Maker.\n\nDisaggregation of Revenue Information\n\nTakeda’s revenue from contracts with customers is comprised of the following:\n\nRevenue by Type of Good or Service\n\nJPY (millions)\n\nFor the Year Ended March 31\n\n202420252026\n\nSales of pharmaceutical products\n¥4,163,652 ¥4,495,972 ¥4,423,111 \n\nOut-licensing and service income\n100,110 85,579 82,609 \n\nTotal\n¥4,263,762 ¥4,581,551 ¥4,505,720 \n\nRevenue by Business Area and Product\n\nJPY (millions)\nFor the Year Ended March 31\n\n202420252026\n\nGastroenterology:\n\nENTYVIO¥800,919 ¥914,098 ¥958,042 \n\nGATTEX/REVESTIVE119,252 146,289 145,659 \n\nTAKECAB/VOCINTI*\n118,526 130,763 143,684 \n\nDEXILANT45,278 38,548 37,259 \n\nEOHILIA200 5,452 8,780 \n\nRESOLOR/MOTEGRITY20,880 19,481 7,261 \n\nOthers111,153 102,391 106,776 \n\nTotal Gastroenterology 1,216,207 1,357,022 1,407,460 \n\nRare Diseases:\n\nTAKHZYRO178,677 223,163 223,924 \n\nADVATE122,911 111,758 105,518 \n\nELAPRASE91,561 97,243 100,485 \n\nREPLAGAL73,553 77,852 80,425 \n\nADYNOVATE/ADYNOVI66,308 64,613 56,689 \n\nLIVTENCITY19,085 32,997 46,909 \n\nVONVENDI16,188 20,934 25,282 \n\nADZYNMA425 7,082 11,957 \n\nOthers119,715 117,173 111,510 \n\nTotal Rare Diseases688,423 752,816 762,698 \n\nPDT:\n\nImmunoglobulin644,587 757,771 790,571 \n\nAlbumin133,990 141,381 140,316 \n\nFEIBA40,543 39,431 32,868 \n\nHEMOFIL/IMMUNATE/IMMUNINE19,518 25,586 25,377 \n\nF-24\n\nJPY (millions)\nFor the Year Ended March 31\n\n202420252026\n\nOthers65,062 68,493 68,392 \n\nTotal PDT903,699 1,032,662 1,057,524 \n\nOncology:\n\nADCETRIS109,425 129,025 140,213 \n\nLEUPLIN/ENANTONE107,350 119,265 120,789 \n\nNINLARO87,361 91,242 82,109 \n\nICLUSIG54,706 70,728 75,045 \n\nFRUZAQLA10,080 47,954 55,113 \n\nALUNBRIG28,524 36,432 36,934 \n\nOthers64,915 65,783 69,923 \n\nTotal Oncology462,362 560,430 580,126 \n\nVaccines:\n\nQDENGA9,557 35,580 40,767\n\nOthers40,798 19,832 18,840 \n\nTotal Vaccines50,355 55,412 59,607 \n\nNeuroscience:\n\nVYVANSE/ELVANSE423,221 350,607 203,233 \n\nTRINTELLIX104,797 125,735 121,841 \n\nADDERALL XR41,756 28,430 24,748 \n\nOthers57,241 61,044 64,521 \n\nTotal Neuroscience627,014 565,816 414,343 \n\nOther:\n\nFOSRENOL13,529 7,911 8,842 \n\nAZILVA*\n33,636 11,808 7,142 \n\nOthers268,536 237,673 207,977 \n\nTotal Other315,701 257,392 223,961 \n\nTotal¥4,263,762 ¥4,581,551 ¥4,505,720 \n\n* The figures include the amounts of fixed dose combinations and blister packs.\n\nF-25\n\nGeographic Information\n\nTakeda’s revenue from contracts with customers is based in the following geographic locations:\n\nJPY (millions)\n\nFor the Year Ended March 31\n\n202420252026\n\nJapan¥451,391 ¥418,462 ¥433,110 \n\nU.S.2,195,711 2,379,651 2,164,824 \n\nEurope and Canada966,835 1,055,252 1,146,238 \n\nLatin America198,100 235,848 254,132 \n\nChina174,844 191,740 195,136 \n\nAsia (excluding Japan & China)86,375 99,392 98,669 \n\nRussia/CIS72,594 72,356 79,719 \n\nOther117,911 128,849 133,892 \n\nTotal¥4,263,762 ¥4,581,551 ¥4,505,720 \n\n“Other” includes the Middle East, Oceania and Africa. This disaggregation provides revenue attributable to countries or regions based on the customer location.\n\nTakeda’s non-current assets are held in the following geographic locations:\n\nJPY (millions)\nAs of March 31\n\n20252026\n\nJapan\n¥317,089 ¥281,337 \n\nU.S.\n7,654,971 7,717,157 \n\nSwitzerland\n799,783 1,018,628 \n\nIreland872,944 987,923 \n\nOther1,330,348 1,404,855 \n\nTotal¥10,975,135 ¥11,409,899 \n\nNon-current assets exclude financial instruments, deferred tax assets and net defined benefit assets.\n\nInformation Related to Major Customers\n\nDuring the year ended March 31, 2024, Cencora, Inc. (previously called “AmerisourceBergen Corporation”) and its subsidiaries (collectively, “Cencora Group”), McKesson Corporation and its subsidiaries (collectively, “McKesson Group”) and Cardinal Health, Inc. and its subsidiaries (collectively, “Cardinal Health Group”), represented more than 10% of Takeda’s sales. The sales to Cencora Group, McKesson Group and Cardinal Health Group were JPY 579,065 million, JPY 578,767 million and JPY 436,951 million, respectively, for the year ended March 31, 2024.\n\nDuring the year ended March 31, 2025, McKesson Group and Cencora Group, represented more than 10% of Takeda’s sales. The sales to McKesson Group and Cencora Group were JPY 592,323 million, JPY 577,017 million, respectively, for the year ended March 31, 2025.\n\nDuring the year ended March 31, 2026, McKesson Group and Cencora Group represented more than 10% of Takeda’s sales. The sales to McKesson Group and Cencora Group were JPY 539,890 million and JPY 470,295 million, respectively, for the year ended March 31, 2026.\n\nF-26\n\nOther Revenue Information\n\nContract Balances\n\nJPY (millions)\nAs of March 31\n\n20252026\n\nReceivables from contracts with customers\n\nTrade receivables (Note 16)\n¥651,414 ¥808,025 \n\nContract assets\n\nUnbilled receivables\n1,372 1,609 \n\nContract liabilities\n\nDeferred income (Note 23)\n23,547 11,575 \n\nAdvance payments\n64 93 \n\nTakeda’s contract assets relate to the right to receive consideration where performance was completed based on the contract, and trade receivables are recognized when the right to receive consideration becomes unconditional.\n\nTakeda’s contract liabilities primarily relate to out-licensing arrangements or product purchase and supply agreements where Takeda receives cash consideration prior to the completion of its performance obligations under the agreements. The revenue recognized during the years ended March 31, 2024, 2025, and 2026 that was included in the contract liability balance as of the beginning of the year was JPY 5,526 million, JPY 5,634 million, and JPY 22,532 million, respectively. The revenue recognized during the years ended March 31, 2024, 2025, and 2026 from performance obligations satisfied (or partially satisfied) in previous periods was JPY 80,794 million, JPY 97,560 million, and JPY 108,267 million, respectively, and primarily relates to royalty income.\n\nTransaction price allocated to the remaining performance obligations\n\nJPY (millions)\n\nTotal\n\nDuration of the remaining performance obligations\n\nWithin one year\n\nBetween one and five years\n\nMore than five years\n\nContract liabilities as of March 31, 2025\n¥23,611 ¥21,781 ¥526 ¥1,304 \n\nContract liabilities as of March 31, 2026\n11,668 7,094 2,812 1,762 \n\nF-27\n\n5.    Other Operating Income and Expenses\n\nJPY (millions)\nFor the Year Ended March 31\n\n202420252026\n\nOther operating income:\n\nChange in fair value of financial assets and liabilities associated with contingent consideration arrangements (Note 26)¥— ¥2,390 ¥— \n\nGain on sales of property, plant and equipment and investment property144 363 165 \n\nGain on divestment of business to Teva Takeda Yakuhin588 4,117 — \n\nGain on divestment of business and subsidiaries (Note 18)7,243 6,081 18,265 \n\nOther11,404 13,262 6,318 \n\nTotal¥19,379 ¥26,212 ¥24,747 \n\nOther operating expenses:\n\nDonations and contributions¥7,009 ¥7,663 ¥6,866 \n\nRestructuring expenses (Note 22)81,358 128,133 70,818 \n\nChange in fair value of financial assets and liabilities associated with contingent consideration arrangements (Note 26)20,757 1,788 1,006 \n\nValuation reserve for pre-launch inventories (reversal)11,052 (7,313)50,984 \n\nImpairment of assets held for sale (Note 18)1,685 6,812 1,363 \n\nProvisions for legal proceedings related to AMITIZA (Note 31)— — 403,478 \n\nOther84,666 69,650 24,466 \n\nTotal¥206,527 ¥206,733 ¥558,979 \n\nFor the year ended March 31, 2024, ”Other” in other operating expenses includes JPY 45,212 million of legal provision for certain legal proceeding, comprising JPY 26,405 million of additional losses recorded for the supply agreement litigation with AbbVie, Inc. (\"AbbVie\").\n\nFor the year ended March 31, 2025, ”Other” in other operating expenses includes JPY 27,004 million of post-trial access costs related to TAK-611 and TAK-609.\n\n.\n\nF-28\n\n6.    Finance Income and Expenses\n\nJPY (millions)\nFor the Year Ended March 31\n\n202420252026\n\nFinance Income:\n\nInterest income\n\nInterest income from financial assets measured at amortized cost¥8,850 ¥15,183 ¥13,184 \n\nInterest income from financial assets measured at fair value through P&L2,442 3,062 291 \n\nInterest income from financial assets measured at fair value through OCI— 1,394 3,404 \n\nInterest income on sublease1 0 — \n\nTotal interest income11,293 19,638 16,878 \n\nDividend income\n\nDividend income from financial assets measured at fair value through OCI and disposed of during the period— 1 1 \n\nDividend income from financial assets measured at fair value through OCI and held at end of the period335 344 345 \n\nTotal dividend income335 345 345 \n\nGain on derivatives – Foreign currency exchange31,053 7,999 179,648 \n\nGain on derivatives – Virtual power purchase agreement3,393 4,959 1,071 \n\nGain on derivatives – Interest rate swaps— 2,968 — \n\nGain on derivatives – Cross currency interest rate swaps4,144 3,856 — \n\nOther1,875 6,784 13,235 \n\nTotal¥52,093 ¥46,549 ¥211,177 \n\nFinance Expenses:\n\nInterest expense\n\nInterest expense on financial debt¥98,710 ¥112,800 ¥123,758 \n\nInterest expense on lease liabilities20,826 24,511 24,366 \n\nTotal interest expense119,535 137,311 148,123 \n\nLoss on derivatives – Virtual power purchase agreement3,393 5,311 3,675 \n\nLoss on foreign currency exchange, net44,665 7,213 171,254 \n\nHyperinflation effect expense18,160 10,565 8,755 \n\nOther34,096 49,665 25,764 \n\nTotal¥219,850 ¥210,065 ¥357,572 \n\nFor the year ended March 31, 2025, ”Other” in finance expenses includes JPY 18,885 million of impairment of assets held for sale (Note 18).\n\nF-29\n\n7.    Income Taxes\n\nIncome Tax Expense (Benefit)\n\nThe composition of income tax expense (benefit) is as follows:\n\nJPY (millions)\nFor the Year Ended March 31\n\n202420252026\n\nCurrent tax expense\n¥107,349 ¥138,057 ¥110,804 \n\nDeferred tax benefit\n(198,755)(71,116)(101,034)\n\nTotal\n¥(91,406)¥66,941 ¥9,770 \n\nCurrent tax expense includes the benefits arising from previously unrecognized tax losses, tax credits and temporary differences of prior periods. These effects decreased current tax expense by JPY 4,952 million, JPY 4,654 million and JPY 15,682 million for the years ended March 31, 2024, 2025 and 2026, respectively.\n\nCurrent tax expense includes Pillar Two global minimum tax expense of JPY 317 million and JPY 2,376 million for the years ended March 31, 2025 and 2026, respectively.\n\nDeferred tax benefit includes the benefits arising from previously unrecognized tax losses, tax credits and temporary differences of prior periods. These effects increased deferred tax benefits by JPY 32,290 million, JPY 19,542 million and JPY 8,292 million for the years ended March 31, 2024, 2025 and 2026, respectively.\n\nTakeda is mainly subject to income taxes, inhabitant tax, and deductible enterprise tax in Japan. The statutory tax rate calculated based on these taxes is 30.6% for the years ended March 31, 2024, 2025 and 2026.\n\nThe following is a reconciliation from income tax expense at Takeda's domestic (Japanese) statutory tax rate to Takeda's income tax expense (benefit) reported for the year ended March 31:\n\nJPY (millions)\n\n202420252026\n\nProfit (loss) before tax\n¥52,791 ¥175,084 ¥(142,355)\n\nIncome tax expense (benefit) at Takeda’s domestic (Japanese) statutory tax rate of 30.6%\n16,143 53,541 (43,532)\n\nNon-deductible expenses for tax purposes *1\n21,353 25,860 59,712 \n\nChanges in unrecognized deferred tax assets and deferred tax liabilities *2\n(3,512)45,243 41,340 \n\nTax credits\n(30,654)(28,371)(14,840)\n\nDifferences in applicable tax rates of overseas subsidiaries *3\n(29,782)(39,963)(32,538)\n\nChanges in tax effects of undistributed profit of overseas subsidiaries\n(1,737)10,282 2,089 \n\nEffect of changes in applicable tax rates and tax law *4\n(11,994)(6,964)(2,939)\n\nTax contingencies *5\n(83,784)426 (1,309)\n\nEffect of prior year items\n(2,479)3,305 (8,323)\n\nEntity reorganizations/Divestments\n33,469 2,880 4,279 \n\nOther\n1,571 702 5,831 \n\nIncome tax expense (benefit) reported for the year¥(91,406)¥66,941 ¥9,770 \n\n*1Amounts for the years ended March 31, 2024, 2025 and 2026 include the impact from intra territory eliminations, the pre-tax effect of which has been eliminated in arriving at Takeda’s consolidated income from continuing operations before income taxes. Additionally, amounts for the years ended March 31, 2024, 2025 and 2026 include non-deductible interest due to Japanese earnings stripping rules. Amount for the year ended March 31, 2026 includes JPY 14,125 million related to impairment of discontinued cell therapy platform assets to which a deferred tax liability was not initially recognized in accordance with the recognition exception under IAS 12.15.\n\n*2Amounts for the years ended March 31, 2024, 2025 and 2026 include deferred tax expenses (benefits) associated with carried forward net operating losses. Amount for the year ended March 31, 2025 includes JPY 21,600 million of deferred tax expense related to derecognition of previously recognized interest expense carryforwards under Japanese earnings stripping rules. Amount for the year ended March 31, 2026 is driven by tax expense resulting from the recognition of provision for legal proceedings resulting from the Amitiza jury verdict.\n\n*3Amounts for the years ended March 31, 2024, 2025 and 2026 include unitary and minimum taxes on overseas subsidiaries. Amounts for the years ended March 31, 2025 and 2026 also include Pillar Two taxes on overseas subsidiaries.\n\n*4Amount for the year ended March 31, 2024 includes JPY 4,206 million deferred tax expense related to U.S. state law change and JPY 16,200 million deferred tax benefit relating to extension of the carryforward period relating to Japanese earnings stripping rules. Amount for the year ended March 31, 2025 includes JPY 5,809\n\nF-30\n\nmillion deferred tax benefit related to U.S. state law changes. Amounts for the years ended March 31, 2025 and 2026 include JPY 1,155 million and JPY 4,797 million deferred tax benefit related to the change in Japan's enacted tax rate (from 30.6% to 31.5%) for years beginning April 1, 2026.\n\n*5Tax benefit for the year ended March 31, 2024 is from favorable resolutions of tax contingencies including JPY 63,547 million relating to the settlement with Irish Revenue Commissioners with respect to a tax assessment related to the treatment of an acquisition break fee Shire received from AbbVie in 2014.\n\nThe increase in Takeda’s income tax expense between the years ended March 31, 2024 and 2025 was primarily due to a tax expense reduction of JPY 63,547 million recorded during the fiscal year ended March 31, 2024 resulting from the reversal of the income taxes payable in excess of the settlement with Irish Revenue Commissioners with respect to a tax assessment related to the treatment of an acquisition break fee Shire received from AbbVie in 2014 and an increase in tax expenses due to the reassessment of recoverability of deferred tax assets as well as higher pretax earnings during the fiscal year ended March 31, 2025.\n\nThe decrease in Takeda’s income tax expense between the years ended March 31, 2025 and 2026 was primarily attributable to a JPY 58,393 million increase in Deferred Tax Assets resulting from the recognition of provisions for legal proceedings recorded following the jury verdict in the AMITIZA antitrust litigation in the U.S. for the fiscal year ended March 31, 2026.\n\nAs a company with worldwide operations, Takeda is subject to several factors that may affect future tax charges, principally the levels and mix of profitability in different jurisdictions, transfer pricing regulations, tax rates imposed and tax regime reforms.\n\nOn July 4, 2025, the United States enacted the One Big Beautiful Bill Act of 2025 (the 2025 Act). The 2025 Act permanently extends certain expiring provisions of the Tax Cuts and Jobs Act of 2017, modifies the U.S. international tax framework, restores immediate expensing for domestic research and development costs. The 2025 Act also includes changes to various other tax provisions with varying effective dates beginning in 2025. The 2025 Act had no material impact on tax expense for the year ended March 31, 2026.\n\nDeferred Taxes\n\nDeferred tax assets and liabilities reported in the consolidated statements of financial position are as follows:\n\nJPY (millions)\nAs of March 31\n\n20252026\n\nDeferred tax assets\n¥370,745 ¥546,260 \n\nDeferred tax liabilities\n(35,153)(26,804)\n\nNet deferred tax assets\n¥335,592 ¥519,456 \n\nF-31\n\nThe major items and changes in deferred tax assets and liabilities are as follows:\n\nJPY (millions)\n\nAs of April 1, 2024Recognized in profit or (loss)Recognized in other comprehensive income\nOther*\nAs of March 31, 2025\n\nResearch and development expenses¥217,010 ¥53,732 ¥— ¥9,816 ¥280,558 \n\nInventories138,402 64,265 — (10,788)191,879 \n\nProperty, plant and equipment(68,509)5,332 — (1,839)(65,016)\n\nIntangible assets(390,270)65,032 — (16,599)(341,837)\n\nFinancial assets measured at FVTOCI(7,639)— 4,235 1,119 (2,285)\n\nAccrued expenses and provisions185,593 (75,010)— 7,624 118,207 \n\nDefined benefit plans14,728 (3,768)2,231 375 13,566 \n\nDeferred income5,493 (875)— 41 4,659 \n\nUnused tax losses88,671 (36,355)— 2,973 55,289 \n\nTax credits46,159 (21,469)— 2,664 27,354 \n\nInvestments in subsidiaries and associates(26,801)17,595 — (361)(9,567)\n\nCash flow hedges21,645 2,969 3,775 1,461 29,850 \n\nOther55,606 (332)(3,350)(18,989)32,935 \n\nTotal¥280,088 ¥71,116 ¥6,891 ¥(22,503)¥335,592 \n\nJPY (millions)\n\nAs of April 1, 2025Recognized in profit or (loss)Recognized in other comprehensive income\nOther*\nAs of March 31, 2026\n\nResearch and development expenses¥280,558 ¥(124,569)¥— ¥3,694 ¥159,683 \n\nInventories191,879 (18,055)— 13,064 186,888 \n\nProperty, plant and equipment(65,016)2,767 — (2,570)(64,819)\n\nIntangible assets(341,837)64,714 — (15,456)(292,579)\n\nFinancial assets measured at FVTOCI(2,285)— 1,941 (3,567)(3,911)\n\nAccrued expenses and provisions118,207 80,641 — 19,246 218,094 \n\nDefined benefit plans13,566 (877)(468)2,016 14,237 \n\nDeferred income4,659 (541)— 46 4,164 \n\nUnused tax losses55,289 77,864 57,635 17,343 208,131 \n\nTax credits27,354 20,816 — 4,503 52,673 \n\nInvestments in subsidiaries and associates(9,567)3,259 — 437 (5,871)\n\nCash flow hedges29,850 4,156 (10,626)(1,246)22,134 \n\nOther32,935 (9,141)(3,051)(111)20,632 \n\nTotal¥335,592 ¥101,034 ¥45,431 ¥37,399 ¥519,456 \n\n* Other consists primarily of foreign currency translation differences, reclassification of deferred tax assets and liabilities classified as held for sale and the tax impact of items charged directly to equity.\n\nThe aggregate amount of current and deferred tax related to items charged directly to equity for the years ended March 31, 2025 and 2026 was JPY 1,347 million and JPY (382) million, respectively.\n\nTakeda considers the probability that a portion or all of the future deductible temporary differences, unused tax losses, or unused tax credits can be utilized against future taxable profits upon recognition of deferred tax assets. In assessing the recoverability of deferred tax assets, Takeda considers the scheduled reversal of taxable temporary differences, projected future taxable profits, and tax planning strategies.\n\nF-32\n\nBased on the level of historical taxable profits and projected future taxable profits during the periods in which the temporary differences become deductible, Takeda has determined that it is not probable a portion of the tax benefits can be utilized.