4502 · Takeda Pharmaceutical

Will it survive?

• Can it pay its interest? 0.1×
  Does not cover its interest
  Operating income ¥6.2B ÷ interest expense ¥123.8B
  What this means

  A full year of operating profit didn't cover the interest bill. This is the zombie zone: the business depends on refinancing, asset sales, or forbearance to service its debt.

• How heavy is the debt, net of cash? ¥4.08T · 656.2× operating profit
  Heavy net debt
  Cash ¥595.1B + ST investments ¥207.4B − debt ¥4.88T
  What this means

  Netting ¥802.5B of cash and short-term investments against ¥4.88T of debt leaves ¥4.08T owed, about 656.2× a year's operating profit (785.2× on the gross debt, before the cash). Net debt is the leverage figure that matters: the cash is already set against the debt. Strategic or illiquid investments aren't counted here.

• How long is cash tied up? —
  Not enough data
  What this means

  The filing data didn't include the inputs for this check.

Is it a good business?

• Return on invested capital 2%
  Below average through the cycle
  10-yr median, range 0%–8%; 0% latest = NOPAT ¥4.9B ÷ invested capital ¥11.72T
  Industry peers: median 21%
  What this means

  The rate the business earns on the money tied up in it, Buffett's north star, because over time a stock tracks the ROIC beneath it. Above ~15% sustained hints at a moat; a return below the cost of capital (~8%) erodes value as a business grows rather than building it — the test Buffett weighs most. The headline is the median of the last 10 years (it ran 0% most recently), so one peak or trough year doesn't set the verdict. Asset-light businesses (R&D expensed, little capital) read artificially high, pair this with Owner Earnings.

• Owner-earnings margin 19%
  High through the cycle
  9-yr median margin, range 12%–28%; latest ¥865.4B = operating cash ¥1.04T − maintenance capex ¥176.0B
  Industry peers: median 36%
  What this means

  What an owner could take out without starving the business: operating cash less the maintenance capital it must spend to hold its position — Buffett's owner earnings. That's 19% of revenue this year, a 19% median across 9 years.

• Are earnings backed by cash? ¥1.04T
  Loss, but cash-generative
  Net income (¥152.4B) · cash from operations ¥1.04T
  What this means

  The company reported a net loss, so a conversion ratio isn't meaningful. What matters then is whether operations still threw off cash, here, they did.

How is the cash used?

• Where do the earnings go? 42%
  Returns about half
  Dividends + buybacks ¥363.5B ÷ Owner Earnings ¥865.4B
  What this means

  Of ¥865.4B Owner Earnings, ¥363.5B (42%) went back to shareholders, ¥311.9B dividends, ¥51.6B buybacks. Returning most of it is the mark of a mature business with little left to reinvest at a high return; reinvesting most could mean a long runway, or empire-building. The split doesn't say which; the return earned on it (see ROIC) does.

• Investing or harvesting? 0.24×
  Harvesting
  Capex ¥176.0B ÷ depreciation ¥721.1B
  What this means

  Descriptive, not a grade. Above ~1× means investing faster than assets wear out (growth, or, sustained for years, today's earnings carrying less depreciation than tomorrow's will). Below means spending less than it's wearing out (efficiency, or a melting asset base). The ratio won't tell you which; the filings will.

Durability & moat, 2017–2026

Whether the record’s returns held, and what the capital reinvested earned.

• Profitable years 9 of 10
  What this means

  Lost money in 1 year(s), look at what happened there before trusting the average.

• Return on capital ≥ 15% 0 of 10 yrs
  What this means

  A moat shows up as a high return on invested capital that holds year after year, not one good vintage.

• Operating margin 10% → 4% (3-yr avg ends)
  What this means

  Through the cycle the operating margin slipped — about 10% early to 4% lately, median 7% — competition or costs are biting in.

• Reinvestment, incremental ROIC 0%
  What this means

  Reinvested capital came back at only a modest incremental return — near the cost of capital, where extra growth adds little per dollar. The record shows whether it is a soft stretch or a thinning moat.

• Owner earnings growth +15%/yr
  What this means

  Owner earnings grew about 15% a year over the record.

• Worst year 2026 · 0.1% op. margin
  What this means

  Stayed profitable even in its hardest year, the resilience that survives recessions.

• Dividend record rising
  What this means

  Paid and raised the dividend across the record, the continuity Graham prized.