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Thank you very much for waiting and participating to our 2Q announcement despite your busy schedule. [Operator Instructions]
Let me introduce today's participants from Takeda's side, President and CEO, Christophe Weber; CFO, Costa Saroukos; CMSO, Andy Plump; JPBU President, Masato Iwasaki. First, we will deliver the presentation and then receive your question after we complete all of the presentation. First, we will have the presentation from Christophe. Now Christophe, please?
[Foreign Language] Good afternoon, and thank you very much for joining us today. I know that you have a very busy day with many company presenting their result.
So what we would like to do today is, first, share our first semester results with you, and then we will also provide an update about the Shire acquisition. So we have a tight schedule. We'll try to be swift but clear so that we have enough time for questions. So let's start with our first semester Q2 results. We are overall having a strong -- what we believe are strong results both on the revenue side, with the growth of 4.2% if you look at our underlying growth; and growth -- profit growth -- a core earning growth of 31.8%; core EPS growth of 32.7%. And with a margin improvement in H1 of 510 basis points, combined -- which is a combination of revenue growth, good margin growth as well because product growing have higher margin than the average of the company, as well as very strong OpEx management as well, the 2 combined, we are able to have this margin growth.
The operating profit, as you know, is declining because we had a significant divestiture last year. But overall, we are able to raise our guidance and the outlook for the year because we are having this significant business momentum. We are also having VELCADE upside. We have not seen a second generic entry yet, so we are assuming now a second generic entry but later in 2019.
And so overall, very good business momentum, we are very pleased with that, good OpEx management, and this is why we are able to raise the full year outlook. So if you look at more details, every region is growing. We have some key products like ENTYVIO with very strong momentum. We have made some -- a few divestiture of noncore assets in the first trimester, Multilab in Brazil and Techpool in China.
On the pipeline side, I will not dwell too much on the pipeline because we have done an R&D Day very recently. But we are very satisfied about the ALUNBRIG data readout, ADCETRIS ECHELON-2 readout as well as our pipeline progression. Again, I think I will refer to our R&D Day that we did very recently. On the profitability, our Global OpEx Initiative is in full motion, and it's really delivering very strong management -- OpEx management. And in fact, in the first semester, our OpEx -- overall OpEx declined by 2.4%, so you can really see the leverage on the P&L. And this is also why we are raising the outlook of the year. If you look at the regions -- region growth. It's -- all 4 regions, Japan, U.S., EUCAN, Emerging Markets, are growing. The Emerging Market -- the like-for-like growth in emerging market is actually closer to 10%. We had to terminate some contracts -- significant contracts with relatively low margin. But had to terminate this contract in Russia. This is a bit explanation behind the 2.4%, but we are not concerned by that. In fact, we are seeing good rebounds in a country like China, for example. The Growth Drivers are really behind our growth. They are growing at close to 10%, and also very specifically GI because GI is a massive part of our Growth Drivers. And they represent today about 63% of overall Takeda revenue. I will not go into all the product detail here, but I will outline ENTYVIO, for example, which is now a very substantial product for Takeda, still growing 33% in H1. So it is -- it has a significant, of course, impact on the overall growth outlook of the company. But it's not only ENTYVIO, all these products -- and many of them are global, especially in Oncology, are really contributing to the overall top line growth of the company. A quick discussion about ALUNBRIG because we made the ALTA-1 first-line data. We communicated about this data. And we really believe that it has the potential to be best in class. Still early days, but when -- whether you look at the data in second-line post-crizotinib or whether you look at the frontline data, there are many signs, whether it is a PFS, which is really impressive in second line, whether there is the response curve in first line, there are a lot of data which, in our mind, are potentially positioning and will bring us best-in-class alkalimeter. So we are very overall satisfied with this data. Of course, we need more data for the future to confirm that, but this is for -- in our mind, it's really -- the data we are fully in line with our expectation as a potential, promising, best-in-class product in the ALK class. We'll be able to answer more questions about the R&D milestones and pipeline. Perhaps I will just outline here Pevonedistat because we have now confirmation that the Phase II trial is positive. If the readout is positive, could be a trial which would grant us approval. So I think it is potentially fast-tracking Pevonedistat for the future. So again, Costa will develop more into details. But overall, very -- we are very satisfied with the dynamic of the business in H1.
And now I will let Costa develop more this first semester result. Thank you very much.
Good afternoon, everyone. It's a pleasure to be here today to give you more details on our first half financials and full year guidance. As Christophe highlighted on his opening slide, we are pleased to report that Takeda's strong underlying performance has continued across the first half of the year, driven by strong business momentum and strict OpEx discipline. But first, some comments on the reported numbers, which were impacted by divestitures and Shire-related costs. Reported revenue was basically flat year-on-year. Although our Growth Drivers remained strong, there was a negative 1 percentage point on foreign exchange and a minus 3.2 percentage points from divestitures. The main foreign exchange items were the appreciation of the yen versus the U.S. dollar and the depreciation of currencies in Brazil and Russia. Divestitures include the sale of additional products to the Teva JV in 2017 and Multilab and Techpool in fiscal year 2018.
Reported operating profit declined by minus 26.6%. This was impacted by 2 large onetime gains booked in fiscal year 2017: firstly, the sale of Wako shares for JPY 106.3 billion; and secondly, the sale of additional long-listed products to the Teva JV for JPY 16.8 billion. Furthermore, in fiscal year 2018, we booked onetime expenses related to the proposed acquisition of Shire.
Excluding these major onetime items, operating profit grew significantly by 64.5%. Reported EPS declined minus 26.9%, with lower financial income and higher financial expenses offset by a lower tax rate. I'll explain more in the next slide.
Underlying performance continues to be very impressive. Underlying revenue was up 4.2%, led by our Growth Drivers growing at 9.8%. Underlying core earnings showed robust growth of 31.8%, with excellent margin improvement of 510 basis points, of which 2/3 was driven by OpEx improvements. And underlying core EPS for the first half was up 32.7%. Operating free cash flow decreased minus 29.7% due to the cash impact of products sold to the Teva JV in fiscal year 2017. Slide 11 shows the first half reported profit and loss statement. Revenue for the first half of the year was JPY 880.6 billion, down JPY 0.8 billion or minus 0.1% versus prior year. As I mentioned on the previous slide, this includes a 1 percentage point negative foreign exchange impact and a negative 3.2 percentage points impact from divestitures. We are very pleased to report double-digit core earnings growth, increasing 13.3% to reach JPY 212 billion. As a reminder, this still includes the negative impact of divestitures and foreign exchange, which we adjust to reach the underlying core earnings growth rate of 31.8%.