\n\nThe unused tax losses, deductible temporary differences, and unused tax credits for which deferred tax assets were not recognized are as follows:\n\nJPY (millions)\nAs of March 31\n\n20252026\n\nUnused tax losses¥1,183,701 ¥1,207,254 \n\nDeductible temporary differences427,373 713,810 \n\nUnused tax credits26,993 29,422 \n\nThe unused tax losses and unused tax credits for which deferred tax assets were not recognized will expire as follows:\n\nJPY (millions)\nAs of March 31\n\nUnused tax losses20252026\n\n1st year¥114 ¥1,083 \n\n2nd year1,278 2,571 \n\n3rd year2,375 584,870 \n\n4th year549,705 451,420 \n\n5th year469,391 5,374 \n\nAfter 5th year152,121 142,539 \n\nIndefinite8,717 19,397 \n\nTotal¥1,183,701 ¥1,207,254 \n\nJPY (millions)\nAs of March 31\n\nUnused tax credits20252026\n\nLess than 5 years¥3,715 ¥4,493 \n\n5 years or more23,278 24,929 \n\nTotal¥26,993 ¥29,422 \n\nThe aggregate amounts of temporary differences associated with investments in subsidiaries for which deferred tax assets were not recognized were JPY 447,645 million and JPY 86,107 million as of March 31, 2025 and 2026, respectively.\n\nThe aggregate amounts of temporary differences associated with investments in subsidiaries for which deferred tax liabilities were not recognized were JPY 578,601 million and JPY 2,163,931 million as of March 31, 2025 and 2026, respectively.\n\nChanges in the amounts of unrecognized deferred tax assets and liabilities associated with investments in subsidiaries are primarily due to changes in temporary differences that had no impact on the consolidated statements of profit or loss.\n\nF-33\n\n8.    Earnings per Share\n\nThe basis for calculating basic and diluted earnings per share (“EPS”) (attributable to owners of the Company) is as follows:\n\nFor the Year Ended March 31\n\n202420252026\n\nNet profit (loss) for the year attributable to owners of the Company:\n\nNet profit (loss) for the year attributable to owners of the Company JPY (millions)\n¥144,067 ¥107,928 ¥(152,390)\n\nNet profit (loss) used for calculation of earnings per share JPY (millions)\n144,067 107,928 (152,390)\n\nWeighted-average number of ordinary shares outstanding during the year (thousands of shares) [basic]\n1,564,450 1,578,873 1,575,062 \n\nDilutive effect (thousands of shares)\n15,893 26,450 — \n\nWeighted-average number of ordinary shares outstanding during the year (thousands of shares) [diluted]\n1,580,343 1,605,323 1,575,062 \n\nEarnings per share\n\nBasic (JPY)\n92.09 68.36 (96.75)\n\nDiluted (JPY)\n91.16 67.23 (96.75)\n\nBasic EPS is calculated by dividing the net profit for the year attributable to owners of the Company, with the weighted average number of ordinary shares outstanding during the year. This calculation excludes the average number of treasury shares. Diluted EPS is calculated by dividing the net profit for the year attributable to owners of the Company, with the weighted-average number of ordinary shares outstanding during the year plus the weighted-average number of ordinary shares that would be issued upon conversion of all the dilutive ordinary shares into ordinary shares.\n\nFor the fiscal year ended March 31, 2026, the dilutive shares are not dilutive because loss per share attributable to owners of the Company would decrease upon the exercise of share options and stock incentive plans.\n\nThere were 814 thousand shares subject to stock options as potential common shares that were not included in the calculation of diluted EPS as of March 31, 2024 and 2025. There were 2,204 thousand shares subject to stock options and 35,489 thousand shares subject to stock incentive plans as potential common shares not included in the calculation of diluted EPS as of March 31, 2026.\n\nF-34\n\n9.    Other Comprehensive Income (Loss)\n\nAmounts arising during the year, reclassification adjustments to profit or loss, and tax effects for each component of other comprehensive income (loss) are as follows:\n\nJPY (millions)\nFor the Year Ended March 31\n\n202420252026\n\nItems that will not be reclassified to profit or loss:\n\nChanges in fair value of financial assets measured at fair value through OCI:\n\nAmounts arising during the year¥4,365 ¥(16,546)¥(6,917)\n\nTax effects(2,056)4,235 1,941 \n\nChanges in fair value of financial assets measured at fair value through OCI¥2,309 ¥(12,311)¥(4,976)\n\nRemeasurement of defined benefit pension plans:\n\nAmounts arising during the year¥(7,172)¥(9,277)¥2,382 \n\nTax effects2,170 2,231 (468)\n\nRemeasurement of defined benefit pension plans¥(5,002)¥(7,046)¥1,914 \n\nItems that may be reclassified subsequently to profit or loss:\n\nExchange differences on translation of foreign operations:\n\nAmounts arising during the year¥956,254 ¥(153,790)¥851,651 \n\nReclassification adjustments to profit or (loss)— — — \n\nBefore tax effects956,254 (153,790)851,651 \n\nTax effects12,588 445 52,244 \n\nExchange differences on translation of foreign operations¥968,842 ¥(153,345)¥903,895 \n\nChanges in fair value of financial assets measured at fair value through OCI:\n\nAmounts arising during the year¥(16,150)¥(16,363)¥(14,206)\n\nReclassification adjustments to profit or (loss)16,150 16,363 14,206 \n\nBefore tax effects— — — \n\nTax effects— — — \n\nChanges in fair value of financial assets measured at fair value through OCI¥— ¥— ¥— \n\nCash flow hedges:\n\nAmounts arising during the year¥171,059 ¥3,627 ¥111,908 \n\nReclassification adjustments to profit or (loss)(137,265)(6,453)(70,433)\n\nBefore tax effects33,794 (2,826)41,476 \n\nTax effects(10,338)1,870 (12,526)\n\nCash flow hedges¥23,456 ¥(956)¥28,950 \n\nHedging cost:\n\nAmounts arising during the year¥12,392 ¥18,663 ¥6,155 \n\nReclassification adjustments to profit or (loss)(2,024)(7,350)(1,542)\n\nBefore tax effects10,368 11,313 4,613 \n\nTax effects(3,171)(3,350)(1,454)\n\nHedging cost¥7,197 ¥7,963 ¥3,159 \n\nShare of other comprehensive loss of investments accounted for using the equity method:\n\nAmounts arising during the year¥(1,793)¥(145)¥(541)\n\nReclassification adjustments to profit or (loss)— — — \n\nBefore tax effects(1,793)(145)(541)\n\nTax effects— — — \n\nShare of other comprehensive loss of investments accounted for using the equity method¥(1,793)¥(145)¥(541)\n\nTotal other comprehensive income (loss) for the year¥995,009 ¥(165,841)¥932,401 \n\nF-35\n\n10.    Property, Plant and Equipment\n\nJPY (millions)\n\nAcquisition cost\nBuildings and structures\n\nMachinery and vehicles\n\nTools, furniture, and fixtures\n\nLand\n\nConstruction in progress\n\nTotal\n\nAs of April 1, 2024\n¥1,679,054 ¥981,944 ¥164,945 ¥105,845 ¥278,689 ¥3,210,478 \n\nAdditions and other increases37,969 22,271 10,480 — 154,435 225,155 \n\nTransfers36,236 48,722 13,185 68 (98,211)— \n\nDisposals and other decreases(36,322)(29,931)(5,668)(0)(7,325)(79,245)\n\nReclassification to assets held for sale (Note 18)\n(22,552)(15,493)(346)(399)(12)(38,803)\n\nForeign currency translation differences(22,509)(12,205)(2,539)(1,172)(5,920)(44,345)\n\nAs of March 31, 2025\n¥1,671,876 ¥995,309 ¥180,056 ¥104,342 ¥321,656 ¥3,273,239 \n\nAdditions and other increases32,610 24,540 10,636 274 132,007 200,067 \n\nTransfers31,982 49,066 8,640 56 (89,744)— \n\nDisposals and other decreases(15,345)(28,536)(10,213)(2,258)(2,281)(58,633)\n\nReclassification to assets held for sale (Note 18)\n(3,061)(7,322)(1,015)(43)(141)(11,581)\n\nForeign currency translation differences118,010 78,813 12,798 6,403 33,392 249,416 \n\nAs of March 31, 2026\n¥1,836,073 ¥1,111,871 ¥200,903 ¥108,774 ¥394,889 ¥3,652,509 \n\nAccumulated depreciation and accumulated impairment losses\n\nAs of April 1, 2024\n¥(507,425)¥(586,080)¥(115,184)¥(273)¥(11,739)¥(1,220,701)\n\nDepreciation expenses(86,344)(66,372)(20,676)— — (173,392)\n\nImpairment losses(498)(830)(116)— (3,333)(4,778)\n\nDisposals and other decreases19,132 24,985 5,341 — 2,840 52,298 \n\nReclassification to assets held for sale (Note 18)\n14,087 11,642 192 47 — 25,968 \n\nForeign currency translation differences6,892 6,541 1,974 3 166 15,575 \n\nAs of March 31, 2025\n¥(554,156)¥(610,114)¥(128,469)¥(223)¥(12,068)¥(1,305,030)\n\nDepreciation expenses(85,047)(68,105)(20,048)— — (173,200)\n\nImpairment losses(3,230)(3,809)(273)(156)(8,150)(15,619)\n\nDisposals and other decreases11,481 24,989 9,840 — 334 46,645 \n\nReclassification to assets held for sale (Note 18)\n1,005 4,945 809 — — 6,759 \n\nForeign currency translation differences(36,608)(43,667)(9,395)(83)(1,672)(91,425)\n\nAs of March 31, 2026\n¥(666,555)¥(695,761)¥(147,537)¥(462)¥(21,555)¥(1,531,870)\n\nJPY (millions)\n\nCarrying amount\nBuildings and structures\n\nMachinery and vehicles\n\nTools, furniture, and fixtures\n\nLand\n\nConstruction in progress\n\nTotal\n\nAs of April 1, 2024\n¥1,171,629 ¥395,865 ¥49,761 ¥105,572 ¥266,950 ¥1,989,777 \n\nAs of March 31, 2025\n1,117,720 385,195 51,587 104,119 309,589 1,968,209 \n\nAs of March 31, 2026\n1,169,518 416,109 53,366 108,312 373,334 2,120,639 \n\nF-36\n\nLeases\n\nThe changes in acquisition cost of property, plant and equipment for the years ended March 31, 2025 and 2026 include the following changes in ROU assets:\n\nJPY (millions)\n\nAcquisition cost of ROU AssetsBuildings and structuresMachinery and vehiclesTools, furniture, and fixturesTotal\n\nAs of April 1, 2024\n¥741,898 ¥21,880 ¥211 ¥763,989 \n\nAdditions and other increases18,118 6,867 — 24,986 \n\nDisposals and other decreases(32,499)(4,677)(110)(37,286)\n\nForeign currency translation differences(10,687)(795)(2)(11,484)\n\nAs of March 31, 2025\n¥716,831 ¥23,275 ¥98 ¥740,204 \n\nAdditions and other increases18,549 7,331 2 25,882 \n\nDisposals and other decreases(13,115)(7,719)(20)(20,854)\n\nForeign currency translation differences48,913 2,634 5 51,552 \n\nAs of March 31, 2026\n¥771,178 ¥25,521 ¥86 ¥796,785 \n\nThe changes in accumulated depreciation and accumulated impairment losses for the years ended March 31, 2025 and 2026 include the following changes in accumulated depreciation and accumulated impairment losses related to ROU assets:\n\nJPY (millions)\n\nAccumulated depreciation and accumulated impairment losses of ROU AssetsBuildings and structuresMachinery and vehiclesTools, furniture, and fixturesTotal\n\nAs of April 1, 2024\n¥(220,496)¥(9,930)¥(160)¥(230,586)\n\nDepreciation expenses(44,571)(6,065)(19)(50,656)\n\nDisposals and other decreases14,587 3,741 109 18,437 \n\nForeign currency translation differences3,738 352 2 4,092 \n\nAs of March 31, 2025\n¥(246,742)¥(11,902)¥(68)¥(258,712)\n\nDepreciation expenses(43,731)(6,406)(15)(50,151)\n\nImpairment losses(1,247)— — (1,247)\n\nDisposals and other decreases10,344 6,016 20 16,380 \n\nForeign currency translation differences(18,478)(1,454)(4)(19,936)\n\nAs of March 31, 2026\n¥(299,853)¥(13,744)¥(67)¥(313,664)\n\nThe carrying amount of property, plant and equipment includes the carrying amount of following ROU assets:\n\nJPY (millions)\n\nCarrying amount of ROU AssetsBuildings and structuresMachinery and vehiclesTools, furniture, and fixturesTotal\n\nAs of April 1, 2024\n¥521,403 ¥11,950 ¥51 ¥533,403 \n\nAs of March 31, 2025\n470,089 11,373 30 481,492 \n\nAs of March 31, 2026\n471,325 11,777 18 483,120 \n\nF-37\n\nTakeda recognized expenses related to leases not included in the measurement of the lease liabilities as follows:\n\nJPY (millions)\nFor the Year Ended March 31\n\n202420252026\n\nExpense relating to short-term leases¥4,312 ¥4,160 ¥3,624 \n\nExpense relating to leases of low-value assets that are not short-term leases expenses887 493 454 \n\nExpense relating to variable lease payments10,954 11,250 12,263 \n\nTotal expenses not included in lease liabilities¥16,152 ¥15,904 ¥16,341 \n\nTotal cash outflow for leases not included in lease liabilities¥16,152 ¥15,904 ¥16,341 \n\nThe total cash outflow for leases on lease liabilities for the years ended March 31, 2024, 2025 and 2026 was JPY 75,412 million, JPY 69,685 million and JPY 67,138 million, respectively. Also, the total future cash outflow for leases not yet commenced to which Takeda is committed for the year ended March 31, 2026 is JPY 238,283 million.\n\nImpairment\n\nTakeda recognized the following impairment losses for property, plant and equipment, which are reflected as follows, in the consolidated statements of profit or loss:\n\nJPY (millions)\nFor the Year Ended March 31\n\n202420252026\n\nCost of sales¥(6,225)¥(1,485)¥(3,358)\n\nSelling, general and administrative expenses— (34)(33)\n\nResearch and development expenses(1,307)(1)(7,359)\n\nOther operating expenses(7,923)(3,257)(4,869)\n\nTotal¥(15,454)¥(4,778)¥(15,619)\n\nImpairment losses for the year ended March 31, 2024 resulted primarily from production facilities, whose recoverable amounts were nil, related to ALOFISEL (for complex Crohn's perianal fistulas) following topline results of the phase 3 ADMIRE-CD Ⅱ trial.\n\nImpairment losses for the year ended March 31, 2026 resulted primarily from property, plant and equipment related to certain programs Takeda decided to discontinue.\n\nThe carrying amounts of the impaired assets were reduced to the recoverable amounts, which were measured at fair value less costs of disposal. This fair value is classified as Level 3 in the fair value hierarchy.\n\nF-38\n\n11.    Goodwill\n\nJPY (millions)\n\nFor the Year Ended March 31\n\n20252026\n\nAcquisition cost\n\nAs of beginning of the year¥5,410,067 ¥5,324,430 \n\nReclassification to assets held for sale (Note 18)\n(6,999)(11,714)\n\nForeign currency translation differences and others(78,637)496,293 \n\nAs of end of the year¥5,324,430 ¥5,809,010 \n\nCarrying amount\n\nAs of beginning of the year¥5,410,067 ¥5,324,430 \n\nAs of end of the year5,324,430 5,809,010 \n\nImpairment Testing of Goodwill\n\nFor the years ended March 31, 2025 and 2026, respectively, goodwill was tested for impairment at the single operating segment level (one CGU), which is the level at which goodwill is monitored for internal management purposes. Impairment loss for goodwill is recognized if the recoverable amount of goodwill is less than the carrying amount. The recoverable amount is the greater of fair value less costs of disposal and value in use of the CGU.\n\nFor the years ended March 31, 2024, 2025 and 2026, respectively, Takeda did not record an impairment loss for goodwill as a result of the impairment testing performed as of January 1.\n\nFor the years ended March 31, 2025 and 2026, the recoverable amount of goodwill was assessed based on fair value less costs of disposal. The fair value less costs of disposal was determined by discounting the estimated future cash flows based on a 10-year projection using a terminal growth rate and a discount rate as well as deducting the estimated costs of disposal. The projection included the sales forecast related to certain products in the U.S. as the significant assumption, associated with product launches, competition from rival products and pricing policy as well as the possibility of generics entering the market and loss of exclusivity. In setting the sales forecast, Takeda considered past experience, external sources of information, knowledge of competitor activity, and industry trends. The valuation methodology uses significant inputs which are not based on observable market data. Therefore, this fair value less costs of disposal is classified as level 3 in the fair value hierarchy.\n\nTerminal growth rate and discount rate used in the discounted cash flow models for the impairment tests are as follows:\n\nFor the Year Ended March 31\n\n20252026\n\nTerminal growth rate0.0%0.0%\n\nDiscount rate (post-tax)5.8%7.0%\n\nTerminal growth rate is based on management’s estimate of future long-term average growth rates. Discount rate is based on weighted average cost of capital (“WACC”) of Takeda.\n\nThe fair value less costs of disposal exceeded the carrying amount of the CGU, and a reasonable change in the assumptions used for the recoverable amount calculation would not result in an impairment.\n\nF-39\n\n12.     Intangible Assets\n\nJPY (millions)\n\nAcquisition costSoftwareIntangible assets associated with productsOtherTotal\n\nAs of April 1, 2024\n¥289,116 ¥8,300,433 ¥11,944 ¥8,601,492 \n\nAdditions and other increases38,769 55,345 134 94,248 \n\nDisposals and other decreases(4,048)(15,453)(116)(19,617)\n\nReclassification to assets held for sale (Note 18)\n(95)(11,108)— (11,204)\n\nForeign currency translation differences(4,424)(122,279)(9)(126,712)\n\nAs of March 31, 2025\n¥319,318 ¥8,206,937 ¥11,953 ¥8,538,208 \n\nAdditions and other increases35,420 191,426 — 226,845 \n\nDisposals and other decreases(15,002)(17,213)(24)(32,238)\n\nReclassification to assets held for sale (Note 18)\n— (46,943)— (46,943)\n\nForeign currency translation differences32,307 640,053 59 672,419 \n\nAs of March 31, 2026\n¥372,043 ¥8,974,261 ¥11,988 ¥9,358,291 \n\nAccumulated amortization and\naccumulated impairment losses\n\nAs of April 1, 2024\n¥(139,483)¥(4,186,707)¥(620)¥(4,326,810)\n\nAmortization(40,414)(548,660)(113)(589,187)\n\nImpairment losses(556)(95,047)— (95,602)\n\nDisposals and other decreases3,081 15,283 20 18,384 \n\nReclassification to assets held for sale (Note 18)\n63 11,108 — 11,171 \n\nForeign currency translation differences2,538 72,858 1 75,397 \n\nAs of March 31, 2025\n¥(174,771)¥(4,731,164)¥(713)¥(4,906,647)\n\nAmortization(42,544)(504,475)(97)(547,116)\n\nImpairment losses(762)(132,640)— (133,402)\n\nDisposals and other decreases14,987 17,213 2 32,202 \n\nReclassification to assets held for sale (Note 18)\n— 43,353 — 43,353 \n\nForeign currency translation differences(19,665)(407,643)(25)(427,332)\n\nAs of March 31, 2026\n¥(222,756)¥(5,715,356)¥(832)¥(5,938,943)\n\nCarrying amount\n\nAs of April 1, 2024\n¥149,632 ¥4,113,726 ¥11,324 ¥4,274,682 \n\nAs of March 31, 2025\n144,547 3,475,773 11,240 3,631,560 \n\nAs of March 31, 2026\n149,287 3,258,905 11,156 3,419,348 \n\nThere were no material internally generated intangible assets recorded in the consolidated statements of financial position.\n\nF-40\n\nThe intangible assets associated with products are comprised of the following:\n\nJPY (millions)\n\nMarketed productsIn-process R&DCarrying amount\n\nAs of April 1, 2024\n¥3,148,680 ¥965,045 ¥4,113,726 \n\nAs of March 31, 2025\n2,556,431 919,342 3,475,773 \n\nAs of March 31, 2026\n2,188,277 1,070,628 3,258,905 \n\nMarketed products mainly represent license rights associated with commercialized products. In-process R&D mainly represents products in development and license rights obtained in connection with Takeda’s collaborations, in-licensing agreements and others. These agreements relate to the right to sell products that are being developed (Note 13).\n\nThe table below provides information about significant intangible assets.\n\nJPY (millions)\n\nCarrying amount\nRemaining amortization period\n\nAs of March 31As of March 31\n\n202520262026\n\nImmunoglobulinsMarketed products¥710,287 ¥682,868 9 Years\n\nZasocitinib (TAK-279) In-process R&D609,329 652,592 -\n\nTAKHZYROMarketed products496,676 471,297 8 Years\n\nADVATE & ADYNOVATE/ADYNOVIMarketed products220,595 192,138 4 Years\n\nALUNBRIGMarketed products163,329 113,396 5 Years\n\nImpairment\n\nTakeda’s impairment assessment for intangible assets requires a number of significant judgments to be made by management to estimate the recoverable amount, including the estimated pricing and costs, likelihood of regulatory approval, and the estimated market and Takeda’s share of the market. The most significant assumption for intangible assets associated with marketed products is the product market share of the therapeutic area and estimated pricing, whereas the most significant assumption with pre-marketed products and in-process R&D is the probability of regulatory approval. A change in these assumptions may have a significant impact on the amount, if any, of an impairment charge recorded during a period. For example, negative results from a clinical trial may change the assumption and result in an impairment. Products in development may be fully impaired when a trial is unsuccessful and there is no alternative use for the development asset.\n\nDuring the year ended March 31, 2024, Takeda recorded impairment losses of JPY 169,405 million, primarily resulting from JPY 73,979 million impairment losses for ALOFISEL (for complex Crohn's perianal fistulas) following topline results of the phase 3 ADMIRE-CD Ⅱ trial, JPY 28,477 million impairment charges for EXKIVITY (for the treatment of non-small cell lung cancer) following a decision to initiate a voluntary withdrawal globally, and impairment charges for certain assets related to in-process R&D assets including those related to TAK-007 and modakafusp alfa (TAK-573) in Oncology as results of decisions to terminate those programs. There were no recoverable amounts of the impaired assets. This was offset by a reversal of impairment losses of JPY 35,686 million related to EOHILIA (TAK-721), a therapy for eosinophilic esophagitis (EoE), following its approval by the U.S. Food and Drug Administration (FDA).