Docstoc

THE NEXT GENERATION OF LEADERSHIP

Document Sample
THE NEXT GENERATION OF LEADERSHIP Powered By Docstoc
					THE NEXT GENERATION OF LEADERSHIP
           ANNUAL REPORT 2003
PROFILE




Management Philosophy
Taisho’s mission is to create and offer superior pharmaceuticals and health-related products as well as
health-care-related information and services that contribute to the enrichment of people’s lives by improv-
ing health. Respecting consumers’ rights to know, protect and choose, we aim to contribute to the
improvement of every aspect of health to create a brighter 21st century.


Growth Strategy
Backed by 90 years of operations, Taisho is a leading company in the self-medication market in Japan. We
are making every effort to release new high-value-added products in tune with changing consumer needs,
strengthen and foster our brand names, and develop new markets, such as the specified health food market.
In the prescription pharmaceuticals field, Taisho is making concerted efforts to create highly innovative
drugs for the global market through its own R&D and in tie-ups with other companies. Recently, Taisho
entered a capital and business tie-up with Toyama Chemical Co., Ltd., which has a strong presence and
unique drug development technologies in the infectious disease field, and through this partnership, the
Company aims to strengthen its prescription pharmaceuticals business. At the same time, Taisho’s R&D
activities are entering a “bring-up era,” where for instance a number of new drug candidates are entering
the clinical development stage. Taisho is also bolstering its sales structure so as to fully deploy these new
medications on the front line of medicine.




CONTENTS

CONSOLIDATED FINANCIAL HIGHLIGHTS                              1       CONSOLIDATED BALANCE SHEETS                                    26
A MESSAGE FROM THE MANAGEMENT                                  2       CONSOLIDATED STATEMENTS OF INCOME                              28
THE NEXT GENERATION OF LEADERSHIP                              6       CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY                29
RESEARCH AND DEVELOPMENT                                      14       CONSOLIDATED STATEMENTS OF CASH FLOWS                          30
GLOBAL PRESENCE                                               15       NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                     31
PRODUCTION AND DISTRIBUTION                                   16       REPORT OF INDEPENDENT ACCOUNTANTS                              39
REVIEW OF OPERATIONS                                          17       CORPORATE INFORMATION                                          40
MANAGEMENT'S DISCUSSION AND ANALYSIS                          22       INVESTOR INFORMATION                                           42




CAUTIONARY STATEMENT WITH RESPECT TO FORWARD-LOOKING STATEMENTS
Statements made in this annual report with respect to Taisho’s current plans, estimates, strategies and beliefs and other statements that
are not historical facts are forward-looking statements about the future performance of the Taisho Group. These statements are based on
management’s assumptions and beliefs in light of the information currently available to it and therefore readers should not place undue
reliance on them. The Taisho Group cautions readers that a number of important factors including but not limited to changes in general
economic conditions could cause actual results to differ materially from those discussed in the forward-looking statements.
CONSOLIDATED FINANCIAL HIGHLIGHTS
Taisho Pharmaceutical Co., Ltd. and Consolidated Subsidiaries
For the years ended March 31, 2003, 2002, 2001, 2000 and 1999




                                                                                                                                                                                                    Thousands of
                                                                                                          Millions of yen                                                    % change                U.S. dollars

                                                                      2003              2002                     2001                   2000              1999           2003/2002                     2003
For the year:
Net sales .......................................... ¥ 274,077                      ¥ 271,397                 ¥ 274,396             ¥ 275,251         ¥ 231,876                 1.0             $2,280,178
Cost of sales.....................................                     73,346            70,826                  70,540                    70,793          63,359               3.6                    610,201
Gross profit ......................................                   200,731           200,571                203,856                  204,458           168,517               0.1                  1,669,977
Selling, general and
  administrative expenses...............                              146,337           139,870                137,265                  120,405           108,251               4.6                  1,217,444
Operating income ............................                          54,394            60,701                  66,591                    84,053          60,266             (10.4)                   452,533
Net income.......................................                      35,392            37,361                  31,269                    50,754          29,567               (5.3)                  294,446

At year-end:
Total assets...................................... ¥ 577,707                        ¥ 590,036                 ¥ 573,612             ¥ 527,728         ¥ 476,638                 (2.1)           $4,806,214
Current assets .................................                      247,589           251,793                245,078                  346,912           298,863               (1.7)                2,059,810
Current liabilities.............................                       46,347            60,156                  64,257                    62,319          58,043             (23.0)                   385,578
Working capital................................                       201,242           191,637                180,821                  284,593           240,820               5.0                  1,674,226
             ,
Shareholders equity ......................                            485,717           486,883                467,601                  441,409           394,746               (0.2)                4,040,909
R&D expenses .................................                         29,526            32,212                  33,401                    23,238          20,096               (8.3)                  245,641
R&D expenses as
  percentage of net sales (%).............                               10.8                11.9                     12.2                      8.4                8.7            —                              —
Capital expenditures .......................                            8,957            24,996                  15,602                       6,991        15,709             (64.2)                     74,517
Free cash flows................................                        63,839            14,199                    8,704                   19,693         (15,410)            349.6                    531,106

Per share data:
             ,
Shareholders equity (yen) ............ ¥1,474.65                                   ¥1,434.51                  ¥1,371.99             ¥         1,286   ¥     1,143               2.8             $         12.27
Net income—basic (yen)................                                 105.81            109.66                    91.41                   147.32           85.58               (3.5)                         0.88
Cash dividends (yen) ......................                             30.00               25.00                  25.00                      25.00         20.00              20.0                           0.25
U.S. dollar amounts in this report, presented for the convenience of readers, have been translated from yen amounts at ¥120.20=U.S.$1,
the approximate exchange rate on March 31, 2003.



Net Sales, Gross Profit                                                         R&D Expenses &                                                            Free Cash Flows
& Operating Income                                                              Percentage of Net Sales                                                   Years ended March 31
Years ended March 31                                                            Years ended March 31

(Billions of yen)                                                               (Billions of yen)                                       (%)               (Billions of yen)



                                                                                                                                                                                                       63.8
               275.3         274.4         271.4         274.1                                         33.4      32.2        29.5
 231.9

                                                                                                               12.2
                                                                                            23.2                         11.9
                                                                                                                                    10.8
                                                                                 20.1
168.5         204.5         203.9         200.6         200.7                             8.7
                                                                                                    8.4
                                                                                                                                                                      19.7
                                                                                                                                                                                8.7          14.2

60.3          84.1          66.6          60.7          54.4
                                                                                                                                                           -15.4

       1999          2000          2001          2002          2003                  1999       2000      2001        2002      2003                           1999      2000         2001      2002      2003
       Net Sales                                                                     R&D Expenses
       Gross Profit                                                                  Percentage of Net Sales
       Operating Income


                                                                                                                                                                                                                     1
    A MESSAGE FROM THE MANAGEMENT




     Shoji Uehara, Chairman of the Board (right)
                   Akira Uehara, President (left)




2
Targeting the Next Stage of Growth through
Customer-Centric Management


Achieving sales and earnings targets within a harsh business environment                 HIGHLIGHTS OF THE FISCAL YEAR
In fiscal 2002, ended March 31, 2003, the Japanese pharmaceutical industry expe-
rienced continued difficult conditions due to prolonged deflation and economic            The Ta isho Pharmaceutical
downturn. In ethical drugs, the operating environment remained harsh, mainly              Group achieved its initial targets
affected by the implementation of new government policies to curb medical costs           for consolidated sales and prof-
and the increase in the copayment of the elderly.                                         its in the fiscal year ended March
   In fiscal 2002, net sales were on par with the previous fiscal year and despite a      31, 2003.
drop in earnings, we were successful in achieving our initial targets. In our main-
stay self-medication business, we launched new products and embarked on                   We are entering a new stage of
developing new business markets, which resulted in increased sales of our princi-         growth through further expan-
pal products. We also took steps to build our presence in the foods market for            sion in the self-medication
specified health use. In addition, we posted steady sales in the prescription phar-       business and the launch of
maceutical business, in line with the previous fiscal year’s results, despite a cut in    Taisho Toyama Pharmaceutical
prescription reimbursement prices. Accordingly, our business activities remained          Co., Ltd. in a tie-up with Toyama
healthy despite the depressed business environment.                                       Chemical Co., Ltd.
   The decrease in operating income was attributable to two factors: first, we
reported expenses related to the acquisition of sales rights of products developed        To return value to shareholders,
by Toyama Chemical Co., Ltd., with which Taisho entered a business and capital            Taisho distributed annual cash
alliance in August 2002; second, we reported higher sales promotion and depreci-          dividends of ¥30 per share,
ation costs than we did during the previous fiscal year.                                  which included a commemora-
   As for our appropriation of surplus, we repurchased 9,817,000 of our own               tive dividend of ¥5 per share to
shares (¥18.8 billion) during fiscal 2002 and increased our year-end cash dividends       celebrate the Company’s 90th
per share to ¥30, which included a commemorative dividend of ¥5 per share to              year of operations. In addition,
mark the Company’s 90th anniversary.                                                      Taisho bought back 9,817 thou-
                                                                                          sand shares totaling ¥18.8 billion
Further strengthening our self-medication business                                        during the fiscal year ended
In recent years, Taisho has reached a turning point in the context of its operating       March 31, 2003.
performance. Namely, by further expanding our self-medication business for the
future, and through the establishment of the new joint venture Taisho Toyama
Pharmaceutical Co., Ltd. in the wake of our business alliance with Toyama
Chemical, we are looking forward to a new stage of growth.
   To properly respond to changes in consumers’ concerns over health-care-
related issues, we believe it is essential to create high-value-added products in
our self-medication business.
   While the size of the over-the-counter (OTC) pharmaceutical market is shrink-
ing due to falling retail prices, health-related issues are drawing more attention
among people nationwide and the demand for drugs is expected to rise as the
number of the elderly increases. In May 2003, the Health Promotion Law was



                                                                                                                               3
    implemented making it mandatory for individuals, schools, companies and local
    municipalities to strive to make their own commitment to enhancing health.
    Moreover, the deregulation of OTC drugs, including approval for new category
    products (i.e. lifestyle improvement drugs) and new formulations, and the relax-
    ation in regulations regarding sales channels, are advancing as medico-economic
    issues gain more importance.
       We are eager to find business opportunities in this changing operating environment
    and aim to expand our market share. To achieve these goals, we will capitalize on our
    brand power with a higher degree of competitiveness and marketing capability, and offer
    valuable medical products and information that truly satisfy our customers’ requests.
       A leading company in the OTC drug market in Japan, Taisho has a long list of
    products, among which 12 (including nutrient drinks, cold remedies and hair-loss
    treatments in primary categories) hold the largest or the second-largest share of
    their respective markets. We also are the only company in the industry that has
    established a database of information on drugstores and medical effects. For this
    reason, we have built trust among our customers and pharmacists.
       During fiscal 2003, we will accelerate the development of new products that
    contribute to satisfying our customers’ needs. This, we believe, will help us to fur-
    ther fortify our market presence. At the same time, we intend to place new
    products on the market for foods for specified health use and steer a new course
    of challenges for our future development.


    Clinical trials for high-potential new drugs
    In the pharmaceutical business, the early success of our business alliance with
    Toyama Chemical will be a significant key to increasing performance. Taisho
    Toyama Pharmaceutical, which began operations in April, specializes in sales and
    marketing of prescription drugs and has a team of more than 1,000 medical repre-
    sentatives. This company is a major building block of the strategic marketing
    platform that will drive us ahead of our rivals. We also intend to establish a coopera-
    tive partnership in R&D activities, mainly centered on the infectious disease field,
    leveraging Toyama Chemical’s strength in synthetic technologies and its competitive
    advantage in this therapeutic area.
       Based on the anticipated benefits of integration, Taisho Toyama Pharmaceutical
    is targeting ¥95 billion in sales of prescription drugs during fiscal 2003, up 20% from
    fiscal 2002, during which the relevant operations of Taisho and Toyama Chemical
    posted a combined total of approximately ¥79.0 billion. We reviewed operations at our
    facilities (Taisho’s nine branches and Toyama Chemical’s 54 branches) to improve
    profitability and work toward establishing an integrated network of 33 facilities
    across Japan, of which 22 are branch offices, and implement business initiatives to
    facilitate distribution activities nationwide.
       Our basic R&D strategy is to continue creating new drugs for the world market, spe-
    cializing in certain fields including the central nervous system (CNS), allergies, diabetes
    and categories in which we have notable strength, namely, prostaglandins and macrolide
    antibiotic agents. With this goal in mind, we have focused on enhancing our R&D platform
    since 1995, and results are beginning to emerge as we enter the development stage.



4
   In 2003 and 2004, six original drugs made by Taisho are scheduled to enter into
the clinical development stage (Phase I). In addition, other new drugs, one of which
has been licensed to Merck & Co., Inc. and another co-developed with Janssen
Pharmaceutica N.V., are expected to enter clinical trials in the near future. In
developing our products, we have re-emphasized originality, market potential and
product development speed. To this end, we constantly review and select candidate
compounds based on several factors (i.e. efficacy, safety, potential market size),
and conduct effective R&D activities that enable us to concentrate our management
resources on projects with positive business potential.
   We will position the prescription pharmaceutical and self-medication busi-
nesses collectively as the driving force for future Group expansion. At the same
time, utilizing the alliance with Toyama Chemical as a model, we will endeavor to
pursue other business alliances.


Aiming to further improve shareholder value
Having celebrated our 90th anniversary in fiscal 2002, fiscal 2003 marks a new
beginning as we move toward our 100th anniversary. During the year, we will fur-
ther buttress our self-medication business and prescription pharmaceutical
business while striving to nurture a dynamic corporate culture geared toward the
continuous pursuit of new businesses and development.
   We have progressed with the restructuring of our core operating systems for
business management. In April 2003, new operating systems were installed for the
accounting, production and all other operations of Taisho Toyama Pharmaceutical,
and these systems continue to operate smoothly and without incident.
   Upon installing new operating systems for our self-medication business, which
is scheduled during the first half of fiscal 2003, we will have completed our system
replacement program. By using business process reengineering (BPR) to innovate
our business structure, consumer resource management (CRM) to utilize our cus-
tomer information, and scientific computing and modeling (SCM) to modify our
delivery systems, we will further utilize IT to implement the comprehensive busi-
ness strategies of the Group, thereby improving productivity and reducing costs.
   As for fiscal 2003, we suspect severe business conditions will continue. Despite
this, we anticipate finally achieving sales of ¥300 billion as contributions from
Taisho Toyama Pharmaceutical flow through to our business results. We will work
tirelessly to improve shareholder value and fully meet our shareholders’ expecta-
tions. At the same time, we will strengthen our IR activities and strive to disclose
management information in a timely and transparent manner. We look forward to
our shareholders’ understanding and continuous support.


August 2003




Shoji Uehara, Chairman of the Board                 Akira Uehara, President



                                                                                       5
    THE NEXT GENERATION OF LEADERSHIP




                                            Growing awareness of self-medication products
                                            In the Japanese health-care market, an increasing number of people are becoming
                                            more concerned about their health and medicine, reflecting a rise in lifestyle-relat-
                                            ed diseases due to the graying of the Japanese population, and changes in the
                                            balance of common illnesses. Consequently, people are becoming more aware of
                                            self-medication as they feel the responsibility of protecting their own health. In addi-
                                            tion to health maintenance, we believe that a growing number of people will use OTC
                                            drugs for less serious symptoms, based on the advice of medical professionals such
                                            as doctors and pharmacists at drugstores.
                                                In accordance with heightened consumer awareness of health, there is
                                            increased demand for the provision of medical products, services and information
                                            that are sensitive to the changing lifestyles and diverse values of individuals, while
                                            respecting their rights to information and choice.
                                                In May 2003, the Health Promotion Law was implemented to promote the health
                                            of Japanese citizens and provide governmental guidance on the prevention of
                                            lifestyle-related diseases. There has also been a movement to advance the stream-
                                            lining of the approval process for OTC drugs and to expand the range of new
    The Lipovitan series holds a top
                                            quasi-drugs (new specified medications for general use).
    share in the Japanese market of             Amid these trends, the Self-Medication Advocacy Council (SMAC) was estab-
    tonics and nutrient drinks and          lished in April 2002, and Taisho President Uehara was appointed a vice-chairman of
    is a mainstay of Taisho’s Self-
    Medication Operation Group. In a        the council. SMAC is a non-profit organization that promotes the advancement of the
    market characterized by numerous        self-medication field. Taisho will continue to fulfill its role as a leader in the
    competing brands, the Lipovitan         Japanese self-medication market to maintain and promote the health of consumers.
    series maintains a trusted position
    enjoying significant consumer sup-
    port. The Company also develops         Market-leading brand strength
    and directly markets a variety of
                                            The Self-Medication Operation Group is Taisho’s core business, and enjoys a strong
    products that address the needs
    of specific consumers. An example is    competitive position in the market thanks to the expertise and brand power that
    Alfe Mini, a nutrient drink for women
    lacking key minerals including iron
    and calcium in their daily diet.        Sales Breakdown of Self-Medication Products Year ended March 31, 2003

                                            Others             29.0 14.8%

                                            Livita Series       1.5   0.8%                                  Tonics and
                                                                                                            Nutrient Drinks      112.9 57.9%
                                            RiUP , etc.        17.7   9.1%

                                            Gastrointestinal                                                Lipovitan D            77.9 39.9%
                                            Treatments          5.3   2.7%
                                                                                                             : Billions
                                            Cold Remedies      28.7 14.7%                                   %: Percentage of total sales of
                                                                                                               self-medication products