Operating profit was JPY 172 billion, a decline of 26.6% versus the prior year. Again, the biggest drivers of the decline were the large onetime items we booked in quarter 1 fiscal year 2017 related to the sale of Wako shares and the sale of additional products to the Teva JV. Excluding these and the Shire-related costs, operating profit grew by significant 64.5%.
Furthermore, there were other significant items with an impact on operating profit growth in fiscal year 2018, which include amortization. This expense was lower by JPY 18.5 billion, mainly due to the end of the VELCADE amortization. Impairment was negative by JPY 9.9 billion, almost entirely due to the Colcrys impairment reversal booked as profit in fiscal year 2017. We have not booked any significant impairments in fiscal year 2018.
Other operating income declined by [ JPY 104.6 billion ], almost entirely due to the sale of the Wako shares in 2017. While we did book a gain of JPY 18.4 billion in quarter 2 this year from the divestiture of Techpool, this was somewhat offset by JPY 10.4 billion lower gains on the sale of real estate.
Other operating expenses was favorable by JPY 15.9 billion. This is mainly due to prelaunch inventory which was recognized as expenses in fiscal year 2017 and then reversed as a gain in fiscal year 2018 as a result of FDA approval of a manufacturing plant in quarter 1. On this slide, we also called out the Shire-related costs in the first half. There were JPY 11.1 billion of Shire-related costs impacting operating profit. Of this, JPY 7.9 billion is within G&A, including adviser fees and legal fees. And JPY 3.2 billion is in other operating expenses related to integration planning.
Net profit was JPY 126.7 billion, a year-on-year decline of minus 26.7%. In addition to the items explained above, this was also impacted by lower financial income due to the recognition of a JPY 9.9 billion gain on sale of marketable securities in fiscal year 2017. Although we also received JPY 38.2 billion cash for securities sold in 2018 fiscal year, we can no longer recognize the gain on the P&L under the new IFRS 9 accounting standards. There was also a net financial expense of JPY 8.8 billion related to the Shire transaction, including the fee for the bridge loan. These items are offset by a favorable tax rate of 21.3%, an improvement of 4.6% over prior year. And this is due to favorable statutory earnings and partial release of an uncertain tax provision. As explained, the impact of Shire-related costs on operating profit was JPY 11.1 billion, and financial expenses was JPY 8.8 billion, for a total profit before tax impact of JPY 19.8 billion. After tax, the impact on the first half net profit was JPY 16.5 billion. In EPS terms, our first half results was JPY 162, a year-on-year decline of 26.9%. However, again, as you exclude the onetime gains on Wako and the Teva JV and the first half of Shire expenses, EPS growth would have been 64.2%. Slide 12 shows our underlying P&L, which truly reflects our strong business momentum and strict OpEx discipline. Underlying revenue growth was a solid 4.2%, driven by our Growth Drivers such as NINLARO, ENTYVIO and the ARIAD-acquired products, Iclusig and ALUNBRIG.
Gross profit increased by 6.8%, outpacing revenue, resulting in an underlying gross profit margin of 73.6%. This is an improvement of 190 basis points over the prior year, driven by growth of higher-margin products such as ENTYVIO and NINLARO. Our gross margin also benefited from the conclusion of a distribution deal for lower-margin consumer health care products in Japan.
OpEx expenses declined by 2.4%, resulting in a significant margin improvement of 330 basis points. Since I became CFO in April of this year, I've emphasized my commitment to delivering on margin improvement. We have seamlessly integrated the Global OpEx Initiative in the way we work, such as KPIs, incentives, budgets and systems, and our actions are delivering tangible results. Underlying core earnings growth was 31.8% increase. The underlying core earnings margin improved by 510 basis points, up to 24.5% of revenue, which is much closer to the global P set. There are some phasing benefits contributing here, but as an underlying trend, we are very positive about the momentum with which we are boosting profitability. Again, I would like to emphasize that 2/3 of this margin growth is coming from OpEx improvement, which is a testament to our commitment to OpEx discipline. Underlying core EPS for the first half of 214 -- was JPY 214, up 32.7%. Our underlying tax rate was 22.1%, 1 percentage point unfavorable versus prior year related to lower R&D tax credits in Japan. As a reminder, our underlying P&L excludes any Shire-related costs. Slide 13 shows our operating free cash flow, which declined minus 29.7% or JPY 25.1 billion. The largest item impacting this was the sale of additional products to the Teva JV of last year. This represented a JPY 28.5 billion benefit in fiscal year 2017. Furthermore, we paid JPY 8.8 billion tax related to this transaction in this fiscal year 2018 for a total net negative impact of JPY 37.3 billion. Outside of this operating free cash flow statement, we had some other significant cash income. Firstly, we continued to dispose of real estate and marketable securities. And in the first half, we generated an additional JPY 44.2 billion. In addition, we received JPY 27.2 billion cash from the sale of noncore businesses, Techpool and Multilab.
Our net debt-to-EBITDA ratio is now 1.7x, improved from 1.8x at the end of the previous fiscal year. The ratio was 2.7x at the end of fiscal year '16, shortly after we closed the ARIAD deal, which means that we have deleveraged by 1 full turn in 18 months. On Slide 14, I would like to give a brief update on the progress of the Global OpEx Initiative, our company-wide program to address profitability. This program is helping to drive margin improvements, with first half OpEx declining by 2.4% and upper -- and OpEx contributing 2/3 of the 510 basis point improvement in underlying core earnings margin. The Global OpEx Initiative is now fully integrated into how we work. This means that it is embedded in our budgets and systems, and is reflected in the KPIs and incentives of our management.
As a result, we are seeing a true shift in cost consciousness in the organization, which is driving us to exceed our Global OpEx cost program target by 6.7% in the first half of this year. In particular, we have seen tangible improvements in spending versus plan in the areas of contractors, consultants, meetings and events as well as travel. Through our internal communications, we have been highlighting and sharing examples of best practices, as reflected in our results and guidance. Slide 15. Our upgraded reported forecast for the full fiscal year 2018, which we are upgrading based on VELCADE upside, Growth Driver momentum and OpEx discipline. I want to emphasize that this excludes the full year impact related to the proposed acquisition of Shire, including the expenses related incurred in the first half. On the other hand, it also does not include possible future earnings from Shire if the deal were to occur within the fiscal year, therefore, it is a strictly like-for-like comparison.
