Kyowa Hakko Announces
Consolidated Earnings for
First-Half of Fiscal 2001

 Tokyo, November 14, 2001 (JCN) - Kyowa Hakko Kogyo Co., Ltd. (TSE: 4151), one of Japan's leading makers of pharmaceuticals and bio-chemicals, is pleased to announce financial results for the six months to September 30, 2001. The audio and presentation of the conference for investors will be available in Japanese on Kyowa Hakko's website from November 15.

Financial highlights for
the six months to September 30, 2001:

• Net sales rose 1.6 percent to 191 billion yen ($1.6 billion)
• Operating income rose 11.2 percent to 10.8 billion yen
• Recurring profit rose to 10.4 billion yen from 10.2 billion yen
• Charges of 17.9 billion yen were recorded as a result of a reorganization of feed-use amino acid and food-grade nucleic acid operations. Costs associated with the restructuring contributed to a net loss of 2.5 billion yen, and a loss per share of 5.94 yen.
• Net income for the full-year is forecast to be about 8 billion yen following an extraordinary profit from the sale of the Company's 40 percent stake in Janssen-Kyowa to Johnson & Johnson K.K., a subsidiary of Johnson & Johnson of the U.S.
• Retained earnings for the six months to September 30, were 4.3 billion yen lower for the period, though the shareholder capital ratio rose 2.4 percent due to unrealized gains on other marketable securities of 14.6 billion yen excluding tax.

 Kyowa Hakko today announced that net sales for the six months to September 30, 2001 rose to 191 billion yen from 188 billion yen. Operating income rose to 10.8 billion yen from 9.7 billion yen, and recurring profit rose to 10.4 billion yen from 10.2 billion yen over the same period the year before. The Company reported a net loss of 2.5 billion yen, or a loss of 5.94 yen per common share, down from net income of 5.4 billion yen, or earnings of 12.40 yen per common share.

 During the period, the Company incurred a charge of 11.7 billion yen related to a reorganization of the feed-use amino acids operations at Biokyowa Inc., and the food-grade nucleic acid business at Kyowa Foods Inc. and Kyowa America, Inc.

 Under the reorganization, Biokyowa will cease manufacturing L-lysine, an additive used to supplement essential proteins in feed for swine and poultry, and start production of higher value-added amino acids for products such as nutritional food supplements. In addition, Kyowa Foods will reduce production of food-use seasonings and convert its plant to a multipurpose plant to make other products including higher value-added amino acids.

 The Company also incurred a charge of 5.7 billion yen related to the reorganization of Fermentaciones Mexicanas S.A. de C.V., or Fermex. The costs are related to the reevaluation of fixed assets at the company and the introduction of new technology that aims to lower costs. Fermex will continue to manufacture lysine.

 "In general, sales and operating profit have grown steadily over the six months reflecting the strength of our businesses in what is a very difficult operating environment," said Toshiaki Mizutani, manager of investor relations at Kyowa Hakko. The reorganization of these operations aims to increase their competitiveness and profitability in the long term."

 Kyowa Hakko also agreed over the period to transfer to Johnson & Johnson the 40 percent stake it owns in Janssen-Kyowa. The agreement is part of the original terms of the contract the two companies signed. As a result, Kyowa Hakko forecasts net income for the full year will be 8 billion.

Pharmaceuticals:
 Sales of pharmaceuticals came to 71.8 billion yen, a 1.1 billion yen decline from the same period the year, while operating income was 10.1 billion yen, a 12.2 percent decline. Earnings fell mainly as a result of the temporary halt of Acenaline, a gastroprokinetic agent in October last year, and a reduction in prices of National Health Insurance drug reimbursement prices.

 Development and sales of drugs developed in-house proceeded smoothly. Sales of Allelock, an anti-allergy treatment that went on sale in Japan in March, and Leukoprol went well. Existing major drugs sales also rose, with Itorizol, an oral anti-fungal agent, Depakene, a central nervous system agent, and Nauzelin, a gastroprokinetic agent, performing well.

 "Kyowa Hakko retains the right to market and sell Itorizol, Nauzelin and Celtect which were licensed by Janssen Pharmaceutica, and we look forward to continuing our good business relationship with the Johnson & Johnson group," said Toshiaki Mizutani, manager of investor relations at Kyowa Hakko. "We aim to further improve our market position through in-house development of cancer and allergies treatments."

 Janssen Pharmaceutica is a subsidiary of Johnson & Johnson of the U.S. A strategy plan by the pharmaceuticals business released in April, strengthens R&D activities in the area of anti-cancer and anti-allergy, aiming to make the Company a leading company in these areas. To this end, a number of products developed by Kyowa Hakko or through partnerships are about to go on sale or are waiting for regulatory approval.

 Durotep, a transdermal analgesic for persistent cancer pain, received approval in October and will go on sale later this fiscal year. Additional applications have been made for Decarbazine, and clinical tests on KW6002, an anti-Parkinson's and anti-depression drug, are continuing in the U.S.

Bio-chemicals:
 Sales of bio-chemicals, including amino acids, nucleic acids and related products for pharmaceutical and industrial-use rose 9.8 percent to 28 billion yen, while operating income climbed to 600 million yen from a loss of 500 million yen.

 The business was boosted by an increase in new product applications related to amino acids and nucleic acids and related products, and the effects of a decline in the value of the yen, which helped boost overseas sales. Overseas demand for amino acids for use in various areas such as pharmaceuticals and nutritional supplements is expected to boost the business's profitability.

Chemicals:
 Sales of chemical products gained 2.2 percent to 31.2 billion yen. Increased prices for naphtha and other raw materials negatively affected profitability, though a reduction in production costs and increased overseas sales enabled the business to narrow operating losses to 0.4 billion yen from 1.4 billion yen the year before.

Liquor and Food:
 Sales of liquor and food rose almost 1 percent to 51 billion yen due to increased sales of shochu liquor, natural seasonings, and processed foods. Deflation and increased competition applied pricing pressure and operating losses improved slightly to about 0.3 billion yen.

About Kyowa Hakko:
 Kyowa Hakko discovers, develops, manufactures and markets prescription and health care medicines. In addition, Kyowa Hakko develops and manufactures one of the industry's most extensive lines of Amino Acids and related compounds, including D-Amino Acids and Branched Chain Amino Acids, as well as Nucleic Acids, Bio-Products, Fine Chemicals, Food Additives and Ingredients. Backed by more than half a century of manufacturing innovation, advanced technology, and a commitment to research, Kyowa Hakko's products are known for high quality, reliability and cost-effectiveness.