\n\nDuring the year ended March 31, 2025, Takeda recorded impairment losses of JPY 95,602 million, primarily resulting from the decision to terminate the acquired development of oncology products and the results of studies for the neuroscience products. The recoverable amount of the impaired assets amounted to JPY 163,392 million.\n\nDuring the year ended March 31, 2026, Takeda recorded impairment losses of JPY 133,402 million, which primarily included JPY 58,173 million related to the gamma delta T-cell therapy platform and associated oncology programs recorded following the decision to discontinue cell therapy research, JPY 31,877 million related to ALUNBRIG, a treatment for non-small cell lung cancer, recorded due to a reduction in future sales forecasts, and impairment charges for certain other in-process R&D assets following the decision to discontinue the related research and development activities. The recoverable amount of the impaired assets amounted to JPY 113,419 million.\n\nThese losses are recognized mainly in amortization and impairment losses on intangible assets associated with products in the consolidated statements of profit or loss.\n\nF-41\n\nImpairment losses were calculated by deducting the recoverable amount from the carrying amount.\n\nFor the years ended March 31, 2024, 2025 and 2026, the recoverable amount was measured at fair value less costs of disposal. This fair value is classified as Level 3 in the fair value hierarchy. The discount rates (post-tax) used for the measurement for the years ended March 31, 2024, 2025 and 2026 were 7.2%, 5.8% and 7.1% respectively.\n\n13.    Collaborations, Licensing Arrangements, Other Asset Acquisitions, and Others\n\nTakeda is a party to certain collaborations, in-licensing agreements, out-licensing arrangements, other asset acquisitions, and others.\n\nOut-licensing agreements\n\nTakeda has entered into various licensing arrangements where it has licensed certain products or intellectual property rights for consideration such as up-front payments, equity interest of partners, milestone payments (development, regulatory approval, launch, and commercial/sales), and/or sales-based royalty payments. The receipt of the variable considerations related to these substantive milestones is uncertain and contingent on the achievement of certain development milestones or the achievement of a specified level of annual net sales by the licensee.\n\nCollaborations, in-licensing arrangements, and other asset acquisitions\n\nThese agreements generally provide for commercialization rights to a product or products being developed by the partner, and in exchange, often resulted in an up-front payment being paid upon execution of the agreement and resulted in an obligation that may require Takeda to make future development, regulatory approval, launch, and commercial/sales milestone payments as well as sales-based royalty payments. In some of these arrangements, Takeda and the licensee are both actively involved in the development and commercialization of the licensed products and have exposure to risks and rewards that are dependent on its commercial success. Other asset acquisitions include acquisitions of legal entities that do not qualify as business combinations under IFRS3, such as acquisitions of entities where the value of these acquired entities largely consists of the rights to a single product or group of products.\n\nUnder the terms of these collaborations, in-licensing arrangements, and other asset acquisitions, Takeda made the following payments:\n\nJPY (millions)\n\nFor the Year Ended March 31\n\n202420252026\n\nInitial up-front payments, milestone payments, and other asset acquisitions¥124,878 ¥87,129 ¥195,152 \n\nAcquisition of shares of collaboration and in-licensing partners\n2,050 12,268 12,070 \n\nThe following is a description of Takeda’s significant collaborations, and in-licensing agreements, and other asset acquisitions which Takeda entered into for the past three fiscal years.\n\nProtagonist Therapeutics, Inc. (“Protagonist”)\n\nIn January 2024, Takeda signed a worldwide license and collaboration agreement with Protagonist for the development and commercialization of rusfertide, an investigational injectable hepcidin mimetic peptide of the natural hormone hepcidin, currently in a pivotal Phase 3 trial, VERIFY, for the treatment of Polycythemia Vera (PV). Under the terms of the agreement, Takeda paid USD 300 million upfront in April 2024. Protagonist is eligible to receive additional worldwide development and regulatory milestone payments, as well as commercial milestones and tiered royalties on ex-U.S. net sales. Protagonist remains responsible for research and development through the completion of the Phase 3 clinical trial and U.S. regulatory approval while Takeda has rights for ex-U.S. development and is responsible for leading global commercialization activities.\n\nIn April 2026, Protagonist exercised its opt-out right, and Takeda paid USD 200 million under the terms of the agreement in June 2026.\n\nAC Immune SA (\"AC Immune\")\n\nIn May 2024, Takeda entered into an exclusive, worldwide option and license agreement with AC Immune for AC Immune’s active immunotherapies targeting toxic forms of amyloid beta (Abeta), including ACI-24.060 for the treatment of Alzheimer’s disease. Under the terms of the agreement, Takeda made an upfront payment of USD 100 million to AC Immune in May 2024. AC Immune will be eligible to receive an option exercise fee and additional potential development, commercial and sales-based milestones of up to approximately USD 2,100 million if all related milestones are achieved over the course of the agreement. In addition, upon commercialization, AC Immune will be entitled to receive tiered double-digit royalties on worldwide net sales.\n\nAscentage Pharma Group International (\"Ascentage Pharma\")\n\nIn June 2024, Takeda signed an option agreement with Ascentage Pharma to enter into an exclusive license agreement for olverembatinib. Under the terms of this agreement, Takeda made an option payment of USD 100 million and made a minority equity investment in Ascentage Pharma in\n\nF-42\n\nJuly 2024. Ascentage Pharma will be eligible for an option exercise fee and additional potential milestone and royalty payments if Takeda exercises the option to license olverembatinib, with the exercise of the option being subject to customary regulatory approvals.\n\nKeros Therapeutics, Inc. (“Keros Therapeutics”)\n\nIn December 2024, Takeda entered into an exclusive licensing agreement with Keros Therapeutics to further develop, manufacture and commercialize elritercept worldwide outside of mainland China, Hong Kong and Macau. Under the terms of the agreement, Takeda made an upfront payment of USD 200 million in February 2025. Keros Therapeutics will be eligible to receive potential payments relating to regulatory, development and commercial sales milestones, as well as royalties on net sales.\n\nInnovent Biologics, Inc. (“Innovent”)\n\nIn October 2025, Takeda entered into a license and collaboration agreement with Innovent for the development, manufacturing and commercialization of two late-stage investigational medicines for solid tumors, IBI363 and IBI343, worldwide outside of China, Hong Kong, Macau and Taiwan. Takeda will also receive an exclusive option to license global rights outside of China, Hong Kong, Macau and Taiwan for IBI3001, an early-stage investigational medicine.\n\nIn December 2025, Takeda made an upfront payment of USD 1,200 million, which includes a minority equity investment in Innovent. Regarding IBI363 and IBI343, Takeda may make potential milestone and royalty payments. Takeda and Innovent will co-develop IBI363 globally with a 60/40 (Takeda/Innovent) cost split. In addition, Takeda will lead and co-commercialize IBI363 in the U.S. with a 60/40 (Takeda/Innovent) profit or loss split. With respect to IBI3001, if the option is exercised, Takeda will make an option payment, as well as additional potential milestone and royalty payments. The transaction is subject to customary closing conditions, including regulatory approvals.\n\nThe following is a description of Takeda’s significant collaborations, and in-licensing agreements, and other asset acquisitions which Takeda completed during the past three fiscal years.\n\nWave Life Sciences, Inc. (“Wave”)\n\nIn February 2018, Takeda entered into an agreement with Wave to discover, develop and commercialize nucleic acid therapies for disorders of the central nervous system (CNS). Under the agreement, Takeda had the option to co-develop and co-commercialize WVE-003 which includes programs in areas of Huntington’s disease, amyotrophic lateral sclerosis, frontotemporal dementia, and spinocerebellar ataxia type 3. In addition, Takeda had the right to license multiple preclinical programs targeting CNS disorders, including Alzheimer’s disease and Parkinson’s disease.\n\nIn October 2024, Takeda made the decision not to exercise the multi-program option to co-develop and co-commercialize WVE-003. As a result of this decision, the collaboration with Wave has completed. The impact on the consolidated financial statements from the completion of the partnership was not material.\n\nOther R&D Related Agreements\n\nBlackstone Life Sciences (“BXLS”)\n\nIn March 2025, Takeda entered into a development funding agreement with BXLS for mezagitamab (TAK-079). Under this agreement, Takeda would receive up to a total of USD 300 million to co-fund development activities for immune thrombocytopenia (ITP) and immunoglobulin A nephropathy (IgAN) from the fiscal year ended March 31, 2026, through the fiscal year ending March 31, 2029. In May 2026, Takeda and BXLS amended the March 2025 agreement and increased the funding by USD 250 million to total of USD 550 million to co-fund additional development activities for mezagitamab. Takeda recognizes the funding as a reduction of research and development expenses as incurred as there is sharing of risk and costs associated with the development activities with BXLS. BXLS is eligible to receive regulatory approval milestone payments of up to USD 415 million and cumulative sales milestone payments of up to USD 500 million if all related milestones are achieved. These milestone payments will be capitalized as intangible assets associated with products which are amortized on a straight-line method over the estimated useful life. Additionally, upon commercialization, BXLS will be entitled to receive royalties on U.S. sales. Royalties will be recorded in cost of sales as incurred. After regulatory approval, Takeda has the option to buy-out its remaining sales milestone payments and royalty obligations for the funding provided by BXLS. In a case where Takeda chooses to exercise the buy-out option, the payment will be capitalized as intangible assets associated with products which are amortized on a straight-line method over the estimated useful life. If Takeda terminates the agreement, BXLS has an option to acquire or license mezagitamab from Takeda at fair value.\n\nF-43\n\n14.    Other Financial Assets\n\nJPY (millions)\nAs of March 31\n\n20252026\n\nDerivative financial instruments (Note 26)\n¥84,369 ¥167,920 \n\nInvestments in convertible notes (Note 26)\n10,424 8,776 \n\nInvestments in debt instruments (Note 26)\n91,348 106,366 \n\nInvestments in equity instruments (Note 26)\n151,687 173,034 \n\nFinancial assets associated with contingent consideration arrangements (Note 26)\n10,197 10,488 \n\nOther23,576 15,244 \n\nTotal¥371,600 ¥481,829 \n\nNon-current¥351,124 ¥439,941 \n\nCurrent¥20,476 ¥41,888 \n\nAs of March 31, 2025 and 2026, investments in equity instruments included JPY 78,073 million and JPY 106,729 million, respectively, of investments in public companies. These are considered Level 1 in the fair value hierarchy as defined in Note 26. The remainder of the equity instruments primarily relates to investments acquired in connection with collaborations and licensing agreements (Note 13) and are considered Level 3 investments in the fair value hierarchy.\n\nAs of March 31, 2025 and 2026, financial assets associated with contingent consideration arrangements are assets mainly recognized in relation to the divestiture of XIIDRA (Note 26) and are considered Level 3 investments in the fair value hierarchy.\n\n15.    Inventories\n\nJPY (millions)\nAs of March 31\n\n20252026\n\nFinished products and merchandise¥323,513 ¥426,933 \n\nWork-in-process552,200 641,002 \n\nRaw materials and supplies341,636 328,685 \n\nTotal¥1,217,349 ¥1,396,620 \n\nThe amount of inventory write-downs recognized was JPY 26,335 million, JPY 40,203 million, and JPY 49,588 million for the years ended March 31, 2024, 2025 and 2026 respectively, and was included in cost of sales.\n\nF-44\n\n16.    Trade and Other Receivables\n\nJPY (millions)\nAs of March 31\n\n20252026\n\nTrade receivables¥770,896 ¥977,355 \n\nOther receivables58,050 36,287 \n\nImpairment loss allowance(9,763)(11,063)\n\nChargebacks and other allowances(109,718)(158,267)\n\nTotal¥709,465 ¥844,312 \n\nTakeda utilizes programs to sell certain trade and other receivables to a select group of banks on a non-recourse basis. Under these programs, trade and other receivables sold are derecognized when the risks and rewards of ownership have been transferred. These trade and other receivables relate to specific customers determined in advance and are eligible for sale, but which of them will be sold will be determined by both parties on a monthly basis. Therefore, these trade and other receivables are held for both collecting cash from customers as well as selling to banks.\n\nTrade and other receivables due from customers that Takeda has the option to factor are classified as investments in debt instruments measured at FVTOCI since they are held to collect and sell. As of March 31, 2025 and 2026, trade and other receivables measured at FVTOCI were JPY 65,568 million and JPY 66,424 million, respectively.\n\n17.    Cash and Cash Equivalents\n\nJPY (millions)\nAs of March 31\n\n20252026\n\nCash and deposits¥233,742 ¥144,760 \n\nShort-term investments151,371 450,294 \n\nTotal¥385,113 ¥595,054 \n\n18.    Assets and Disposal Groups Held for Sale\n\nTakeda has classified certain assets as held for sale in the consolidated statements of financial position. Non-current assets and disposal groups are transferred to assets held for sale when it is expected that their carrying amounts will be recovered principally through a sale and the sale is considered highly probable. The non-current assets and disposal groups held for sale are held at the lower of carrying amount and fair value less costs to sell.\n\nGains or losses recognized from measuring the assets or disposal groups (excluding those related to associates) classified as held for sale at the lower of their carrying amounts or fair value less costs to sell are recorded as other operating income or expenses.\n\nAssets Held for Sale\n\nDuring the fiscal year ended March 31, 2025, Takeda decided to enter into discussions with Teva Pharmaceutical Industries Ltd. to dissolve a joint venture business in Japan primarily focused on generic medicines and long-listed products. Following the decision, Takeda reclassified all of its outstanding shares in its associate, Teva Takeda Pharma Ltd., to assets held for sale and recorded an impairment loss of JPY 18,885 million in financial expenses (Note 6). Upon the completion of the transfer in March 2025, Takeda received the proceeds from the sale of shares in the associate of JPY 56,525 million, including JPY 50,806 million of dividends received, and this amount comprised the majority of Takeda’s proceeds from sales of shares in associates in the consolidated statement of cash flows of JPY 57,691 million for the fiscal year ended March 31, 2025. Takeda also recognized JPY 1,727 million in revenue and JPY 3,823 million in other operating income (Note 5) due to the realization of the unrealized profit from past transactions.\n\nF-45\n\nDisposal Groups Held for Sale\n\nJPY (millions)\nAs of March 31\n\n20252026\n\nProperty, plant and equipment¥6,259 ¥5,444 \n\nGoodwill7,011 8,953 \n\nIntangible assets33 3,497 \n\nOther assets95 61 \n\nTotal assets¥13,397 ¥17,955 \n\nTrade and other payables— 102 \n\nOther liabilities— 716 \n\nTotal liabilities¥— ¥818 \n\nThe disposal groups held for sale consisted of the following and their associated fair value is classified as Level 3 in the fair value hierarchy as of March 31, 2025.\n\n•The assets such as property, plant and equipment related to a manufacturing site in Orth, Austria was classified as held for sale as a result of a transfer agreement Takeda entered into. The transfer was completed in May 2025.\n\n•Following an agreement Takeda entered into to transfer business operations related to MEPACT, Takeda classified the assets, including goodwill allocated to the business, as held for sale. The transfer was completed in May 2025.\n\n•Takeda entered into an agreement to transfer business operations related to non-core products in the Middle East and North Africa regions and classified the corresponding goodwill as held for sale. The transfer was completed in June 2025.\n\nDuring the fiscal year ended March 31, 2025, Takeda recognized a divestiture gain in other operating income (Note 5) upon the completion of transfer of the manufacturing operation of TACHOSIL and the proceeds from this divestiture are reflected in Takeda’s proceeds from sales of business (net of cash and cash equivalents divested) in the consolidated statements of cash flows of JPY 20,556 million for the fiscal year ended March 31, 2025.\n\nThe disposal groups held for sale consisted of the following and their associated fair value is classified as Level 3 in the fair value hierarchy as of March 31, 2026.\n\n•Takeda entered into an equity and asset purchase agreement to transfer products such as ACTOVEGIN, in the Eurasian Economic Union territory and the manufacturing site in Yaroslavl in May 2024. The agreement was subject to approval by the Russian Government Commission. Following receipt of the approval in August 2025, the related assets and liabilities, including goodwill and property, plant and equipment, as well as the related other comprehensive income were classified as held for sale.\n\n•In March 2026, Takeda entered into an asset purchase agreement for the divestiture of RIOPAN, a non-core gastric acidity management agent, in Europe and Canada and classified the corresponding goodwill as held for sale. The divestiture was completed in May 2026.\n\nDuring the fiscal year ended March 31, 2026, Takeda completed the transfer of the business operations related to MEPACT and non-core products in the Middle East and North Africa regions. In addition, during the fiscal year ended March 31, 2026, Takeda classified the assets such as intangible asset as held for sale related to an asset purchase agreement for the divestiture of non-core products in Europe and Canada and completed the divestiture. Upon the completion of these divestitures, Takeda recognized a JPY 18,265 million divestiture gain in other operating income (Note 5) and the proceeds from these divestitures are reflected in Takeda’s proceeds from sales of business (net of cash and cash equivalents divested) in the consolidated statements of cash flows of JPY 33,325 million for the fiscal year ended March 31, 2026.\n\nWhen disposal groups were classified as held for sale, Takeda recorded an impairment loss of JPY 1,685 million, JPY 6,812 million and JPY 1,363 million in other operating expenses (Note 5) during the year ended March 31, 2024, 2025 and 2026, respectively.\n\nF-46\n\n19.    