IntroductionDue to increased life expectancy and the rapid increase in the world's population, the pharmaceutical industry is becoming increasingly important. The problem of an aging population and high healthcare costs is particularly serious in Japan. This essay will focus on a Japanese drug manufacturer: Takeda Pharmaceutical Company Limited (Takeda, the Company). First, in order to provide background information, Takeda's current business model and relevant information will be outlined and analyzed based on the company's financial data and annual reports. Second, the essay will examine the most significant challenges the company has faced over the past five years, including the cause and effect behind these challenges. Finally, the discussion will cover the pharmaceutical industry as a whole, exploring the merger and acquisition activities of large pharmaceutical companies around the world, i.e. Big Pharma.1. StructureBefore discussing Takeda's business model, it is essential to understand the concept of the term "business model" and develop a framework with key components for the analysis. This term first appeared in 1975 (Ghaziana and Ventresca, 2005), and after that year many scholars, consultants and other business institutions added various kinds of ideas and methods to explore and interpret the concept of "business model ". Some indicate that what the business model provides is the construct that mediates the value creation process between technical inputs and economic outputs (Chesbrough and Rosenbloom, 2002), while others perceive the business model as a system made up of components , connections between components, and dynamics (Afuah and Tucci, 2000). However, since Takeda is a research-based pharmaceutical company...... half of article ......nline]. Available at: http://www.marketline.com/ (Accessed: 15 December 2013) Maris, D. (2012) “What's Really Driving the Pharma M&A Frenzy”, Forbes, 27 April [Online]. Available at: http://www.forbes.com/sites/davidmaris/2012/04/27/pharma-feeding-frenzy/ (Accessed: 15 December 2013) Scherer, A. (2012) 'M&A in Big Pharma : Holy Grail or buying time', Contract Pharma, 21 March [Online]. Available at: http://www.contractpharma.com/contents/view_experts-opinion/2012-03-21/ma-in-big-pharma/#sthash.NnrBSo3O.dpuf (Accessed: 15 December 2013) Takeda (2011 ) Takeda Annual Report 2011 (2012) Takeda Annual Report 2012 (2013) Takeda Annual Report 2013 (2011) 'Takeda to Acquire Nycomed', Takeda official website, 19 May. [Online]. Available at: http://www.tpi.takeda.com/media/news-releases/2011/takeda-to-acquire-nycomed/ (Accessed: December 15 2013)