Takeda Pharmaceutical : 2023 Annual Integrated Report

2023 ANNUAL INTEGRATED REPORT

Fiscal Year ended March 31, 2023

2023 Annual Integrated Report

About Governance Patient People Planet Financials Global CSR Appendix

TA K E DA I S A G L O B A L

values-based, research and development (R&D)-driven biopharmaceutical company committed to achieving our corporate purpose: better health for people and a brighter future for the world. We strive to deliver truly transformative treatments, significantly increasing the value that we bring to society.

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CSR Appendix

2023 Annual Integrated Report

CEO LETTER

About Governance Patient People Planet Financials Global

D E A R S TA K E H O L D E R S ,

At Takeda, the patients we serve - and achieving outcomes for them and their health - have been at the heart of everything we do for more than 240 years. Today, with health care systems increasingly under strain as life expectancies rise, populations age and innovative treatment options expand, our patient-centered and outcomes-focused approach is more relevant than ever.

In our 2023 Annual Integrated Report, I'm pleased to share the progress we have made over the past year to deliver on our purpose of better health for people and a brighter future for the world. We are positioning ourselves for long-term sustainable growth, innovation and resilience while staying rooted in our core values of Integrity, Fairness, Honesty and Perseverance, brought to life through actions based on patient, trust, reputation and business, in that order.

Innovating with Patients in Mind

Public health care systems built on a fee- for-service model are facing significant financial and resource strain, and the restrictive drug pricing and reimbursement

policies adopted in some countries in an effort to alleviate the pressure, raise concerns about the impact on R&D investment and innovation.

I believe that health care systems need to urgently move toward value-based health care, an approach that pays for outcome and care quality and is set up around delivering results for patients. This is the true purpose of any health care system.

At the same time, we are realistic about the scale of the challenge and recognize that a successful transition to a value-based system in the public market is unlikely in the near-term and would not be sustainable without an accompanying increase in government funding.

That is why Takeda's global growth strategy is centered on the discovery and development of innovative, life- transforming medicines and vaccines that have the potential to be best-in-class or first-in-class. At the same time, we are building resilience against external risks and making bold investments in data, digital and technology (DD&T) to upskill our people and drive value creation.

Christophe Weber

President and CEO

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2023 Annual Integrated Report

About Governance Patient People Planet Financials Global CSR Appendix

Advancing Our Pipeline to Deliver Life- Transforming Treatments to Patients

Our innovative R&D strategy is delivering. In 2022, we achieved a significant milestone as our dengue vaccine, QDENGA®  (Dengue tetravalent vaccine [live, attenuated]), was approved for use in the European Union (EU). This followed a positive opinion from the European Medicines Agency's (EMA) Committee for Medicinal Products for Human Use (CHMP), recommending approval in the EU and in dengue-endemic countries participating in the parallel EU- Medicines-for-all(EU-M4all)1 procedure. QDENGA has now also been approved for use in Indonesia, Brazil, Argentina, the U.K. and Thailand, with broad labels, for use regardless of serostatus.

Other pipeline highlights include pediatric approval for hereditary angioedema (HAE) prophylaxis TAKHZYRO® (lanadelumab) in the U.S.; continued growth of gut-selective ENTYVIO® (vedolizumab); and approvals of EXKIVITY® (mobocertinib), for non-small cell lung cancer, and LIVTENCITYTM (maribavir), for post-transplant cytomegalovirus infection/disease, in key geographies.

Together, these achievements will enable us to serve new patient populations, help prevent serious illness and reduce the treatment burden for many patients.

Complementing our in-house R&D engine, we reinforced our long-term growth potential through business development to bring three highly innovative programs into our mid-to-late stage pipeline. We acquired,

from Nimbus Therapeutics, a potentially best-in-class oral, selective allosteric tyrosine kinase 2 (TKY2) inhibitor that has possible application across a broad range of diseases, including psoriasis, psoriatic arthritis, inflammatory bowel disease (IBD) and systemic lupus erythematosus. This TYK2 inhibitor - now named TAK-279 - has the potential to offer the convenience of an oral therapy while addressing unmet medical needs.

We also signed an exclusive licensing agreement to further develop and commercialize fruquintinib, a potential new treatment for refractory metastatic colorectal cancer, expanding our oncology portfolio. And we signed a licensing agreement to develop a first-in-class celiac disease therapy with TAK-227.

Recognizing the Power of Our People

Ultimately, it is our people who drive our success. I continue to be inspired by our approximately 50,000 Takeda employees who live our values every day. Results from our annual global Employee Experience Survey confirm that our employees overwhelmingly understand how their work impacts patients and that they are able to make decisions guided by our values.