6
come from more than 90 years of operations. Of our principal products, six brands        The RiUP series of male-pattern
                                                                                         baldness treatments was the first
hold the top share of their respective markets, including the Lipovitan series of ton-
                                                                                         hair-care treatment to receive
ics and nutrient drinks, the Pabron series of cold remedies, the Dermarin series of      direct-to-OTC approval in Japan.
athlete’s foot treatments, and the RiUP series of hair-loss treatments. Moreover, six    Marketed in 30 countries, RiUP,
                                                                                         which contains the hair-growth
brands are ranked No. 2 in market share, including Taisho Kanpo Ichoyaku, a gas-
                                                                                         component minoxidil, has enjoyed
trointestinal treatment, Naron Ace, a painkiller, and Alfe Mini, a nutrient drink for    great popularity as the only hair-
women.                                                                                   growth treatment recognized as
                                                                                         effective by the FDA.
   Taisho aims to strengthen these brands into the No. 1 name in each product cat-
egory. Moreover, we will expand our product lineup from the customer’s point of
view in response to qualitative changes in consumer needs for health products.
   In fiscal 2002, we introduced an array of new products, including the nutrient
drinks Lipovitan 8 II and Lipovitan 11 Royal, the cold remedies Pabron Ace Granules
and the new-formulation gelatin-based Pabron Cough Medicine (Stick Jelly), and the
switch-to-OTC athlete’s foot treatment Dermarin Ace . In a new field for the
Company, Taisho also released Cholescare, a cholesterol-absorbing and controlling
agent designated as a food for specified health use.
   In May 2002, Taisho acquired permanent sales rights in Japan for the Vicks
Medicated Drops brand of throat lozenges from the Procter & Gamble Company in
the United States. Taisho started direct sales of Vicks Medicated Drops in January
2003, and sales have grown steadily since then.                                          The Pabron series of combination
                                                                                         cold remedies enjoys the No. 1
                                                                                         market share in Japan. Taisho con-
Effective marketing through direct sales structure                                       tinues to enhance its product lineup
The OTC drug market in Japan is shrinking as a result of falling retail prices. The      in an effort to address a variety of
                                                                                         cold-related ailments, marketing
self-medication market, however, remains promising over the long term. Taisho
                                                                                         Pabron in tonic, granule and gelatin
aims to grow by strengthening its marketing capabilities in each brand across all        forms and in both child and adult
product stages, from planning and development to promotion, based on product             dosages.

concepts that target the true needs and wants of consumers.
   Over 70% of sales in the OTC drug market are made up of major pharmaceutical
chain stores and companies. The remainder is claimed by retail pharmacies with a
high degree of expertise in products, information and customer relations. Since
deregulation took effect in 1999, quasi-drugs such as nutrient drinks have enjoyed a
wider range of sales channels including convenience stores, supermarkets, kiosks
in train stations and vending machines.
   Taisho has its own direct sales structure that bypasses drug wholesalers for
transactions with pharmacies and drugstores, giving the Company a strong connec-
tion to its customers. Through detailed area marketing, we plan to strengthen
marketing to leading pharmacies and drugstores in each area.




                                                                                                                                7
    In recent years, the number of            Equally important as its brand name, another strength of Taisho is its nationwide
    Japanese with high serum choles-
                                           database related to the self-medication market—the only one in the industry—that
    terol rates has risen significantly.
    High serum cholesterol rates are       the Company has compiled over a long period. Taisho will make every effort to
    now recognized as increasing the       expand its market share by using this database to examine and execute sales plans.
    risk of arteriosclerosis and cardiac
    and cerebral infarction. Containing
    depolymerized sodium alginate,         More leading products for fiscal 2003
    which lowers serum cholesterol         Taisho’s basic strategy is to quickly develop products and create technologies that
    levels, Cholescare is an officially
    approved product classified as a       are better than its competitors' in order to satisfy the diverse range of health-
    food for specified health use.         related needs of its customers.
                                              In an effort to expand the scope of application of its products, Taisho is focus-
                                           ing on the development of new drugs for treating lifestyle-related diseases and for
                                           improving quality of life. The Company is also working on developing new switch-
                                           to-OTC drugs (which are drugs that become OTC drugs though made from the
                                           active ingredients of prescription drugs).
                                              To differentiate its products, Taisho is working on the development and use of
    Livita is our brand covering all
                                           herbal medicine sources and applying for new products. At the same time, the
    Taisho Pharmaceutical food prod-
    ucts whose safety and effectiveness    Company is making efforts to develop technologies of drug formulations that
    have been demonstrated by scien-       enhance efficacy and reduce dosage through new formulations, better solubiliza-
    tific means, established in support
                                           tion and basic technologies.
    of growing public awareness of self-
    medication and concerns relating to       In fiscal 2003, we are concentrating efforts on launching new products tailored to
    lifestyle-related diseases.            consumer needs, which are applied as new constituents, new formulations, or prod-
                                           ucts in new fields like oral-care products. In the first quarter of fiscal 2003, we have
                                           already released Resty Tablets, an insomnia treatment, and DENTWELL VC, the first
                                           medicinal toothpaste with stable vitamin C. We plan to continue releasing a variety
                                           of new products, ranging from nutrient drinks and tonics to therapeutic medicines.
                                           In addition, we are adding sales of new products from the consumer health-care
                                           business division of Toyama Chemical.
                                              Since its release in 1999, the hair-loss treatment RiUP has created a large mar-
                                           ket for direct over-the-counter sales. In December 2002, we applied for approval to
                                           release RiUP for Women, which should expand the market even further. In addition,
                                           in the Livita series of food for specified health use, we introduced Cholescare and
                                           then followed up with Glucocare, a drink that slows the rise of blood sugar after
                                           meals, in February 2003. In fiscal 2003, we will continue to expand our product line-
                                           up and promote our brand name in the self-medication market.
                                              In addition to the aforementioned product development, Taisho strives to present
                                           information in an easy-to-understand format that appeals to consumers, including
                                           displays, design and containers. In this way, we also work to enhance our presence
                                           and competitiveness in the self-medication market.



8
New drugs for new growth
Growth in the domestic prescription pharmaceuticals market is stagnating due to gov-
ernment reforms to the health-care system, especially policies to restrict medical
expenditures. The International Conference on Harmonization of Technical
Requirements for Registration of Pharmaceuticals for Human Use (ICH) is opening up
the Japanese market to international competition, propelling the domestic pharmaceu-
ticals industry into an era of intense worldwide competition.
   Based on the basic philosophy of applying scientific, ethical and ingenious research
and development in pharmaceuticals for the welfare of the human race, Taisho is com-
mitted to the timely creation of innovative pharmaceuticals for the world market based
on new fundamental strategies in the Prescription Pharmaceutical Operation Group.
   The Prescription Pharmaceutical Operation Group boasts a lineup of approximately
20 products, including Clarith, a macrolide antibiotic agent that continued record-
breaking sales growth in fiscal 2002, as well as Palux, a peripheral vasodilator, Lorcam,
a nonsteroidal anti-inflammatory drug, Ancaron, an anti-arrythmic agent, and Solon, an
anti-ulcer agent.
   Based on evidence based medicine (EBM), we disseminate information regarding the
appropriate use of pharmaceuticals to doctors, pharmacists and other medical profession-
als. At the same time, we concentrate on improving the qualifications of medical
representatives, who collect clinical data and make reports on needs in the medical market.
   Over the past few years, the global pharmaceutical market has come to appreciate
the necessity of major new product introductions for future growth. In turn, pharma-
ceutical companies are faced with the important task of enhancing their development
capabilities for new drugs. As a result, Taisho is naturally working to bolster its new
drug development capability in-house and through business tie-ups with companies in
Japan and overseas.


Tie-up with Toyama Chemical boosts R&D and marketing capabilities
One of the major highlights of fiscal 2002 in the Prescription Pharmaceutical Operation
Group was the capital and business tie-up with pharmaceutical manufacturer Toyama
                                                                                                Clarith, a macrolide antibiotic agent
Chemical in August. Toyama Chemical has strengths in antibiotic agents.
                                                                                                developed by Taisho’s Research
   In October 2002, Taisho and Toyama Chemical jointly established Taisho Toyama                Center, is the Prescription
Pharmaceutical as a domestic marketing company. Taisho Toyama Pharmaceutical ini-               Pharmaceutical Operation Group’s
                                                                                                flagship product.
tiated operations in April 2003, and is already contributing to stronger marketing
activities. Since April, the new company has been in charge of sales and promotional
activities of existing products of both companies, and it reserves the first refusal right of
newly developed products of both companies. The new company will have more than
1,000 medical representatives from the combination of approximately 500 medical



                                                                                                                                        9
                                                representatives from Taisho’s Prescription Pharmaceutical Operation Group sales
                                                division and about 500 medical representatives from Toyama Chemical’s sales
                                                department. Backed by this increase in the number of domestic salespeople,
                                                Taisho Toyama Pharmaceutical is targeting net sales of ¥120.0 billion in fiscal 2005.
                                                   Of the products under development at Toyama Chemical, the rheumatism treat-
                                                ment agent T-614 is preparing for approval application ahead of its expected release in
                                                2005 in Japan. Currently in the clinical development stage, the quinolone synthetic
                                                antibacterial agent T-3811 is expected to go on sale in oral form in Japan in 2006.
                                                Toyama Chemical also has many other new drugs in the pipeline, including T-588, a
                                                therapeutic agent for Alzheimer-type dementia. The tie-up has led to a stronger lineup
     Taisho’s development activities focus
                                                of potential new drugs that are likely to hit the market in a few years.
     on high-potential research themes
     that reflect the specific needs of            Taisho and Toyama Chemical have signed an agreement to expand their collective
     medical practitioners and con-             pipeline of new drugs through the establishment of a joint research and development
     sumers. The Company adopts the
                                                structure for the exchange of R&D personnel, reciprocal access to libraries of pharma-
     standard development process of
     testing, clinical trials and application   ceutical compounds, and the sharing of platforms including overseas development
     for approval from Japan’s Ministry of      bases and experimental treatment facilities.
     Health, Labour and Welfare. After
     obtaining regulatory approval and
                                                   Taisho has gained a potent partner through this agreement, and the Company
     completing a product launch, Taisho        expects to experience a new stage of growth in its Prescription Pharmaceutical
     conducts thorough market research          Operation Group.
     in an effort to develop variants and
     related products.
                                                Strengthening position in infectious disease field and
                                                improving business efficiency
                                                In fiscal 2003, Taisho is prioritizing the accelerated launch of marketing activities of
                                                Taisho Toyama Pharmaceutical in its management measures for the Prescription
                                                Pharmaceutical Operation Group. The Company expects net sales of ¥95.0 billion in
                                                fiscal 2003 and is implementing measures to increase business efficiency in order to
                                                improve profits. Both companies have already streamlined their respective opera-
                                                tions and consolidated them into 33 facilities, of which 22 are branch offices, under
                                                Taisho Toyama Pharmaceutical. Moreover, we are promoting higher business effi-
                                                ciency including distribution systems. On the marketing front, we are concentrating
                                                efforts on expanding the presence of our core products for orthopedic surgery,
                                                including Lorcam, and promoting our mainstay antibiotic bacterial agents, which
                                                account for more than 50% of net sales. Our medium-term objective is to become
                                                No. 1 in the areas of infectious disease treatments (antibiotics and antifungals) and
                                                anti-inflammatory agents in Japan. By realigning our bolstered staff of medical rep-
                                                resentatives and setting targets, we plan to focus resources on university hospitals
                                                and central hospitals, strengthen area marketing tailored to regions, improve the
                                                doctor coverage ratio and conduct consulting promotions.



10
   Sharing the basic goal of constantly releasing new drugs, Taisho and Toyama           Standards for drug development,
                                                                                         including testing, clinical trials and
Chemical aim to increase their synergies in the infectious disease field, an area of
                                                                                         approval processes, vary from
mutual strength, and will promote joint research in order to become a company that       country to country. In line with a
is best-of-class in its area of operations. We also aim to expand our new-drug           current movement to internationally
                                                                                         unify these standards, the
pipeline and accelerate and reinforce the development structure toward simultane-
                                                                                         Prescription Pharmaceutical
ous development in Japan and overseas.                                                   Operation Group is building a struc-
                                                                                         ture to facilitate the attainment of
                                                                                         world-class standing in terms of
Toward an era of growth for Taisho-developed products                                    research quality and speed.
To prosper amid global competition in research and development, Taisho has
worked to strengthen and upgrade its research foundation. The Company has
defined phases of development by referring to the years 1995—2001 as the era of
change, 2002—2009 as the era of nurturing and 2010 onward as the era of growth.
   Taisho marked the era of change as a time to upgrade its platforms for drug
research, including personnel and organizations, to constantly create original candi-
date substances in stages. While building a foundation for drug research and
development, Taisho narrowed its field for development and tightened the focus of
its research, resulting in the discovery of several development candidate sub-
stances. From fiscal 2003, Taisho has entered the era of nurturing. During this era,
the Company aims to build a development structure able to take candidate sub-
stances it discovered and develop them into pharmaceuticals faster and with a
higher success rate than rival companies. Furthermore, the Company aims to create
a drug development structure able to develop original drugs on a consistent basis.
   Taisho plans to move six candidate substances for psychiatric disorder, cerebral
circulation disease, diabetes, allergies and other fields to the clinical development
stage (Phase I) within two years. In fiscal 2003, the Company plans for three of these
candidate substances to enter Phase I clinical trials. Of these, Taisho expects strong
demand due to large market scale for TS-011, a treatment for acute stages of cere-
bral infarction, and TS-021, a treatment for type-II diabetes. In addition, we expect
MGS0028, for schizophrenia, licensed to Merck & Co. of the United States, and CRA
receptor compound, an antidepressant and anti-anxiety treatment under joint devel-
opment with Janssen Pharmaceutica to enter Phase I.
   In September 2002, we further reinforced product development by signing an
agreement with Nissan Chemical Industries, Ltd. for the joint development of NT-
702 (code name NM-702 in the United States; in late Phase II in the United States
and completed Phase I in Japan), a therapeutic agent for chronic arterial occlusion.
   New products from Toyama Chemical are scheduled to be launched in 2004—
2005. From 2008, Taisho expects these proprietary products to reach
commercialization, leading to the regular release of new drugs.



                                                                                                                                  11
                                                                                   Environmental Activity Promotion System
                                                                           Taisho’s Basic Policies and Standards of Conduct Regarding the Environment

                                                                                                      Issues and objectives                                   Environmental Administration Section
                                                                                                                                                                         Secretariat
                                                                                                                                            P   Environmental Practices           Environmental
                                                                                           Environmental policies, targets and objectives
                                                                                                                                                                Council                   Council
                                                                                                         Branch Offices
                                                                                                                                                   D
                                 Review corporate activities       Review planning and operations Environmental Management Operation and management                       Operation and management
                                                                                                            System
                                                                               A
                                                                                                    Inspection and adjustment

                                                                                                                     C
                                 Environmental Administration Section
                                                                                                    Inspection and adjustment
                                       Information Disclosure
                                       Environmental Report                                   Environmental Administration Section
                                       Environmental Accounting
                                                                                                    Environmental Auditing
                                                                                                Identify and evaluate performance
                                                                                                Environmental risk inspection




                                                          Organized for Environmental Preservation
                                                          Environmental preservation is an important issue underlying corporate activities at Taisho,
                                                          from product development through manufacture, distribution, consumption and disposal. In
                                                          an effort to ensure a clean global environment for future generations, Taisho has formulated
                                                          its Environmental Management & Promotion System, based on its Basic Environmental
                                                          Policy, and comprising six Environmental Action Guidelines.
                                                              From an organizational standpoint, Taisho has established the Environmental Council,
                                                          comprised of directors of all relevant divisions, which deliberates and makes decisions
                                                          regarding environment-related issues. The Environmental Practices Council has also been
                                                          established to promote implementation of items decided by the Environmental Council.
                                                              In addition, Taisho has created the Environmental Administration Section at the Head
                                                          Office, whose function is to perform environmental audits, promote environmental activities
                                                          and to ensure the open and fair disclosure of the Company’s environmental activities through
                                                          such vehicles as Taisho Pharmaceutical’s Environmental Report.

                                                          Introducing Environmental Auditing and Accounting
                                                          Following ISO 14001 certifications at the Company’s Omiya and Hanyu factories, Taisho
                                                          acquired certification at its Okayama Factory in March 2003, completing accreditation at all
                                                          three manufacturing facilities.
                                                               In the area of environmental audit, the Company has conducted an internal audit once a
                                                          year in line with ISO 14001 guidelines. This was in conjunction with an external audit also con-
                                                          ducted once a year. From fiscal 2002, Taisho has implemented a third tier, conducted by the
                                                          Environmental Administration Section. This audit examines, confirms and evaluates each
                                                          facility’s performance under the Company’s Action Guidelines in an effort to further improve
                                                          environmental activities.
                                                               Moreover, Taisho has introduced environmental accounting from fiscal 2002 with the aim
                                                          of effectively recognizing and recording the costs associated with its environmental activities
                                                          and to ensure accurate and timely information disclosure to all stakeholders.