Revenue is still expected to decline for the full year due to the impact of divestitures and foreign exchange rates, but the rate of decline improves in our revised forecast to minus 1.2%. Operating profit is now expected to grow year-on-year by 15.8%, which is an impressive turnaround versus the previous forecast of minus 16.9% decline. In addition to Growth Driver momentum, VELCADE upside and OpEx, this also benefits from the newly incorporated gain from the sale of Techpool and higher value on sale of real estate and lower restructuring expenses. Our EPS forecast has also changed from a negative outlook to positive, and we now expect year-on-year growth of 9.8%. We also remain committed to the annual dividend per share of JPY 180.
With regards to Shire-related costs, as explained earlier, we booked first half expenses of JPY 16.5 billion after tax. For the full year, we estimate a portion of the Shire-related expenses to be incurred by Takeda to be between JPY 40 billion and JPY 60 billion. Please note that this does not include integration costs, debt interest and other financial expenses as the magnitude of the fiscal year 2018 impact from these items will be dependent on the timing of deal closing. Our full year forecast that does include the full impact of Shire will be announced once a reasonable assumption can be made. Slide 16 shows details on how our revised forecast for the full year compares to our actual fiscal year 2017 results. As you can see in the box on the right, both revenue and core earnings are negatively impacted by foreign exchange rates. Divestitures also have a negative impact, including the fiscal year 2017 sale of products to the Teva JV and the fiscal year 2018 divestiture of Techpool and Multilab.
As I explained back in May, our outlook for other income is impacted by the large gain we booked in fiscal year 2017 related to the sale of Wako shares, which will not be fully offset by the higher outlook for sale of real estate in the fiscal year 2018.
On the other hand, other expenses will also be lower this year due in part to a onetime currency translation adjustment expense that we booked in fiscal year 2017 as well as lower restructuring costs this year.
On the next slide, I will give some more details into what has changed between our May forecast and our revised October forecast, so please refer to Slide 17. Here, we show a comparison of the revised forecast as of October 31 versus the previous forecast announced on May 14 and have noted on the right-hand side the main reasons for the upgrade. Again, please bear in mind that this excludes all Shire-related costs.
So revenue is revised upwards by JPY 13 billion or 0.7%. This includes an additional of JPY 35.5 billion of VELCADE revenue as well as continued momentum from our Growth Drivers. This will be partially offset by loss of revenue due to the divestment of Techpool, which represents JPY 15.8 billion, and negative impact of foreign exchange, mainly due to currency depreciation in Emerging Markets, representing JPY 13.5 billion negative.
Core earnings improvement of JPY 20.5 billion or 6.6% reflects a VELCADE upside, Growth Driver momentum and OpEx discipline. However, we have increased our assumption for R&D expenses by JPY 9 billion and also expect a negative impact from foreign exchange of JPY 4.5 billion. Our forecast for operating profit has a large upward revision of JPY 79 billion or 39.3%. This is driven by high expected value from real estate disposals of JPY 24.5 billion. It also includes the gain on the sale of Techpool of JPY 18.4 billion, which we booked in quarter 2. And we also assume lower restructuring costs by JPY 12.5 billion.
Our EPS outlook now assumes a more favorable tax rate, improving from approximately 24% to approximately 22% due to a favorable earnings mix and partial release of an uncertain tax provision. Slide 18 shows our full year underlying guidance, which is also being revised upwards. In the previous guidance of May 14, we projected underlying revenue growth of low single digit, and this remains unchanged. However, we are upgrading our guidance for underlying core earnings from high single digit to high teen and our guidance for underlying EPS from low teens to mid-20s. I'm also pleased to upgrade the underlying core earnings margin improvement guidance, which we previously stated would be at the low end of the 100 to 200 basis points. We now expect margin growth to be at the higher end of that range, closer to 200 basis points. As with the reported forecast, the upward revision is driven by VELCADE, Growth Driver momentum and OpEx discipline. Regarding VELCADE, I would like to explain here that our revised guidance assumes one additional therapeutically nonequivalent competitor to VELCADE with intravenous and subcutaneous administration launching in the U.S. in March 2019. This provides revenue upside of JPY 35.5 billion versus prior guidance. And again, as with our reported forecast, the underlying guidance does not include any Shire-related costs in order to achieve a like-for-like comparison. So to summarize. We are extremely pleased with the robust first half performance and the progress that we have made against our key priorities to grow the portfolio, strengthen the pipeline and boost profitability. Our underlying growth continues to be very strong, with business momentum and strict OpEx discipline resulting in an underlying core earnings margin improvement of 510 basis points.
Our reported results reflect the large impact from divestitures, most notably Wako and Teva JV products in 2017; and also the booking of onetime costs related to the Shire transaction in 2018. Excluding these major onetime items, our operating profit would have been up by an impressive 64.5%.
When we look out on the full year, we are confident to raise both our reported forecast and underlying guidance due to the VELCADE upside, our growth momentum and OpEx discipline. As noted throughout, this revised guidance does not include the Shire-related costs.
And before I hand it back to Christophe for an update on the proposed acquisition of Shire, I'd like to close with reemphasizing on my key financial commitments. So on Slide 20, I want to demonstrate how our strong financial discipline and solid execution is laying the foundation for the Shire acquisition and integration.
Firstly, I'm committed to continue to boost profitability and deliver solid fundamentals in the Takeda stand-alone business. This includes executing and improving the Global OpEx Initiative and successfully delivering 100 to 200 basis points a year of underlying core earnings margin improvement.
Second, I would like to stress my commitment to maintaining investment-grade credit rating. This means that when we do take on debt, we will focus on quick deleveraging through cash generation of the business but also through disposal of noncore assets. I think that the speed at which we have delevered since the ARIAD acquisition is a strong testament to this commitment. Already this year, we have generated over JPY 70 billion from disposal of noncore assets, such as real estate, securities and noncore businesses. And we'll continue to pursue these opportunities where it makes strategic and financial sense.
Finally, the dividend remains a very important priority to us, and we intend to maintain a well-established dividend policy with JPY 180 per share annually. Thank you for your attention, and I'd like to hand it back to Christophe.