Bonds and Loans\n\nJPY (millions)\nAs of March 31\n\n20252026\n\nBonds¥4,190,632 ¥4,656,812 \n\nShort-term loans74,621 26 \n\nLong-term loans250,012 225,000 \n\nTotal¥4,515,265 ¥4,881,837 \n\nNon-current¥3,966,326 ¥4,369,681 \n\nCurrent¥548,939 ¥512,157 \n\nThe composition of bonds is as follows:\n\nInstrumentJPY (millions)\nCarrying amountMaturity\n\nPrincipal amount in contractual currency (millions)As of\nMarch 31, 2025As of\nMarch 31, 2026Interest rate (%)\n\nUnsecured Senior Notes Assumed in Shire Acquisition$500 195,295 81,332 \n5.250%\n\nJune 2045\n\nUnsecured Senior Notes Assumed in Shire Acquisition$1,500 219,033 237,743 \n3.200%\n\nSeptember 2026 (4)\n\n2018 EUR Unsecured Senior Notes – fixed rate€3,000 482,180 547,557 \n\n2.250 - 3.000%\n\nNovember 2026 - November 2030\n\n2018 USD Unsecured Senior Notes – fixed rate$1,750 259,681 278,416 \n5.000%\n\nNovember 2028\n\n2020 USD Unsecured Senior Notes – fixed rate$7,000 1,037,021 1,111,083 \n2.050 - 3.375%\n\nMarch 2030 - July 2060\n\n2020 EUR Unsecured Senior Notes – fixed rate€3,600 577,703 655,829 \n0.750 - 2.000%\n\nJuly 2027 - July 2040\n\n2021 JPY Unsecured Senior Bonds – fixed rate¥250,000 249,561 249,628 \n 0.400%\n\nOctober 2031\n\n2024 Hybrid bonds (subordinated bonds)¥460,000 457,983 458,443 \n1.934% per annum through June 25, 2029 and One-Year JGB interest rate + margin (1.400 - 2.400%) thereafter\n\nJune 2084 (1)(2)\n\n2024 USD Unsecured Senior Notes – fixed rate$3,000 442,175 473,755 \n5.300 - 5.800%\n\nJuly 2034 - July 2064 (3)\n\n2025 JPY Unsecured-Senior Bonds – fixed rate¥184,000 — 183,609 \n1.599 - 2.292%\n\nJune 2030 - June 2035 (7)\n\n2025 USD Unsecured Guaranteed Senior Notes – fixed rate$2,400 — 379,418 \n5.200 - 5.900%\n\nJuly 2035 - July 2055 (8)\n\nCommercial Paper\n¥270,000 as of March 31, 2025(6)\n270,000 — \n—\n\nApril 2025 - June 2025\n\nTotal¥4,190,632 ¥4,656,812 \n\nF-47\n\nThe composition of loans is as follows:\n\nInstrumentJPY (millions)\nCarrying amountMaturity\n\nPrincipal amount in contractual currency (millions)As of\nMarch 31, 2025As of\nMarch 31, 2026Interest rate (%)\n\nBilateral Loans¥185,000 210,000 185,000 \n0.513 - 2.616%\n\nMarch 2029 - March 2034 (9)\n\n2025 USD Bilateral Loan\n$500 as of March 31, 2025\n74,505 — \n4.71492%\n\nJuly 2025\n\n2024 Syndicated Hybrid Loans (Subordinated Loans)¥40,000 40,000 40,000 \n6 months TIBOR＋margin (1.350% - 2.350%)\n\nOctober 2084 (1)(5)\n\nOther128 26 \n\nTotal¥324,633 ¥225,026 \n\n(1) The Hybrid Bonds are callable on or after June 25, 2029 and the Hybrid Loan is prepayable on or after October 3, 2029.\n\nOn April 25, 2024, Takeda repaid JPY 50,000 million in Bilateral Loans falling due and on the same day entered into new Bilateral Loans of JPY 50,000 million maturing on April 25, 2031. Following this, on June 25, 2024, Takeda issued 60-year Unsecured Hybrid Bonds with an aggregate principal amount of JPY 460,000 million and a maturity date of June 25, 2084(2).\n\nOn July 5, 2024, Takeda issued USD 3,000 million (principal amount) in Unsecured U.S. dollar-denominated senior notes with maturity dates ranging from July 5, 2034 to July 5, 2064(3). The proceeds of the USD bond issuance were efficiently deployed to fund a tender offer to redeem USD 1,500 million (principal amount) in Unsecured Senior Notes on July 12, 2024 in advance of their original maturity in September 2026(4), with the balance of proceeds deployed towards the reduction of Commercial Paper drawings in July 2024.\n\nOn October 3, 2024, Takeda drew down a Syndicated Hybrid Loan with an aggregate principal amount of JPY 40,000 million and a maturity date of October 3, 2084(5). The proceeds of the Syndicated Hybrid Loan, together with the proceeds of the Hybrid Bonds issued on June 25, 2024 were deployed towards the redemption of JPY 500,000 million (principal amount) in Hybrid Bonds issued in June 2019 on October 6, 2024, in advance of their original maturity of June 6, 2079.\n\nOn March 31, 2025, Takeda prepaid JPY 313,500 million and USD 1,500 million (principal amounts) in Syndicated Loans in advance of their original maturity dates ranging from April 27, 2026 to April 26, 2030. To repay the Syndicated Loans, Takeda used cash on hand, Short Term Loan with an aggregated principal amount of USD 500 million, which was drawn down on March 31, 2025, as well as Short Term Commercial Paper drawings. The principal amount of Commercial Paper drawings outstanding was JPY 270,000 million as at March 31, 2025(6).\n\nOn April 25, 2025, Takeda repaid JPY 10,000 million in Bilateral Loans falling due. On June 12, 2025, Takeda issued JPY 184,000 million in unsecured JPY denominated senior bonds (“JPY Bonds”) with maturity dates ranging from June 12, 2030, to June 12, 2035(7). The proceeds of the JPY Bonds were used to redeem commercial paper. Following this, on June 23, 2025, Takeda redeemed USD 800 million of unsecured U.S. dollar-denominated senior notes on their maturity date. Takeda has also rolled over USD 500 million Bilateral Loan, which was originally drawn down on March 31, 2025, on a monthly basis until July 3, 2025.\n\nOn July 2, 2025, Takeda issued unsecured U.S. dollar-denominated senior guaranteed notes (the \"USD Notes\") in an aggregate principal amount of USD 2,400 million with maturity dates of July 7, 2035 and July 7, 2055(8), through its indirect wholly owned finance subsidiary Takeda U.S. Financing, Inc. The proceeds of the USD Notes were primarily used to repay USD 500 million Bilateral Loan on July 3, 2025, and redeem commercial paper drawings in July 2025.\n\nOn March 31, 2026, Takeda repaid JPY 75,000 million in Bilateral Loans falling due and on the same day entered into new Bilateral Loans of JPY 60,000 million maturing on March 31, 2034(9). Takeda also entered into commitment facilities of JPY 350,000 million and USD 2,100 million. These commitment facilities are effective from March 31, 2026 for five years at minimum and contain certain restrictive covenants, the breach of which may limit our ability to access these facilities. Takeda was in compliance with the covenants as of March 31, 2026. The purpose of the new facilities is for general business use. In connection with these new facilities, Takeda’s existing commitment facility of JPY 700,000 million expiring in September 2026 was cancelled on the same date.\n\n*Amounts presented in the above explanation for Bonds and Loans are based on the principal amount.\n\nF-48\n\n20.    Other Financial Liabilities\n\nJPY (millions)\nAs of March 31\n\n20252026\n\nDerivative financial instruments (Note 26)\n¥16,528 ¥20,524 \n\nLease liabilities (Note 26)\n573,325 594,520 \n\nFinancial liabilities associated with programs to sell certain receivables\n67,223 79,788 \n\nFinancial liabilities associated with contingent consideration arrangements (Note 26)\n4,362 3,185 \n\nOther\n108,582 14,452 \n\nTotal¥770,020 ¥712,469 \n\nNon-current¥550,900 ¥571,248 \n\nCurrent¥219,120 ¥141,220 \n\nAs of March 31, 2025, “Other” mainly includes deposits related to certain vaccines operations.\n\n21.    Employee Benefits\n\nDefined Benefit Plans\n\nThe Company and some of its subsidiaries have various defined benefit plans such as lump-sum retirement payments plans and defined benefit pension plans, which define the amount of benefits that an employee will receive on or after retirement, usually based on one or more factors, such as age, years of employment, compensation, classes, and service.\n\nThe Company’s defined benefit plans are the most significant plans among Takeda’s defined benefit obligations and plan assets.\n\nDefined benefit pension plans\n\nJapan\n\nThe Company’s corporate defined benefit pension plan in Japan is a funded defined benefit pension plan, which is regulated by the Defined-Benefit Corporate Pension Act, one of the Japanese pension laws. Benefits are paid in exchange for services rendered by employees who worked for more than a specified period, typically three years, considering their years of service and the degree of their contribution to the Company.\n\nThe Company’s pension fund (the “Fund”) is an independent entity established in accordance with the Japanese pension laws, and Takeda has an obligation to make contributions. The Director(s) of the Fund has the fiduciary duty to comply with laws; the directives by the Minister of Health, Labour and Welfare, and the Director-Generals of Regional Bureaus of Health and Welfare made pursuant to those laws; and the by-laws of the Fund and the decisions made by the Board of Representatives of the Fund. Contributions are also regularly reviewed and adjusted as necessary to the extent permitted by laws and regulations.\n\nForeign\n\nOther types of defined benefit pension plans operated by Takeda are generally established and operated in the same manner as described above and in accordance with local laws and regulations where applicable.\n\nThe present value of the defined benefit obligation is calculated annually based on actuarial valuations that are dependent upon a number of assumptions, including discount rates and future salary (benefit) increases. Service costs charged to operating expense related to defined benefit plans represent the increase in the defined benefit liability arising from pension benefits earned by active participants in the current period. Takeda is exposed to investment and other experience risks and may need to make additional contributions where it is estimated that the benefits will not be met from regular contributions, expected investment income, and assets held.\n\nIn addition, during the fiscal year ended March 31, 2025, a pension buyout was implemented for a certain retirement pension plan with participants in multiple U.S. subsidiaries. As a result, an insurance company assumed the defined benefit obligation and the plan assets at an amount that includes fees and other charges added to the obligation with the plan assets. The insurance company is henceforth responsible for providing benefit payments to the plan participants. Consequently, the investment risk of the plan assets and the risk of increasing defined benefit obligations due to factors such as the longevity of beneficiaries have been eliminated for pension benefits to active employees, vested deferred members and retired employees under the plan. This pension buyout does not have a significant impact on the consolidated statement of profit or loss.\n\nF-49\n\nThe amounts recognized in the consolidated statements of profit or loss and the consolidated statements of financial position are as follows:\n\nConsolidated statements of profit or loss\n\nJPY (millions)\nFor the Year Ended March 31\n\n202420252026\n\nJapan¥2,741 ¥4,182 ¥2,139 \n\nForeign15,95613,925 17,871 \n\nDefined benefit costs¥18,697 ¥18,106 ¥20,011 \n\nConsolidated statements of financial position\n\nJPY (millions)\n\nAs of March 31, 2025\n\nJapanForeignTotal\n\nPresent value of defined benefit obligations ¥130,864 ¥253,624 ¥384,488 \n\nFair value of plan assets221,422125,701347,123\n\nEffect of asset ceiling78,717 — 78,717 \n\nNet defined benefit liabilities (assets)¥(11,840)¥127,922 ¥116,083 \n\nConsolidated statements of financial position\n\nNet defined benefit liabilities¥7,462 ¥127,967 ¥135,429 \n\nNet defined benefit assets*\n19,30244 19,346\n\nNet amount of liabilities (assets) recognized in the consolidated statements of financial position¥(11,840)¥127,922 ¥116,083 \n\nJPY (millions)\n\nAs of March 31, 2026\n\nJapanForeignTotal\n\nPresent value of defined benefit obligations¥116,648 ¥303,505 ¥420,153 \n\nFair value of plan assets¥224,045 ¥166,940 ¥390,985 \n\nEffect of asset ceiling98,399 8 98,407 \n\nNet defined benefit liabilities (assets)¥(8,998)¥136,573 ¥127,576 \n\nConsolidated statements of financial position\n\nNet defined benefit liabilities¥7,047 ¥136,637 ¥143,683 \n\nNet defined benefit assets16,044 63 16,108 \n\nNet amount of liabilities (assets) recognized in the consolidated statements of financial position¥(8,998)¥136,573 ¥127,576 \n\n*Net defined benefit assets were included in other non-current assets on the consolidated statements of financial position.\n\nF-50\n\nDefined benefit obligations\n\nA summary of changes in present value of the defined benefit obligations for the periods presented is as follows:\n\nJPY (millions)\n\nFor the Year Ended March 31, 2025\n\nJapanForeignTotal\n\nAt beginning of the year¥143,712 ¥301,078 ¥444,790 \n\nCurrent service cost2,918 12,281 15,199 \n\nInterest cost2,448 9,170 11,618 \n\nRemeasurement of defined benefit pension plans\n\nFrom changes in demographic assumptions40 37 77 \n\nFrom changes in financial assumptions(7,622)(3,952)(11,574)\n\nExperience adjustments696 7,006 7,701 \n\nPast service cost1,535 (2,731)(1,196)\n\nSettlement*\n— (57,537)(57,537)\n\nBenefits paid(12,701)(17,053)(29,754)\n\nContributions by the employees— 5,053 5,053 \n\nEffect of business combinations and disposals(161)(95)(256)\n\nForeign currency translation differences— 366 366 \n\nAt end of the year¥130,864 ¥253,624 ¥384,488 \n\nJPY (millions)\n\nFor the Year Ended March 31, 2026\n\nJapanForeignTotal\n\nAt beginning of the year¥130,864 ¥253,624 ¥384,488 \n\nCurrent service cost2,370 13,117 15,486 \n\nInterest cost3,209 6,978 10,187 \n\nRemeasurement of defined benefit pension plans\n\nFrom changes in demographic assumptions7 (3,977)(3,971)\n\nFrom changes in financial assumptions(9,507)(4,149)(13,655)\n\nExperience adjustments(900)6,488 5,588 \n\nBenefits paid(9,394)(14,412)(23,807)\n\nContributions by the employees— 5,978 5,978 \n\nForeign currency translation differences— 39,859 39,859 \n\nAt end of the year¥116,648 ¥303,505 ¥420,153 \n\n* The defined benefit obligation for the fiscal year ended March 31, 2025, decreased due to the implementation of a pension buyout for a certain retirement pension plan with participants in multiple U.S. subsidiaries.\n\nThe remaining weighted average duration of the defined benefit obligations was 12.1 years and 11.2 years as of March 31, 2025 and 2026, respectively.\n\nSignificant actuarial assumptions used to determine the present value are as follows:\n\nDiscount rateFuture salary increases\n\nAs of March 31, 2025\n\nJapan2.4 %— \n\nForeign2.5 %3.0 %\n\nAs of March 31, 2026\n\nJapan3.5 %— \n\nForeign2.5 %2.8 %\n\nTakeda has cash balance plans and the future salary increases are not used to determine the present value of the defined benefit obligations for those plans. As of March 31, 2025 and 2026, future salary increases were not used to determine the present value of the defined benefit obligations related to all the defined benefit plans in Japan and certain plans in foreign countries.\n\nF-51\n\nA 0.5% change in these actuarial assumptions would affect the present value of defined benefit obligations at the end of the reporting period, while holding all other assumptions constant, by the amounts shown below:\n\nJPY (millions)\n\nDiscount RateFuture Salary Increases\n\nChange in\nassumptionImpactChange in\nassumptionImpact\n\nAs of March 31, 2025\n\nJapan+0.50  %(7,178)+0.50  %— \n\n-0.50  %7,914 -0.50  %— \n\nForeign+0.50  %(14,452)+0.50  %4,871 \n\n-0.50  %16,049 -0.50  %(4,397)\n\nAs of March 31, 2026\n\nJapan+0.50%(5,919)+0.50%— \n\n-0.50  %6,540 -0.50  %— \n\nForeign+0.50%(15,920)+0.50%5,668 \n\n-0.50  %17,903 -0.50  %(5,092)\n\nF-52\n\nPlan assets\n\nThe defined benefit plans are independent of Takeda and funded only by contributions from Takeda. Takeda’s investment policies are designed to secure the necessary returns in the long-term within acceptable risk levels to ensure payments of pension benefits to eligible participants, including future participants. The acceptable risk level in the return rate on the plan assets is derived from a detailed study considering the mid- and long-term trends and the changes in income such as contributions and payments. Based on policies and studies, after consideration of issues such as the expected rate of return and risks, Takeda formulates a basic asset mix which aims at an optimal portfolio on a long-term basis with the selection of appropriate investment assets.\n\nA summary of changes in fair value of plan assets for the periods presented is as follows:\n\nJPY (millions)\nFor the Year Ended March 31\n\n20252026\n\nBalance at beginning of the year¥391,743 ¥347,123 \n\nInterest income on plan assets8,574 7,560 \n\nRemeasurement of defined benefit plans\n\nReturn on plan assets\n1,164 8,135 \n\nContributions by the employer18,845 15,417 \n\nContributions by the employees5,053 5,978 \n\nSettlement*\n(60,320)— \n\nBenefits paid(18,826)(15,914)\n\nForeign currency translation differences890 22,686 \n\nBalance at end of the year¥347,123 ¥390,985 \n\n* Plan assets for the fiscal year ended March 31, 2025, decreased due to the implementation of a pension buyout for a certain retirement pension plan with participants in multiple U.S. subsidiaries.\n\nTakeda expects to contribute JPY 16,122 million to the defined benefit plans for the year ending March 31, 2027.\n\nF-53\n\nThe breakdown of fair value by asset class is as follows:\n\nJPY (millions)\nAs of March 31\n\n20252026\n\nWith quoted prices in active marketsNo quoted prices in active marketsWith quoted prices in active marketsNo quoted prices in active markets\n\nEquities:\n\nJapan¥10,531 ¥2,315 ¥8,910 ¥1,857 \n\nForeign57,690 81,589 75,471 71,794 \n\nBonds:\n\nJapan387 19,513 450 23,112 \n\nForeign33,014 33,246 38,696 31,580 \n\nLife insurance company general accounts— 68,741 — 79,709 \n\nCash and cash equivalent11,070 — 16,727 — \n\nProperty536 18,036 688 27,665 \n\nOther1,104 9,350 4,316 10,010 \n\nTotal plan assets¥114,332 ¥232,791 ¥145,259 ¥245,726 \n\nEquities and bonds with no quoted prices in active markets include pooled funds that are primarily invested in listed securities on active markets. Life insurance company general accounts are accounts with guaranteed capital and minimum interest rate, in which life insurance companies manage funds on a pooled basis. Property with no quoted prices in active markets primarily includes real estate investments in Switzerland.\n\nChanges in effect of asset ceiling for the periods presented are as follows:\n\nJPY (millions)\nFor the Year Ended March 31\n\n20252026\n\nBalance at beginning of the year¥63,422 ¥78,717 \n\nInterest income1,059 1,897 \n\nRemeasurement\n\nChanges in effect of asset ceiling\n14,237 17,792 \n\nBalance at end of the year¥78,717 ¥98,407 \n\nDefined Contribution Plans\n\nThe Company and some of the Company’s subsidiaries offer defined contribution benefit plans.\n\nBenefits of defined contribution plans are linked to contributions paid, the performance of each participant’s chosen investments, and the form in which participants choose to redeem their benefits. Contributions made into these plans are generally paid into an independently administered fund.\n\nContributions payable by Takeda for these plans are charged to operating expenses. Takeda has no exposure to investment risks and other experience risks with regard to defined contribution plans.\n\nThe amount of defined contribution costs was JPY 60,521 million, JPY 52,692 million, and JPY 52,490 million for the years ended March 31, 2024, 2025, and 2026, respectively. These amounts include contributions to publicly provided plans.\n\nOther Employee Benefit Expenses\n\nMajor employee benefit expenses other than retirement benefits for each fiscal year are as follows:\n\nJPY (millions)\nFor the Year Ended March 31\n\n202420252026\n\nSalary¥688,316 ¥701,775 ¥711,159 \n\nBonuses161,821 174,576 138,442 \n\nOther274,094 266,491 273,240 \n\nThe above table excludes severance and other personnel expenses related to restructuring, as detailed in Note 22.\n\nF-54\n\n22.    