                                                          Implementing Measures to Reduce Environmental Load
                                                          Concerns for the environment and its preservation underpin all aspects of Taisho’s business
     High-concentration wastewater                        activities beginning with the product design phase. As another example, the Company is shift-
     processing facilities at the Omiya                   ing from polyvinyl chloride (PVC) to polypropylene containers and packaging—69%
     Factory                                              polypropylene in fiscal 2001 and 80.6% in fiscal 2002—in an effort to reduce dioxin emissions,



12
which result from the incineration of PVC. Taisho is also progressively employing 100% recy-
cled paper in packaging—82% of all paper-packaged products in fiscal 2001 and 93.2% in
fiscal 2002—with the aim of conserving resources.
     In fiscal 2002, Taisho also introduced contents labels for 42 additional products to support
recycling efforts through the correct separation of waste. As of the end of fiscal 2002, all
Taisho products are appropriately labeled. Moreover, from a product design standpoint, the
Company is shifting toward the use of lightweight tea-colored bottles for its tonics and nutri-
ent drinks, which facilitate recycling and resource conservation.
     From the standpoint of energy conservation, Taisho has implemented Groupwide targets
for the reduction of waste. These include the reduction of carbon dioxide emissions resulting
from energy consumption by the Group’s research, production and administrative depart-
ments in fiscal 2005 to 6% of net sales based on fiscal 1999 levels, and the reduction of
disposal by landfills to less than 50%.
     Taisho is also actively promoting the recycling of solvent waste at its manufacturing facili-
ties in an effort to reduce environmental load. In fiscal 2002, the Company successfully
developed new technology for the recovery of organic solvents from high-concentration efflu-
ent at its Omiya Factory. For its efforts in this area and the significant reduction in industrial
waste (20% in fiscal 2001), Taisho received the Saitama Environmental Award from the
Saitama Prefectural Government.                                                                       As a part of our efforts to promote
                                                                                                      recycling, we display product ingre-
Contributing to Society as a Good Corporate Citizen                                                   dients on external packaging.

Information Disclosure
As individuals take greater care and responsibility for their personal health, Taisho has
responded to a growing focus on self-medication by establishing a Customer Hotline to deliv-
er accurate, appropriate and timely health- and drug-related information. In fiscal 2002, the
Company fielded approximately 41,000 calls relating primarily to the use of products. In addi-
tion, while providing easy-to-follow information regarding usage and efficacy of drugs, Taisho
supports pharmacies and drugstores as local distribution centers of health-care information
through the quarterly release of Self-Doctor since 1997.
                                                                                                      Because the green and black glass
Self-Medication Promotion Activities                                                                  bottles used in our Alfe and Zena
The promotion of self-medication is a key global issue and countries throughout the world are         nutrient drinks are more difficult to
                                                                                                      recycle than brown glass bottles,
advancing a number of initiatives. One such initiative in Japan is the establishment of the non-
                                                                                                      we plan to start gradually introduc-
profit organization Self-Medication Advocacy Council (SMAC) in May 2002. Focusing on the              ing brown glass bottles for these
individual, Taisho works in concert with SMAC in the promotion of health, medicine and welfare.       products.

Life Science Forum
The Life Science Forum has been held since 1986. Targeting newspaper, magazine and women’s
lifestyle journalists, the forum provides the latest research and information across a broad spec-
trum of health-related topics including molecular biology, nutrition and pharmacology. In 1997, to
mark the 100th forum Taisho received a certificate of appreciation from the news media.

The Uehara Memorial Foundation
In February 1985, Taisho established the Uehara Memorial Foundation to commemorate the
Company’s 70th anniversary and in memory of Taisho’s former president and chairman. The
Company established the foundation to support research in various fields relating to life sciences,
to fund endowment lectures and to sponsor the Uehara Award for outstanding research achieve-
ments. In fiscal 2002, the foundation's grants and awards totaled approximately ¥927 million.

Sports Promotion                                                                                      A press conference was held in May
Taisho has been an official sponsor of Japan’s national rugby team since May 2001. The                2002 to announce the establishment
Company also contributes to sporting events and activities through the Lipovitan D Challenge          of the Self-Medication Advocacy
EKIDEN Carnival, a series of relay races held across Japan.                                           Council.




                                                                                                                                              13
     RESEARCH AND DEVELOPMENT




                            Broad-based research activities for new prescription and OTC drugs
                            Our Research Center located near the Omiya Factory in Saitama Prefecture carries out
                            our research activities for the discovery and development of new medicines.
                                At our Medicinal Research Laboratories, we conduct research into prescription
                            pharmaceuticals. We search for and select target molecules from new genomes that
                            are related to the emergence and advancement of illnesses. We employ various new
                            technologies in new-drug discovery, including combinatorial chemistry, which is able to
                            quickly create compounds; high-throughput screening (HTS), which automatically
                            batch-processes assessments of drug efficacy; and bioinformatics, which employs
                            computers to carry out genome sequencing. Applying these and other cutting-edge
                            technologies, our research structure is able to efficiently discover promising original
                            substances. In 1995, Taisho reinforced its drug development structure by overhauling
                            research functions. Since then, the Company has focused research efforts on the dis-
                            covery of new drugs in such fields as the central nervous system, allergies, diabetes
                            and other areas of competence including prostaglandin and macrolide antibiotics. As a
                            result of these efforts, we expect a number of original compounds to enter the clinical
                            development stage during the current fiscal year.
                                At our Self-Medication Laboratories, which handle the research and development of
                            OTC drugs, we are working to develop products that offer high efficacy, safety and con-
                            venience to consumers. We focus efforts on switch-to-OTC drugs, whose classification
                            has shifted from prescription to OTC, direct-to-OTC drugs, which receive immediate
                            OTC approval, and research into drug delivery systems. Taisho strives to improve the
                            quality of life of consumers as a leader in the OTC drug market, as shown by the hair-
                            growth treatment for male-pattern baldness RiUP, which was the first direct-to-OTC
                            drug in Japan in 1999; the athlete’s foot treatment Dermarin Ace, which is used only
                            once per day for best results; and the hemorrhoid treatment Preser Ace.


                            Expanding overseas development
                            Overseas, Taisho is actively engaged in the joint development and exchange of technology
                            with major drug companies and collecting information related to our research activities.
                            Taisho and Janssen Pharmaceutica are cooperating in the joint research and development
                            of treatments for depression and anxiety. The Company is also aggressively pursuing tie-
                            ups with major companies overseas, such as the licensing of a new proprietary substance
                            for the treatment of schizophrenia to Merck & Co. Moreover, to speed up new drug develop-
                            ment overseas, we established Taisho Pharmaceutical R&D Inc. as a subsidiary in New
                            Jersey, U.S.A., in August 2001. We intend to continue strengthening our three-region devel-
                            opment structure of Japan, the United States and Europe.




14
GLOBAL PRESENCE




                                                                         Manufacturing & Sales
                                                                         Sales Only
                                                                         Representative Office
                                                                         R&D Subsidiary




Providing the world with Japan's No. 1 tonics and nutrient drinks
Taisho is a world-class producer of OTC medicines. Building on strong popularity in
Japan, Taisho has made concerted efforts to promote its Lipovitan D nutrient drink
overseas. Lipovitan began its journey overseas in 1963, and is now manufactured and
sold by subsidiaries located in Hong Kong, Taiwan, Malaysia, the Philippines,
Indonesia, Thailand, Vietnam, China, the United States and the United Kingdom.
   In 1998, Taisho began selling Lipovitan LIBOGEN in China (excluding Hong Kong).
The Company is strengthening sales promotion activities to the huge market of more
than 1.2 billion people in China through bases in Shanghai, Beijing and Guangzhou. In
addition to Lipovitan LIBOGEN, in February 2002 we launched the nutrient drink
Libaojian Yirenzhuang (Lipovitan Alfe), targeting women that are active socially in
China, which is experiencing sharp economic growth. In addition, we have been mar-
keting actively in the United Kingdom and other European countries lately.
    Health and nutrient drink sales have expanded to include 18 countries, mainly in
Asia, and have taken root especially in Southeast Asia as they have in Japan. We will
continue to promote the development and sale of Lipovitan as an energy drink to peo-
ple around the world in a way that identifies with local customs and cultures.
    In prescription drug markets, Taisho sells the core product clarithromycin (trade
name Biaxin/Claricid in overseas countries and Clarith in Japan), a popular macrolide
antibiotic agent, through Abott Laboratories of the United States to approximately 90
countries around the world. Peak annual sales of this drug to date have exceeded
US$1 billion. Taisho aims to be a global prescription pharmaceutical drug manufac-
turer that provides innovative products to people around the world.




                                                                                                 15
     PRODUCTION AND DISTRIBUTION




                              Toward world-class quality assurance and faster commercialization
                              Taisho is concentrating efforts on the construction of a production structure compliant
                              with good manufacturing practice (GMP) standards in Japan as well as the United States,
                              which are viewed as the most stringent in the world. We are building a quality assurance
                              system at each of our factories based on highly precise systems automation. We are
                              constantly affirming the quality of our products shipped to markets around the world
                              and feeding back this data to the production process and relevant manufacturing bases.
                                   The Omiya Factory, our main plant, established the new Quality Control Building in
                              December 2001 to help accelerate commercialization and to acquire global standards
                              quality assurance certification. The six-floor building houses the Quality Control
                              Division, Production Technology Laboratories and Environment Division. Working
                              together, this organization aims to further improve quality and business efficiency.
                                   The Production Technology Laboratories oversee and manage the process of trans-
                              ferring research from our laboratories to the production floor. Working in unison with
                              the Quality Control Division, they have also made possible faster commercialization
                              while maintaining quality assurance and high productivity.
                                   In April 2002, Taisho completed a ¥13.5 billion expansion of its Okayama Factory,
                              the main plant for nutrient drinks in western Japan. The new production lines for nutri-
                              ent drinks are able to produce 1.1 million units per day. The four new high-speed filling
                              and packaging lines can alternate between 100ml and 50ml bottles in accordance with
                              demand. Taisho is now able to assure a stable supply of product during peak demand
                              periods and to take advantage of the growing number of sales channels resulting from
                              deregulation and to offer a more diverse range of products.


                              Completion of Omiya Distribution Center to increase distribution efficiency
                              In addition to the new Quality Control Building at the Omiya Factory and facility expansion at the
                              Okayama Factory, Taisho has completed construction on the Omiya Distribution Center, the fifth
                              phase of a plan to renovate plant facilities. The center began operations in August 2002.
                                   The new distribution center aims to reduce distribution costs and improve customer
                              satisfaction while adjusting to changes in the operating environment. It has the dual
                              functions of warehousing for receiving and storing products and distribution to cus-
                              tomers in the Kanto, Koshinetsu and Shizuoka regions. The facility enables improved
                              shipment precision and shortened lead times due to the employment of distribution
                              codes (ITF) and a high-speed product case sorter. The facility also realizes cost reduc-
                              tions through labor and personnel savings.
                                   The Omiya Factory employs factory automation technology in each process, including
                              distribution. We aim to build a computer-integrated manufacturing (CIM) system that inte-
                              grates basic systems for marketing, distribution and other data over information networks.



16
REVIEW OF OPERATIONS




Top-Selling Self-Medication Products
                                                                                                                                 Year ended March 31, 2003
                                                                                                      ¥ Billions       %*
                                                Tonics and Nutrient Drinks                             ¥112.9         57.9%
                                                   Lipovitan D                                            77.9        39.9
                                                Cold Remedies                                             28.7        14.7
                                                Gastrointestinal Treatments                                 5.3        2.7
                                                RiUP, etc.                                                17.7         9.1
                                                Livita Series                                               1.5        0.8
                                                Others                                                    29.0        14.8
                                             *Percentage of total sales of self-medication products

            Main Products
            Type                     Category                                Product Name
            Internal Medications     Tonics and Nutrient Drinks              Lipovitan D/Lipovitan 8 II/Lipovitan Gold
                                                                             Zena F-I/ F-II/F-III/King
                                                                             Alfe Mini
                                     Cold Remedies                           Pabron Ace/Pabron S Gold
                                                                             Pabron S/Pabron N
                                     Gastrointestinal Treatments             Taisho Kanpo Ichoyaku
                                                                             Avalon Z/Avalon S
                                                                             Colac/Colac Soft/Colac Herb
                                     Painkillers                             Naron Ace
                                     Motion Sickness Remedies                Semper QT/Semper/Semper Oral Solution
            Topical Medications      Hair-Care Products                      RiUP
                                                                             Pre-RiUP
                                     Eye-Care Products                       Iris Neo/Iris CL-I Neo
                                     Athlete's Foot Treatments               Dermarin Ace/Dermarin L High
                                                                             Dermarin L Liquid Hi
                                                                             Dermarin Ice Spray/Dermarin Cool Powder
                                     Hemorrhoid Treatments                   Preser Ace/Preser Ace Ointment
                                                                             Preser Clean Ace
                                     Analgesics and                          Menfula Hap IM /Menfula Cool IM
                                       Anti-inflammatories                   Menfula Ice 80 /Menfula Ice Spray




Top-Selling Prescription Pharmaceutical Products
                                                                                                      ¥ Billions       %*        Year ended March 31, 2003

                                                Clarith                                                  ¥27.1        34.3%
                                                Palux                                                     14.5        18.4
                                                Lorcam                                                      4.2        5.3
                                                Ancaron                                                     3.5        4.4
                                                Solon                                                       2.6        3.3
                                                Metligine                                                   2.4        3.0
                                                Limas                                                       2.3        2.9
                                                Royalties                                                   6.3        8.0
                                                Others                                                    16.1        20.4
                                             *Percentage of total sales of prescription pharmaceutical products


            Main Products (Taisho Toyama Pharmaceutical)
            Category                   Product Name                Drug Classification                             Launch Date
            Anti-inflammatory          Rinlaxer                    Muscle Relaxant                                   Apr. '79
                                       Alvo                        NSAID                                             Dec. '85
                                       Lorcam                      NSAID                                             Feb. '01
                                      *Flucam                      NSAID                                             Dec. '99
            Dermatology                Pandel                      Topical Corticosteroid                            Feb. '83
            Central Nervous System     Limas                       Antimanic Agent                                   Feb. '80
            Gastrointestinal Tract     Solon                       Anti-ulcer Agent                                  Mar. '84
            Cardiovascular             Palux                       Peripheral Vasodilator                            Oct. '88
                                       Metligine                   Antihypotensive Agent                             Jun. '89
                                       Ancaron                     Anti-arrhythmic Agent                             Oct. '92
                                      *Luprac                      Diuretic Agent                                    Dec. '99
            Immunology                 Metalcaptase                Antirheumatic Agent                               Jun. '78
            Infection                  Clarith                     Macrolide Antibiotic Agent                        Jun. '91
                                      *Tomiron                     Cephem Antibiotic Agent                           Aug. '87
                                      *Ozex                        Quinolone Antibacterial Agent                     Apr. '90
                                      *Pentcillin                  Penicillin Derivative Agent                       Feb. '80
                                      *Tazocin                     Complex Penicillin Derivative Agent               Jun. '01
                                      *Halospor                    Cephem Antibiotic Agent                           Feb. '81
                                      *Pasil                       Quinolone Antibacterial Agent                     Sep. '02
            Others                     Hikamilon                   Intra-articular Injection of                      Jul. '95
                                                                      Sodium Hyaluronate
                                       Hornel                      Active Vitamin D3                                Aug. '01
                                       Biopex                      Bone Filler                                      Jun. '00
            *Developed by Toyama Chemical Co., Ltd.
                                                                                                                                                             17
     Self-Medication Operation Group




     Consolidated Sales Breakdown                           Through its self-medication operations, Taisho has led the market by consistently
     (Millions of yen)                                      delivering a variety of products that meticulously match changing conditions and
     1,793        1,689
                                  1,547        1,357        consumer needs.
     7,974        7,166           7,389        8,535           In addition to its mainstay products such as the Lipovitan series of tonics and
                                                            nutrient drinks, the combination cold remedy Pabron, and gastrointestinal treat-
                                                            ments, Taisho has recently expanded its lineup of lifestyle-improvement products to
                                                            include the RiUP series, a hair-growth treatment for male-pattern baldness, which
     191,745      190,042         183,492      185,233
                                                            has attracted significant market acceptance. Our foods for specified health use, dis-
                                                            tributed through food-oriented sales channels across Japan, have also garnered
                                                            major market shares in a variety of categories. Following deregulation in 1999, many
                                                            of Taisho’s nutrient drinks categorized as quasi-drug products are now marketed
                                                            through convenience stores and supermarkets, expanding our sales channels
         2000/3          2001/3       2002/3       2003/3
         OTC Products, etc.                                 through food-oriented outlets.
         Consumer Goods
         Others
                                                               In fiscal 2002, the over-the-counter medication market fell 5%, battered by con-
                                                            tinued difficult operating conditions. Utilizing food-oriented sales channels,
                                                            however, the quasi-drug tonics and nutrient drinks market expanded, despite stiff
                                                            competition. Against this backdrop, sales of the Self-Medication Operation Group
                                                            increased 1.4% from the previous fiscal year to ¥195.1 billion reflecting the release
                                                            of new products as well as efforts to cultivate new markets, strengthen marketing in
                                                            the nutrient drinks business and upgrade other OTC product lineups.
                                                               By product category, we released new products in the Lipovitan series, such as
                                                            Lipovitan 8 II and Lipovitan 11 Royal and strengthened our marketing efforts through
                                                            food-oriented channels, focusing on supermarkets. Taisho recorded a strong sales
                                                            performance following the launch of the new Pabron Ace Granules, part of the Pabron



18
                                                       Quasi-Drug Drinks:                                              Lipovitan D:
                                                       Sales Breakdown by Sales Channel                                Sales Breakdown by Sales Channel
                                                       (Billions of yen)                                               (Billions of yen)




                                                                                                                       24.0            30.0            35.0            38.4
                                                       24.0            35.0            42.5            45.6


Top-Share Brands
Name                 Category

Lipovitan Series     Tonics and Nutrient Drinks
                                                       55.3            51.7            43.3            41.7
                                                                                                                       53.3            49.6            42.2            39.5
Pabron               Cold Remedies
RiUP                 Hair-Care Products
Colac                Laxatives
Dermarin             Athlete's Foot Treatments                2000/3          2001/3          2002/3          2003/3          2000/3          2001/3          2002/3          2003/3
                                                           Drug-Oriented Channels                                          Drug-Oriented Channels
                                                           Food-Oriented Channels                                          Food-Oriented Channels
                                                       (Non-consolidated basis)                                        (Non-consolidated basis)




series of cold remedies, with sales of the series increasing 7.2% year on year. This
reflected Pabron's standing as a leading brand in its market. In the Dermarin series of
athlete’s foot treatments, the Company launched a new switch-to-OTC product
Dermarin Ace and cultivated new markets with the release of Dermarin Cool Powder
for women. Sales of the RiUP series of hair-growth treatments declined 4.3%. This
was an improvement over the sales decrease in the previous fiscal year, however,
attributable to the introduction of a new 120ml bottle to supplement the 60ml size. In
March 2002, Taisho introduced Cholescare, a drink that has been categorized among
foods for specified health use, which reduces serum cholesterol levels. In February
2003, the Company also released Glucocare, another food for specified health use,
which slows the rise of blood sugar after meals. Sales of both products have per-
formed steadily since introduction. In May 2002, the Company acquired the license to
market U.S.-based Procter & Gamble Company’s Vicks Medicated Drops. Taisho com-
menced direct sales from January 2003 and business continues to progress smoothly.
    Looking overseas, sales of tonics and nutrient drinks fell slightly overall, despite
growth in the United States, China and the Philippines.
    In fiscal 2003, we plan to continue the introduction of new products that address
the needs of our customers and will work to reinforce our brand name in foods for
specified health use through our Livita series, for example. For the fiscal year ending
March 31, 2004, we are anticipating a 2% increase in sales to ¥199.5 billion.
    We will continue our focus on proposing brand concepts that realize benefits to our
customers and in planning, developing and cultivating new products overall, will for-
mulate marketing policies on a brand-by-brand basis. Through meticulous
management and area marketing, Taisho strives to further expand its market share.



