Company: TAK
Filing Date: 2025-06-25
Form Type: 20-F
Source: 0001395064-25-000095
Chunk: 217

Company: TAKEDA PHARMACEUTICAL CO LTD
Filing Date: 2025-06-25
Form: 20-F
Item: Item 19
Chunk 217
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 and U. S. State and Federal government health programs (collectively, “ U. S. rebates”) of 241,704 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, 2025. 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.

We 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.

The 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.

F-2

TAKEDA PHARMACEUTICAL COMPANY LIMITED AND ITS SUBSIDIARIES

Valuation of goodwill

As discussed in Notes 3 and 11 to the consolidated financial statements, the Company recorded goodwill of 5,324,430 million JPY as of March 31, 2025. Goodwill was