Provisions\n\nJPY (millions)\nFor the Year Ended March 31\n\n20252026\n\nNon-current¥35,177 ¥37,550 \n\nCurrent533,140 998,501 \n\nTotal¥568,317 ¥1,036,051 \n\nThe movements in the provisions are as follows:\n\nJPY (millions)\n\nLitigation (Note 31)RestructuringRebates and return\nreservesOtherTotal\n\nAs of April 1, 2024\n¥22,342 ¥12,102 ¥483,259 ¥21,089 ¥538,793 \n\nIncreases7,181 41,794 871,225 39,848 960,049 \n\nDecreases (utilized)(16,959)(29,976)(799,841)(16,829)(863,606)\n\nDecreases (reversed)(63)(8,609)(42,854)(750)(52,275)\n\nForeign currency translation differences(40)(1,316)(12,624)(664)(14,644)\n\nAs of March 31, 2025\n¥12,462 ¥13,995 ¥499,165 ¥42,695 ¥568,317 \n\nIncreases408,681 31,135 989,718 8,028 1,437,561 \n\nDecreases (utilized)(5,758)(16,842)(932,913)(10,027)(965,541)\n\nDecreases (reversed)(646)(1,953)(51,243)(3,080)(56,922)\n\nForeign currency translation differences1,010 1,592 47,341 2,692 52,635 \n\nAs of March 31, 2026\n¥415,749 ¥27,927 ¥552,068 ¥40,308 ¥1,036,051 \n\nLitigation\n\nTakeda is involved in various legal and administrative proceedings. The litigation provision for the fiscal year ended March 31, 2026 includes a provision for damages relating to the AMITIZA (lubiprostone) antitrust litigation, for which a verdict was rendered in May 2026 in the U.S. District Court for the District of Massachusetts (Note 31).\n\nRestructuring\n\nTakeda has various restructuring efforts in place during the years ended March 31, 2024, 2025 and 2026, in connection with the following:\n\n•Enterprise-wide efficiency program - Takeda implemented an enterprise-wide program from the fiscal year ended March 31, 2025 onward, aimed at promoting business growth and improving profitability. This program includes increasing the agility and simplicity of our business organization, investing in digital, data, and technology (DD&T) to enhance productivity and efficiency across the organization, and implementing cost reductions and process improvements in supply chain and vendor management.\n\n•Various other efforts to improve the efficiency of its operations and related facilities.\n\nA restructuring provision is recorded when Takeda has developed a detailed formal plan for the restructuring and, through an execution of the plan or an announcement of its main features to those affected by it, a valid expectation has been raised in those affected by the plan that the plan will be implemented. Takeda records the provision and associated expenses based on estimated costs associated with the plan. The ultimate cost and the timing of any payments under the plan will be impacted by the actual timing of the actions and the actions of employees impacted by the restructuring activities.\n\nF-55\n\nRestructuring expenses recorded for the fiscal years ended March 31, 2024, 2025 and 2026 are as follows:\n\nJPY (millions)\nFor the Year Ended March 31\n\n202420252026\n\nCash:\n\nSeverance¥13,685 ¥62,595 ¥35,198 \n\nConsulting fees11,528 16,205 8,345 \n\nOther48,622 44,784 19,240 \n\nTotal¥73,835 ¥123,584 ¥62,783 \n\nNon-Cash:\n\nDepreciation and impairment¥7,523 ¥4,548 ¥8,035 \n\nTotal¥81,358 ¥128,133 ¥70,818 \n\nOther restructuring expenses for the fiscal years ended March 31, 2024, 2025 and 2026 include personnel expenses of JPY 9,769 million, JPY 16,353 million, and JPY 9,550 million, respectively, and mainly related to retention bonus and salary of employees fully dedicated to restructuring programs. Also, other restructuring expenses for the fiscal year ended March 31, 2024 include expenses related to lease termination agreement to consolidate the offices for the purpose of maximizing organizational effectiveness.\n\nTakeda’s Board of Directors held on March 25, 2026 approved the transformation program designed to strengthen our competitiveness and accelerate future growth and, primarily as a result of the program, a restructuring expense of JPY 170,000 million is projected to be incurred in the fiscal year ending March 31, 2027.\n\nRebates and Returns\n\nTakeda has recognized a provision related mainly to sales rebates and returns for products and merchandise. The balances stated in the summary table above include provisions of JPY 241,704 million and JPY 291,232 million as of March 31, 2025 and 2026, respectively, for contractual and statutory rebates payable under Commercial healthcare provider contracts and U.S. State and Federal government health programs, such as U.S. Medicaid and U.S. commercial managed care programs. These are expected to be paid out generally within one year. Return reserves are recorded primarily for credits expected to be issued to customers for certain expired products that will be returned. Sales rebates and sales returns reserves are reviewed and updated monthly or when there is a significant change in its amount.\n\nOther\n\nOther provisions are primarily related to asset retirement obligations, contract termination fees and onerous contracts, and other provisions for the fiscal year ended March 31, 2025 also included post-trial access costs for the terminated program (Note 5).\n\n23.    Other Liabilities\n\nJPY (millions)\nAs of March 31\n\n20252026\n\nAccrued expenses¥605,697 ¥626,674 \n\nDeferred income38,213 21,026 \n\nOther35,233 42,270 \n\nTotal¥679,143 ¥689,970 \n\nNon-current¥82,859 ¥99,818 \n\nCurrent¥596,283 ¥590,152 \n\nAccrued expenses include accrued employee benefit expenses of JPY 291,957 million and JPY 304,931 million as of March 31, 2025 and 2026, respectively.\n\nDeferred income includes contract liabilities related to out-licensing agreements, product procurement and supply agreements, and government grants for the purchase of property, plant and equipment. The grants received were JPY 12,001 million and JPY 6,527 million during the fiscal years ended March 31, 2025 and 2026, respectively. The primary government grants relate to funding a portion of Takeda’s investment in the development and production of vaccines. Takeda received reimbursement for its investments in facilities. The grant income is recognized over the life of the associated assets and is recorded as an offset to the depreciation expense included in cost of sales, selling, general and administrative expenses, and research and development expenses.\n\nF-56\n\n24.    Trade and Other Payables\n\nJPY (millions)\nAs of March 31\n\n20252026\n\nTrade payables¥308,450 ¥324,368 \n\nOther payables167,091 166,977 \n\nTotal¥475,541 ¥491,345 \n\n25.    Equity and Other Equity Items\n\nThousands of Shares\nFor the Year Ended March 31\n\n20252026\n\nAuthorized shares as of the beginning of the year\n3,500,000 3,500,000 \n\nShares issued:\n\nAt the beginning of the year\n1,582,419 1,590,950 \n\nExercise of stock options\n12 280 \n\nIssuance of shares\n8,519 — \n\nAs of the end of the year\n1,590,950 1,591,229 \n\nThe shares issued by the Company are ordinary shares with no par value that have no restrictions on any rights.\n\nThe number of treasury shares included in the above shares issued was 13,405 thousand shares, 17,300 thousand shares, and 11,392 thousand shares as of April 1, 2024, March 31, 2025, and 2026, respectively.\n\nThe number of treasury shares as of April 1, 2024, March 31, 2025 and 2026 includes 5,888 thousand shares, 5,565 thousand shares and 5,102 thousand shares, respectively, held by the Employee Stock Ownership Plan (“ESOP”) Trust and the Board Incentive Plan (“BIP”) Trust. During the year ended March 31, 2025, the ESOP and BIP Trust acquired 460 thousand shares and sold 783 thousand shares. During the year ended March 31, 2026, the ESOP and BIP Trust acquired 401 thousand shares and sold 865 thousand shares.\n\nDuring the year ended March 31, 2025, the Company issued 8,519 thousand shares of common stock and conducted the disposal of 7,327 thousand treasury shares under Long-Term Incentive Plan (“LTIP”) for the Company Group employees overseas. The issuance of these shares resulted in an increase in share capital of JPY 18,064 million and share premium of JPY 18,064 million and the disposal of treasury shares resulted in a decrease in treasury shares of JPY 24,999 million.\n\nDuring the year ended March 31, 2026, the Company conducted the disposal of 17,271 thousand treasury shares under Long-Term Incentive Plan (“LTIP”) for the Company Group employees overseas. The disposal of treasury shares resulted in a decrease in treasury shares of JPY 73,760 million.\n\nThe shares of the Company’s common stock and treasury shares were converted into the Company’s American Depositary Shares (“ADSs”) and settled with employees.\n\nDuring the year ended March 31, 2025, Takeda acquired a total of 11,544 thousand shares of its common stock for JPY 49,978 million in accordance with the resolution on the acquisition of its own shares at the Board of Directors Meeting held on January 30, 2025. During the year ended March 31, 2026, Takeda acquired a total of 11,824 thousand shares of its common stock for JPY 49,978 million, and the acquisition under the resolution was completed.\n\nF-57\n\ni) Dividends declared and paid during the previous fiscal years and the current fiscal year\n\nDividends declared and paidJPY (millions)\nTotal dividendsDividends per share JPYRecord dateEffective date\n\nApril 1, 2023, to March 31, 2024\n\nQ1 2023¥140,475 ¥90.00 March 31, 2023June 29, 2023\n\nQ3 2023148,037 94.00 September 30, 2023December 1, 2023\n\nApril 1, 2024, to March 31, 2025\n\nQ1 2024148,041 94.00 March 31, 2024June 27, 2024\n\nQ3 2024155,893 98.00 September 30, 2024December 2, 2024\n\nApril 1, 2025, to March 31, 2026\n\nQ1 2025154,763 98.00 March 31, 2025June 26, 2025\n\nQ3 2025158,470 100.00 September 30, 2025December 1, 2025\n\nii) Dividends declared whose record date falls in the fiscal year ended March 31, 2026 and the effective date falls in the following fiscal year\n\nMatters with respect to dividends on shares of common stock will be proposed at the Annual General Meeting of Shareholders to be held on June 24, 2026.\n\nDividends to be submittedJPY (millions)\nTotal dividendsDividends per share JPYRecord dateEffective date\n\nApril 1, 2026, to March 31, 2027\n\nQ1 2026158,494 ¥100.00 March 31, 2026June 25, 2026\n\nF-58\n\n26.    Financial Instruments\n\nTakeda promotes risk management to reduce the financial risks arising from business operations. The principal risks to which Takeda is exposed include market risk, counterparty credit risk, and liquidity risk caused by changes in the market environment such as fluctuations in foreign exchange rates, interest rates and market prices of commodities and other financial holdings. Each of these risks is managed in accordance with Takeda’s policies.\n\nFinancial Assets and Liabilities\n\nJPY (millions)\n\nAs of March 31, 2025\n\nFinancial assets measured at amortized\ncostMeasured at fair value through other comprehensive incomeMeasured at fair value through profit or lossDerivative hedging instrumentsOther financial liabilitiesTotal\n\nFinancial assets measured at fair value\n\nOther financial assets -\n\nInvestments in equity instruments¥— ¥151,687 ¥— ¥— ¥— ¥151,687 \n\nDerivative financial instruments— — 12,361 72,007 — 84,369 \n\nInvestments in convertible notes— — 10,424 — — 10,424 \n\nInvestments in debt instruments— 79,342 12,005 — — 91,348 \n\nFinancial assets associated with contingent consideration arrangements— — 10,197 — — 10,197 \n\nTrade and other receivables— 65,568 — — — 65,568 \n\nTotal¥— ¥296,597 ¥44,987 ¥72,007 ¥— ¥413,592 \n\nFinancial assets not measured at fair value\n\nOther financial assets\n¥23,576 ¥— ¥— ¥— ¥— ¥23,576 \n\nTrade and other receivables643,896 — — — — 643,896 \n\nCash and cash equivalents385,113 — — — — 385,113 \n\nTotal¥1,052,586 ¥— ¥— ¥— ¥— ¥1,052,586 \n\nFinancial liabilities measured at fair value\n\nOther financial liabilities -\n\nDerivative financial instruments¥— ¥— ¥16,309 ¥219 ¥— ¥16,528 \n\nFinancial liabilities associated with contingent consideration arrangements— — 4,362 — — 4,362 \n\nTotal¥— ¥— ¥20,671 ¥219 ¥— ¥20,890 \n\nFinancial liabilities not measured at fair value\n\nOther financial liabilities -\n\nLease liabilities¥— ¥— ¥— ¥— ¥573,325 ¥573,325 \n\nOther— — — — 175,805 175,805 \n\nTrade and other payables— — — — 475,541 475,541 \n\nBonds and loans— — — — 4,515,265 4,515,265 \n\nTotal¥— ¥— ¥— ¥— ¥5,739,936 ¥5,739,936 \n\nF-59\n\nJPY (millions)\n\nAs of March 31, 2026\n\nFinancial assets measured at amortized\ncostMeasured at fair value through other comprehensive incomeMeasured at fair value through profit or lossDerivative hedging instrumentsOther financial liabilitiesTotal\n\nFinancial assets measured at fair value\n\nOther financial assets -\n\nInvestments in equity instruments\n¥— ¥173,034 ¥— ¥— ¥— ¥173,034 \n\nDerivative financial instruments— — 11,102 156,818 — 167,920 \n\nInvestments in convertible notes— — 8,776 — — 8,776 \n\nInvestments in debt instruments— 85,148 21,219 — — 106,366 \n\nFinancial assets associated with contingent consideration arrangements— — 10,488 — — 10,488 \n\nTrade and other receivables— 66,424 — — — 66,424 \n\nTotal¥— ¥324,606 ¥51,585 ¥156,818 ¥— ¥533,009 \n\nFinancial assets not measured at fair value\n\nOther financial assets¥15,244 ¥— ¥— ¥— ¥— ¥15,244 \n\nTrade and other receivables777,888 — — — — 777,888 \n\nCash and cash equivalents595,054 — — — — 595,054 \n\nTotal¥1,388,186 ¥— ¥— ¥— ¥— ¥1,388,186 \n\nFinancial liabilities measured at fair value\n\nOther financial liabilities -\n\nDerivative financial instruments¥— ¥— ¥20,524 ¥— ¥— ¥20,524 \n\nFinancial liabilities associated with contingent consideration arrangements— — 3,185 — — 3,185 \n\nTotal¥— ¥— ¥23,709 ¥— ¥— ¥23,709 \n\nFinancial liabilities not measured at fair value\n\nOther financial liabilities -\n\nLease liabilities¥— ¥— ¥— ¥— ¥594,520 ¥594,520 \n\nOther— — — — 94,240 94,240 \n\nTrade and other payables— — — — 491,345 491,345 \n\nBonds and loans— — — — 4,881,837 4,881,837 \n\nTotal¥— ¥— ¥— ¥— ¥6,061,942 ¥6,061,942 \n\nFair Value Measurement\n\nDerivative and non-derivative financial instruments measured at fair value are categorized in the following three-tier fair value hierarchy that reflects the significance of the inputs in making the measurements. Level 1 is defined as observable inputs, such as quoted prices in active markets for an identical asset or liability. Level 2 is defined as inputs other than quoted prices in active markets within Level 1 that are directly or indirectly observable. Level 3 is defined as unobservable inputs.\n\nF-60\n\nJPY (millions)\n\nAs of March 31, 2025\n\nLevel 1Level 2Level 3Total\n\nAssets:\n\nFinancial assets measured at fair value through profit or loss\n\nDerivative financial instruments¥— ¥2,892 ¥9,470 ¥12,361 \n\nInvestment in convertible notes— — 10,424 10,424 \n\nInvestment in debt instruments— — 12,005 12,005 \n\nFinancial assets associated with contingent consideration arrangements— — 10,197 10,197 \n\nDerivative financial instruments for which hedge accounting is applied\n— 72,007 — 72,007 \n\nFinancial assets measured at fair value through OCI\n\nTrade and other receivables— 65,568 — 65,568 \n\nEquity instruments78,073 — 73,614 151,687 \n\nInvestments in debt instruments79,342 — — 79,342 \n\nTotal¥157,415 ¥140,467 ¥115,709 ¥413,592 \n\nLiabilities:\n\nFinancial liabilities measured at fair value through profit or loss\n\nDerivative financial instruments¥— ¥6,475 ¥9,834 ¥16,309 \n\nFinancial liabilities associated with contingent consideration arrangements— — 4,362 4,362 \n\nDerivative financial instruments for which hedge accounting is applied— 219 — 219 \n\nTotal¥— ¥6,694 ¥14,196 ¥20,890 \n\nJPY (millions)\n\nAs of March 31, 2026\n\nLevel 1Level 2Level 3Total\n\nAssets:\n\nFinancial assets measured at fair value through profit or loss\n\nDerivative financial instruments¥— ¥1,849 ¥9,253 ¥11,102 \n\nInvestment in convertible notes— — 8,776 8,776 \n\nInvestment in debt instruments— — 21,219 21,219 \n\nFinancial assets associated with contingent consideration arrangements— — 10,488 10,488 \n\nDerivative financial instruments for which hedge accounting is applied— 156,818 — 156,818 \n\nFinancial assets measured at fair value through OCI\n\nTrade and other receivables— 66,424 — 66,424 \n\nEquity instruments106,729 — 66,306 173,034 \n\nInvestments in debt instruments85,148 — — 85,148 \n\nTotal¥191,876 ¥225,091 ¥116,042 ¥533,009 \n\nLiabilities:\n\nFinancial liabilities measured at fair value through profit or loss\n\nDerivative financial instruments¥— ¥8,358 ¥12,166 ¥20,524 \n\nFinancial liabilities associated with contingent consideration arrangements— — 3,185 3,185 \n\nTotal¥— ¥8,358 ¥15,351 ¥23,709 \n\nF-61\n\nValuation Techniques\n\nThe fair value of derivatives classified as Level 2 is measured based on Treasury management system valuation models or the Black-Scholes model, whose significant inputs are based on observable market data.\n\nDerivatives classified as Level 3 include those recognized in connection with settlements of cash flows arising from differences between the fixed prices and floating market prices of renewable energy in a virtual power purchase agreement and those recognized in an agreement to offset the volatility of such cash flows. The fair value of derivatives in Level 3 is measured using the discounted cash flow method. The key assumptions taken into account include forecasted renewable energy prices and the expected generation of the renewable energy generating facility.\n\nThe fair value of the investment in convertible notes is measured using techniques such as the discounted cash flow and option pricing models.\n\nThe fair value of trade and other receivables, which are due from customers that Takeda has the option to factor, are measured based on the invoiced amount.\n\nEquity instruments and investments in debt instruments are not held for trading. If equity instruments or investments in debt instruments are quoted in an active market, the fair value is based on price quotations at the period-end-date. If equity instruments or investments in debt instruments are not quoted in an active market, the fair value is calculated utilizing an adjusted book value per share method or EBITDA multiples approach based on available information as of each period-end-date and comparable companies. The principal input that is not observable and utilized for the calculation of the fair value of equity instruments and investments in debt instruments classified as Level 3 is the EBITDA rate used for the EBITDA multiples approach, which ranges from 4.3 times to 7.9 times. During the years ended March 31, 2025 and 2026, cumulative losses on equity investments of JPY (1,339) million and JPY (12,205) million were reclassified from other comprehensive income to retained earnings, respectively, upon the disposal of certain equity investments in publicly traded companies. The fair value of these investments on the dates of disposal during the years ended March 31, 2025 and 2026 were JPY 25,019 million and JPY 2,138 million, respectively. The investments were disposed of after management’s assessment of these investments relative to the investment strategy.\n\nFinancial assets and liabilities associated with contingent consideration arrangements are measured at fair value at the time of the divestiture or the acquisition date of business combination. When the contingent consideration arrangement meets the definition of a financial asset or liability, it is subsequently re-measured at fair value at each closing date. The determination of the fair value is based on models such as scenario-based methods and discounted cash flows. The key assumptions take into consideration the probability of meeting each performance target, forecasted revenue projections, and the discount factor. The financial assets associated with contingent consideration arrangements are recognized mainly in relation to the divestiture of XIIDRA. The financial liabilities associated with contingent consideration arrangements are discussed in Financial liabilities associated with contingent consideration arrangements.\n\nThe fair value of the other financial liabilities is measured using the discounted cash flow model.\n\nTransfers between levels\n\nTakeda recognizes transfers between levels of the fair value hierarchy, at the end of the reporting period during which the change has occurred. There were transfers from Level 3 to Level 1 recorded in the years ended March 31, 2025. These transfers resulted from the investments in the companies whose shares were previously not listed on an equity or stock exchange and had no recent observable active trades in the shares. During the years ended March 31, 2025, the companies listed its equity shares on an exchange and are currently actively traded in the market. As the equity shares have a published price quotation in an active market, the fair value measurement was transferred from Level 3 to Level 1 on the fair value hierarchy during the years ended March 31, 2025. There were no other significant transfers between levels of the fair value hierarchy during the years ended March 31, 2025 and 2026.