                                                                                                                                                                                       19
       Prescription Pharmaceutical Operation Group




     Consolidated Sales Breakdown                           At Taisho, we firmly believe the continuous introduction of new ethical drugs to the
     (Millions of yen)                                      market is essential to survival. To this end, Taisho will work to speed up the devel-
                                               6,321        opment of innovative proprietary products and to fortify its R&D framework. In
                                  6,775
     6,211        6,225
                                  9,647        10,994       collaboration with Toyama Chemical, the Company is also anticipating advances in
     8,413        10,133
                                                            its research and development activities. Moreover, through its joint-venture com-
                                                            pany with Toyama Chemical, Taisho Toyama Pharmaceutical, Taisho has expanded
                                                            and strengthened its nationwide sales network.
     59,114       59,141          62,547       61,637
                                                               In fiscal 2002, the prescription pharmaceutical market grew 4% year on year.
                                                            Despite this growth, Taisho’s sales in this segment were ¥79.0 billion, on par with
                                                            the previous fiscal year. This reflected measures by public authorities to curb
                                                            medical costs and downward revisions to prescription reimbursement prices
         2000/3          2001/3       2002/3       2003/3
         Prescription Pharmaceuticals
                                                            implemented in April 2002, with Taisho’s prices falling 6% for the period.
         Others
         Royalty Income
                                                               By product category, sales of mainstay Clarith , a macrolide antibiotic,
                                                            increased 4.9% in fiscal 2002. We are making every effort to increase peak sales of
                                                            this product. This however was offset by declines in sales of Palux injection, a
                                                            peripheral vasodilator, which fell 16.1% due to the reduction of prescription reim-
                                                            bursement prices and moves to curtail the use of high-priced drugs. On a brighter
                                                            note, sales of Lorcam, a nonsteroidal anti-inflammatory drug, posted strong
                                                            growth, rising 22.7% year on year, and Ancaron, a tablet for the treatment of car-
                                                            diac arrhythmia, surged 35.7%.
                                                               Royalty income in the Prescription Pharmaceutical Operation Group fell 6.7%
                                                            compared with the previous fiscal year.
                                                               Fiscal 2003 is the first full year of operations for our sales company Taisho
                                                            Toyama Pharmaceutical and we are expecting significant results from this new



20
Taisho Pharmaceutical: New Drug Pipeline (As of July 2003)
                        Product Name /                                                                     Independent and
Development Stage                                     Beneficial Effect, Disease Treated                                                        Notes
                       Development Code                                                                   Joint Development
 Application filed   RiUP                    Hair growth agent for women (OTC product)                                                Indication expansion
                     Clarith                 Oral antibiotic agent; more compact tablet                                               Additional formulation
                     Metligine               Antihypotensive agent; rapidly disintegrating tablet                                     Additional formulation
                     Solon                   Anti-ulcer agent; powder                                                                 Additional formulation
 Phase II / III      Ancaron                 Anti-arrhythmic agent; injection                         Sanofi-Synthelabo-Taisho        Additional formulation
                                                                                                       Pharmaceuticals Co., Ltd.
 Phase II            NT-702 (NM-702)         Intermittent claudication                                Nissan Chemical                 Phase II in the U.S. and
                                             (arteriosclerotic obliteration, spinal canal stenosis)    Industries, Ltd.               completed Phase I in Japan
                     ABT-773                 Oral ketolide antibiotic agent                           Abbott Laboratories             Postponed overseas
 Phase I             ST-152                  Asthma                                                   Seikagaku Kogyo                 United States
                     SUN N8075               Acute stage of cerebral infarction                       Suntory Limited                 United States
 Preclinical         TS-011                  Acute stage of cerebral infarction                       In-house                        Entering Phase I in fiscal
                                                                                                                                      2003 (estimate)
                     TS-021                  Type II diabetes                                         In-house                        Entering Phase I in fiscal
                                                                                                                                      2003 (estimate)
                     TS-022                  Atopic dermatitis                                        In-house                        Entering Phase I in fiscal
                                                                                                                                      2003 (estimate)
                     CRA receptor compound   Depression and anxiety                                   Janssen Pharmaceutica N.V.
                     MGS0028                 Schizophrenia                                            Licensed to Merck & Co., Inc.




company. In doubling our complement of medical representatives to more than
1,000, we have established a marketing framework capable of covering a broad-
ened range of medical institutions and doctors. We will also enhance the efficacy,
safety and quality of pharmaceutical treatment and support through optimal use of
information technology and systems and improvements to our “knowledge man-
agement.” With the inclusion of Taisho Toyama Pharmaceutical in the scope of
consolidation, we are forecasting net sales of ¥110.5 billion in fiscal 2003 for the
Prescription Pharmaceutical Operation Group, a year-on-year increase of 40%
from the ¥79.0 billion recorded in fiscal 2002. The benefits of Taisho Toyama
Pharmaceutical will be reflected not only in increased efficacy and expanded busi-
ness scale, but also in improvements in the Group’s earning power.
    Moreover, we are gearing up our sales structure in preparation for the launch
of new prescription medicines including Toyama Chemical’s antirheumatic agent,
synthetic antibacterial agents and other proprietary candidates, scheduled for
launch after 2005. Ultimately, Taisho strives to accelerate development of innova-
tive new drugs by leveraging the strengths of the two companies, in particular in
the field of antibiotic agents to combat infectious diseases.
    In response to calls from the market and to deliver new drugs, Taisho is dedi-
cated to pursuing the next stage of growth by actively promoting joint development
and business tie-ups both at home and overseas.




                                                                                                                                                                   21
     MANAGEMENT'S DISCUSSION AND ANALYSIS




     Financial Strategy                                                        Segment Information
     Taisho and the Taisho Pharmaceutical Group position enhanced              In the Self-Medication Operation Group, sales of the Pabron series
     asset efficiency, maintaining sufficient liquidity and working capital    of cold remedies increased 7.2% and contributed ¥1.9 billion,
     to sustain business activities, and a robust balance sheet as the cor-    fueled by the introduction of a new product, while the Company
     nerstones of its financial policy. Maintaining due diligence and care     also recorded strong performances by the antipyretic analgesic
     and a sound financial position are also integral to the smooth and        Naron Ace and the Dermarin series of athlete’s foot treatments.
     efficient procurement of investment and working capital funds.            Sales of the Livita series, a total brand covering foods for specified
        Investment decisions regarding research and development, capital       health use, including Cholescare, also boosted sales, generating a
     investment, M&A, brand and other acquisitions, are assessed on an         year-on-year increase of ¥1.1 billion.
     individual basis in the context of equity costs and the medium- and                              (Billions of yen)
                                                                               Self-Medication
     long-term potential of each project. The Taisho Pharmaceutical Group
                                                                               Net Sales &                          201.5         198.9         192.4         195.1
     strives to realize efficient management and appropriate cost control in   Operating Income
     an effort to generate business growth and stable cash flows.
                                                                                                       160.9

     Overview                                                                      Net Sales
                                                                                   Operating Income
     In fiscal 2002, ended March 31, 2003, Japan’s pharmaceutical
     industry was characterized by harsh conditions, impacted by the                                                67.4          61.1          53.2          50.4

     continued enforcement of measures to lower health-care costs.                                    41.0

     Over-the-counter medications also performed poorly owing to the
                                                                               Years ended March 31          1999          2000          2001          2002          2003
     effects of a prolonged economic recession. Overseas, conditions
     deteriorated on the back of a slowdown in the U.S. economy and               Moreover, Taisho acquired the open-ended license to market
     growing uncertainty regarding the situation in Iraq.                      Vicks Medicated Drops of U.S.-based Procter & Gamble. The
        Confronted by these circumstances, Taisho actively pursued             Company commenced direct sales and business continues to
     marketing activities, released new products and cultivated new            progress steadily.
     markets in an effort to combat international competition and to              The introduction of two new products in the Lipovitan series of
     secure sustained development and growth.                                  nutrient drinks offset a slight sales decline in existing products.
                                                                               Sales in this series were essentially on par with the previous fiscal
     Group Overview                                                            year. Despite increased overseas sales in the United States, China,
     The Taisho Pharmaceutical Group is made up of Taisho                      the Philippines and other regions, overall sales of nutrient drinks
     Pharmaceutical Co., Ltd. (“Taisho”), 21 subsidiaries, three affiliated    fell slightly on a year-on-year basis.
     companies and two other related companies.                                   Sales of the RiUP series of hair-growth treatments declined
        The Self-Medication Operation Group comprises Taisho, five             4.3%. This was an improvement over the sales decrease in the pre-
     domestic and 13 overseas subsidiaries, and one overseas affiliated        vious fiscal year, however, attributable to the introduction of a new
     company. The Prescription Pharmaceutical Operation Group is made          120ml bottle to supplement the 60ml size.
     up of Taisho, three domestic subsidiaries, one overseas subsidiary,          As a result of all these factors, sales in the Self-Medication
     two affiliated companies and two other related domestic companies.        Operation Group rose 1.4% to ¥195.1 billion, and comprised sales of
        In fiscal 2002, Taisho established Taisho Toyama Pharmaceutical        ¥185.2 billion in over-the-counter medications (up 0.9%), ¥8.5 billion in
     Co., Ltd. (55% shareholding), a joint venture with Toyama Chemical        sales of household goods and nutritional foods (an increase of 15.5%)
     Co., Ltd., which was newly included in the scope of consolidation.        and sales of ¥1.4 billion in other products (a decrease of 12.3%).
     This new company commenced full-fledged operations in April
                                                                               Prescription           (Billions of yen)
     2003 in line with original schedules. Taisho also acquired 43 million     Pharmaceutical                                                   79.0          79.0
     shares in Toyama Chemical, raising its ownership to 22%. Toyama           Net Sales &                          73.7          75.5
     Chemical has been included in the scope of consolidation as an            Operating Income        70.9

     affiliated company accounted for by the equity method.

                                                                                   Net Sales
     Net Sales                                                                     Operating Income   19.2          16.7
     Consolidated net sales for the fiscal year under review edged up
     1.0% compared with the previous fiscal year to ¥274.1 billion,
                                                                                                                                  5.5           7.5           4.0
     reflecting the Group’s aggressive marketing, the introduction of
                                                                               Years ended March 31          1999          2000          2001          2002          2003
     new products and efforts to cultivate new markets. Segment infor-
     mation is presented in the following paragraphs.


22
   In the Prescription Pharmaceutical Operation Group, sales of                                          ¥140 million, a drop of 27.8% compared with the previous fiscal year.
the Company’s mainstay Clarith, a macrolide antibiotic, increased                                           Devaluation losses on investment securities fell 69.7% to ¥665
4.9%, or ¥1.2 billion. Taisho also experienced favorable perfor-                                         million, mainly reflecting the absence of unrealized loss on golf
mances from Lorcam, a nonsteroidal anti-inflammatory drug,                                               membership of ¥114 million and restructuring expenses for sub-
and Ancaron, a tablet for the treatment of cardiac arrhythmia.                                           sidiaries of ¥130 million incurred in the previous fiscal year. Taisho
   Despite these favorable results, however, sales of the                                                however posted ¥1,296 million in prior years’ retirement benefit for
Company’s Palux injection, a peripheral vasodilator, fell sharply                                        directors, statutory auditors and executive officers as a result of
due to the impact of prescription reimbursement price cuts,                                              changes in accounting standards applied. As a result of all these
while revenues from overseas royalties also declined on a year-                                          factors, income before income taxes and minority interests
on-year basis.                                                                                           amounted to ¥60,269 million, a drop of 9.3% compared with the
   Total sales in the Prescription Pharmaceutical Operation Group                                        previous fiscal year.
were on par with the previous fiscal year and amounted to ¥79.0                                             Income taxes for the period totaled ¥24,892 million, a decrease of
billion. By product category, sales of ethical drugs fell 1.4% to ¥61.6                                  14.5%, while minority interests in loss of consolidated subsidiaries
billion, other sales increased 14.0% to ¥11.0 billion, while revenues                                    were ¥15 million. Net income in fiscal 2002 was ¥35,392 million, for a
from royalty income were ¥6.3 billion, a decline of 6.7% compared                                        net income margin of 12.9%. Net income per share was ¥105.81, with
with the previous fiscal year.                                                                           ROE of 7.3% and ROA of 6.1%.

                                                                                                         Net Income,            (Billions of yen)                                                     (%)
Income and Expenses                                                                                      ROE & ROA
                                                                                                                                                        12.14

In the areas of costs, Taisho took steps to reduce R&D and adver-
                                                                                                                                                        10.10
tising expenses. The cost of sales ratio and selling, general and
                                                                                                                                                                                    7.83
administrative (SG&A) expense ratio increased, however, due to a                                                                                                      6.88                        7.28
                                                                                                                                                                                    6.40
number of factors. The Company upgraded its drinks production                                                                                                         5.70                        6.10
                                                                                                             Net Income
line at its Okayama Factory and introduced new facilities at its                                             ROE
                                                                                                             ROA                29.6          50.8          31.3          37.4          35.4
Omiya Distribution Center, incurring an increase in depreciation
expense. In addition to a rise in sales and promotion expenses,
Taisho also incurred operating expenses in the acquisition of sales
                                                                                                         Years ended March 31          1999          2000          2001          2002          2003
licenses relating to products developed by Toyama Chemical,
including T-3811, a quinolone antimicrobial agent, and T-614, an
antirheumatic agent. As a result, cost of sales rose 3.6% to ¥73,346                                     Liquidity and Capital Resources
million, while the cost of sales ratio edged up 0.7 percentage point                                     Net cash provided by operating activities increased 19.6% to
to 26.8%, giving a gross profit for the fiscal year under review of                                      ¥53,420 million. Major components were income before income
¥200,731 million. SG&A expenses climbed 4.6% year on year to                                             taxes and minority interests, which fell 9.3% to ¥60,269 million, a
¥146,337 million, which translated to a 1.9 percentage point                                             drop in trade notes and accounts receivable of ¥6,481 million,
increase in the SG&A expense ratio to 53.4%. Operating income for                                        depreciation and amortization of ¥16,832 million (an increase of
the period fell 10.4% to ¥54,394 million for an operating income                                         18.6%), and a jump in operating assets. Income taxes paid for the
margin of 19.8%.                                                                                         period were ¥34,072 million, a drop of 10.1%.
                              (Billions of yen)                                                    (%)
                                                                                                            Net cash provided by investing activities was ¥10,419 million, a
Operating Income &                                   30.5
Operating Income                                                                                         turnaround of ¥40,874 million. The transfer from time deposits
Margin                                  26.0                                                             exceeding three months contributed to a decrease in time
                                                                   24.3
                                                                                 22.4                    deposits of ¥35,784 million. Another principal component was pro-
                                                                                               19.8
                          60.3             84.1          66.6          60.7          54.4
                                                                                                         ceeds from sales/redemption of marketable securities of ¥25,100
    Operating Income                                                                                     million. The outflow of investing cash flows was up 46.4%, attribut-
    Operating Income Margin
                                                                                                         able to payments for purchases of intangible assets of ¥8,976
                                                                                                         million relating to the acquisition of trademarks for Vicks
                                                                                                         Medicated Drops and to payments for the acquisition of Toyama
                                                                                                         Chemical stock totaling ¥19,012 million.
Years ended March 31               1999           2000          2001          2002          2003
                                                                                                            Net cash used in financing activities was ¥27,613 million, up
   Interest and dividend income declined 4.5% to ¥4,581 million,                                         ¥16,133 million from the previous fiscal year. The major component
while interest expenses fell 35.0% to ¥13 million. Accordingly, net                                      of this outflow was payments for purchases of treasury stock of
financial income totaled ¥4,568 million, a decrease of ¥207 million,                                     ¥19,307 million, an increase of ¥16,309 million. Cash dividends
or 4.3%. Equity in net earnings of affiliated companies amounted to                                      amounted to ¥8,467 million.