We are building an exceptional people experience that promotes well-being and performance, embraces flexibility and emphasizes the value of regular face-to- face interactions. We believe that executing this transformation well could be a competitive advantage.

I am proud that our people policies and practices have been recognized by the Top Employers Institute, which named Takeda as a Global Top Employer for the sixth consecutive year, one of only 15 companies to achieve this recognition.

A Steadfast Focus on the Future of Our Planet

Taking care of patients goes beyond developing life-transforming treatments. It's also about being responsible and ethical while protecting our planet. We remain focused on achieving net-zero2 by 2035 for our own value chain and by 2040 across our entire value chain, including our suppliers and customers, in accordance with the Science Based Targets initiative's (SBTi's) Corporate Net-Zero Standard. Our initiatives include conserving natural resources and designing our products with sustainability principles in mind.

Better Health, Brighter Future

This is a very exciting time for Takeda. The continued strengthening of our pipeline is a direct reflection of our financial discipline and success in deleveraging, driven by our strong free cash flow.

In fiscal year 2022, we delivered core revenue3 growth at constant exchange rate (CER) of +3.5%, driven by sales of our Growth & Launch Products.4 On a reported basis, revenue was 4,027.5 billion yen (USD

30.3 billion), with a year-over-year increase of +12.8%. And we delivered or exceeded our management guidance for core revenue, core operating profit and core EPS growth at CER.

Takeda delivered core operating profit growth of +9.1% at CER and a robust margin of 29.5%. This strong performance was driven by a combination of momentum in our Growth & Launch Products, solid commercial execution across the portfolio and disciplined cost control.

We also continued to deliver important cash flow (446.2 billion yen free cash flow in FY2022), allowing us to invest in strategic business development activities and returning value to shareholders, while paying down debt. Our success in rapid deleveraging resulting in net debt to adjusted EBITDA of 2.6x at the end of March 2023. Excluding the upfront cash payment for TAK-279, this ratio would have been 2.3x. We have updated our capital allocation policy as a reflection of our deleveraging progress and our new phase of investment for growth and shareholder returns, and in FY2023 we intend to raise the dividend to underscore confidence in our future growth.

Looking ahead, I'm confident that we have the right strategy, values and people capability to deliver our vision of providing life-transforming treatments to patients and our purpose of better health for people and a brighter future for the world.

Christophe Weber

President and CEO

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1 The European Medicines Agency. Medicines for use outside the EU -EU-M4all. July 2020. Retrieved June 2023.

1. Takeda defines carbon neutrality and net-zero emissions in accordance with The Greenhouse Gas Protocol and the SBTi guidelines. SBTi's Corporate Net-Zero Standard requires companies to reduce GHG emissions by more than 90% and use permanent carbon removal and storage technologies to counterbalance the remaining <10% of residual GHG emissions that cannot otherwise be eliminated.
2. Core revenue, core operating profiit, core operating profiit margin, core EPS, CER % Change, net debt, adjusted EBITDA, and free cash flow are non-IFRS measures, i.e., measures not calculated and presented in accordance with IFRS. See the fiinancial appendix at the end of Takeda's FY2022 investor presentation (available at takeda.com/investors/financial-results) for further information about Takeda's Non-IFRS Measures and reconciliations to the most directly comparable measures calculated and presented in accordance with IFRS.
3. Please refer to page 49for definition of Growth and Launch Products.

About Governance Patient People Planet Financials Global CSR Appendix

2023 Annual Integrated Report

BETTER HEALTH FOR PEOPLE, BRIGHTER FUTURE FOR THE WORLD

A M E S S A G E F R O M

Takako Ohyabu

Chief Global Corporate Affairs

and Sustainability Officer

W H I L E M U C H H A S changed since Takeda was established in 1781, our founding philosophy has remained constant: to serve patients with integrity in a way that also benefits society. By doing so, Takeda has expanded its business to become the global values-based, R&D- driven biopharmaceutical company it is today. We are guided by our values, which incorporate Integrity, Fairness, Honesty and Perseverance, with Integrity at the core. Our unwavering values are embedded in Takeda's global growth strategy and drive our business decisions. We aim to make decisions that put the focus first on patients, trust and reputation, with the goal of building a sustainable and high- performing business in the long term.

A little more than one year ago, I embarked on the journey to operationalize sustainability as an integral part of Takeda's way of doing business. In this time, I've met and listened to many internal and external stakeholders. As I reflect on these conversations, I realize how much more we must accomplish to truly fulfill our purpose. Yet these conversations also instilled in me great confidence in the future for three reasons.

First, creating a positive impact through our corporate values is in our heritage. This is a unique strength of Takeda. Second, our employees are giving life to these values. Each and every colleague I work with,

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