Kyowa Hakko's vision
of pharmaceutical business,
"Reform for value creation"

 Kyowa Hakko (President: Dr. Tadashi Hirata) released its vision of pharmaceutical business on the 24th April, 2001.

 Kyowa Hakko is encountering increasingly difficult conditions in its core pharmaceutical business due to such factors as governmental policies to restrain the healthcare cost and the rising cost to develop new drugs. Competition with global pharmaceutical manufacturers is intensified, and their merger and reorganization for survival is going on.

 Under these strict conditions, Kyowa Hakko launched "Allelock", a new in-house-developed anti-allergic agent, on the 6th March and will be able to launch "Durotep", a therapeutic agent for persistent cancer pain, within this year in the field of cancer, one of its target therapeutic domains. Taking this opportunity, it formulated a plan of pharmaceutical business in two steps: the first is 5 years for solidifying the basis and the second is another 5 years for drastic growth. In the era of genomics enlarging the possibility of life science for radical treatment, Kyowa Hakko aims to be a highly valued global enterprise with good justification for existence as a "bio-pharmaceutical company who can supply patients-oriented pharmaceuticals to satisfy unmet needs worldwide".

 All efforts of the Kyowa Hakko Group will be concentrated to realize this vision.

 The principal components of the management plan of its pharmaceutical business is as follows.

T.Pharmaceutical business in fiscal 2010

1. High-profit and R&D-oriented global company with 300,000 mil. yen of sales
2. Leading company in the bio-pharmaceutical sector and in the fields of cancer and allergic diseases

* Net operating profit after tax invested capital (on a no loan basis)

U.Two steps to realize the vision

First step :
Period to reinforce the basis for the domestic business and to build the future assets (2001 to 2005)

1. Reinforcing the bases for the domestic business and firmly positioned in the market to aim at the sales of 170,000 mil. yen
• Stabilizing "Navelbine", an anticancer agent, launched in 1999 and "Durotep", a transdermal analgesic for persistent cancer pain, to be launched this year and further upgrading the Kyowa Hakko's brand in the cancer field which started from Mitomycin C, an anticancer agent.
• Aiming at the top ranking in the domestic anti-allergic market share with "Allelock", an antiallergic agent, launched in March and the existing "Celtect".
• Upgrading "Coniel" (an antihypertensive and angina treatment agent) and other mainstream products by extending the indications and adding the product forms mainly by "Products Upgrading Strategy Team" which started at the end of last year.
• Aiming at strategic product introduction in the domestic cardiovascular market where Kyowa Hakko is strong and has "Coniel", "Inovan", an agent to improve acute circulatory dysfunction, etc. in its lineup.
2. Investing positively for speeding up the overseas development, improving the capabilities to create novel pharmaceuticals, and forming the structure to develop business in the overseas market and to build up the future assets of 300,000 mil. yen
• From 2001 to 2002, the staff at Kyowa Pharmaceutical, Inc., a basis for the clinical development in the U.S., and Kyowa Hakko U.K. Ltd. in the U.K. will be increased to 33 and 13, respectively, for forming the structure to make annually two compounds enter into the clinical stage. The structure for the clinical development in China will be also set up.
• From 2003 to 2005, the structure for production will be prepared with the progress of development. In Europe, the existing sales bases in the U.K., etc. will be strengthened. In Asia, the existing bases in China will be bolstered and expanded. The structure for sale considering the marketability will be formed in the U.S.
• Pharmaceutical Research & Planning Division was set up in this April to improve the capabilities to create novel pharmaceuticals. The following three reforms will be implemented to 2005.
1. Two-thirds of the R&D resources will be focused on two target therapeutic fields of cancer and allergic diseases and the remaining one-third will be invested in the development of strategic themes (to be promoted from the general view) and in the program to upgrade and expand the launched products. Core technologies such as antibody-based medicines, genomics, combinatorial chemistry, high through-put screening, and molecular design will be strengthened to make up chemoinformatics as drug discovery technology comprehensively including the utilization of microorganism resources.
2. The approach to universities, TLO, etc. will be positively promoted to support the discovery and development of research seeds. Newly organized Research Alliance Department will be in charge.
3. The functions for portfolio strategy will be strengthened through the reforms in the R&D management by introducing field/technology managers, enhancing the R&D marketing staff, introducing the personnel system to activate the R&D staff, etc. More market-oriented and speedy R&D will be promoted by strategic utilization of research alliance.

Second step :
Period to increase the sales mainly in the overseas market (2006 to 2010)

1. Launching new drugs in the overseas market and attaining the global sales 300,000 mil. yen (100,000 mil. yen in the overseas market and 200,000 mil. yen in the domestic market).
• The following compounds are now under development overseas:
• KW-6002 (anti-Parkinson's disease, anti-depression)
• KW-2401 (anticancer)
• KW-2170 (anticancer)
• KW-7158 (an agent for treating urinary incontinence)
• KW-2871 (antimelanoma)
• KW-4490 (antiasthmatic, in preparation for Phase I)

2. Increasing the future assets to 500,000 mil. yen by adding new low molecular medicines, increasing the clinically developed antibody-based medicines, commercializing leading-edge technologies in cell replacement therapy, etc.
• The future assets in fiscal 2010 will be made up as follows:
• By drug type  :
  bio-pharmaceuticals 200,000, low molecular medicines 300,000 mil. yen
• By disease field  :
  anticancer 200,000, anti-allergic 200,000, others 100,000 mil. yen

-Remarks-
The figures on future estimation in this vision are calculated on a basis of the information presently available and may vary depending on future economic situation and other factors.