\n\nLevel 3 financial assets fair values\n\nTakeda invests in equity instruments mainly for research collaboration. The following table shows a reconciliation from the opening balances to the closing balances for Level 3 financial asset fair values for the years ended March 31, 2025 and 2026. The disclosure related to Level 3 financial liabilities which are financial liabilities associated with contingent consideration arrangements are included in Financial liabilities associated with contingent consideration arrangements. There are no significant changes in fair value during the changes in certain assumptions which influence the fair value measurement for Level 3 financial assets.\n\nF-62\n\nJPY (millions)\nFor the Year Ended March 31\n\n20252026\n\nFinancial assets associated with contingent consideration arrangementsEquity instrumentsFinancial assets associated with contingent consideration arrangementsEquity instruments\n\nAs of the beginning of the year¥12,293 ¥88,925 ¥10,197 ¥73,614 \n\nRecognition of financial assets associated with contingent consideration arrangements147 — — — \n\nChanges recognized as finance income (expenses)516 — 564 — \n\nChanges in fair value of financial assets associated with contingent consideration due to other elements than time value(1,789)— (566)— \n\nChanges in fair value of financial assets measured at fair value through OCI and exchange differences on translation of foreign operations(970)(16,846)293 (10,676)\n\nPurchases— 2,843 — 3,236 \n\nSales— (361)— (777)\n\nTransfers to Level 1— (1,626)— — \n\nAcquisition from conversion of convertible notes— 1,488 — 1,500 \n\nTransfers to investments accounted for using the equity method— (809)— (1,182)\n\nTransfers from investments accounted for using the equity method— — — 591 \n\nAs of the end of the year¥10,197 ¥73,614 ¥10,488 ¥66,306 \n\nFinancial liabilities associated with contingent consideration arrangements\n\nFinancial liabilities associated with contingent consideration arrangements represent consideration related to business combinations or license agreements that are payable only upon future events such as the achievement of development milestones and sales targets, including pre-existing contingent consideration arrangements of the companies that are acquired by Takeda. At each reporting date, the fair value of financial liabilities associated with contingent consideration arrangements is re-measured based on risk-adjusted future cash flows discounted using an appropriate discount rate.\n\nAs of March 31, 2025 and 2026, the balance primarily relates to pre-existing contingent consideration arrangements from historical acquisitions.\n\nThe fair value of financial liabilities associated with contingent consideration arrangements could increase or decrease due to changes in certain assumptions which underpin the fair value measurements. The assumptions include probability of milestones being achieved.\n\nF-63\n\nThe fair value of financial liabilities associated with contingent consideration arrangements are classified as Level 3 in the fair value hierarchy. The following table shows a reconciliation from the opening balances to the closing balances and payment term for financial liabilities associated with contingent consideration arrangements for the years ended March 31, 2025 and 2026, respectively. There are no significant changes in fair value during the changes in significant assumptions which influence the fair value measurement for financial liabilities associated with contingent consideration arrangements.\n\nJPY (millions)\nFor the Year Ended March 31\n\n20252026\n\nAs of the beginning of the year¥7,772 ¥4,362 \n\nChanges in the fair value during the period(2,059)476 \n\nSettled and paid during the period(774)— \n\nForeign currency translation differences(577)(1,652)\n\nAs of the end of the year¥4,362 ¥3,185 \n\nJPY (millions)\nAs of March 31\n\n20252026\n\nPayment term (undiscounted)\n\nWithin one year¥3,003 ¥3,103 \n\nBetween one and three years1,398 83 \n\nFinancial instruments not measured at fair value\n\nThe carrying amount and fair value of financial instruments that are not measured at fair value in the consolidated statements of financial position are as follows. Fair value information is not provided for financial instruments, if the carrying amount is a reasonable estimate of fair value due to the relatively short period of maturity of these instruments.\n\nJPY (millions)\nAs of March 31\n\n20252026\n\nCarrying amountFair valueCarrying amountFair value\n\nBonds¥3,920,632 ¥3,578,117 ¥4,656,812 ¥4,269,732 \n\nLong-term loans250,012 245,220 225,000 217,426 \n\nLong-term financial liabilities are recognized at their carrying amount. The fair value of bonds is measured at quotes whose significant inputs to the valuation model used are based on observable market data. The fair value of loans is measured at the present value of future cash flows discounted using the applicable market rate on the loans in consideration of the credit risk by each group classified in a specified period. The fair value of bonds and long-term loans are classified as Level 2 in the fair value hierarchy.\n\nF-64\n\nMarket Risk\n\nMajor market risks to which Takeda is exposed are 1) foreign currency risk, 2) interest rate risk and 3) price fluctuation risk. Financial instruments affected by market risk include loans and borrowings, deposits, equity investments and derivative financial instruments.\n\nForeign Currency Risk\n\nTakeda’s exposure to foreign exchange rates primarily relates to its foreign currency denominated operations and Takeda’s net investments in foreign subsidiaries. Takeda manages foreign currency risks in a centralized manner using derivative financial instruments. Takeda’s policy does not permit the use of speculative foreign currency financial instruments or derivatives.\n\nTakeda uses forward exchange contracts, cross currency interest rate swaps, currency options to hedge individually significant foreign currency transactions. Takeda has also designated bonds and loans denominated in the United States Dollar and Euro and certain forward exchange contracts as hedging instruments of net investments in foreign operations. As of March 31, 2025, the total fair value of the foreign currency denominated loans and bonds was JPY 74,517 million and JPY 2,892,158 million respectively. As of March 31, 2026, there were no outstanding foreign currency denominated loans, and the total fair value of the foreign currency denominated bonds was JPY 3,417,873 million.\n\nTakeda is exposed mainly to foreign currency risks of the United States Dollar and Euro. The fair values of Takeda’s financial instrument holdings are analyzed to determine their sensitivity to changes in foreign exchange rates. Our analysis shows that if the JPY were to change against all other currencies by 5%, as of March 31, 2025 and 2026, the hypothetical impact on net income would not be material. This analysis assumes that all other variables, in particular interest rates, remain constant and that a change in one currency’s rate relative to the JPY would not have any effect on another currency’s rate relative to the JPY. In addition, this analysis does not include the effects of foreign currency translation on financial instruments that are denominated in the functional currency of the entity holding them.\n\nJPY (millions)\n\nAs of March 31, 2025\n\nContract amount Contract amount to be settled in more than one yearFair value\n\nForward exchange contracts:\n\nSelling:\n\nEuro¥1,178,796 ¥— ¥(3,120)\n\nUnited States Dollar128,717 — 1,673 \n\nBuying:\n\nEuro305,964 — 1,054 \n\nUnited States Dollar129,574 — (1,693)\n\nCross currency interest rate swaps:\n\nBuying:\n\nUnited States Dollar774,089 774,089 68,154 \n\nJPY (millions)\n\nAs of March 31, 2026\n\nContract amount Contract amount to be settled in more than one yearFair value\n\nForward exchange contracts:\n\nSelling:\n\nEuro¥1,562,772 ¥— ¥(4,332)\n\nBuying:\n\nEuro513,196 — (2,177)\n\nCross currency interest rate swaps:\n\nBuying:\n\nUnited States Dollar774,089 774,089 155,015 \n\nThe above cross currency interest rate swaps, designated as hedging instruments in a cash flow hedge, were related to foreign currency denominated bonds and loans. The cash flow hedge reserve related to the cross currency interest rate swaps were reclassified to profit or loss in the same period as the hedged expected future cash flows occur.\n\nF-65\n\nInterest Rate Risk\n\nTakeda’s exposure to the risk of changes in benchmark interest rates and foreign exchange rate relates to the debts with floating interest rates as well as the trade and other receivables due from customers that Takeda has the option to factor. Takeda uses interest rate swaps, forward interest rate contracts, cross currency interest rate swaps that fix the amount of future payments to manage interest and foreign exchange rate risks through cash flow hedge strategies. Takeda may also use derivatives that effectively convert its fixed rate debt to floating through fair-value hedge strategies. The following summarizes interest rate swaps, forward interest rate contracts, and cross currency interest rate swaps designated as cash flow hedges as of March 31:\n\nJPY (millions)\n\nAs of March 31\n\nContract amountContract amount to be settled in more than one yearFair value\n\n2025¥1,103,099 ¥829,089 ¥70,291 \n\n2026829,089 814,089 156,818 \n\nThe fair values of Takeda’s financial instrument holdings are analyzed to determine their sensitivity to interest rate changes. Our analysis shows that if there were a 1% change in interest rates, as of March 31, 2025 and 2026, the hypothetical impact on net income would not be material. This analysis assumes that all other variables, in particular foreign currency exchange rates, remain constant.\n\nPrice Fluctuation Risk Management\n\nCommodity Price Risk\n\nFor its business operations, Takeda is exposed to risks from commodity price fluctuations. Takeda manages this risk primarily by utilizing fixed price contracts but may also use financial instruments to lock in a fixed price.\n\nMarket Price Risk\n\nMarket pricing and valuations of Takeda’s fixed-income financial assets and liabilities are impacted by changes in currency rates, interest rates and credit spreads, which are managed as described above. For equity instruments, Takeda manages the risk of price fluctuations in the instruments by regularly reviewing share prices and financial positions of the issuers.\n\nOur analysis shows that if the market price of equity instruments held by Takeda and investments in trusts which hold equity instruments on behalf of Takeda had changed by 10%, as of March 31, 2025 and 2026, the hypothetical impact on other comprehensive income would not be material. This analysis assumes that all other variables, in particular interest rates and foreign currency exchange rates, remain constant. There is no impact on net income because the changes in the fair value of equity instruments are recognized directly in equity.\n\nDerivative Financial Instruments\n\nAs described above, Takeda is exposed to effects related to foreign exchange fluctuations in connection with our international business activities that are denominated in various currencies and Takeda’s overseas entities that have different functional currencies. Takeda is also exposed to currency and interest rate fluctuations on our borrowings that we use to finance our business operations and our acquisitions. In addition, Takeda is exposed to interest rate fluctuations on the trade and other receivables due from customers that Takeda has the option to factor. These are denominated in various currencies and may bear interest at variable rates, resulting in the risk related to the currency and interest rate movements.\n\nIn order to manage the risk of currency exchange rate and interest rate fluctuations, Takeda may enter into derivative contracts with highly rated financial institutions. Takeda enters into derivative contracts based on our risk management policies, which determine the authority for entering into such transactions and the transaction limits. The policy, which has been consistently followed, is that financial derivatives be used only for hedging foreign currency and interest rate exposure and not for speculative purposes.\n\nTakeda generally designates its derivatives as hedges for accounting purposes. In certain instances, Takeda enters into derivative contracts (“balance sheet hedges”) that do not qualify for hedge accounting but are nevertheless utilized to manage the underlying foreign currency exposure risk. Balance sheet hedges are used to offset the foreign currency impact from assets and liabilities on Takeda balance sheet that are denominated in non-functional currencies. Given these foreign currency derivatives work on an offset basis they do not require hedge accounting. Takeda has established guidelines for risk assessment procedures and controls for the use of financial instruments. These guidelines include a clear segregation of duties between execution and administration, and then again between accounting and controlling.\n\nF-66\n\nSummary of Financial Position and Financial Performance for Derivative and Hedging Activities\n\nThe following tables represent the items designated as hedging instruments, amounts within other components of equity related to items designated as hedged items and amounts of changes in fair value of hedging instruments recorded in other comprehensive income and the amounts reclassified from the hedging reserve to profit or loss as of and for the year ended March 31, 2025:\n\nJPY (millions)\n\nAs of March 31, 2025\n\nNotionalCarrying amount – assetsCarrying amount – liabilitiesLine item in the statement of financial position where hedging instrument is includedAverage rate used for the fair value of the hedging instrument\n\nCash flow hedges\n\nInterest risk\n\nInterest rate swapsJPY 130,000 million1,412 — Other financial assets1.04 %\n\nForward interest rate contractsJPY 50,000 million119 37 Other financial assets /liabilities1.32 %\n\nUSD 1,000 million650 7 Other financial asset/liability4.20 %\n\nCurrency and interest risk\n\nCross currency interest rate swapsUSD 5,750 million68,154 — Other financial assets\n134.62 JPY\n\n(0.11)%\n\nNet investment hedges\n\nForeign currency denominated bonds and loansUSD 6,506 million— 969,495 Bonds and loans\n\nEUR 6,632 million— 1,070,017 Bonds and loans\n\n   Forward exchange contractsUSD 863 million1,673 — Other financial assets\n\nEUR 1,000 million— 175 Other financial liabilities\n\nJPY (millions)\n\nAs of March 31, 2025\n\nBalance in cash flow hedges and net investment hedgesBalance in hedge cost reserve\n\nCash flow hedges\n\nInterest risk\n\nInterest rate swaps¥1,010 ¥— \n\nForward interest rate contracts(15,795)— \n\nCurrency and interest risk\n\nCross currency interest rate swaps(53,627)(7,967)\n\nCurrency risk\n\nHedge related to acquisition3,560 — \n\nNet investment hedges\n\nForeign currency denominated bonds and loans324,759 — \n\n    Forward exchange contracts203,262 — \n\nF-67\n\nJPY (millions)\n\nFor the year ended March 31, 2025\n\nAmounts recognized in OCIAmount reclassified to profit or loss\n\nChange in fair value of hedging instrumentsHedging costsCash flow hedgeHedging costsLine item in which reclassification adjustment is included\n\nCash flow hedges\n\nInterest risk\n\nInterest rate swaps¥2,037 ¥— ¥(6,415)¥— Finance income\n\nForward interest rate contracts2,301 — 2,317 — Finance expenses\n\nCurrency and interest risk\n\nCross currency interest rate swaps(711)18,663 (2,355)(7,350)Finance income and Finance expenses\n\nNet investment hedges\n\nForeign currency denominated bonds and loans (19,662)— — — \n\n Forward exchange contracts13,466 — — — \n\nThe following tables represent the items designated as hedging instruments, amounts within other components of equity related to items designated as hedged items and amounts of changes in fair value of hedging instruments recorded in other comprehensive income and the amounts reclassified from the hedging reserve to profit or loss as of and for the year ended March 31, 2026:\n\nJPY (millions)\n\nAs of March 31, 2026\n\nNotionalCarrying amount – assetsCarrying amount – liabilitiesLine item in the statement of financial position where hedging instrument is includedAverage rate used for the fair value of the hedging instrument\n\nCash flow hedges\n\nInterest risk\n\nInterest rate swapsJPY 55,000 million1,803 — Other financial assets1.70 %\n\nCurrency and interest risk\n\nCross currency interest rate swapsUSD 5,750 million155,015 — Other financial assets\n134.62 JPY\n\n(0.11)%\n\nNet investment hedges\n\nForeign currency denominated bondsUSD 2,000 million— 319,166 Bonds\n\nEUR 6,627 million— 1,212,915 Bonds\n\nJPY (millions)\n\nAs of March 31, 2026\n\nBalance in cash flow hedges and net investment hedgesBalance in hedge cost reserve\n\nCash flow hedges\n\nInterest risk\n\nInterest rate swaps¥1,215 ¥— \n\nForward interest rate contracts(13,323)— \n\nCurrency and interest risk\n\nCross currency interest rate swaps(27,354)(4,808)\n\nCurrency risk\n\nHedge related to acquisition3,560 — \n\nNet investment hedges\n\nForeign currency denominated bonds463,091 — \n\n    Forward exchange contracts228,060 — \n\nF-68\n\nJPY (millions)\n\nFor the year ended March 31, 2026\n\nAmounts recognized in OCIAmount reclassified to profit or loss\n\nChange in fair value of hedging instrumentsHedging costsCash flow hedgeHedging costsLine item in which reclassification adjustment is included\n\nCash flow hedges\n\nInterest risk\n\nInterest rate swaps¥528 ¥— ¥(229)¥— Finance income\n\nForward interest rate contracts1,435 — 2,043 — Finance expenses\n\nCurrency and interest risk\n\nCross currency interest rate swaps109,946 6,155 (72,246)(1,542)Finance income\n\nNet investment hedges\n\nForeign currency denominated bonds157,640 — — — \n\n Forward exchange contracts57,733 — — — \n\nThe amount relating to the ineffectiveness recorded in profit or loss was immaterial for the years ended March 31, 2025 and 2026. The amount of hedging gains/losses recorded in other comprehensive income and reclassified to profit or loss as hedged future cash flows were no longer expected to occur was not material for the years ended March 31, 2025 and 2026.\n\nCapital Management\n\nThe capital structure of Takeda consists of shareholders’ equity (Note 25), bonds and loans (Note 19), and cash and cash equivalents (Note 17). The fundamental principles of Takeda’s capital risk management are to build and maintain a steady financial base for the purpose of maintaining soundness and efficiency of operations and achieving sustainable growth. According to these principles, Takeda conducts capital investment, profit distribution such as dividends, and repayment of loans based on steady operating cash flows through the development and sale of competitive products.\n\nTakeda utilizes factoring arrangements for selected trade and other receivables. Under these programs, trade and other receivables sold are derecognized when the risks and rewards of ownership have been transferred. Amounts due from customers that are subject to the factoring arrangements but have not been factored at fiscal year end are disclosed in Note 16.\n\nTakeda balances and monitors its capital structure between debt and equity and adheres to a conservative financial discipline.\n\nF-69\n\nCredit Risk\n\nTakeda is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing activities, including deposits with banks and financial institutions, foreign exchange and interest rate derivatives, and other financial instruments. The maximum exposure to credit risk, without taking into account any collateral held at the end of the reporting period, is represented by the carrying amount of the financial instruments which is exposed to credit risk on the consolidated statements of financial position. Takeda regularly monitors the status of credit risk exposure with banks and financial institutions.