                                                                                                                                                                                                            23
     Cash Flows                  (Billions of yen)                                                         ratio was 84.1%, an improvement of 1.6 percentage points, reflect-
                                                                                                           ing the Company’s policy of essentially debt-free operations.
                                                 103.5
                                                                                                           Shareholders’ equity per common share was ¥1,474.65.
                                  77.1                          70.4           80.6               77.1


                                                                                                           Derivative Transactions
         Cash Flows              50.5           73.1           36.6           44.7            53.4         The Taisho Group does not engage in derivative transactions or
         Cash Flows from                                                                    10.4
         Operating Activities                                                                              apply derivative instruments and is not subject to market and credit
         Cash Flows from        -65.9          -53.4          -27.9          -30.5                         risks that would normally apply.
         Investing Activities


                                                                                                           Basic Earnings Distribution Policy
     Years ended March 31               1999           2000           2001           2002           2003
                                                                                                           To be able to maintain stable dividends at a high level while
                                                                                                           strengthening the Company’s corporate culture, Taisho is working
     Financial Position                                                                                    to increase retained earnings. Retained earnings will be appropri-
     Total assets as of the end of the fiscal year decreased 2.1%, or
                                                                                                           ated for investment that will strengthen the Company’s
     ¥12,329 million, to ¥577,707 million, reflecting the purchase of trea-
                                                                                                           foundations, including R&D, capital and new business development
     sury stock and a drop in unrealized gains of marketable securities.
                                                                                                           investment.
        Major movements in assets included the reclassification of a
                                                                                                              In fiscal 2002, Taisho bought back 9,817,000 shares of treasury
     portion of the Company’s investment in securities to marketable
                                                                                                           stock for a total acquisition cost of ¥18,808 million, in line with its
     securities and a slight increase in cash, including time deposits.
                                                                                                           profit-sharing policy. Moreover, the Company declared a dividend
     Other asset accounting line items fell, however, with current assets
                                                                                                           of ¥30 per share, comprising ¥5 per share in commemoration of its
     falling to ¥247,589 million, a decline of 1.7%. The Company’s liquidi-
                                                                                                           90th anniversary and an ordinary dividend of ¥25 per share. As a
     ty ratio remained at the extremely high level of 534%.
                                                                                                           result, the dividend payout ratio based on nonconsolidated net
        Investment securities stood at ¥179,102 million, a drop of 9.2%,
                                                                                                           income of ¥35,136 million was 28.6%, an increase of 6.2 percentage
     attributable to the reclassification to marketable securities identi-
                                                                                                           points, and the dividends to shareholders’ equity ratio was 2.0%, up
     fied above.
                                                                                                           from 1.7% in the previous fiscal year.
     Total Capital              (Billions of yen)

                                                              0.4
                                                                             0.5            0.3            Capital and IT-Related Investment
                                               0.4                           0.05
                                                              0.2                                          Capital investment totaled ¥8,957 million, a year-on-year decline
                                0.3            0.4
                                0.6                                                                        of 64.2%, and was primarily devoted to the capacity upgrade of
                                394.7          441.4          467.6          486.9          485.7          the Company’s drinks production line at its Okayama Factory and
         Short-Term Loans
                                                                                                           the introduction of new facilities at its Omiya Distribution Center.
         Current Portion of
         Long-Term Debt                                                                                    The Company does not anticipate undertaking any major invest-
         Shareholders' Equity                                                                              ments in fiscal 2003, with capital expenditure limited to repairs
                                                                                                           and maintenance. In addition, since fiscal 1999 Taisho has been
     Years ended March 31               1999           2000           2001           2002           2003
                                                                                                           carrying out an upgrade of its information systems in an effort to
                                                                                                           enhance efficiency. The new system, which covers accounting and
        Inventories were ¥18,580 million, down from ¥19,296 million as
                                                                                                           production operations, will come on line during fiscal 2003 for
     of the end of the previous fiscal year. The inventory turnover ratio
                                                                                                           Taisho Toyama Pharmaceutical. Taisho’s Self-Medication
     was an extremely healthy 14.8 times.
                                                                                                           Operation Group is expected to shift to the new system during the
        The introduction of new facilities at the Omiya Distribution Center
                                                                                                           first half of fiscal 2003.
     contributed to a 9.8% increase in the balance of buildings and
     structures, which stood at ¥110,425 million. Net property, plant and
                                                                                                           Capital                    (Billions of yen)                                                         (%)
     equipment, however, fell 4.7% to ¥102,720 million.                                                                                                                                     31.0
                                                                                                           Expenditures &
        Intangible assets increased 24.7% to ¥17,839 million mainly due                                    Percentage of
     to the acquisition of trademarks and sales licenses for three of                                      Cash Flows
                                                                                                                                                 20.3                         22.2
     Toyama Chemical’s over-the-counter drugs and for Vicks
     Medicated Drops. Deferred income taxes jumped 87.5% to ¥20,708                                            Capital Expenditures
                                                                                                               Percentage of            15.7                           15.6          25.0
     million.                                                                                                                                                                                               11.7
                                                                                                               Cash Flows
        Shareholders’ equity stood at ¥485,717 million, a decrease of
                                                                                                                                                        7.0      6.8                               9.0
     0.2%. The principal movements were net unrealized gains on secu-
     rities of ¥165 million and an increase in treasury stock of ¥19,309
                                                                                                           Years ended March 31             1999              2000        2001          2002             2003
     million to ¥22,756 million. As of the end of the fiscal year, the equity


24
Research & Development                                                                              infections. Toyama Chemical has also progressed to Phase II
The Company’s R&D policy focuses on investment in those areas                                       clinical trials of T-588, a treatment for Alzheimer’s disease, in
that provide the most efficacy. Taisho does not, however, antici-                                   the United Kingdom.
pate major expenditure in the foreseeable future. In the                                               In fiscal 2003, Taisho plans to commence Phase I clinical trials
Self-Medication Operation Group, Taisho continues to conduct                                        of three proprietary candidate substances, namely, TS-011, an
R&D in developing new products for improving quality of life,                                       agent for the treatment of stroke (acute stage); TS-021, a treat-
such as hair-loss treatments, additions to therapeutic OTC med-                                     ment for type-II diabetes; and TS-022, a treatment for atopic
icines and other health-related products. The Company                                               dermatitis. Overseas, the Company is pursuing development of
leverages its accomplishments in R&D related to prescription                                        new drug candidates and derivatives including MGS0028, a treat-
drugs and accumulated know-how to develop new self-medica-                                          ment for schizophrenia, which has been licensed to Merck & Co.,
tion products focusing on efficacy and safety. In the fiscal year                                   and a CRA receptor compound treatment for depression and anx-
under review, R&D expenditure in the Self-Medication Operation                                      iety co-developed with Janssen Pharmaceutica. Both are
Group totaled ¥6,904 million. In the Prescription Pharmaceutical                                    expected to enter the clinical trial stage soon.
Operation Group, Taisho concentrates on R&D into innovative
drugs that can be marketed on a global basis. R&D expenditure                                       Human Resources
in this Group amounted to ¥22,622 million, for a combined total                                     The total number of employees as of March 31, 2003 was 4,806,
of ¥29,526 million, or 10.8% of total net sales.                                                    a decrease of 88. The total number of employees on a non-con-
                                                                                                    solidated basis was 4,430, a decline of 80.
R&D Expenses &            (Billions of yen)                    12.2                           (%)
                                                                             11.9
Percentage of
Net Sales
                                                                                           10.8     Outlook
                                     8.7                                                            In fiscal 2003, ending March 31, 2004, Japan’s pharmaceutical
                                                  8.4
                                                                                                    industry is expected to remain weak, impacted by the continued
                                                                                                    enforcement of measures to reduce health-care costs. Against
    R&D Expenses
    Percentage of Net Sales   20.1         23.2         33.4          32.2          29.5            these difficult conditions, Taisho is anticipating a strong contri-
                                                                                                    bution from Taisho Toyama Pharmaceutical, established in
                                                                                                    fiscal 2002.
                                                                                                       In Japan, the aging of society, reforms to the pharmaceuticals
Years ended March 31             1999         2000         2001          2002          2003         industry, lower health-care costs and market deregulation are
                                                                                                    expected to intensify competition among companies, exacerbat-
Development Pipeline                                                                                ed by the inflow of foreign companies. The pharmaceuticals
Taisho and Taisho Toyama Pharmaceutical have a number of                                            market is also expected to exhibit increased demand for a
prescription pharmaceutical drugs under pipeline development.                                       diverse range of high-quality treatments and products, as peo-
In Japan, three additional formulations (including mainstay prod-                                   ple become more conscious of their health and well-being.
uct Clarith, an antibiotic) have already been filed. Two drugs,                                        In an effort to meet consumer needs, Taisho will focus on the
including ABT-773, a ketolide antibiotic, are currently in Phase II                                 area of self-medication by enhancing its lineup of products pro-
clinical trials. As for OTC products, RiUP (minoxidil) as a treat-                                  moting health, illness prevention, early detection and early
ment for female androgenetic alopecia has also been filed.                                          treatment. In the field of prescription ethical drugs, the
   Overseas, Taisho and Nissan Chemical Industries, Ltd. have                                       Company will push forward to develop internationally accepted
started late-Phase II clinical trials of a therapeutic agent for the                                innovative drugs, expand its product lineup, strengthen its
treatment of chronic arterial occlusion, NT-702 (development                                        structure through Taisho Toyama Pharmaceutical and improve
code NM-702 in the United States). The Company has also col-                                        its marketing capabilities.
laborated with Seikagaku Corp. in the development of ST-152, an
injectible asthma drug, and with Suntory Ltd. in the application of
SUN N8075 to treat acute cerebral infarction, currently in Phase I
clinical trials in the United States.
   In addition, Toyama Chemical is preparing application for clini-
cal trials of T-614, an antirheumatic agent jointly developed with
Eisai Co., Ltd. This product is scheduled for sale by Taisho
Toyama Pharmaceutical. In collaboration with Bristol-Myers
Squibb Company, Taisho is pursuing Phase III clinical trials of the
des-F(6)-quinolone T-3811, a potential treatment for bacterial


                                                                                                                                                                          25
     CONSOLIDATED BALANCE SHEETS
     Taisho Pharmaceutical Co., Ltd. and Consolidated Subsidiaries
     As of March 31, 2003 and 2002




                                                                                                                                                         Thousands of
                                                                                                                                                          U.S. dollars
                                                                                                                               Millions of yen              (Note 3)

     ASSETS                                                                                                             2003                     2002       2003
     Current assets:
     Cash and cash equivalents (Note 4) ...........................................................                   ¥ 62,126            ¥ 26,064      $ 516,853
     Time deposits..............................................................................................        54,142              89,926         450,434
     Marketable securities (Note 5) ...................................................................                 34,036              25,104         283,158
     Notes and accounts receivable, trade ........................................................                      67,025              73,574         557,615
     Allowance for doubtful accounts ................................................................                     (747)               (626)         (6,214)
     Inventories ..................................................................................................     18,580              19,296         154,577
     Deferred income taxes (Note 10)................................................................                     7,886              12,343          65,608
     Other current assets...................................................................................             4,541               6,112          37,780
         Total current assets .............................................................................            247,589             251,793       2,059,810




     Investment securities (Note 5) ..................................................................                 179,102              197,304      1,490,031




     Property, plant and equipment, net (Note 6) ............................................                          102,720              107,775        854,574




     Intangible assets and other assets:
     Intangible assets.........................................................................................         17,839              14,308         148,407
     Deferred income taxes (Note 10)................................................................                    20,708              11,042         172,279
     Other assets ................................................................................................       9,749               7,814          81,112
         Total intangible assets and other assets.............................................                          48,296              33,164         401,798
         Total assets ..........................................................................................      ¥577,707            ¥590,036      $4,806,214
     The accompanying notes are an integral part of these statements.




26
                                                                                                                                                 Thousands of
                                                                                                                                                  U.S. dollars
                                                                                                                      Millions of yen               (Note 3)

LIABILITIES AND SHAREHOLDERS’ EQUITY                                                                           2003                     2002        2003
Current liabilities:
Short-term loans (Note 7) ..........................................................................       ¥      340            ¥      533     $     2,829
Current portion of long-term debt (Note 7) ...............................................                         —                     45              —
Notes and accounts payable, trade ............................................................                 13,575                16,370         112,937
Accrued income taxes (Note 10).................................................................                 6,511                15,877          54,167
Accrued expenses.......................................................................................        12,161                11,853         101,173
Other current liabilities ..............................................................................       13,760                15,478         114,472
   Total current liabilities.........................................................................          46,347                60,156         385,578

Long-term liabilities:
Long-term debt (Note 7) .............................................................................               6                    —               50
Accrued retirement benefits (Note 8).........................................................                  41,010                40,369         341,184
Other long-term liabilities (Note 10) ..........................................................                3,757                 2,167          31,253
   Total long-term liabilities ....................................................................            44,773                42,536         372,487

Minority interests in consolidated subsidiaries.......................................                           870                      462         7,240

Shareholders’ equity:
Common stock:
    Authorized—1,195,459 thousand shares
    Issued—340,965 thousand shares .......................................................                   29,804                 29,804         247,957
Additional paid-in capital............................................................................       14,935                 14,935         124,252
Retained earnings (Note 9) .........................................................................        467,229                440,409       3,887,097
Net unrealized gains on securities.............................................................                (165)                 7,292          (1,376)
Foreign currency translation adjustment ..................................................                   (3,330)                (2,110)        (27,707)
Treasury stock (Note 2-(14))
 (2003: 11,646,919 shares, 2002: 1,559,144 shares) ..................................                       (22,756)                (3,447)       (189,314)
    Total shareholders’ equity ...................................................................          485,717                486,883       4,040,909

Commitments and contingent liabilities (Notes 13 and 14)
   Total liabilities and shareholders’ equity ............................................                 ¥577,707              ¥590,036       $4,806,214




                                                                                                                                                                 27
     CONSOLIDATED STATEMENTS OF INCOME
     Taisho Pharmaceutical Co., Ltd. and Consolidated Subsidiaries
     For the years ended March 31, 2003 and 2002




                                                                                                                                                             Thousands of
                                                                                                                                                              U.S. dollars
                                                                                                                                 Millions of yen                (Note 3)

                                                                                                                          2003                     2002         2003
     Net sales .....................................................................................................    ¥274,077            ¥271,397        $2,280,178
     Cost of sales ...............................................................................................        73,346              70,826           610,201
         Gross profit...........................................................................................         200,731             200,571         1,669,977
     Selling, general and administrative expenses (Note 11) .........................                                    146,337             139,870         1,217,444
         Operating income .................................................................................               54,394              60,701           452,533

     Other income:
     Interest and dividends ................................................................................               4,581                    4,795        38,110
     Other (Note 12)............................................................................................           4,048                    3,765        33,678
              .......................................................................................................      8,629                    8,560        71,788

     Other expenses:
     Interest .......................................................................................................         13                       20           112
     Other (Note 12)............................................................................................           2,741                    2,795        22,800
              .......................................................................................................      2,754                    2,815        22,912
     Income before income taxes and minority interests ...............................                                    60,269                   66,446       501,409

     Income taxes (Note 10)...............................................................................                24,892                   29,121       207,090
     Income before minority interests .............................................................                       35,377                   37,325       294,319

     Minority interests in loss of consolidated subsidiaries ...........................                                      15                   36             127
     Net income..................................................................................................       ¥ 35,392             ¥ 37,361       $ 294,446


                                                                                                                                                             U.S. dollars
                                                                                                                                      Yen                      (Note 3)

                                                                                                                          2003                     2002         2003
     Per share (Note 2-(12)):
     Net income—Basic .....................................................................................             ¥ 105.81             ¥ 109.66       $       0.88
                —Diluted...................................................................................                   —                    —                  —
     Cash dividends ............................................................................................           30.00                25.00               0.25
     The accompanying notes are an integral part of these statements.




28
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
Taisho Pharmaceutical Co., Ltd. and Consolidated Subsidiaries
For the years ended March 31, 2003 and 2002




                                                                                                              Millions of yen
                                                                                                                   Net            Foreign
                                                                                    Additional                  unrealized       currency
                                                        Number            Common     paid-in     Retained        gains on       translation   Treasury      Comprehensive
                                                        of shares          stock     capital     earnings       securities      adjustment      stock          income

Balance as of March 31, 2001 .......                 340,965,510          ¥29,804    ¥14,935     ¥411,681       ¥16,162          ¥(4,467)     ¥    (513)
Dividends paid................................                    —            —           —        (8,520)            —               —              —
Adjustment for retained earnings
 of consolidated subsidiary ...........                           —            —           —           (31)            —               —              —
Bonuses to directors
 and corporate auditors ................                          —            —           —           (83)            —               —              —
Purchase of treasury stock ...........                            —            —           —            —              —               —          (2,991)
Cost for disposition of
 treasury stock ..............................                    —            —           —            —              —               —             57
Net income.....................................                   —            —           —       37,361              —               —              —       ¥37,361
Unrealized loss on securities ........                            —            —           —            —         (8,870)              —              —         (8,870)
Currency translation adjustment ..                                —            —           —            —              —           2,357              —          2,357
Balance as of March 31, 2002 .......                 340,965,510           29,804     14,935      440,409          7,292          (2,110)         (3,447)     ¥30,848
Dividends paid................................                    —           —            —       (8,485)             —               —             —
Bonuses to directors
 and corporate auditors ................                          —           —            —           (87)            —               —             —
Purchase of treasury stock ...........                            —           —            —            —              —               —       (19,309)
Net income.....................................                   —           —            —       35,392              —               —             —        ¥35,392
Unrealized loss on securities ........                            —           —            —            —         (7,457)              —             —          (7,457)
Currency translation adjustment ..                                —           —            —            —              —          (1,220)            —          (1,220)
Balance as of March 31, 2003 ....... 340,965,510                          ¥29,804   ¥14,935      ¥467,229        ¥ (165)        ¥(3,330)      ¥(22,756)       ¥26,715



                                                                                                   Thousands of U.S. dollars (Note 3)
                                                                                                                   Net            Foreign
                                                                                    Additional                  unrealized       currency
                                                                          Common     paid-in     Retained        gains on       translation   Treasury      Comprehensive
                                                                           stock     capital     earnings       securities      adjustment      stock          income

Balance as of March 31, 2002 .............................. $247,957                $124,252 $3,663,966         $ 60,666        $(17,554) $ (28,677)
Dividends paid .......................................................        —            —      (70,592)             —               —              —
Bonuses to directors and corporate auditors ......                            —            —          (723)            —               —              —
Purchase of treasury stock...................................                 —            —            —              —               —      (160,637)
Net income ............................................................       —            —      294,446              —               —              —      $294,446
Unrealized loss on securities ...............................                 —            —            —        (62,042)              —              —        (62,042)
Currency translation adjustment .........................                     —            —            —              —         (10,153)             —        (10,153)
Balance as of March 31, 2003 .............................. $247,957 $124,252 $3,887,097 $ (1,376) $(27,707) $(189,314) $222,251
The accompanying notes are an integral part of these statements.