Thank you very much. As you can see, we are contemplating this acquisition of Shire on the basis of a strong business momentum. And this is the first thing I would like to say, and we have always repeated that, this is Shire as -- we see Shire as an opportunity to accelerate our transformation to create a values-based, R&D-driven, global biopharmaceutical leaders. So it's not that our strategy is not working, it's that we have this opportunity -- this unique opportunity, we believe, to really accelerate our transformation to deliver our vision.
It will be -- so in the next 25 minutes, 30 minutes or so, I'll reupdate you about where we are with Shire. As you know, we have set the record date, which means that we have until January 18 to organize the shareholder meeting. So we have between now and January 18 to organize a shareholder meeting. We have not defined the date yet, so stay with us. But we feel that it's a great opportunity today to update you about the Shire acquisition.
So we want -- we had this opportunity to create this leader headquarter in Japan. There is no debate about it, you are in the global headquarter today. This opportunity is to create an R&D-driven company with the scale, with the strength to deliver new, more life-changing innovative medicine to patients. That's really our goal, our intent, and that's why we are contemplating this acquisition. This acquisition will not change our vision. Our vision is to deliver to all patients in the world innovative medicine. And it requires a certain set of skills but also scale. And this is, of course, what we are looking for with this acquisition: skill, know-how, but also scale, scale of investment in R&D. But we feel that our vision is the correct vision to be successful in the future. So first, what do we mean by value-driven? And we think that's very important. And these are, we believe, a key foundation of Takeda and the real strength of the company. And we don't want these values to be damaged or changed with the Shire acquisition. In fact, we would like all Shire employees to understand these values, but more than to understand, to live these values. And also like us, feel that they are very appealing for a company in health care delivering medicines. And these values have been shaped with the history of the company since its creation in 1781. So when we make difficult decisions at Takeda, we use these values as a compass. We ask ourself, is it the right thing for the patient? We ask ourself, does it reinforce first with society? We ask ourself, does it reinforce the reputation of the company? And then we ask ourself, is it developing our business? In that order. And very often, we are dealing with complex situations where, sometimes, there is a tension between business and doing the right thing. And this is really helping us and all employees in Takeda to do the right thing. And this is, we think, very important for our future. And these are the values we -- there is -- we will not compromise. And this is really the Takeda values. So the new Takeda, after the integration of Shire, will have exactly these values. And we are planning an integration process, where all employees, all leader of this new Takeda, will really understand and live these values on a daily basis. We think it's very important. That's what we call values-driven company. R&D-driven. R&D-driven means that will -- our core, our long-term success resides on our ability to deliver new innovative medicines. We have -- as you know, we have just made a significant R&D transformation. We have redesigned our R&D engine, which is based on therapy area focus, which is based on external partnership. It has been a huge disruption, but we are starting to see the benefits at Takeda.
We don't want to reinvent a new engine with the Shire acquisition. We will complement, we will, if you like, grow our engine with Shire, but the engine design will remain the same. We don't want to do a second disruption after the first one, which is -- which happened not a long time ago. So we see actually integration of Shire as not very disruptive to R&D. We will maintain our research center which are dedicated to therapy area. But what we will do in the future is that we will continue to develop our pipeline. And you have seen this is the pipeline that we have shared during the R&D Day. You have seen that we believe that there is good progress; still early days, but good progress. I like -- personally, I like very much the fact, for example, that 45% of our pipeline is partnered. What does it mean? It means that there are many molecules here that we will never be able to develop internally because we were able -- it's because we are able to partner often in the early stage, so we co-create the value, but it's because we are able to partner that we are able to progress this pipeline. And we have seen good progression. In the first trimester, as I said earlier, we had 7 molecule entering into Phase I. So it's still early days, but there are good signs. So we believe that we have an R&D engine which is promising for the future. We don't want to disrupt that.
So what -- how will it look like with Shire? This is a starting point with Takeda, so we focus on 3 therapy areas plus vaccines. With Shire, we will focus on 4 plus vaccines and plasma-derived therapies. So we'll add rare disease as a therapy area. We'll have our own research center on rare disease, but we will also partner. And actually, rare disease is, we believe, a very promising area. There are a lot of scientific innovation going on, gene therapy being one of them. So we are really quite attracted to add 1 therapy area to the 3 that we have selected.
Plasma-derived therapies is a different type of R&D. It's very much about life cycle, making sure that the products that are coming out of the plasma fractionation are upgraded, whether it is a formulation, an indication or different products. So it's really looking at the optimization of your plasma fractionation. And this is something that we will specifically focus on in the future. But as you can see, it's not a significant disruption. Organizationally wide, it will not be a significant disruption neither. It will allow us to increase our R&D budget to at least JPY 400 billion per year, with actually a very lean infrastructure as well, which means that the majority of this budget will be dedicated to pipeline development, to external spend. And so we think that we will have a very competitive R&D engine for the future. And in the midterm, of course, there is good complementarity of pipeline. You have seen that. I will not spend much more time on that. But we are looking forward to also developing the assets that are coming from the pipeline of Shire. And some are complementary to our GI, for example, franchise. And of course, you have the rare disease assets which are there.
But I think the key message, in our mind, is that this is not -- it will not create a major disruption in R&D. The -- one of the issue of many M&As in the pharmaceutical industry is that it takes -- it's so difficult to combine the 2 R&D organization, that you lose years of productivity of R&D. We don't think this is the case with Shire. For example, Shire do not have a research center -- their own research center, so we don't have to close a research center. We don't have to merge. We just need to focus on rare disease on top of GI, Oncology and Neuroscience and also make sure that we optimize this plasma-derived therapy business, which is substantial and will be substantial in the future.
So we talked about the strategic fit, and this is something that we are also looking forward to. Today, if you look at the 3 therapy areas that we are focusing on at Takeda, they represent 55% of our total sales, which means that, of course, 45% remaining are other products, mainly often very local products, sometimes regional products. You have some example on the right column. With Shire, we will, of course, broaden our focus. But 75% of our global sales will come from 5 business drivers: oncology; GI; neuroscience; rare disease; and plasma-derived therapies. So in fact, it will be a company much more focused than Takeda is today, with some really key global brands in the field of GI, oncology, neuroscience, rare disease and plasma-derived therapies. And on the -- for the remaining 25%, we will -- some of these assets are very strong. Some we will look at disposing these assets if we feel that they are better off outside of Takeda. Needless -- so global scale is important. There is good geographic fit between the 2 company. Of course, Takeda is the leading company in Japan, will remain the leading company in Japan. In the future, on a pro forma basis, Japan will contribute 18% of the total sales of the company. The U.S. will represent 48% of the combined sales of the company. This is really the step change for Takeda. And so we will be highly competitive. We'll be in the top 10 pharmaceutical company in the U.S. In Europe and Emerging Market, in many countries, we'll double our size as well.
