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Japanese drugmaker Takeda to raise the bar on research projects

By Chang-Ran Kim and Ritsuko Shimizu

TOKYO (Reuters) - Japan's biggest drugmaker Takeda Pharmaceutical Co will become more selective in its choice of research and development projects, its newly appointed president said on Tuesday, as the company struggles with shrinking margins due to a dearth of new blockbuster products.

Christophe Weber, poached from GlaxoSmithKline, said Takeda was still reviewing which, if any, of its six major fields of therapy it would exit, but would only invest in areas where it would be the best.

"We have to be very stringent," Weber, who joined Takeda as chief operating officer in April and took the president's post in late June, told Reuters in an interview. "If we do research in oncology or in gastro-intestine diseases, are we good enough to be among the best?"

Confidence in Takeda's pipeline of new products was hit by the failure in December of a late-stage experimental diabetes drug that the company intended as a replacement for its global best-selling diabetes drug Actos.

Patent protection on Actos ended in 2012 and generic versions have since been eating into Takeda's sales and profit margins. Actos was also at the center of a U.S. lawsuit alleging Takeda had concealed cancer risks associated with it.

With the paucity of new drugs, Takeda's operating margin narrowed to 17.6 percent in 2011/12, then to 7.9 percent the following year. The margin remained low at 8.2 percent in 2013/14, when the company switched to IFRS standards, or 9.2 percent if calculated under the previous Japanese standards.

MORE EFFICIENT

The company last Friday forecast flat to slightly lower core earnings, its key measure of performance, for the year through March 2015.

Weber, one of only a handful of foreigners to run a blue-chip company in Japan, said he would announce any changes he intends to make at Takeda by year-end, adding he wanted to make the 233-year-old company more "efficient and agile".

Weber was appointed by Takeda CEO Yasuchika Hasegawa, who intends the Frenchman to succeed him next year, to make the company more global.

But just months into his tenure, and before Takeda's annual shareholders' meeting in late June, a group of more than 100 shareholders and former employees sent a letter to management questioning Weber's appointment, partly due to a belief that foreign executives may favor short-term goals over longer-term gains.

The group also expressed concern about Takeda's acquisitions overseas, which include U.S. biotech firm Millennium Pharmaceuticals in 2008 and Switzerland's Nycomed in 2011.

Characterizing the group's objections as a minority view, Weber said he felt no resistance to his appointment at Takeda.

"You need to be mindful of what you change and what you don't, and the speed at which you change and how you involve people," he said. "I'm not looking for a revolution. It's more like evolution."

(Editing by Miral Fahmy and David Holmes)

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