                                                                                                                                                                            29
     CONSOLIDATED STATEMENTS OF CASH FLOWS
     Taisho Pharmaceutical Co., Ltd. and Consolidated Subsidiaries
     For the years ended March 31, 2003 and 2002




                                                                                                                                                          Thousands of
                                                                                                                                                           U.S. dollars
                                                                                                                                 Millions of yen             (Note 3)

                                                                                                                          2003                     2002      2003
     Cash flows from operating activities:
     Income before income taxes and minority interests .................................                                ¥ 60,269             ¥ 66,446     $ 501,409
     Adjustments:
         Depreciation and amortization.............................................................                       16,832                14,189      140,033
         Interest and dividend income...............................................................                      (4,581)               (4,795)     (38,110)
         Interest expenses.................................................................................                   13                    20          108
         Proceeds from sales of investment securities....................................                                 (1,633)               (1,625)     (13,586)
         Loss on redemption of investment securities .....................................                                    24                    —           200
         Devaluation of investment securities ..................................................                             665                 2,080        5,532
         Loss on disposals of property, plant and equipment, net ...................                                         270                   329        2,246
         Increase in accrued retirement benefits .............................................                               641                 1,336        5,333
         Increase in accrued directors’ retirement benefit ..............................                                  1,380                    —        11,481
         Amortization of goodwill ......................................................................                      22                    57          183
         Equity in net earnings of affiliated companies ....................................                                (140)                 (194)      (1,165)
         (Increase) decrease in notes and accounts receivable, trade.............                                          6,481                (2,254)      53,918
         Decrease in inventories .......................................................................                     680                   406        5,657
         Increase (decrease) in notes and accounts payable, trade.................                                        (2,693)                  837      (22,404)
         Other, net..............................................................................................          4,684                 1,496       38,960
              .......................................................................................................     82,914                78,328      689,803
         Interest and dividends income received ..............................................                             4,591                 4,253       38,195
         Interest paid .........................................................................................             (13)                  (20)        (108)
         Income taxes paid ................................................................................              (34,072)              (37,907)    (283,461)
             Net cash provided by operating activities .....................................                              53,420                44,654      444,429

     Cash flows from investing activities:
     Decrease in time deposits ..........................................................................                 35,784                17,023      297,704
     Payments for purchases of marketable securities....................................                                      —                 (1,000)          —
     Proceeds from sales/redemption of marketable securities .....................                                        25,100                10,003      208,819
     Payments for purchases of property, plant and equipment ......................                                      (13,418)              (21,366)    (111,631)
     Proceeds from sales of property, plant and equipment ............................                                        39                   126          324
     Payment for purchases of intangible assets..............................................                             (8,976)               (6,137)     (74,676)
     Payments for purchases of investment securities ....................................                                (26,350)              (31,824)    (219,218)
     Proceeds from sales of investment securities ..........................................                              17,781                 3,025      147,928
     Payment for purchases of investment in stocks of affiliated company.....                                            (19,012)                   —      (158,170)
     Payments for long-term prepaid expenses ...............................................                                (442)                 (556)      (3,677)
     Other, net ....................................................................................................         (87)                  251         (724)
             Net cash provided by (used in) investing activities .......................                                  10,419               (30,455)      86,681

     Cash flows from financing activities:
     Proceeds from long-term debt...................................................................                           5                   —             42
     Repayment of long-term debt ....................................................................                         —                  (196)           —
     Proceeds from short-term loans ...............................................................                          443                  460         3,686
     Repayment of short-term loans .................................................................                        (462)                (302)       (3,844)
     Cash dividends ............................................................................................          (8,467)              (8,505)      (70,441)
     Payments for purchases of treasury stock ................................................                           (19,307)              (2,998)     (160,624)
     Proceeds from sales of treasury stock ......................................................                             —                    61            —
     Other, net ....................................................................................................         175                   —          1,456
             Net cash used in financing activities.............................................                          (27,613)             (11,480)     (229,725)
     Effect of exchange rate changes on cash and cash equivalents .............                                             (164)                 481        (1,364)
     Net increase (decrease) in cash and cash equivalents ............................                                    36,062                3,200       300,020
     Cash and cash equivalents at the beginning of the year..........................                                     26,064               22,864       216,834
     Cash and cash equivalents at the end of the year ....................................                              ¥ 62,126             ¥ 26,064     $ 516,853
     The accompanying notes are an integral part of these statements.



30
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Taisho Pharmaceutical Co., Ltd. and Consolidated Subsidiaries




1. BASIS OF PRESENTING CONSOLIDATED                                              (2) Foreign currency translation
   FINANCIAL STATEMENTS:                                                         Foreign currency transactions are translated using foreign exchange rates
The accompanying consolidated financial statements of Taisho                     prevailing at the transaction dates.
Pharmaceutical Co., Ltd. (the “Company”) and its domestic and foreign              All monetary assets and liabilities denominated in foreign currencies,
subsidiaries (together, the “Companies”) are basically English versions of       whether they are long-term or short-term, are translated into Japanese
those which have been filed with the Ministry of Finance and prepared in         yen at the exchange rates prevailing at the balance sheet date. Resulting
accordance with accounting principles and practices generally accepted in        gains and losses are included in net profit or loss for the period.
Japan, which are different in certain respects as to application and disclo-       All assets and liabilities of foreign subsidiaries and affiliates are translat-
sure requirements from International Accounting Standards. The                   ed at current rates at the respective balance sheet dates and all the
preparation of these financial statements requires management to make            income and expense accounts are translated at average rates for
estimates and assumptions that affect the reported amounts of assets             respective periods. Foreign currency translation adjustments are present-
and liabilities and the disclosure of contingent assets and liabilities at the   ed as a component of Shareholders’ equity in the consolidated financial
date of the consolidated financial statements as well as reported amounts        statements.
of revenues and expenses during the reporting periods.
  The accompanying consolidated financial statements incorporate cer-            (3) Financial instruments
tain reclassifications and rearrangements in order to present these              a) Derivatives:
statements in a form which is more familiar to the readers of these state-       All derivatives are stated at fair value, with changes in fair value included in
ments outside Japan. In addition, the notes to consolidated financial            net profit or loss for the period in which they arise, except for derivatives
statements include information that is not required under generally              that are designated as “hedging instruments.”
accepted accounting principles and practices in Japan but is presented
herein as additional information.                                                b) Securities:
  The figures shown in the consolidated financial statements have been           Securities held by the Company and its subsidiaries are classified into four
rounded to the nearest millions of yen.                                          categories:
                                                                                   Trading securities are stated at fair value, with changes in fair value
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:                                   included in net profit or loss for the period in which they arise.
(1) Consolidation and investments in affiliates                                    Held-to-maturity debt securities are stated at cost after accounting for
The consolidated financial statements include the accounts of the                any premium or discount on acquisition, which is amortized over the peri-
Company and all significant subsidiaries in which the Company has the            od to maturity.
ability to control and exercise significant influence over operating and           Investments of the Company in equity securities of non-consolidated
financial policies.                                                              subsidiaries and affiliates are accounted for by the equity method.
  Taisho Pharmaceutical R&D Inc., a wholly owned subsidiary of the                 Other securities for which market quotations are available are stated at
Company, was established in August 2001, of which the accounts have              fair value. Net unrealized gains or losses on these securities are reported
been included in the 2002 consolidation.                                         as a separate item in the shareholders’ equity at a net-of-tax amount.
  Toyama Chemical Co., Ltd. became an affiliate, around 22% owned by             Other securities for which market quotations are unavailable are stated at
the Company, in September 2002 through subscribing newly issued                  cost.
shares by ¥19,012 million. Therefore, the investment in this company has           When the fair value of held-to-maturity debt securities or other securi-
been accounted for by the equity method in 2003 consolidation.                   ties has declined significantly and such impairment of the value is not
  Taisho Toyama Pharmaceutical Co., Ltd. which is a 55% owned sub-               deemed temporary, those securities are written down to the fair value and
sidiary of the Company and a 45% owned affiliate of Toyama Chemical Co.,         the resulting losses are included in net profit or loss for the period.
Ltd. was established in October 2002, under the Shareholders’ Agreement            Trading securities and debt securities due within one year are presented
and acts as a distributor and a promoter of the medical products to doc-         as “current assets” and all the other securities are presented as “invest-
tors for both companies. Therefore, the accounts of the subsidiary have          ment securities.”
been included in 2003 consolidation.
  All significant intercompany transactions and accounts and unrealized          c) Hedge accounting:
intercompany profits are eliminated in consolidation. All the consolidated       Gains or losses arising from changes in fair value of derivatives designated
subsidiaries except for Taisho Toyama Pharmaceutical Co., Ltd. are taken         as “hedging instruments” are deferred as an asset or liability and included
into consolidated accounts with their accounts closed for their fiscal years     in net profit or loss in the same period during which the gains and losses
ended December 31, 2002 and 2001, while the accounts of Taisho Toyama            on the hedged items or transactions are recognized.
Pharmaceutical Co., Ltd. are consolidated with its financial statements for        Derivatives designated as hedging instruments by the Company are
its fiscal year ended March 31, 2003. Material differences in intercompany       principally forward exchange and interest swap contracts. A hedged item
transactions and accounts arising from the use of the different fiscal year-     is an asset, liability, firm commitment, or forecasted future transaction
ends are appropriately adjusted in consolidation.                                that exposes the enterprise to risk of changes in fair value or changes in
  Investments in 50% or less owned companies over which the parent               future cash flows and that for hedge accounting purposes, is designated
company does not have controls, but has the ability to exercise significant      as being hedged.
influence are accounted for by the equity method. The excess of the cost           The Company has a policy to utilize the above hedging instruments in
over the underlying net equity of investments in affiliates accounted for on     order to reduce the Company’s exposure to the risk of exchange and inter-
an equity basis is deferred and amortized over the period in which future        est rate fluctuations. Thus, the Company’s purchases of the hedging
benefit of investments is estimated to continue. Consolidated net income         instruments are limited to, at maximum, the amounts of the hedged
includes the Company’s equity in current earnings of these equity compa-         items.
nies after the elimination of unrealized intercompany profits.                     The Company evaluates effectiveness of its hedging activities by refer-
                                                                                 ence to the accumulated gains or losses on the hedging instruments and
                                                                                 the related hedged items from the commencement of the hedges.




                                                                                                                                                                     31
     (4) Allowance for doubtful accounts                                            reported amounts and the tax bases of assets and liabilities. Valuation
     The allowance for doubtful accounts is provided for estimated future loss-     allowances are recorded to reduce deferred tax assets when it is more
     es based on past experience, and the allowance is based on an evaluation       likely than not that a tax benefit will not be realized.
     of the collectability of individual receivables.
                                                                                    (11) Appropriation of retained earnings
     (5) Inventories                                                                The appropriation of retained earnings reflected in the accompanying con-
     Inventories held by the Company are stated at cost, which is determined        solidated financial statements has been recorded after approval by the
     by the average method.                                                         shareholders as required under the Japanese Commercial Code.

     (6) Property, plant and equipment                                              (12) Earnings per share information
     Property, plant and equipment, including significant renewals and              The computation of net income and cash dividends per share is based on
     improvements, are capitalized at cost. Maintenance and repairs and minor       the weighted-average number of shares outstanding, excluded treasury
     renewals and betterments are charged to income. Depreciation is com-           stock shares during each period.
     puted primarily on the declining-balance method at rates based on the            The Company retains stock option plans, however, net income per share
     estimated useful lives of the assets. In the case of retirement or disposal,   is not diluted after the computation.
     the difference between the net book value and salvage or sales proceeds          Effective from the year ended March 31, 2003, the Company and its sub-
     is charged or credited to income.                                              sidiaries adopted the Statement of Accounting Standard No. 2 “Accounting
                                                                                    Standard for Earnings per Share” issued by the Accounting Standards
     (7) Retirement benefits and pension plans                                      Board of Japan. Prior to adopting the new statement, earnings per share
     Lump-sum severance indemnity regulations of the Companies, which               were calculated based on the net income shown on consolidated state-
     cover substantially all employees, provide for benefit payments deter-         ments of income, which is the amount before deduction of bonuses to
     mined by reference to the employee’s current basic rate of pay, length of      directors and statutory auditors that are recognized as an appropriation of
     service, position in the respective companies and termination circum-          retained earnings in the consolidated statement of shareholders’ equity.
     stance. The regulations provide for additional benefits upon retirement at     However, the new statement requires that net income should be adjusted
     the retirement age from 55 years old to 60 years old, death or for certain     by deducting the amounts not attributable to the common shareholders
     defined reasons.                                                               such as bonuses paid to directors and statutory auditors as well as the
       In addition to the lump-sum severance indemnity regulations, the             payment of dividends to shareholders of preferred stocks to be recognized
     Company has contributory funded defined benefit pension plans which are        as an appropriation of retained earnings from net income shown in state-
     pursuant to the Japanese Welfare Pension Insurance Law and cover a             ments of income and the calculation of earnings per share be made on
     portion of the governmental welfare pension program under which the            that adjusted net income basis.
     contributions are made by the Company and their employees.                       The following are earnings per share for the years ended March 31, 2003
       The accrued retirement benefits represent the actuarially calculated         and 2002 calculated using the prior method.
     present value of projected benefit obligation in excess of the fair value of
     the plan assets except for, as permitted under the standard, the unrecog-                                                                    Yen
     nized actuarial differences and the unrecognized prior service cost which                                                            2003           2002
     are amortized on a straight-line basis over the period of fifteen or sixteen   Per share
     years, that is within the average remaining service period of employees,       Net income — Basic...............................   ¥106.07         ¥109.66
     from the next year in which they arise.                                                   — Diluted............................         —               —
       In order to prepare for the payment of retirement severance indemnity
     for directors, statutory auditors and executive officers, the provision is     (13) Cash equivalents
     newly provided for lump-sum severance indemnity based on internal reg-         For the purpose of the statement of cash flows, all highly liquid invest-
     ulation in 2003, while in prior years such payments to them were charged       ments which are readily convertible into cash and/or mature within three
     to income when paid.                                                           months or less are considered to be cash equivalents.
       By this change, the amount for the provision which belongs to previous
     years is charged to income in other expenses, and the amount for current       (14) Treasury stocks
     year is charged to income in selling, general and administrative expenses.     Treasury stocks are stated at cost as a separate component of the share-
     Consequently, compared with prior year, this accounting change causes          holders’ equity in the accompanying consolidated balance sheets. Net
     operating income to decrease by ¥83 million and income before income           gains on resale of treasury shares are presented as additional paid-in cap-
     taxes and minority interests to decrease by ¥1,380 million, respectively.      ital in the shareholders’ equity in the accompanying consolidated balance
                                                                                    sheets.
     (8) Revenue recognition                                                          Effective from the year ended March 31, 2003, the Company and its sub-
     Sales are generally recognized at the time the goods are delivered to the      sidiaries adopted the Statement of Accounting Standard No.1 “Accounting
     customers.                                                                     for Treasury Stock and Reduction of Legal Reserve” issued by the
                                                                                    Accounting Standards Board of Japan. However, the effect on net income
     (9) Finance leases                                                             for this period is immaterial.
     Finance leases, other than those where ownership of the lease assets is          Effective from October 1, 2001, the Company is allowed to acquire its
     transferred to the lessee, are accounted for as operating leases.              own shares to the extent that the aggregate cost of treasury stocks does
                                                                                    not exceed the maximum amount available for dividends. On June 27,
     (10) Income taxes                                                              2003, the general shareholders’ meeting has approved to acquire its own
     The provision for income taxes is computed based on the pre-tax income         shares with a limit of 15,000,000 shares of which amount is limited to
     included in the consolidated statements of income. The asset and liability     ¥35,000 million ($291,181 thousand) until the date of next general share-
     approach is used to recognize deferred tax assets and liabilities for the      holders’ meeting.
     expected future tax consequences of temporary differences between the



