UPDATE 3-Takeda holds forecast, drugs outlook still tough

* Q2 recurring profit rises 9 pct to 117.3 bln yen

* Keeps FY recurring profit forecast at 400 bln yen

* Tough sales in markets, falling sales in flagship drugs

* Shares up 3.4 pct, vs Nikkei gain of 1.5 pct (Adds Takeda president's comments, more details)

By Yumiko Nishitani

TOKYO, Oct 30 (Reuters) - Takeda Pharmaceutical, Japan's top drugmaker, kept its full-year profit outlook unchanged despite larger-than-forecast first half earnings, as it expects yen strength and weak sales to dull the impact of cost cuts.

Takeda (4502.T), which earns about half its revenues overseas, saw second-quarter sales hurt by a firm local currency, weak global economy and intensified competition.

In contrast, the underlying drug businesses at Japan's third- and fourth-largest drugmakers, Daiichi Sankyo (4568.T) and Eisai (4523.T), showed relative strength in the second quarter, featuring growth at home and in mainstay drugs.

Daiichi, which owns a majority of India's Ranbaxy Laboratories (RANB.BO), more than doubled its quarterly recurring profit, thanks to the strong sales of its mainstay high blood pressure drug and Ranbaxy's contribution.

Takeda suffered from tough sales conditions in Japan and the United States, its two main markets, in the second quarter and failed to deliver the six-month sales it projected, it said.

"In Japan, our market share fell slightly as overall demand growth centred on influenza and cancer treatments. We do not make any influenza drug and have only six rather old cancer drugs which faced tough competition with newer rivals," Takeda president Yasuchika Hasegawa told a news conference.

He added that he was confident that Takeda could turn around its domestic market share next business year by launching several new drugs but did not expand on what these new drugs were.

In the United States, the poor state of the economy and a delay in the launch of new products, as well as the strong yen, pressured Takeda's sales. Hasegawa said Takeda's U.S. sales in the July-August period were weak but saw a modest recovery in September.

"However, it remains uncertain whether recovery will continue," he said.

In the year ahead, Takeda may be further hurt by declining sales in its flagship drugs, analysts said.

"Takeda's sales may drop from next year on as patents of some drugs will expire and most investors are wondering how Takeda will deal with the problem. And I can not see any answer from these results." said Kenji Masuzoe, a drug sector analyst at Deutsche Bank.

Among such drugs, Takeda's best-selling diabetes drug, Actos, will lose its U.S. patent protection towards the end of the next business year to March 2011.

The sales of the flagship drug have already started running out of steam, failing to rack up enough sales growth to fight the strength of the yen and falling 4.1 percent in yen terms in April-September.

Hasegawa told reporters and analysts at another event later on Friday Takeda will consider acquisitions more positively to beef up its pipeline of new drugs.

RECURRING PROFIT TOPS FORECAST

Takeda's April-September recurring profit topped its own forecast by almost a quarter, despite the sales shortfall, chiefly because it had postponed a costly development project to the third quarter and cut more costs than targeted.

Takeda kept its annual recurring profit forecast at 400 billion yen, a touch below a consensus forecast for 414 billion yen from 14 analysts on Thomson Reuters I/B/E/S, but lowered its sales estimate by 1.3 percent to 1.48 trillion yen.

Takeda said recurring profit rose to 117.3 billion yen in July-September and more than doubled for the first half.

Shares of Takeda rose 3.4 percent to 3,650 yen, outperforming a 1.5 percent rise in the Nikkei average .N225.

Abroad, Takeda's bigger rivals have increased their profits in the latest quarter. [ID:nN22535787] U.S. giant Pfizer (PFE.N) posted profit growth as cost cuts offset a negative foreign exchange impact and falling drug sales. [ID:nN208741]

(Additional reporting by Nobuhiro Kubo; Editing by Edwina Gibbs and Valerie Lee)