\n\nCustomer Credit Risk\n\nTrade and other receivables are exposed to customer credit risk. Takeda monitors the status of overdue balances, reviews outstanding balances for each customer and regularly examines the credibility of major customers in accordance with Takeda’s policies for credit management to facilitate the early evaluation and the reduction of potential credit risks. In parallel, Takeda utilizes programs to sell certain trade and other receivables due from certain customers to a select group of banks on a non-recourse basis which in turn minimizes the credit risk associated with such customers. If necessary, Takeda obtains rights to collateral or guarantees on the receivables.\n\nThe following represents the carrying amount of the trade receivables categorized by due date and the analysis of impairment loss allowance as of March 31, 2025 and 2026:\n\nJPY (millions) except for percentage\n\nAs of March 31, 2025\n\nAmount past due\n\nCurrentWithin 30\ndaysOver 30 days but within 60 daysOver 60 days but within 90 daysOver 90 days but within one yearOver one\nyearTotal\n\nGross carrying amount¥585,910 ¥28,481 ¥9,162 ¥5,605 ¥19,894 ¥12,127 ¥661,178 \n\nImpairment loss allowance(1,965)(299)(459)(505)(2,171)(4,364)(9,763)\n\nNet carrying amount583,945 28,181 8,702 5,100 17,723 7,763 651,414 \n\nWeighted average loss rate (%)0.3 %1.1 %5.0 %9.0 %10.9 %36.0 %1.5 %\n\nJPY (millions) except for percentage\n\nAs of March 31, 2026\n\nAmount past due\n\nCurrentWithin 30\ndaysOver 30 days but within 60 daysOver 60 days but within 90 daysOver 90 days but within one yearOver one\nyearTotal\n\nGross carrying amount¥705,556 ¥47,464 ¥11,364 ¥9,440 ¥23,187 ¥22,077 ¥819,088 \n\nImpairment loss allowance(2,504)(68)(15)(80)(754)(7,642)(11,063)\n\nNet carrying amount703,051 47,396 11,349 9,361 22,433 14,435 808,025 \n\nWeighted average loss rate (%)0.4 %0.1 %0.1 %0.8 %3.3 %34.6 %1.4 %\n\nManagement believes that the unimpaired amounts that are past due are still collectible in full, based on historical payment behavior and extensive analysis of customer credit risk.\n\nAs of March 31, 2025 and 2026, Takeda has provided loss allowance on trade receivables and other receivables not past due based on an analysis of credit histories. Loss allowance for trade receivables are measured based on expected credit losses on a collective basis using the simplified approach. However, when events that have a detrimental impact on the estimated future cash flows such as customers’ deterioration of financial conditions or failure of payment overdue have occurred, expected credit losses are measured on an individual basis as credit-impaired financial assets. Takeda considers a financial asset to be in default when the customer is unlikely to pay the obligation in full, without recourse by Takeda to take actions such as realizing collaterals, if any.\n\nF-70\n\nThe following is a summary of the change in the impairment loss allowance for trade receivables for the years ended March 31, 2025 and 2026. The impairment loss allowance recognized for other than trade receivables is immaterial.\n\nJPY (millions)\n\nBad debt provision\ncalculated by simplified\napproachBad debt provision\nrecognized to credit-\nimpaired financial assetsTotal\n\nAs of April 1, 2024\n¥3,833 ¥4,543 ¥8,376 \n\nIncreases3,249 550 3,799 \n\nDecreases (written off)(1,590)(391)(1,981)\n\nDecreases (reversed)(258)(56)(314)\n\nForeign currency translation differences(26)(91)(117)\n\nAs of March 31, 2025\n¥5,207 ¥4,556 ¥9,763 \n\nIncreases1,128 707 1,834 \n\nDecreases (written off)(690)(643)(1,333)\n\nDecreases (reversed)(328)(327)(655)\n\nForeign currency translation differences761 691 1,453 \n\nAs of March 31, 2026\n¥6,079 ¥4,984 ¥11,063 \n\nOther Counterparty Credit Risk\n\nCash reserves of Takeda are concentrated mostly with the Company and entities acting as the cash pool leader in the U.S. and Europe. These cash reserves are primarily managed exclusively by investments in highly rated money market funds, short-term bank deposits and bonds of highly rated issuers within the investment limits determined by reviewing the investment ratings and terms under Takeda’s policies for fund management, resulting in limited credit risk. Cash reserves, other than those subject to the group cash pooling system, are managed by each consolidated subsidiary in accordance with the Company’s fund management policies. For derivatives, Takeda enters into contracts only with financial counterparties rated investment grade or higher in order to minimize counterparty risk.\n\nF-71\n\nLiquidity Risk\n\nTakeda manages liquidity risk and establishes an adequate management framework for liquidity risk to secure stable short-, mid-, and long-term funds and sufficient liquidity for operations. Takeda manages liquidity risk by monitoring forecasted cash flows and actual cash flows on an ongoing basis. In addition, Takeda has commitment lines with some counterparty financial institutions to manage liquidity risk (Note 19). Takeda strives to maximize the available liquidity with a combination of liquid short-term investments and committed credit lines with strong rated counterparties. The objective is to maintain levels in excess of project cash needs to mitigate the risk of contingencies.\n\nThe table below presents the balances of financial liabilities by maturity. The total contract amount below reflects cash flows presented on an undiscounted cash flow basis, including interest expense. The amounts disclosed as of March 31, 2025 and 2026 are undiscounted cash flows using the respective spot foreign exchange rates as of March 31, 2025 and 2026.\n\nJPY (millions)\n\nCarrying amountTotalWithin one yearBetween one and two yearsBetween two and three yearsBetween three and four yearsBetween four and five yearsMore than five years\n\nAs of March 31, 2025\n\nBonds and loans\n\nBonds¥4,190,632 ¥5,635,859 ¥499,779 ¥570,054 ¥216,517 ¥355,414 ¥1,046,745 ¥2,947,350 \n\nLoans324,633 334,907 161,958 1,837 1,903 76,945 41,495 50,769 \n\nTrade and other payables475,541 475,541 475,541 — — — — — \n\nLease liabilities573,325 825,819 64,443 57,426 54,117 50,974 49,114 549,744 \n\nDerivative liabilities16,528 18,043 7,766 1,078 1,047 1,013 1,081 6,057 \n\nDerivative assets(84,369)(269,425)(35,404)(29,400)(29,428)(30,556)(18,240)(126,397)\n\nAs of March 31, 2026\n\nBonds and loans\n\nBonds¥4,656,812 ¥6,448,659 ¥650,604 ¥263,936 ¥404,913 ¥1,121,772 ¥469,763 ¥3,537,671 \n\nLoans225,026 246,247 3,505 3,629 78,885 43,490 2,010 114,727 \n\nTrade and other payables491,345 491,345 491,345 — — — — — \n\nLease liabilities594,520 847,049 65,443 62,679 58,269 55,393 51,561 553,705 \n\nDerivative liabilities20,524 22,935 9,188 1,457 1,474 1,560 1,715 7,541 \n\nDerivative assets(167,920)(311,149)(33,383)(31,610)(51,246)(19,777)(49,702)(125,430)\n\nThe contractual amount of bonds in “Between four and five years” as of March 31, 2025 and in “Between three and four years” as of March 31, 2026 includes JPY 460,000 million principal amount of the 2024 Hybrid bonds (subordinated bonds), as Takeda expects to make an early repayment of all of the bonds in June 2029.\n\nIn addition, the contractual amount of loans in “Between four and five years” as of March 31, 2025 and in “Between three and four years” as of March 31, 2026 includes JPY 40,000 million principal amount of the 2024 Syndicated hybrid loans (subordinated loans) as Takeda expects to make an early repayment in October 2029.\n\nFor details on the principal and interest rates associated with these bonds and loans, see Note 19.\n\nF-72\n\nReconciliation of liabilities arising from financing activities\n\nJPY (millions)\n\nBondsLong-term loansShort-term loansLease liabilitiesDerivative assets used for hedge of debtsTotal\n\nAs of April 1, 2024\n¥4,092,879 ¥750,622 ¥251 ¥619,639 ¥(95,368)¥5,368,024 \n\nCash flows from financing activities\n\nNet increase (decrease) in short-term\nloans and commercial papers(47,000)— 74,490 — — 27,490 \n\nProceeds from long-term loans— 90,000 — — — 90,000 \n\nRepayments of long-term loans— (587,246)— — — (587,246)\n\nProceeds from bonds934,460 — — — — 934,460 \n\nRepayments of bonds(733,844)— — — — (733,844)\n\nProceeds from the settlement of cross currency interest rate swaps related to bonds— — — — 46,880 46,880 \n\nRepayments of lease liabilities— — — (45,174)— (45,174)\n\nInterest paid— — — (24,511)— (24,511)\n\nNon-cash items\n\nForeign exchange movement(62,248)(3,603)(0)(8,892)— (74,744)\n\nChange in fair value— — — — (19,666)(19,666)\n\nNew, amended and terminated leases— — — 7,752 — 7,752 \n\nOthers6,385 239 (119)24,511 — 31,016 \n\nAs of March 31, 2025\n¥4,190,632 ¥250,012 ¥74,621 ¥573,325 ¥(68,154)¥5,020,436 \n\nJPY (millions)\n\nBondsLong-term loansShort-term loansLease liabilitiesDerivative assets used for hedge of debtsTotal\n\nAs of April 1, 2025\n¥4,190,632 ¥250,012 ¥74,621 ¥573,325 ¥(68,154)¥5,020,436 \n\nCash flows from financing activities\n\nNet increase (decrease) in short-term\nloans and commercial papers(270,000)— (71,780)— — (341,780)\n\nProceeds from long-term loans— 60,000 — — — 60,000 \n\nRepayments of long-term loans— (85,136)— — — (85,136)\n\nProceeds from bonds526,060 — — — — 526,060 \n\nRepayments of bonds(115,296)— — — — (115,296)\n\nRepayments of lease liabilities— — — (42,772)— (42,772)\n\nInterest paid— — — (24,366)— (24,366)\n\nNon-cash items\n\nForeign exchange movement320,067 104 (2,725)39,709 — 357,155 \n\nChange in fair value— — — — (86,862)(86,862)\n\nNew, amended and terminated leases— — — 24,259 — 24,259 \n\nOthers5,348 20 (90)24,366 — 29,644 \n\nAs of March 31, 2026\n¥4,656,812 ¥225,000 ¥26 ¥594,520 ¥(155,015)¥5,321,342 \n\nOthers includes an increase in debts due to application of amortized cost method.\n\nF-73\n\n27.    Share-based Payments\n\nTakeda maintains share-based compensation payment plans for the benefit of its directors and certain employees of the Company and its subsidiaries and affiliates worldwide. Takeda recorded total compensation expense related to its share-based payment plans of JPY 71,510 million, JPY 73,585 million, and JPY 73,300 million for the years ended March 31, 2024, 2025 and 2026, respectively, in its consolidated statements of profit or loss.\n\nEquity-Settled Plans\n\nStock Options\n\nTakeda previously provided a stock option plan under which it granted awards to members of Takeda's board of directors (the “Board”) and senior management through the year ended March 31, 2014. There were no stock options granted for the years ended March 31, 2025 and 2026 and all previously granted awards are fully vested. These awards generally vested three years after the grant date. The stock options are exercisable for 10 years after the grant date for options held by members of the Board and 20 years for options held by senior management. The individual must be either a Board member or an employee of the Company or the Company's subsidiaries to exercise the options, unless the individual retired due to the expiration of their term of office, mandatory retirement or other acceptable reasons.\n\nThere was no compensation expense recorded during the years ended March 31, 2024, 2025 and 2026 as all awards were fully vested.\n\nThe following table summarizes the stock option activity:\n\nFor the Year Ended March 31\n\n202420252026\n\nNumber of options\n\n(shares)\n\nWeighted average exercise price\n\n(JPY)\n\nNumber of options\n\n(shares)\n\nWeighted average exercise price\n\n(JPY)\n\nNumber of options\n\n(shares)\n\nWeighted average exercise price\n\n(JPY)\n\nAs of beginning of the year3,303,600 ¥4,111 3,180,900 ¥4,136 3,168,900 ¥4,138 \n\nExercised(122,700)3,464 (12,000)3,712 (279,500)3,840 \n\nAs of end of the year3,180,900 4,136 3,168,900 4,138 2,889,400 4,166 \n\nAll of the stock options were exercisable as of March 31, 2024, 2025 and 2026.\n\nThe weighted-average share price at the date of exercise was JPY 4,540, JPY 4,167 and JPY 5,247 during the years ended March 31, 2024, 2025 and 2026, respectively. The weighted-average exercise price and weighted-average remaining contractual life of the share options outstanding were JPY 4,136 and 8 years, JPY 4,138 and 7 years, and JPY 4,166 and 6 years, as of March 31, 2024, 2025 and 2026, respectively.\n\nStock Incentive Plans\n\nTakeda has the following 3 stock-based incentive compensation plans for its directors and eligible employees including members of senior management:\n\nBoard incentive plan (“BIP”) Trust -The BIP Trust is an incentive plan for members of the Board designed based on Restricted Stock Units and Performance Share Units, whereby Restricted Stock Unit awards and Performance Share Unit awards are granted to members of the Board. Each award point is settled in a single share of the Company's common stock. Under the BIP, Restricted Stock Unit awards are subject to certain service-based conditions, and vest ratably over three years or vest three years from the date of grant. Performance Share Unit awards are granted to internal directors and are subject to certain service-based conditions and also subject to the achievement of certain performance metrics that are intended to align with Takeda's strategic focus and long-term growth. Performance Share Unit awards vest three years from the date of grant. For purposes of the Performance Share Unit awards, the performance metrics may include top line revenues, cash flow, indicators on profit, R&D metrics and other performance factors over a three-year performance period. The settlement value of the awards is based on stock price and subject to, among other things, applicable tax withholding, foreign exchange rates (in countries other than Japan) and the value of company dividends during the vesting period. Takeda, through a wholly owned trust, buys shares of the Company's common stock in the market on the grant date, and uses these shares to settle the awards upon vesting. The number of shares the individual receives (either through physical settlement or cash) is based on the achievement of the performance criteria and vesting of the award. The trust settles the awards through the delivery of shares to individuals residing in Japan. For individuals residing outside of Japan, awards are settled through the delivery of American Depositary Shares (“ADSs”), which are converted from vested shares, or the trust sells the shares the individual is eligible to receive and pays cash to the individual in settlement of the award.\n\nEmployee Stock Ownership Plan (“ESOP”) Trust - The ESOP Trust is an employee incentive plan designed based on Restricted Stock Units and Performance Share Units, whereby Restricted Stock Unit awards and Performance Share Unit awards are granted to certain employees, including members of senior management of the Company. Each award point is settled in a single share of the Company's common stock. Restricted Stock Unit awards and Performance Share Unit awards are granted to certain members of senior management while Restricted Stock Unit awards are granted to the remainder of employees. Restricted Stock Unit awards are subject to certain service-based conditions and vest ratably over three years. Performance Share Unit awards are subject to certain service-based conditions and also subject to the achievement of certain performance\n\nF-74\n\nmetrics that are intended to align with Takeda's strategic focus and long-term growth. Performance Share Unit awards vest three years from the date of grant. For purposes of the Performance Share Unit awards, the performance metrics may include top line revenues, cash flow, indicators on profit, R&D metrics and other performance factors over a three-year performance period. The settlement value of the awards is based on stock price and subject to, among other things, applicable tax withholding and the value of company dividends during the vesting period. Takeda, through a wholly owned trust, buys shares of the Company's common stock in the market or issues shares the Company's common stock on the grant date and uses these shares to settle the awards upon vesting. The number of shares the individual receives is based on the achievement of the performance criteria and vesting of the award. The trust settles the awards through the delivery of shares to individuals residing in Japan. For individuals residing outside of Japan, the trust sells the shares the individual is eligible to receive and pays cash to the individual in settlement of the award.\n\nLong-Term Incentive Plan for Company Group Employees residing outside of Japan (“LTIP”) - The LTIP was approved by the Board on June 24, 2020 and is an incentive plan that provides for the grant of awards to eligible employees, including members of senior management of the Company and its subsidiaries and affiliates outside of Japan. The LTIP provides for the grant of Restricted Stock Units and Performance Stock Units, as well as other equity based awards. Grants under the LTIP may be settled in ADSs or cash, or a combination thereof.\n\nTakeda first granted awards under the LTIP on July 1, 2020 in the form of Restricted Stock Unit awards and Performance Stock Unit awards, and no other forms of awards have been granted under the LTIP to date. Restricted Stock Unit awards are subject to certain service-based conditions and vest ratably over three years. Performance Stock Unit awards are subject to certain service-based conditions and also subject to the achievement of certain performance metrics that are intended to align with Takeda's strategic focus and long-term growth. Performance Stock Unit awards vest three years from the date of grant. For purposes of the Performance Stock Unit awards, the performance metrics may include top line revenues, cash flow, indicators on profit, R&D metrics and other performance factors over a three-year performance period. The value of such awards when such awards are to be settled in ADSs is based on the fair market value of the shares of the Company's common stock converted into ADSs, subject to, among other things, applicable tax withholding, foreign exchange rates and the value of company dividends during the vesting period. Restricted Stock Unit awards and Performance Stock Unit awards granted under the LTIP are to be settled in ADSs to award recipients residing and employed in countries outside of Japan where settlement in ADSs is permitted by local law and regulation. In countries outside of Japan where such form of settlement is not permissible due to legal, regulatory and/or administrative reasons, Restricted Stock Unit awards and Performance Stock Unit awards are structured such that settlement is to be made in cash and accounted as a “Cash-Settled LTIP Award” (please refer to Cash-Settled LTIP Awards).\n\nThe total compensation expense recognized related to these plans was JPY 70,871 million, JPY 72,867 million and JPY 72,775 million during the years ended March 31, 2024, 2025 and 2026, respectively.\n\nThe weighted average fair value of the award points/units at the grant date is as follows (in JPY):\n\nFor the Year Ended March 31\n\n202420252026\n\nBIP:\n\nWeighted average fair value at grant date¥4,527 ¥4,192 ¥4,394 \n\nESOP:\n\nWeighted average fair value at grant date4,527 4,192 4,394 \n\nEquity-Settled LTIP:\n\nWeighted average fair value at grant date\n2,273\n\n(USD15.71 in contractual currency)\n\n2,092\n\n(USD13.00 in contractual currency)\n\n2,215\n\n(USD15.37 in contractual currency)\n\nThe grant date fair value for BIP and ESOP was calculated using the share price of the Company's common stock on the grant date while the grant date fair value for LTIP was calculated using the share price of ADS as it was determined to be approximately the same as the fair value of the awards. One ADS equals 0.5 of the Company's common stock.