32
(15) Reclassifications                                                                                                                         Thousands of U.S. dollars (Note 3)
Certain accounts in the consolidated financial statements for the year                                                                      Book              Fair          Unrealized
ended March 31, 2002 have been reclassified to conform to the 2003 pre-                         March 31, 2003                              value             value        gains (losses)
sentation.                                                                                      Securities whose fair
                                                                                                 values exceed their
3. UNITED STATES DOLLAR AMOUNTS:                                                                 book values on the
The U.S. dollar amounts are included solely for convenience and have                             consolidated
been translated at the rate of ¥120.20 = U.S.$1, the approximate exchange                        balance sheet:
rate prevailing in the Japanese foreign exchange market as at March 31,                           (1) Government bonds,
                                                                                                      municipal bonds, etc....... $            —          $       —        $       —
2003. This translation should not be construed as a representation that the
                                                                                                  (2) Corporate bonds .............. 39,949                   43,468            3,519
yen amounts actually represent, or have been or could be converted into
                                                                                                       Subtotal........................... 39,949             43,468            3,519
U.S. dollars.
                                                                                                Securities whose fair
4. CASH AND CASH EQUIVALENTS:                                                                    values do not exceed
Cash and cash equivalents at March 31, 2003 and 2002 comprised the                               their book values on
following:                                                                                       the consolidated
                                                                                                 balance sheet:
                                                                               Thousands of       (1) Government bonds,
                                                                               U.S. dollars           municipal bonds, etc........                  —          —                   —
                                                    Millions of yen              (Note 3)         (2) Corporate bonds .............. 32,020                31,585                (435)
                                                    2003         2002            2003                   Subtotal........................... 32,020         31,585                (435)
Cash ............................................. ¥41,285     ¥ 12,011        $343,468                 Total................................. $71,969    $75,053          $    3,084
Time deposits.............................. 20,841               14,053         173,385
                                                   ¥62,126     ¥ 26,064        $516,853                                                                  Millions of yen
                                                                                                                                            Book              Fair          Unrealized
                                                                                                March 31, 2002                              value             value        gains (losses)
5. MARKETABLE SECURITIES AND INVESTMENT SECURITIES:                                             Securities whose fair
The following information relates to the aggregate book value and fair                           values exceed their
value of securities in 2003 and 2002.                                                            book values on the
i) Held-to-maturity securities whose fair value is readily determinable.                         consolidated
                                                                                                 balance sheet:
                                                             Millions of yen                      (1) Government bonds,
                                                                                                      municipal bonds, etc....... ¥           —           ¥       —         ¥        —
                                                Book              Fair          Unrealized
March 31, 2003                                  value             value        gains (losses)     (2) Corporate bonds ..............       4,171               4,272                101
                                                                                                       Subtotal .......................... 4,171               4,272                101
Securities whose fair
 values exceed their
 book values on the                                                                             Securities whose fair
 consolidated                                                                                    values do not exceed
 balance sheet:                                                                                  their book values on
  (1) Government bonds,                                                                          the consolidated
      municipal bonds, etc....... ¥           —               ¥      —          ¥       —        balance sheet:
  (2) Corporate bonds ..............       4,802                  5,225                423        (1) Government bonds,
                                                                                                      municipal bonds, etc.......                   —          —                    —
        Subtotal.......................... 4,802                  5,225                423
                                                                                                  (2) Corporate bonds ..............             4,937      4,730                 (206)
                                                                                                        Subtotal...........................      4,937      4,730                 (206)
Securities whose fair
                                                                                                        Total................................. ¥ 9,108    ¥ 9,003           ¥     (105)
 values do not exceed
 their book values on
 the consolidated
 balance sheet:
  (1) Government bonds,
      municipal bonds, etc.......                   —              —                    —
  (2) Corporate bonds ..............             3,849          3,797                  (52)
        Subtotal...........................      3,849          3,797                  (52)
        Total................................. ¥ 8,651        ¥ 9,022           ¥      371




                                                                                                                                                                                            33
                                                          Thousands of U.S. dollars                                                              Thousands of U.S. dollars (Note 3)
                                                  Book              Fair          Unrealized                                               Acquisition            Fair          Unrealized
     March 31, 2002                               value             value        gains (losses)   March 31, 2003                              cost                value        gains (losses)
     Securities whose fair                                                                        Securities whose fair
      values exceed their                                                                          values exceed their
      book values on the                                                                           carrying values on the
      consolidated                                                                                 consolidated
      balance sheet:                                                                               balance sheet:
       (1) Government bonds,
                                                                                                      (1) Equity securities............. $ 46,702            $     88,521      $ 41,819
           municipal bonds, etc....... $            —           $       —        $        —
       (2) Corporate bonds ..............       31,302              32,060               758          (2) Government bonds,
            Subtotal........................... 31,302              32,060               758              municipal bonds, etc.....            239,367           241,727            2,360
                                                                                                      (3) Corporate bonds............          536,597           540,625            4,028
     Securities whose fair                                                                            (4) Others..............................  16,639            16,681               42
      values do not exceed                                                                                  Subtotal .......................   839,305           887,554           48,249
      their book values on
      the consolidated                                                                            Securities whose fair
      balance sheet:                                                                               values do not exceed their
       (1) Government bonds,                                                                       carrying values on the
           municipal bonds, etc.......                    —           —                —           consolidated
       (2) Corporate bonds ..............             37,051      35,497           (1,546)
                                                                                                   balance sheet:
             Subtotal...........................      37,051      35,497           (1,546)
                                                                                                      (1) Equity securities.............            96,214         64,025         (32,189)
             Total................................. $ 68,353    $ 67,557         $   (788)
                                                                                                      (2) Government bonds,
     Note: U.S. dollar amounts in the above table have been translated at                                 municipal bonds, etc.....                     —            —               —
           ¥133.25=US$1, the approximate exchange rate on March 29, 2002.                             (3) Corporate bonds............              199,667      198,316          (1,351)
                                                                                                      (4) Others..............................     249,584      232,861         (16,723)
     ii) Other securities whose fair value is readily determinable.                                         Subtotal .......................       545,465      495,202         (50,263)
                                                                                                            Total.............................. $1,384,770   $1,382,756        $ (2,014)
                                                               Millions of yen
                                               Acquisition          Fair          Unrealized
     March 31, 2003                               cost              value        gains (losses)   Other securities whose fair value is readily determinable are recorded at
     Securities whose fair                                                                        fair value on the consolidated balance sheet at March 31, 2003.
      values exceed their
                                                                                                                                                             Millions of yen
      carrying values on the
                                                                                                                                           Acquisition            Fair          Unrealized
      consolidated                                                                                March 31, 2002                              cost                value        gains (losses)
      balance sheet:
                                                                                                  Securities whose fair
         (1) Equity securities............. ¥ 5,613             ¥ 10,640          ¥ 5,027
                                                                                                   values exceed their
         (2) Government bonds,
                                                                                                   carrying values on the
             municipal bonds, etc.....            28,772           29,056               284
                                                                                                   consolidated
         (3) Corporate bonds............          64,499           64,983               484
                                                                                                   balance sheet:
         (4) Others..............................  2,000            2,005                 5
                                                                                                      (1) Equity securities............. ¥ 14,951             ¥ 29,580         ¥ 14,629
               Subtotal ....................... 100,884           106,684             5,800
                                                                                                      (2) Government bonds,
                                                                                                          municipal bonds, etc.....            18,120            18,156                36
     Securities whose fair
                                                                                                      (3) Corporate bonds............          50,600            51,236               636
      values do not exceed their
                                                                                                      (4) Others..............................     —                 —                 —
      carrying values on the
                                                                                                            Subtotal .......................   83,671            98,972            15,301
      consolidated
      balance sheet:
                                                                                                  Securities whose fair
         (1) Equity securities.............          11,565          7,696            (3,869)
                                                                                                   values do not exceed their
         (2) Government bonds,
                                                                                                   carrying values on the
             municipal bonds, etc.....                   —            —                —
                                                                                                   consolidated
         (3) Corporate bonds............             24,000       23,837             (163)
                                                                                                   balance sheet:
         (4) Others..............................    30,000       27,990           (2,010)
                                                                                                      (1) Equity securities.............             684             548              (136)
               Subtotal .......................      65,565       59,523           (6,042)
                                                                                                      (2) Government bonds,
               Total.............................. ¥166,449     ¥166,207          ¥ (242)
                                                                                                          municipal bonds, etc.....               10,116        10,096              (20)
                                                                                                      (3) Corporate bonds............             51,023        50,325             (698)
                                                                                                      (4) Others..............................    32,000        30,094           (1,906)
                                                                                                            Subtotal .......................      93,823        91,063           (2,760)
                                                                                                            Total.............................. ¥177,494      ¥190,035         ¥ 12,541




34
                                                        Thousands of U.S. dollars                                                                                                   Book value
                                            Acquisition               Fair           Unrealized                                                                      Millions              Thousands of
March 31, 2002                                 cost                   value         gains (losses)   March 31, 2002                                                   of yen               U.S. dollars
Securities whose fair                                                                                Other securities:
 values exceed their                                                                                   (1) Unlisted equity securities...................... ¥ 1,169                         $      8,773
 carrying values on the                                                                                (2) Bonds issued by domestic
 consolidated                                                                                              corporations............................................ 22,000                       165,103
                                                                                                       (3) Beneficial interest on
 balance sheet:
                                                                                                           trusted lease receivables .....................                     —                   —
    (1) Equity securities............. $ 112,203                $ 221,989            $109,786
                                                                                                             Total...................................................... ¥ 23,169           $ 173,876
    (2) Government bonds,
        municipal bonds, etc.....            135,985                 136,255                  270    Note: U.S. dollar amounts in the above table have been translated at
    (3) Corporate bonds............          379,737                 384,510                4,773          ¥133.25=US$1, the approximate exchange rate on March 29, 2002.
    (4) Others..............................      —                       —                    —
          Subtotal .......................   627,925                 742,754              114,829    v) Redemption schedule for other securities having a maturity date and
                                                                                                        held-to-maturity securities.
Securities whose fair
                                                                                                                                                                     Millions of yen
 values do not exceed their
                                                                                                                                                               Due 2004-            Due 2008- Due after
 carrying values on the                                                                              March 31, 2003                         Due 2003             2007                 2012     2013
 consolidated
                                                                                                     (1) Government bonds,
 balance sheet:                                                                                          municipal bonds, etc. ... ¥              —           ¥ 28,627              ¥      —       ¥ —
    (1) Equity securities.............             5,134                 4,113             (1,021)   (2) Corporate bonds...........           34,309            23,637                  8,199        —
    (2) Government bonds,                                                                            (3) Others.............................   2,000                —                      —         —
        municipal bonds, etc.....                 75,917            75,767               (150)               Total......................... ¥ 36,309          ¥ 52,264              ¥   8,199      ¥ —
    (3) Corporate bonds............              382,912           377,674             (5,238)
    (4) Others..............................     240,150           225,846            (14,304)                                                          Thousands of U.S. dollars (Note 3)
          Subtotal .......................       704,113           683,400            (20,713)                                                                 Due 2004-            Due 2008- Due after
          Total.............................. $1,332,038        $1,426,154           $ 94,116        March 31, 2003                         Due 2003             2007                 2012     2013
Note: U.S. dollar amounts in the above table have been translated at                                 (1) Government bonds,
      ¥133.25=US$1, the approximate exchange rate on March 29, 2002.                                     municipal bonds, etc. ... $              —           $238,162 $      —                    $ —
                                                                                                     (2) Corporate bonds........... 285,435                    196,643    68,211                     —
Other securities whose fair value is readily determinable are recorded at                            (3) Others.............................  16,639                 —        —                      —
fair value on the consolidated balance sheet at March 31, 2002.                                              Total......................... $302,074          $ 434,805 $ 68,211                   $ —

iii) Other securities sold in the current fiscal year.                                                                                                               Millions of yen
                                                                                                                                                               Due 2003-            Due 2007- Due after
                                                                                    Thousands of     March 31, 2002                         Due 2002             2006                 2011     2012
                                                              Millions              U.S. dollars     (1) Government bonds,
March 31, 2003                                                 of yen                 (Note 3)           municipal bonds, etc. ... ¥ 8,000                    ¥ 20,030              ¥      —       ¥ —
Proceeds from sale of                                                                                (2) Corporate bonds...........          17,100             47,500                  4,000        —
 other securities............................................... ¥ 1,970             $ 16,389        (3) Others.............................     —               2,000                     —         —
Gain on sale of other securities......................             1,633               13,587                Total ....................... ¥ 25,100           ¥ 69,530              ¥   4,000      ¥ —
Loss on sale of other securities......................                —                    —
                                                                                                                                                             Thousands of U.S. dollars
                                                              Millions              Thousands of
March 31, 2002                                                 of yen               U.S. dollars                                                               Due 2003-            Due 2007- Due after
                                                                                                     March 31, 2002                         Due 2002             2006                 2011     2012
Proceeds from sale of
 other securities............................................... ¥ 3,025 $ 22,702                    (1) Government bonds,
Gain on sale of other securities......................             1,625   12,195                        municipal bonds, etc. ... $ 60,038                   $ 150,319             $     —        $ —
Loss on sale of other securities......................                —        —                     (2) Corporate bonds........... 128,330                     356,473               30,019         —
                                                                                                     (3) Others.............................      —              15,009                   —          —
Note: U.S. dollar amounts in the above table have been translated at
                                                                                                             Total ....................... $ 188,368          $ 521,801             $ 30,019       $ —
      ¥133.25=US$1, the approximate exchange rate on March 29, 2002.
                                                                                                     Note: U.S. dollar amounts in the above table have been translated at
iv) Securities whose fair value is not readily determinable.                                               ¥133.25=US$1, the approximate exchange rate on March 29, 2002.

                                                                             Book value
                                                                                    Thousands of
                                                              Millions              U.S. dollars
March 31, 2003                                                 of yen                 (Note 3)
Other securities:
  (1) Unlisted equity securities...................... ¥ 1,324                       $ 11,015
  (2) Bonds issued by domestic
      corporations............................................ 18,000                     149,750
  (3) Beneficial interest on
      trusted lease receivables .....................                   —                   —
        Total..................................................... ¥19,324           $ 160,765



                                                                                                                                                                                                           35
     6. PROPERTY, PLANT AND EQUIPMENT:                                                                         The components of net retirement cost for the year ended March 31,
     Property, plant and equipment at March 31, 2003 and 2002 consisted of                                   2003 and 2002 are as follows:
     the following:
                                                                                                                                                                                         Thousands of
                                                                                            Thousands of                                                                                 U.S. dollars
                                                                                             U.S. dollars                                                      Millions of yen             (Note 3)
                                                                    Millions of yen           (Note 3)                                                      2003             2002          2003
                                                               2003                2002        2003          Service cost................................. ¥ 2,700          ¥ 2,938      $ 22,463
     Buildings and                                                                                           Interest cost ................................  1,983            1,980        16,498
      structures ................................. ¥110,425 ¥100,591                        $ 918,678        Expected return
     Machinery, equipment                                                                                      on plan assets ..........................      (850)             (879)       (7,072)
      and vehicles .............................         72,254  69,241                        601,114       Amortization of prior
     Other ..........................................    27,446  25,980                        228,338         service cost...............................    (174)               (29)      (1,448)
     At cost .......................................... 210,125 195,812                      1,748,130       Amortization of
     Accumulated                                                                                               actuarial gain/loss...................          471              342         3,918
      depreciation.............................. (130,936) (120,818)                        (1,089,320)      Net retirement cost ................... ¥ 4,130                ¥ 4,352      $ 34,359
     Land ..........................................     23,471  23,296                        195,268
     Construction                                                                                               Assumptions used for the year ended March 31, 2003 and 2002 were as
      in progress................................            60   9,485                           496        follows:
             .................................. ¥102,720 ¥107,775                           $ 854,574                                                      2003            2002
                                                                                                             Discount rate                                2.5%             3.0%
                                                                                                             Expected return on plan assets               4.0%             4.0%
     7. SHORT-TERM LOANS AND LONG-TERM DEBT:                                                                 Method of attributing
     Short-term loans at March 31, 2003 represented bank overdrafts which                                      the projected benefits                 Straight-line    Straight-line
     bore average interest of 1.375%.                                                                          to periods of service                      basis            basis
       Long-term debt at March 31, 2003 represented unsecured long-term                                      Period for amortization of
     loans from banks and their annual maturities are as follows:                                              transition obligation                        —               —
                                                                                                             Period for amortization
                                                                                             Thousands of      of prior service cost                    15 years         15 years
                                                                                 Millions     U.S. dollars   Period for amortization
     Maturities in                                                                of yen       (Note 3)        of actuarial gain/loss                 15-16 years 15-16 years
     2003 ....................................................................    ¥ —          $     —
     2004 ....................................................................      —                —
     2005 and thereafter .........................................                  6                50      9. APPROPRIATION OF RETAINED EARNINGS:
                                                                                  ¥ 6          $     50      The Japanese Commercial Code provides that an amount equal to at least
                                                                                                             10% of cash dividends and bonuses to directors and statutory auditors
                                                                                                             shall be appropriated as a legal reserve until such reserve equals 25% of
     8. COST OF RETIREMENT AND SEVERANCE BENEFITS:                                                           the capital stock account. This reserve is not available for dividends but
     The funded status as at March 31, 2003 and 2002 was as follows:                                         may be used to reduce a deficit or may be transferred to stated capital.
                                                                                                             Effective from October 1, 2001, such reserve shall be provided until the
                                                                                            Thousands of     sum of capital surplus and a legal reserve equals 25% of the stated capi-
                                                                                            U.S. dollars     tal. The balances of the legal reserve of the Company at March 31, 2003
                                                                    Millions of yen           (Note 3)       and 2002 which is included in retained earnings in the accompanying con-
                                                    2003     2002                              2003          solidated balance sheet were ¥7,451 million ($61,989 thousand) and
     Benefit obligation ....................... ¥ 75,337 ¥ 66,099                           $ 626,765        ¥7,451 million, respectively.
     Plan assets.................................. (19,280) (21,264)                          (160,399)        Under the Japanese Commercial Code, the appropriation of retained
     Unfunded benefit
                                                                                                             earnings for a fiscal year is made by resolution of shareholders at a gener-
      obligation...................................  56,057  44,835                            466,365
                                                                                                             al meeting to be held after the balance sheet date, and the accounts for
     Unrecognized prior                                                                                      the year do not reflect such appropriation.
      service cost...............................       2,413    2,588                             20,077      The proposed appropriation of retained earnings of the Company for the
     Unrecognized                                                                                            year ended March 31, 2003 which was approved on June 27, 2003 at the
      actuarial loss ............................ (17,460)      (7,054)                       (145,258)      general shareholders’ meeting is as follows:
     Accrued retirement
      benefits...................................... ¥ 41,010 ¥ 40,369                      $ 341,184                                                                                    Thousands of
                                                                                                                                                                           Millions       U.S. dollars
      The above figures include amounts for a portion of the governmental                                                                                                   of yen          (Note 3)
     welfare pension program.                                                                                Cash dividends at
                                                                                                              ¥30.00 per share .............................................. ¥ 9,879     $ 82,188
                                                                                                             Directors' and statutory
                                                                                                              auditors' bonuses.............................................       87          724
                                                                                                                                                                              ¥ 9,966     $ 82,912