We think that for an R&D-driven company, pro-innovation company, being strong in the U.S. is important because the U.S. market is and, we believe, will continue to be the most pro-innovation market. What does it mean? It means that this is a country where new product have the fastest access to the market, the fastest takeoff and the fastest access. And so of course, when you invest JPY 400 billion per year in R&D, when you discover these new molecules, you want a fast access so that your payback is faster as well. That's why in the U.S. -- the presence in the U.S. is very important. So we think that really on the strategic fit and then the R&D, there is a very compelling reason for the acquisition.
What about the financial situation? These -- some of these elements we have seen before, but we are also trying to give a bit more granularity about some of the other parameters. So there is -- first, there will be some cost synergies, and we are actively working on it. And we believe that there will be at least USD 1.4 billion of cost synergy when we will combine the 2 company. And we are confirming this, at least number today. We have been progressing quite well in the integration planning. I will detail that a little bit more later on.
In our mind, there is no doubt that it's an accretive acquisition. Whether you look at the underlying EPS, the core EPS, the reported EPS, it's highly accretive. And so for example, on a reported EPS basis, it will be accretive within 3 years, so I think this is very compelling in terms of the accretiveness.
The return on invested capital is higher than what we saw very rapidly for this type of acquisition. And that's assuming that we will maintain our dividend policy of JPY 180 dividend per share.
We have been asked very often about the amortization of intangibles and goodwill and how -- what is the risk of impairment. So here, what we want is to clarify the size of the combined company goodwill, we give a range between JPY 4,000 billion and JPY 4,400 billion for the goodwill and intangible asset between JPY 6,300 billion and JPY 6,700 billion because we have many numbers floating around. It's not an easy exercise to do, but we want here to clarify what we see will be the goodwill and the intangible of the combined company.
We believe that the risk of impairment is low. Why? Because most of the product -- Shire product are in-market product and we have been, we believe, very prudent in our forecast product by product. So the intangible, of course, are broken down by product. And for example, when it comes to the hemophilia, we took into consideration in our forecast the competitive pressure of Chugai, for example. For a product like Vyvanse with the loss of exclusivity, later we took that into consideration. And we think that we have been quite prudent in our forecasts, in our assumptions when defining the acquisition price, and therefore -- and that's reflected in the intangibles. So this is something, which is, in our mind, very important because, of course, we don't want to take too much high risk.
The deleveraging is very important. We are planning to -- we want -- we are committed, and Costa reemphasized that, we are committed to the investment grade. So we will -- we are very much committed to deleveraging profile and to be below 2 within 3 to 5 years. So here, we are clarifying the debt level at start with a net debt of JPY 5,452 billion and a deleveraging profile. And for illustration, we are providing 2 scenarios, with and without disposal. And we did communicate and are committed to some disposals of noncore assets. And you can see here that if you take an assumptions of a total value of disposals of USD 10 billion, you -- we will be able to be at 1.7 net debt-to-EBITDA ratio by March 2023. So this is something we are very, very committed and we are already, of course, working on it.
We have been made -- we have made some progress on the financing. I will not develop further. You have seen the recent announcement about the hybrids and so we are continuing to work on the financing. So far, so good. I think we are able to really finance this acquisition at a very competitive rate.
I would like to share with you now the governance and how the board did proceed because we had some questions from investors about the board involvement of the company. So first, let me remind you about our board composition. It's a board with an Audit and Supervisory Committee. It's a board chaired by Sakane-san, so he's chairing the board meeting. It's a board, which is dominated by independent directors. So we think it's a strong board with Audit and Supervisory Committee, Compensation Committee, Nomination Committee, chaired by independent director and the board itself is chaired by independent directors.
So I just want to say that the board has been extensively involved in this acquisition. I mean, it's pretty obvious, but I just want to make the point that we started looking at it in 2017. We had many meetings. I think there were a few key decision points. One is -- was in March 22, a few days before the leak of the potential interest of Takeda occur and a few days before we started approaching Shire board. And then, of course, there was a negotiation period and we made, at the board, a final decision on May 7 with the final agreement and it was communicated on May 8. And of course, at every board meeting now we have a topic about Shire, the acquisition, how it's going, but also how we are preparing the integration.
So I think that there has been a really, I believe, very strong governance and board involvement, not only the board, by the way, but also the Takeda executive team, obviously, which has been very much involved. So it's a collective assessment effort commitment to do this acquisition.
One of the key discussions at the board was the risk: what type of risk do we take, how do we mitigate these risks? So we look at the financial market risk. Can we sustain such a level of debt? Can we deleverage rapidly enough? And that's -- that was a big element of the discussion. I showed you the deleveraging profile, the potential disposal of noncore assets, so we felt comfortable with that in spite of the acquisition size.
There was a business risk and also the impairment of the intangibles, as I mentioned. And here, we were able to be very -- we were very prudent, we believe, in our forecast. We were always below the analyst forecast line by line, product by product. So when we defined the maximum price that we were able to -- we believe, was on the prudent side, we were able to be there. And so we feel that the risk of impairment, whether it is a goodwill impairment or the intangible impairment, is very reasonable.
And then we look at the integration risk. Of course, can we integrate such a company with its specificities with such a strong presence in the U.S., and we discussed that very extensively. And we felt that we were able to do that because of -- especially because of Takeda's current position. You have seen our business momentum. The executive team has been working together now for 4 years, it's a very global executive team. The R&D description, as we have seen, is very limited, so we think that the R&D integration will be very -- I will never say easy, but it is very much possible without disruption. So we were also -- on the integration risk we are comfortable that we were able to do that without losing the values of Takeda also that I explained earlier. So overall, I think it was really a key consideration and one of the key debates at the board.
The last thing I would like to cover with you, are the integration. And just to share with you that the integration planning is progressing very well. We have clarified our strategy. We have, in fact, clarified our operating model. So we have clarified internally how we'll be organized by business unit, by regions. So we'll have 4 Regional Business Units, for example, and we'll have 3 Global Business units, plasma-derived therapy, oncology and vaccines. So we have defined already what the operating model will look like internally. This is something we have communicated to all our employees at Takeda and at Shire and so we are starting to plan the integration like that.