\n\nF-75\n\nThe following table summarizes the award activity related to the BIP (the number of award points) (1 award point represents 1 share of the Company's common stock), ESOP (the number of award points) (1 award point represents 1 share of the Company's common stock) and Equity-settled LTIP (the number of award units) (1 award unit represents 1 share of the ADS). One ADS equals 0.5 of the Company's common stock:\n\nFor the Year Ended March 31\n\n202420252026\n\nBIPESOPEquity-Settled LTIPBIPESOPEquity-Settled LTIPBIPESOPEquity-Settled LTIP\n\nAt beginning of the year1,311,989 773,844 59,752,598 1,199,972 746,762 65,410,484 1,070,188 665,377 70,266,342 \n\nGranted338,189 363,559 36,531,621 331,999 363,868 44,722,656 423,407 290,201 38,351,586 \n\nForfeited/expired before vesting— (39,545)(4,747,804)— (98,350)(10,023,316)— (57,786)(8,366,464)\n\nVested(450,206)(351,096)(25,916,216)(461,783)(346,903)(29,843,482)(540,079)(323,079)(31,949,014)\n\nTransfer to Cash-Settled LTIP— — (209,715)— — — — — — \n\nAt end of the year1,199,972 746,762 65,410,484 1,070,188 665,377 70,266,342 953,516 574,713 68,302,450 \n\nThe balance as of March 31, 2024, 2025 and 2026, each represents unvested awards. The weighted average remaining contractual life of the outstanding award points/units was one year for the BIP as of March 31, 2025 and 2026, one year for the ESOP as of March 31, 2025 and 2026, and one year for the Equity-Settled LTIP plans as of March 31, 2025 and 2026.\n\nCash-Settled Awards\n\nTakeda previously provided a phantom stock appreciation rights (“PSARs”) plan through the year ended March 31, 2014 for certain employees of subsidiaries of the Company. The value of PSAR is linked to the share price of the Company and is settled in cash. Moreover, where settlement of awards granted under the LTIP described under “—Equity-Settled Plans” above in ADSs or shares of common stock is not permissible due to legal, regulatory and/or administrative reasons, such awards are settled in cash. The total compensation expense recorded in association with these plans was JPY 639 million, JPY 717 million and JPY 525 million during the years ended March 31, 2024, 2025 and 2026, respectively. The total liability reflected in the consolidated statements of financial position as of March 31, 2024, 2025 and 2026 was JPY 1,018 million, JPY 642 million and JPY 662 million, respectively.\n\nPhantom stock appreciation rights (“PSARs”)\n\nThe PSARs vest one third each year over a three-year period from the end of the fiscal year during which the awards were granted and can be exercised for a period of ten years from the end of the fiscal year during which the awards were granted. The awards are settled through a cash payment to the holder based on the difference between the share price of the Company at the date of exercise, and the share price at the date of grant.\n\nThe following table summarizes the award activity related to the PSARs (the number of awards) (1 award represents 1 share of the Company's common stock) :\n\nFor the Year Ended March 31\n\n202420252026\n\nNumber of PSARsWeighted average exercise price\n(JPY)Number of PSARsWeighted average exercise price\n(JPY)Number of PSARsWeighted average exercise price\n(JPY)\n\nAs of beginning of the year217,530 ¥5,956 — ¥— — ¥— \n\nForfeited/expired after vesting(217,530)6,428 — — — — \n\nAs of end of the year— — — — — — \n\nAll PSARs were vested and expired as of March 31, 2024, 2025 and 2026.\n\nF-76\n\nCash-Settled LTIP Awards\n\nAs noted above, for purposes of restricted stock unit awards and performance stock units granted under the LTIP in countries where settlement in ADSs is not permissible due to legal, regulatory and/or administrative reasons, such grants are structured such that settlement is to be made in cash and accounted for as Cash-Settled LTIP Awards.\n\nThe following table summarizes the award activity related to the Cash-Settled LTIP Awards (the number of awards) (1 award represents 1 ADS):\n\nFor the Year Ended March 31\n\n202420252026\n\nAs of the beginning of the year367,642 395,762 371,668 \n\nGranted197,798 341,518 481,374 \n\nForfeited/expired before vesting(38,245)(53,520)(47,122)\n\nVested(341,148)(312,092)(457,680)\n\nTransfer from Equity-Settled LTIP209,715 — — \n\nAs of the end of the year395,762 371,668 348,240 \n\nThe balance as of March 31, 2024, 2025 and 2026, each represents unvested awards.\n\nF-77\n\n28.    Subsidiaries and Associates\n\nThe number of consolidated subsidiaries decreased by 4 in the year ended March 31, 2026, primarily due to liquidations and mergers to reorganize capital in subsidiaries. The number of associates accounted for using the equity method decreased by 5 primarily due to divestitures and liquidations.\n\nThe following is a listing of the Company’s consolidated subsidiaries (including partnerships): 154 subsidiaries as of March 31, 2026\n\nCompany nameCountry Ownership of Voting Rights (%)\n\nTakeda Argentina S.A.Argentina100.0%\n\nTakeda Austria GmbHAustria100.0%\n\nTakeda Manufacturing Austria AGAustria100.0%\n\nBaxalta Innovations GmbHAustria100.0%\n\nBaxalta Belgium Manufacturing S.A.Belgium100.0%\n\nTakeda Distribuidora Ltda.Brazil100.0%\n\nTakeda Pharma Ltda.Brazil100.0%\n\nTakeda Canada Inc.Canada100.0%\n\nTakeda (China) Holdings Co., Ltd.China100.0%\n\nTakeda (China) International Trading Co., Ltd.China100.0%\n\nTianjin Takeda Pharmaceuticals Co., Ltd.China100.0%\n\nTakeda APAC Biopharmaceutical Research and Development Co., Ltd.China100.0%\n\nTakeda France S.A.S.France100.0%\n\nTakeda GmbHGermany100.0%\n\nTakeda Ireland LimitedIreland100.0%\n\nShire Acquisitions Investments Ireland Designated Activity CompanyIreland100.0%\n\nShire Ireland Finance Trading LimitedIreland100.0%\n\nTakeda Italia S.p.A.Italy100.0%\n\nTakeda Pharmaceuticals Korea Co., Ltd.Korea100.0%\n\nTakeda Mexico S.A.de C.V.Mexico100.0%\n\nTakeda Nederland B.V.Netherlands100.0%\n\nTakeda Pharmaceuticals Limited Liability CompanyRussia100.0%\n\nTakeda Manufacturing Singapore Pte. Ltd.Singapore100.0%\n\nTakeda Farmaceutica Espana S.A.Spain100.0%\n\nTakeda Pharma ABSweden100.0%\n\nTakeda Pharmaceuticals International AGSwitzerland100.0%\n\nBaxalta Manufacturing S.à r.l.Switzerland100.0%\n\nTakeda Pharma AGSwitzerland100.0%\n\nTakeda UK LimitedUnited Kingdom100.0%\n\nTakeda Pharmaceuticals U.S.A., Inc.U.S.100.0%\n\nTakeda Pharmaceuticals America, Inc.U.S.100.0%\n\nTakeda Vaccines, Inc.U.S.100.0%\n\nTakeda Development Center Americas, Inc.U.S.100.0%\n\nBaxalta IncorporatedU.S.100.0%\n\nDyax Corp.U.S.100.0%\n\nTakeda Ventures, Inc.U.S.100.0%\n\nBaxalta US Inc.U.S.100.0%\n\nShire Human Genetic Therapies, Inc.U.S.100.0%\n\nF-78\n\nCompany nameCountry Ownership of Voting Rights (%)\n\nBioLife Plasma Services LPU.S.100.0%\n\nTakeda Manufacturing U.S.A., Inc.U.S.100.0%\n\nTakeda U.S. Financing, Inc.U.S.100.0%\n\nOther 113 subsidiaries\n\nAssociates accounted for using the equity method: 10 associates as of March 31, 2026.\n\n29.    Related Party Transactions\n\nCompensation for Key Management Personnel\n\nKey management personnel are defined as members of the Board and CFO. The compensation for key management personnel is as follows:\n\nJPY (millions)\nFor the Year Ended March 31\n\n202420252026\n\nBasic compensation and bonuses¥1,839 ¥1,879 ¥1,492 \n\nShare-based compensation (expensed amount)2,749 2,466 3,886 \n\nOther85 147 146 \n\nTotal¥4,673 ¥4,491 ¥5,524 \n\n30.    Business Combinations\n\nAcquisitions during the Years ended March 31, 2024, 2025, and 2026\n\nThere was no material business combination during the years ended March 31, 2024, 2025, and 2026.\n\nF-79\n\n31.    Commitments and Contingent Liabilities\n\nPurchase commitments\n\nThe amount of contractual commitments for the acquisition of property, plant and equipment was JPY 7,728 million as of March 31, 2026.\n\nMilestone Payments\n\nAs discussed in Note 13, Takeda has certain contractual agreements related to the acquisition of intangible assets that require it to make payments of up to JPY 1,333,609 million as of March 31, 2026. These commitments include development, regulatory approval and launch milestone payments in relation to R&D programs under development. The related commercial milestone payments were not included in the commitments given the payments were not deemed reasonably likely to occur.\n\nLitigation\n\nTakeda is involved in various legal and administrative proceedings. The most significant matters are described below.\n\nTakeda may become involved in significant legal proceedings for which it is not possible to make a reliable estimate of the expected financial effect, if any, which may result from ultimate resolution of the proceedings. In these cases, appropriate disclosures about such cases would be included in this note, but no provision would be made for the cases.\n\nWith respect to each of the legal proceedings described below, other than those for which a provision has been made, Takeda is unable to make a reliable estimate of the expected financial effect at this stage. This is due to a number of factors, including, but not limited to, the stage of proceedings, the entitlement of parties to appeal a decision, if any, and lack of clarity as to the merits of theories of liability, the merits of Takeda’s defenses, the amount and recoverability of damages and/or governing law. Takeda does not believe that information about the amount sought by the plaintiffs, if that is known, is, by itself, meaningful in every instance with respect to the outcome of those legal proceedings.\n\nLegal expenses incurred and charges related to legal claims are recorded in selling, general and administrative expenses. Provisions are recorded, after taking appropriate legal and other specialist advice, where an outflow of resources is considered probable and a reliable estimate can be made of the likely outcome of the dispute. The factors Takeda considers in developing a provision include the merits and jurisdiction of the litigation, the nature and the number of other similar current and past litigation, the nature of the product and the current assessment of the science subject to the litigation, and the likelihood of settlement and current state of settlement discussions, if any. As of March 31, 2025 and 2026, Takeda’s aggregate provisions for legal and other disputes were JPY 12,462 million and JPY 415,749 million, respectively. The ultimate liability for legal claims may vary from the amounts provided and is dependent upon the outcome of litigation proceedings, investigations and possible settlement negotiations. Unless otherwise stated below, Takeda is unable to predict the outcome or duration of these matters at this time.\n\nTakeda’s position could change over time, and, therefore, there can be no assurance that any losses that result from the outcome of any legal proceedings will not exceed, by a material amount, the amount of the provisions reported in these consolidated financial statements. Matters that were previously disclosed may no longer be reported because, as a result of rulings in the case, settlements, changes in our business or other developments, in our judgment, they are no longer material to our financial condition or operating results.\n\nProduct Liability and Related Claims\n\nPre-clinical and clinical trials are conducted during the development of potential products to determine the safety and efficacy of products for use by humans following approval by regulatory bodies. Notwithstanding these efforts, when drugs and vaccines are introduced into the marketplace, unanticipated safety issues may become, or be claimed by some to be, evident. Takeda is currently a defendant in a number of product liability lawsuits related to its products. For the product liability lawsuits and related claims, other than those for which a provision has been made, Takeda is unable to make a reliable estimate of the expected financial effect at this stage.\n\nTakeda’s principal pending legal and other proceedings are disclosed below. The outcomes of these proceedings are not always predictable and can be affected by various factors. For those legal and other proceedings for which it is considered at least reasonably possible that a loss has been incurred, Takeda discloses the possible loss or range of possible loss in excess of the recorded loss contingency provision, if any, where such excess is both material and estimable.\n\nACTOS Economic Loss Cases\n\nTakeda has been named in ACTOS-related lawsuits brought by plaintiffs who do not assert any claims for personal injuries. Instead plaintiffs claim they suffered an economic loss by paying for ACTOS prescriptions that allegedly would not have been written had Takeda provided additional information about the alleged risks of bladder cancer associated with ACTOS in its US product label. A putative class of third party payors and consumers brought suit against Takeda in the U.S. District Court for the Central District of California.\n\nF-80\n\nProton Pump Inhibitor (“PPI”) Product Liability Claims\n\nAs of March 31, 2024, more than 6,100 product liability lawsuits related to the use of PREVACID and DEXILANT had been filed against Takeda in U.S. federal and state courts. Most of these cases were pending in U.S. federal court and were consolidated for pre-trial proceedings in a multi-district litigation in federal court in New Jersey. The plaintiffs in these cases alleged that they developed kidney injuries or, in some cases, gastric cancer as a result of taking PREVACID and/or DEXILANT, and that Takeda failed to adequately warn them of these potential risks. Similar cases were filed against other manufacturers of drugs in the same PPI class as Takeda’s products, including AstraZeneca plc, Procter & Gamble Company and Pfizer Inc. Outside the U.S., one proposed class action is pending in Canada (Saskatchewan).\n\nIn April 2024, Takeda reached an agreement in principle to resolve the U.S. cases and established a provision for a non-material amount. In November 2024, the final written settlement agreement was executed with lead plaintiffs’ counsel for the same amount. The terms of the settlement are confidential. The settlement had no material impact on Takeda’s consolidated statements of profit or loss.\n\nIntellectual property\n\nIntellectual property claims include challenges to the validity and enforceability of Takeda’s patents on various products or processes as well as assertions of non-infringement of those patents. A loss in any of these cases could result in loss of patent protection for the product at issue. The consequences of any such loss could be a significant decrease in sales of that product and could materially affect future results of operations for Takeda.\n\nENTYVIO Patent Revocation Actions\n\nFrom February to April 2026, third parties brought patent revocation proceedings in the United Kingdom and the Netherlands against certain patents owned by Takeda relating to ENTYVIO, including patents covering aspects of intravenous (“IV”) and subcutaneous (“SC”) dosing and certain IV and SC formulations. These proceedings are ongoing and still at an early stage.\n\nOther\n\nIn addition to the individual case described above, there are no other patent litigations that have a material impact on Takeda’s consolidated financial statements as of and for the year ended March 31, 2026.\n\nSales, Marketing, and Regulation\n\nTakeda has other litigations related to its products and its activities, the most significant of which are describe below.\n\nACTOS Antitrust Litigation\n\nIn December 2013, the first of two antitrust class action lawsuits was filed against Takeda in the U.S. District Court for the Southern District of New York by a putative class of patients who were prescribed ACTOS. The second class action was filed against Takeda in the same court in April 2015 by a putative class of wholesalers that purchased ACTOS from Takeda. In both actions, plaintiffs allege, inter alia, that Takeda improperly characterized certain patents for ACTOS in the FDA Orange Book, which they claim imposed requirements on generic companies that filed Abbreviated New Drug Applications and, in turn, resulted in delayed market entry for generic forms of ACTOS.\n\nAMITIZA Antitrust Litigation\n\nSince 2021, several antitrust actions have been filed in the U.S. District Court for the District of Massachusetts against Takeda Pharmaceutical Company Limited, Takeda Pharmaceuticals U.S.A., Inc., and Takeda Pharmaceuticals America, Inc. (“Takeda”). The pending case consolidates actions filed by a putative class of wholesalers, a putative class of third‑party payors, and individual retailer plaintiffs. The plaintiffs collectively allege that a settlement that Takeda and Sucampo Pharmaceuticals, Inc. entered into in 2014 with Par Pharmaceutical, Inc. to resolve patent litigation claims related to Par’s generic formulation of AMITIZA (lubiprostone) was anticompetitive.\n\nOn May 18, 2026 (U.S. Eastern Time), a jury in the same court returned a verdict against Takeda in the AMITIZA antitrust litigation and awarded plaintiffs USD 884,943,990 in single damages. Under U.S. antitrust law, the damages awarded to the wholesaler class (USD 474,897,965 in single damages) and individual retailers (collectively USD 346,837,646 in single damages) will be automatically trebled upon entry of judgment, while the damages awarded to the third-party payor class remain subject to further proceedings prior to entry of judgment. As of March 31, 2026, Takeda had provisions for legal proceedings of JPY 403,510 million related to this matter.\n\nThe amount of any liability that may ultimately be imposed on Takeda has not yet been finalized. Takeda intends to pursue post-trial motions and an appeal and will seek a stay of execution of the judgment during the pendency of the appeal.\n\nSeparately, in January and February 2025, several additional complaints have been filed by individual health insurer plaintiffs in Massachusetts State Court.\n\nCOLCRYS Antitrust Litigation\n\nIn September 2021, an antitrust class action was filed against Takeda Pharmaceuticals U.S.A., Inc. (“Takeda”) in the U.S. District Court for the Eastern District of Pennsylvania. The plaintiffs, a putative class of wholesalers, allege that settlements that Takeda entered into in 2015 and 2016 to resolve patent litigation claims against several generic pharmaceutical manufacturers related to generic formulations of COLCRYS were\n\nF-81\n\nanticompetitive. In September 2023, Takeda reached an agreement in principle to resolve the antitrust matter for an amount that is immaterial, which was fully executed in December 2023. The settlement had no material impact on Takeda’s consolidated statements of profit or loss.\n\nIn November 2023, a subsequent antitrust class action challenging the same settlements was filed in the U.S. District Court for the Southern District of New York by plaintiffs seeking to represent a putative class of end payors.\n\nDEXILANT Antitrust Litigation\n\nIn March 2025, four individual retail pharmacies filed a civil action in the U.S. District Court for the Northern District of California against Takeda and Twi Pharmaceuticals, Inc. (“Twi”), a generic pharmaceutical manufacturer, alleging that the settlement agreement Takeda and Twi entered into in April 2015 to resolve patent litigation related to DEXILANT violated the U.S. antitrust laws. Subsequently, complaints were filed on behalf of classes of direct and indirect purchasers, as well as individual retail pharmacies, asserting substantially the same allegations.\n\nDepartment of Justice Civil Investigative Demands\n\nOn February 19, 2020, Takeda received a Civil Investigative Demand (“CID”) from the DOJ (through its office in Washington, DC). The CID sought information as part of an investigation of possible off-label promotion and violations of the Anti-Kickback Statute in connection with the promotion and sale of TRINTELLIX. Takeda has cooperated with the DOJ’s investigation.\n\nIn May 2026, Takeda finalized an agreement with DOJ to resolve the matter for USD 13.67 million. In entering into the settlement, Takeda has not admitted and expressly denies wrongdoing of any kind. The settlement has no material impact on Takeda’s consolidated statements of profit or loss.\n\n32.    Subsequent Events\n\nNot applicable.\n\nF-82"}