We have already nominated the future Takeda executive team. So postclosing, so on day 1, postclosing, that would be the Takeda executive team with, of course, some Shire leaders joining us. And it's reflecting our operating model and the organization of the company. And you can see that it's a very diverse, but also very experienced executive team.
For the story, I was calculating that cumulatively we have more than 400 years of pharmaceutical experience here with this team. So this is important. We want the integration to happen swiftly, but also well. We want this integration to be a good experience for both Shire employees and Takeda employees. And we want to have a clarity of our strategic intent and our organization as soon as possible and that's why we are preparing the integration.
So these are the information that I wanted to clarify with you today. Many of the information I shared here you have heard it before, not all, so we have added some information like the goodwill and intangibles because we have seen many questions here. But we are -- we really believe that this acquisition is really a unique opportunity, quite -- very unique opportunity to accelerate our transformation journey and to really allow us to become this value-based, R&D-driven global biopharmaceutical leader headquarter in Japan. Thank you very much.
[Operator Instructions]
Now we start Q&A session. If you have a question, please raise your hand. Before you state the questions, please mention your name and affiliation.
Steve Barker from CLSA. I had 2 questions. The first was about VELCADE. I see you've raised your -- it had a positive JPY 35.5 billion impact on your new forecast for the current year. I understand that the former assumption was that you would have generic competition from October. Now you seem to be pushing that back until March, that's a 6-months difference. But a JPY 35.5 billion increase in revenue, that seems a little low for 6-months sector sales and it's got about $100 million sales per month, I believe, in the U.S. So just if you could give a little bit more clarity around that. And then also this assumption that you're going to have a generic competitor in March, is that based upon specific knowledge that you have? Or is that just an assumption that you've made in the absence of specific knowledge?
It's a great question. Forecasting VELCADE these days is quite an exercise, right, because we have the information that we have. So we look at current competitors, what they can do and how they can penetrate the market. So that's one dynamic that we are watching. And we are talking about the Fresenius competitors. And then we are also monitoring the environment and monitoring what type of other product could join the market, but it's not a certainty. But we have to make some assumptions, which in our mind, should be the most realistic assumptions based on what we know. And it's not a crystal ball, but it's not easy to forecast. But if we assume now a new entry of both IV and subcutaneous, which is important, in March 2019, it's because we believe that some companies are working on it. Are they really ready to launch in March 2019? That's our assumption that we prefer to take. And you know, also as a company philosophy, we want to be successful assuming they are VELCADE generics and if they don't come it's an upside. It would be, I think, a mistake to be a bit complacent and take very positive assumptions and not do what is right to do in terms of OpEx and in terms of disciplines. So this is also something very important to have in mind.
My second question is about the timing of the completion of the acquisition of Shire vis-a-vis your comment earlier on, you'll hopefully be holding an EGM before January 2018. And assuming you get a positive result and Shire gets a positive result, how should we be thinking about completion of the deal post the EGM? I don't expect you to give me a specific forecast, but are there any particular issues that would prevent it happening just a few days later or weeks later? I'm thinking specifically the scheme of arrangement that Shire has, I think there's probably like legal issues that would force the completion to take place sometime after the EGM. Any guidance there would be helpful.
Yes, so at this stage, we can only confirm that we believe that the closure will happen in the first semester in H1 2019 calendar year. The real -- so we have the EGM and the scheme of arrangement. The ADR -- and then you have the closing date, of course, which is linked to the -- organizing the shareholder meeting on both side, the [ GSA ] quote on the Shire side. We'll have the ADR -- in our mind, we'll have the ADR listing a few days before closure. But at this stage, we can only say, well, we confirm, in our mind, that the closure will still happen assuming, of course, we get approval by both the AGM, by both shareholder meetings in the first semester. Of course, as you have seen, we are in dialogue with the European Commission. We'll -- so this dialogue -- the outcome of this dialogue is -- play a big part on the possible date of closure.
Yes, go ahead.
Hashiguchi from Daiwa Securities. I have 2 questions. One is about ENTYVIO for subcutaneous for UC, Phase III data is now available. And based on that, how much [ influence ] is it going to help on the revenue side? And this trial, is the subcu use only for maintenance period? In the induction period, do you have a plan to have a subcu formulation as well? That's my first question.
Thank you for the question. So we -- at this point, we don't have a plan to introduce subcutaneous for induction. So the go-to-market strategy would be infusion for induction and then maintenance with subcutaneous. Maybe you want to take on, Christophe, the market projection?
Well, it's an important development for ENTYVIO because, of course, a subcutaneous formulation is much more -- it's easier for the patients for the administration. They don't have to go to a center for infusion. So this is an important part of the development of the product. So it's quite a -- it's an important development for the product and to offer different alternatives of administration for the patients here.
Second question. Post the closing, you gave the update on finance for the integration cost. $2.4 billion was mentioned in the past. Does this number remain unchanged?
Yes, thank you. Yes, we communicated to deliver on the synergies of at least USD 1.4 billion on -- within third year post close, that we'll need to spend approximately USD 2.4 billion. That, at this stage, has not changed. Of course, we are currently ongoing with the dialogue and evaluating the cost opportunities of the synergies. And at the right time, once we close, we will be able to communicate if there are any changes. But at this stage, we don't see any reason to change that number.
How many questions can I ask? Up to 2 or 3? There is no limitation. My name is Seki from UBS. So first, you have received approvals in all core regions, ex EC, and you have now a good visibility on the EC approval. So what prevents you from hosting EGM and descending Shire's key documents?
So we still need a bit -- a little bit more clarity about the -- how the remedy will be constructed within -- in Europe. So we are clear about the remedies, about 647 compound of Shire. We need to have a bit more dialogue about how this remedy will -- what do we need to do to make sure that we are compliant with what Europe is demanding. And as you know, there is -- we'll have clarity about that on November 20.
And as a second, after successful closure of this deal, so you will be no longer restricted by U.K. takeover code. So I mean, we are very looking forward to the update on your outlook after this deal. So my question is when will you host the -- or would you host an Investor Day? Or would we have to wait until May with your first quarter fiscal year results?
Depends when the closing date happens, so I cannot tell you which month. So we need a few months -- of course, we need a few months to aggregate the data together, get a good understanding of all the combined outlook. We'll be ready with integration because we are working on it. We'll be ready with the organization design, but we need a few months to really come up with the first clarity about the guidance. So when exactly, I cannot tell you, it depends on the closing date. But I can tell you one thing is that we are also looking forward to share also more detailed information with you because we know that -- we share as much that we can. But of course, we are looking forward to share more and more combined information.
Likewise. And finally, on [ Nimaro ], so now you have maintenance trial data eventually in-house. Are you still confident you'll achieve $3 billion drastic revenue you have shown 3 years ago?
I think we need still to look at the final readout of the front-line data to answer that question. So we have now the third line. We have the maintenance. We need -- we will have the readout of the front-line next year. I think this is important to have in order to answer that question.
If you have a question, please raise your hand again.
Watanabe from Merrill Lynch Securities. My question is a follow-up with Seki-san's question about the situation for EC discussion. I know that the discussion is now ongoing. But my question is, in terms of SHP647 asset, is there any kind of option that you just need to sell off the Europe operation? Or you need to sell off all the global rights? That's my first question.
I think we'll -- we are more considering global rights.
Second question about Japanese business. [Foreign language]. Regarding the Japan business, I have a question. Your company have divested LLPs as early as possible. So you started earlier than the others. Going forward, you are going to increase the margin in your operation. In that process, in order to improve your profitability, the product portfolio and also cost discipline, are you going to take different approach and measures to make it happen further improvement?
Thank you for your question. As you just mentioned, we have transformed our business by divesting LLPs. In parallel with that, comprehensive regional health care and the medical functions are the -- our focus points and we have reinforced our capabilities to deal with that change. And also, we are using digital technologies very proactively. So our thought is that the best timing and the best information and the best way of information dissemination needs to be ensured. And that's what we are doing. And based on that, we have to think about the optimal allocation of the human resources and also cost expenses. What I can say for sure now is that we have improved our productivity significantly in our business. There are many questions about the Shire lately. So Shire and also we are going to launch ENTYVIO shortly in Japan. We are going to shift our pipeline focus more on to the specialty areas. So with that shift, we can improve productivity furthermore to entertain profitability improvement and growth. So we are growing, for sure. So please monitor us for a while.
A question on the R&D question. I know this may be irrelevant to your current business, but I was wondering if you could make a quick comment on the recently announced AMBER trial by Grifols for the Alzheimer's disease plasma. So as a scientist, if you could make any readout -- read-across comments, that will be helpful.
Well, the first comment -- I'm glad to make comments. The first comment is you should ask Grifols about that trial. But the second comment is I think that it's a trial that looked at infusion of albumin and immunoglobulin into patients with Alzheimer's disease and I think the exciting part of the trial is it's the first step in testing a hypothesis that's existed for quite some time that Alzheimer's disease is ultimately an inflammatory disease. So I'm not close enough to the data. I've seen essentially what you've seen, so I don't know the credibility of the trial, of the data, but I think that the inflammatory hypothesis in Alzheimer's disease is a very credible hypothesis. There's very strong generic rationale. I will say that, in our partnership with Denali, one of the mechanisms that we're looking closely at its preclinical mechanism is in inflammatory target. So I believe in the hypothesis.
Perhaps can I perhaps re-precise something because it's a very important point is that you have seen on the R&D slide I showed where we have the 4 therapy area plus vaccine and plasma-derived therapy, is something which is a construct, which is very important to understand. And we are creating a plasma-derived therapy business unit, which will also lead this R&D effort. So because Andy will have a rare disease unit, they will focus on the future innovation in rare disease, gene therapy, whatever, you name it, any modality, which can really transform this therapy area of rare disease. But at the same time -- can you go one slide more? At the same time, you have the plasma-derived therapy, which is this very significant entity where we collect plasma, we fractionate it and we have multiple product coming out. Now this product, we need to manage this product and create innovation in this plasma-derived therapy. They might be sometimes in competition with innovations coming from rare disease. They need to proactively see that and adapt and maintain and develop this business and they will have to invest in R&D as well, a new indication, new formulation, what other competitors are doing. So this is very important and we are very determined to do it.
Sakai from Crédit Suisse. Shire having Covington day early November about plasma business. That issue with Shire plasma business, lack of investment because of Baxalta background. Now are you willing to commit certain CapEx to keep up this business ongoing? Or do you think that this Covington facility is good enough near term to sustain the plasma business going forward?
Well, we believe that there is a significant potential in this business if you manage it well. You need to invest in R&D. You need to invest in manufacturing. You need to invest in plasma collection. You need to expand geographically. There is huge demand in many countries like China. So we need to be strategic about this business. That's why we are creating this plasma-derived therapy business unit, which will really lead this vision for this business. And this is -- we really believe this is the right setup to make sure we have the strategic intent on this business and do the right investment. And it is a business, which will be led by Julie Kim who has more than 15 years of experience in the plasma-derived business. And she was from Baxalta and she will create this vision of -- for this business here.
A few more questions. And a second one, probably this is for Costa-san. I was kind of surprised, kind of positive direction, though, you disclosed the goodwill and intangible numbers, JPY 4.4 trillion for goodwill and JPY 6.3 trillion, JPY 6.7 trillion for intangible. How hard these numbers are?
So thank you for the question. I mean, of course, we need to -- once we close, we will reassess this. But at this stage, these numbers that have been supported by auditors, Deloitte. So we've looked at, first and foremost, the mechanics on how you determine intangible and goodwill. So you look at the Shire goodwill balance sheet and intangibles and you actually reset it to 0. So there's no Baxalta goodwill intangibles there. Then you look at it as a combined company and then you add the updated version with the Takeda version. And this is numbers based on product by product, intangible value on fair value, the inventory step-up as well is all factored into that and this is the numbers that we're using when we actually discuss the reported EPS accretion in 3 years. So this is based on these numbers. So we, again, the caveat is it's not 100% yet until we close. But directionally, from a range, I can say I'm pretty comfortable with these. And again, we'll get them validated once we close.
Okay. So this is the maximum for what you're assuming at this moment?
That's a fair comment, yes. The upper number, so the...
The upper number is the maximum.
So why we wanted to show this is also the fact that we've seen numbers out there in the -- that are much higher because the calculations are not being done correctly, they're adding what's in the Shire balance sheet, plus the updated Shire, plus Takeda. And we wanted to just clarify first how the calculation is done. And this is where we're coming with these ranges.
And third and final question for Andy-san. I'm very interested in R&D integration process because Shire rare business is one unique, I guess, I should say creature because they have a specialist, they have a rare disease unit and they have a specialist doctor working for their whole life for the patient. And you have a different kind of business model. You have kind of a different organization as far as the development is concerned. So how you integrate this Shire development team into your Takeda development team because you have already outsourced the development works to VHA. So I was just wondering how could this play out.
Actually, Sakai, so the question is operationally how do we run our rare disease trials in the combined company. Because, in principle, rare disease is not that much different to specialty care. It's a spectrum of diseases and you operationalize fairly similarly across the spectrum. The predominant difference in a rare disease trial is that you have very few patients and you have very few investigators who interface with those patients. And so the model that rare disease companies including Shire, have used, is to position across the world geographically clinical scientists that focus on that rare disease. And that's not our model. Our model is to work predominantly through a contract research organization. So the answer to your question is that we'll introduce a hybrid. So we'll continue to work predominantly through an outsourced model, but recognizing the need for more direct contact with sites, physicians and patients, we'll also likely position clinical scientists globally as Shire has done. I'm not worried about it, I think it's going to be great. And as you know, our portfolio, and particularly in neuroscience, is already moving more and more towards that rare disease model.
So the retention of the people, that could be -- you think it could be that managed?
I -- for sure. I think we have a really exciting proposition for these individuals in our combined company and I feel very strongly that we'll be able to retain based on the attractiveness of the company and the R&D organization that we have moving forward. Now of course, we're looking at the critical talent. We have significant retention plans in place for the short term. We all understand that those don't hold people long term. It's really the motivation to drive impact that for these people is often the primary motivator. But I'm confident that we're going to put together something that will be very attractive. And if not, we've proven with our R&D transformation that Takeda R&D is a very attractive place to work. We've been very successful in recruiting top talent and I'm confident that we'll be able to do that in the future.
Another question, that gentleman in the front.
It's Joe Cairnes, Deutsche Bank. First one for Costa. Just looking back, you've been on the job for some 6 months now and it's good to see the momentum kept up on the Global OpEx Initiative. We were running ahead of the 1 to 2 percentage points medium-term target that you set yourselves. Just wanted to ask if you've seen consistent traction across regions for this cultural shift that you're implementing? And also if you could update on your plans beyond, I think you mentioned, travel, conferences and contractors. Where else is drawing your focus?
Thanks, Joe, for the question. I'm very pleased to say that we're seeing positive traction. In fact, for all the Global OpEx Initiative cost packages throughout all the regions. So we're delivering actually 6.7% favorability versus our target for the cost packages. So we're seeing that in all the regions, and that's really impressive. And then on top of that, we're seeing favorability on the overall OpEx. So it's not only to deliver on the packages because we have 11 cost packages, but we want to make sure we're also delivering twofold on the OpEx package and overall OpEx. And we're seeing -- that's why we're seeing year-to-date 2.4% reduction even versus prior year. So overall, we've bedded-in the process, as I mentioned, if you now budget, it's in our KPIs. We have monthly and quarterly KPI reviews per business unit. So we've got it heightened a lot on the management team. It's factored into our incentives. So it's a new cost-conscious mindset that we've had and we've embedded in an agile way. And so we're seeing the fruits of this come to -- become tangible. With respect to travel, consulting -- consultant meetings and events, we're tracking all these, of the 11 cost packages, predominantly noncustomer facing, because we don't want to reduce resources, expenses that jeopardize potentially customer-facing activities. So at this stage, we've kept the 11 cost packages, but we're looking at ways with the KPIs on how to continue to improve those. And some examples are the travel, how do we book in advance, how do we -- in fact, 6 to 8 months ago, we had over 70 different travel agencies globally. Today, we have 5. So now we have touch-of-button KPIs. We know where we have gaps and how we communicate consistently throughout the organization.
Just one follow-up on ENTYVIO and the launch in Japan. I think we've got the approval through back in July. And I was just wanting to check if you could give us an update on the rollout plans there. Is everything okay on the manufacturing side? And the marketing plans are all in place?
[Foreign Language] And I think I've answered to the previous question. But launch is upcoming very soon. And the supply side, once the product is launched for long term, we have responsibility to continue the supply for long term. So we've been working on that. But internally, we have confirmed our ability. So we will launch the product very soon.
Japan, I would add, I think -- we are very glad that it got premium status as well in Japan. So I think it's important and I think it's a good sign that the Japanese market is also valuing innovation in that case.
I'm [ Ms. Noh ] from Tokio Marine. I have 2 questions about the pipeline. The first one, I think it was the R&D, but it is not listed on that document. But ENTYVIO on the cap of 018, that is entered into the Phase I stage. So I'd like to understand the mechanism of this project. And according to the R&D document, TAKECAB and the Nexium head-to-head study results will be available soon. So what is the implication you can expect from this? So in Europe or China, you have clinical trials for TAKECAB. So if you cannot get the good results of this study, it's difficult to market that product in the regions. Or do you still see the great potential from TAKECAB even if you fail to achieve the good results from this trial?
So thank you for the questions. The first question is the Phase I program, the Enterome program, 018, which is a collaboration with the French microbiome company, Enterome, who we've been working with since 2016 on a microbiome target discovery collaboration. This represents a next step in that partnership and a partnership around the specific molecule. This is an orally restricted small molecule that antagonizes a bacterially expressed adhesion molecule bacterially expressed adhesion molecule called FimH that drives a penetration of certain bacterial strains from the gut into the intestinal mucosa and is believed to be a key driver of inflammation in a variety of different conditions, including inflammatory bowel disease, also thought to be involved in the development of peritonitis in patients with end-stage liver disease. So we will be sequentially investigating those hypotheses together with Enterome over the next couple of years. It's very exciting. And it's our first real foray into a microbiome-specific therapeutic. With respect to TAKECAB, we've just completed a study in NERD, a comparative study that we haven't released results yet of that study. Those results will be published at a scientific symposium that are upcoming. We also have in China multiple ongoing studies for TAKECAB, which is known in China as Vocinti and we're confident in the profile of TAKECAB. It's demonstrated superiority to PPIs across multiple indications in multiple studies. I don't think we're concerned about where TAKECAB heads. And I think, with any given study, obviously, you take some risk. But I think, overall, when we think about the TAKECAB franchise, both within Japan and beyond, particularly in China, we're quite excited.
[Foreign Language] Well, time is almost up. But if you would like to ask the last question? Okay. Thank you very much. With this, we would like to close the meeting. Thank you very much for your participation. We look forward to your continued support. Thank you very much. This is the end of the meeting.
Thank you for your time. And that concludes today's conference call. You may now disconnect your lines.