36
10. INCOME TAXES:
The components of income tax expenses were as follows:                                 Deferred tax liabilities:
                                                                                        Net unrealized gains on
                                                                       Thousands of      securities ................................        —       (5,280)              —
                                                                        U.S. dollars    Deferred gain on sales of
                                                 Millions of yen         (Note 3)        real property ..........................       (2,035)     (2,177)         (16,930)
                                             2003            2002          2003         Other..........................................    (21)        (14)            (180)
Income taxes                                                                                     Total deferred tax
  —Current by payable .............. ¥ 24,707              ¥ 34,775    $ 205,553                   liabilities....................      (2,056)     (7,471)         (17,110)
  —Deferred................................      185         (5,654)       1,537
                                                                                                 Net deferred tax
                                            ¥ 24,892       ¥ 29,121    $ 207,090
                                                                                                   assets........................ ¥ 28,576         ¥23,373        $ 237,735

  On March 31, 2003, the Japanese National Diet approved various
                                                                                         The valuation allowance mainly relates to deferred tax assets of foreign
changes to the calculation of the statutory local enterprise tax for compa-
                                                                                       consolidated subsidiaries with tax loss carryforwards that are not expect-
nies with capital in excess of ¥100 million, effective April 1, 2004. Under the
                                                                                       ed to be realized in the near future.
amended legislation, the enterprise tax will be the sum of three tax com-
                                                                                         Net deferred tax assets included in the consolidated balance sheets
ponents; a) an income based component, b) a value added component and
                                                                                       were as follows:
c) a capital based component, although there was only an “income tax
based component” before the amendment. Concurrently, the basic tax                                                                                               Thousands of
rate for the “income based component” would be reduced from 9.6% to                                                                                              U.S. dollars
7.2%. As a result of this amendment, the tax rate to be applied to deferred                                                             Millions of yen            (Note 3)
tax assets and liabilities as at March 31, 2003 for the expected future tax                                                         2003           2002             2003
consequences of temporary differences between the carrying amounts                     Current assets—Deferred
and tax bases of assets and liabilities, which are expected to reverse in the           income taxes ............................ ¥ 7,886         ¥ 12,343       $ 65,608
year beginning April 1, 2004 or later, decreased from 42.0% to 40.9%. This             Other assets—Deferred
resulted in a reduction in deferred tax assets at March 31, 2003 by ¥384                income taxes ............................ 20,708           11,042          172,279
                                                                                       Long-term
million ($3,194 thousand), compared with the deferred tax asset that
                                                                                        liabilities—Other......................            (18)           (12)          152
would have been recognized if a tax rate of 42.0% had been fully applied to            Net deferred
all temporary differences. Net income for the year ended March 31, 2003                 tax assets .................................. ¥ 28,576    ¥ 23,373       $ 237,735
also reduced by ¥384 million ($3,194 thousand) as a result of these
changes in statutory local enterprise tax regulations.
                                                                                          At March 31, 2003, no deferred income taxes have been provided on
  The significant components of deferred tax assets and liabilities as of
                                                                                       undistributed earnings of foreign subsidiaries not expected to be remitted
March 31, 2003 and 2002 were as follows:
                                                                                       in the foreseeable future. Tax loss carryforwards of consolidated foreign
                                                                                       subsidiaries at March 31, 2003 amounted to approximately ¥612 million
                                                                       Thousands of
                                                                       U.S. dollars    ($5,094 thousand) and are available as an offset against future taxable
                                                 Millions of yen         (Note 3)      income of such foreign subsidiaries. These carryforwards expire at various
                                             2003           2002           2003        dates and realization is dependent on generating sufficient taxable income
Deferred tax assets:                                                                   by such foreign subsidiaries prior to expiration of the tax loss carryfor-
 Enterprise taxes....................... ¥ 805              ¥ 1,457    $     6,701     wards.
 Accrued expenses ...................             2,427       2,100         20,192        Although realization is not assured, management believes it is more
 Research expenses, etc. ........                 2,860       7,314         23,792     likely than not that all of the deferred tax assets less valuation allowance
 Accrued retirement benefits                                                           will be realized. The amount of such net deferred tax assets considered
  for directors, statutory                                                             realizable, however, could be changed in the near term if estimates of
  auditors and executive                                                               future taxable income during the carryforward period change.
  officers.....................................     565            —         4,697
 Accrued employees                                                                     11. RESEARCH AND DEVELOPMENT EXPENSES:
  retirement benefits...............             15,112      14,548        125,724     Research and development expenses included in selling, general and
 Accrued bonuses.....................             1,269       1,027         10,554     administrative expenses approximated ¥29,526 million ($245,641 thou-
 Net unrealized losses on                                                              sand) and ¥32,212 million for the years ended March 31, 2003 and 2002,
  securities ................................       114            —          947      respectively.
 Prepaid research
  expenses.................................       2,216       2,457         18,434
 Operating loss carryforwards
  for tax purposes.....................             435         406          3,617
 Other..........................................  5,264       1,936         43,804
  Gross deferred tax assets....                  31,067      31,245        258,462
  Less: Valuation allowance...                     (435)       (401)        (3,617)
          Total deferred tax
            assets........................       30,632      30,844        254,845




                                                                                                                                                                                37
     12. OTHER INCOME AND EXPENSES:
     Other income and expenses for the years ended March 31, 2003 and 2002                                                                                     Thousands of
                                                                                                                                                               U.S. dollars
     consist of the following:
                                                                                                                                         Millions of yen         (Note 3)
                                                                                                                                     2003             2002        2003
                                                                               Thousands of
                                                                               U.S. dollars   (Lessee)
                                                      Millions of yen            (Note 3)       Current obligation.................... ¥ 3,590     ¥ 1,814     $ 29,867
                                                 2003               2002           2003         Long-term obligation.............. 10,764            3,895       89,551
                                                                                                Present values
     Other income:
                                                                                                 of lease payment................... ¥14,354       ¥ 5,709     $ 119,418
       Gain on sales of property,
        plant and equipment ......... ¥                   4     ¥          9   $       33
       Equity in net earnings of
        affiliated companies ...........                140             194         1,165     14. CONTINGENT LIABILITIES:
       Rental income of                                                                       Contingent liabilities at March 31, 2003 for an affiliated company’s loans
        real estate ............................        518             463         4,309     which are guaranteed by the Company amounted to ¥98 million ($815
       Gain on sales of                                                                       thousand).
        investment securities.........                1,633       1,625          13,586
       Others......................................   1,753       1,474          14,585
                                                                                              15. SEGMENT INFORMATION:
                                                    ¥ 4,048     ¥ 3,765        $ 33,678
                                                                                              (1) Industry segment information
                                                                                              The Company and its subsidiaries are engaged principally in the following
                                                                               Thousands of
                                                                                              two industrial segments:
                                                                               U.S. dollars
                                                      Millions of yen            (Note 3)       Self-medication: OTC products, consumer goods for household and
                                                 2003               2002           2003                          general use and other products
     Other expenses:                                                                            Pharmaceutical: ethical drugs.
       Devaluation losses                                                                       The segment information of the Company and its subsidiaries for the
        on investment securities ... ¥ 665                      ¥ 2,194        $    5,532     years ended March 31, 2003 and 2002 is presented below:
       Loss on disposal of property,
        plant and equipment..........                   270             329         2,246                                                                      Thousands of
       Restructuring expenses                                                                                                                                  U.S. dollars
        for subsidiaries....................             —              130            —                                                 Millions of yen         (Note 3)
       Prior years’ retirement                                                                                                        2003            2002        2003
        benefit for directors,                                                                Net sales:
        statutory auditors and                                                                   Self-medication..................... ¥ 195,125   ¥ 192,428    $1,623,338
        executive officers ................           1,296           —          10,782          Prescription
       Others......................................     510         142           4,240           pharmaceutical ..................      78,952      78,969       656,840
                                                    ¥ 2,741     ¥ 2,795        $ 22,800                                               ¥ 274,077   ¥ 271,397    $ 2,280,178
                                                                                              Operating income:
                                                                                                 Self-medication..................... ¥ 50,412    ¥ 53,216     $ 419,403
                                                                                                 Prescription
     13. LEASES:                                                                                  pharmaceutical ..................       3,982      7,485        33,130
     Periodic lease charges to the Companies as a lessee for the years ended
                                                                                                                                      ¥ 54,394    ¥ 60,701     $ 452,533
     March 31, 2003 and 2002 were ¥3,011 million ($25,050 thousand) and                       Identifiable assets:
     ¥1,813 million, respectively. An analysis of amounts, as if they had been                   Self-medication..................... ¥ 267,434   ¥ 262,978    $2,224,908
     capitalized, relates to leased assets under finance lease contract which                    Prescription
     were not capitalized at March 31, 2003 and 2002 is as follows:                               pharmaceutical .................. 117,176         102,082       974,848
                                                                                                 Elimination/corporate .......... 193,097           224,976     1,606,458
                                                                               Thousands of                                           ¥ 577,707   ¥ 590,036    $ 4,806,214
                                                                               U.S. dollars   Depreciation
                                                      Millions of yen            (Note 3)       and amortization:
                                                 2003               2002           2003          Self-medication..................... ¥ 12,455    ¥    9,573   $ 103,619
     Tools, equipment, software                                                                  Prescription
      and others:                                                                                 pharmaceutical ..................       4,377      4,616        36,414
       At cost...................................... ¥20,637    ¥ 9,449        $171,693                                               ¥ 16,832    ¥ 14,189     $ 140,033
       Accumulated                                                                            Capital expenditures:
         depreciation......................... (6,283)           (3,740)        (52,275)         Self-medication..................... ¥ 13,463    ¥ 18,811     $ 112,010
                                                     ¥14,354    ¥ 5,709        $119,418          Prescription
                                                                                                  pharmaceutical ..................       3,436      6,823        28,590
                                                                                                                                      ¥ 16,899    ¥ 25,634     $ 140,600
       The present values of future lease payments of the Companies, includ-
     ing amounts representing interest, at March 31, 2003 and 2002 were as
     follows:
                                                                                              (2) Geographic area information and export
                                                                                                  sales information
                                                                                              As the total sales by consolidated subsidiaries outside Japan and the total
                                                                                              export sales overseas are less than 10% of the consolidated net sales,
                                                                                              information relating to geographic area and export sales has been
                                                                                              omitted.




38
REPORT OF INDEPENDENT ACCOUNTANTS




                                                                                                          Kasumigaseki Bldg. 32nd Floor
                                                                                                          3-2-5, Kasumigaseki, Chiyoda-ku,
                                                                                                          Tokyo 100-6088, Japan




June 27, 2003


To the Board of Directors
of Taisho Pharmaceutical Co., Ltd.


In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of income,
of shareholders’ equity and of cash flows present fairly, in all material respects, the financial position of Taisho
Pharmaceutical Co., Ltd. and its consolidated subsidiaries at March 31, 2003 and 2002, and the results of their opera-
tions and their cash flows for each of the two years in the period ended March 31, 2003 in conformity with accounting
principles generally accepted in Japan. These financial statements are the responsibility of the Company’s manage-
ment; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with auditing standards generally accepted in Japan which require that we
plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements, assessing the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the
opinion expressed above.


As described in Note 2-(7) to the consolidated financial statements, effective from the year ended March 31, 2003, the
Company has changed its method of accounting for accrued retirement benefits for directors, statutory auditors and
executive officers.




PricewaterhouseCoopers
(Certified Public Accountants)



Notice to Readers:
The accompanying consolidated financial statements are not intended to present the financial position and results of operations and cash flows in
accordance with accounting principles and practices generally accepted in countries and jurisdictions other than Japan. Accordingly, the accompanying
consolidated balance sheets and related consolidated statements of income, of shareholders’ equity and of cash flows and their utilization are not
designed for those who are not informed about Japanese accounting principles, procedures and practices.

The standards, procedures and practices utilized in Japan to audit such financial statements may differ from those generally accepted in countries and
jurisdictions other than Japan.



                                                                                                                                                         39
     CORPORATE INFORMATION
     (As of July 1, 2003)




     Board of Directors



     CHAIRMAN OF THE BOARD                           MANAGING DIRECTORS                         CORPORATE AUDITORS
     Shoji Uehara*                                   Yoshimasa Miki                             Kunio Hiruma
                                                     Hideyuki Waki                              Masahiro Furuhashi
     PRESIDENT
                                                                                                Toshio Morikawa**
     Akira Uehara*                                   EXECUTIVE DIRECTORS
                                                                                                Yoshio Ninomiya**
                                                     Hironaka Aihara
     EXECUTIVE VICE PRESIDENT
                                                     Yukio Yamamoto                             **External auditor as stipulated by Act
     Akira Ohira*                                                                               18-1 related to the exception to the
                                                     Yoshiaki Sasaki                            commercial code for audits.
                                                     Kunihiro Kitamura
     SENIOR MANAGING DIRECTOR
     Hisataka Hotta*

     *Representative Director




     Directory



     Head Office                                                         Omiya Factory
     24-1, Takada 3-chome, Toshima-ku, Tokyo 170-8633, Japan             403, Yoshino-cho 1-chome, Kita-ku,
     Telephone: 81-3-3985-1111                                           Saitama-shi, Saitama 330-8520, Japan
     Facsimile: Prescription Pharmaceutical Business Strategy            Telephone: 81-48-663-1111 Facsimile: 81-48-664-9400
                Division: 81-3-3985-0716
                                                                         Research Center
                International Sales Support Division: 81-3-3980-6624
                                                                         403, Yoshino-cho 1-chome, Kita-ku,
                Licensing Division (Self-Medication): 81-3-3988-2963
                                                                         Saitama-shi, Saitama 330-8530, Japan
                Public Relations Section: 81-3-3985-6485
                                                                         Telephone: 81-48-663-1111 Facsimile: 81-48-652-7254
                Home page: http://www.taisho.co.jp
                                                                         Okayama Factory
           Branch Offices
                                                                         33-2, Taiheidai, Shouou-cho,
           Osaka, Nagoya, Fukuoka, Sapporo, Sendai, Hiroshima,
                                                                         Katsuta-gun, Okayama 709-4321, Japan
           Shikoku, Kanazawa
                                                                         Telephone: 81-868-38-6131 Facsimile: 81-868-38-5342
           Milan Office
                                                                         Hanyu Factory
           Via Mario Idiomi no 3/6, 20090 Assago, Italy
                                                                         603-27, Komatsudai 1-chome,
           Telephone: 39-2-4571-2688 Facsimile: 39-2-4571-4484
                                                                         Hanyu, Saitama 348-8540, Japan
           Beijing Office                                                Telephone: 81-48-563-1121 Facsimile: 81-485-63-2152
           Room 802, Chang Fu Gong Center Jia-26,
           Jian Guo Men Wai Avenue, Beijing 100022, China
           Telephone: 86-10-6513-0834 Facsimile: 86-10-6513-0835

           Guangzhou Office
           Room 2803, GIE Tower, 403 Huanshi Rd. East,
           Guangzhou 510095, China
           Telephone: 86-20-8732-0767/82 Facsimile: 86-20-8732-1309




40
Major Subsidiaries and Affiliates
                                                                                                                                        Parent Company
                    Name                                                              Address
                                                                                                                                         Ownership (%)

                                               25-1, Takada 3-chome, Toshima-ku, Tokyo 170-8635, Japan
Taisho Toyama Pharmaceutical Co., Ltd.                                                                                                      55%
                                               Tel: 81-3-3985-8100 Fax: 81-3-3985-8140
Sanofi-Synthelabo-Taisho                       3-23, Kioicho, Chiyoda-ku, Tokyo 102-0094, Japan
                                                                                                                                            49%
 Pharmaceuticals Co., Ltd.                     Tel: 81-3-5275-7139 Fax: 81-3-5275-7217
                                               26-3, Takada 3-chome, Toshima-ku, Tokyo 170-8633, Japan
Taisho Kosei Service Co., Ltd.                                                                                                             100%
                                               Tel: 81-3-3981-6281 Fax: 81-3-3983-0181
                                               19-18, Kume 1-chome, Naha-shi, Okinawa 900-0033, Japan
Taisho Okinawa Co., Ltd.                       Tel: 81-98-868-7809 Fax: 81-98-864-5738
                                                                                                                                           100%

                                               26-3, Takada 3-chome, Toshima-ku, Tokyo 170-8633, Japan
Taisho Pharmaceutical Logistics Co., Ltd.      Tel: 81-3-3985-5231 Fax: 81-3-3985-3694
                                                                                                                                           100%

                                               2-5, Kasumigaseki 3-chome, Chiyoda-ku, Tokyo 100-6090, Japan
Taisho M.T.C. Co., Ltd.                        Tel: 81-3-3592-4461 Fax: 81-3-3592-4253
                                                                                                                                            60%

                                               26-3, Takada 3-chome, Toshima-ku, Tokyo 170-8633, Japan
Taisho Business Research Institute Co., Ltd.   Tel: 81-3-3985-1140 Fax: 81-3-3985-3649                                                     100%

                                               Flat A6, 8th Floor, Po Yin Building, 62-70 Texaco Road, Tsuen Wan, N.T., Hong Kong
Taisho Pharmaceutical (H.K.) Ltd.              Tel: 852-2408-2190 Fax: 852-2408-2193                                                       100%

Taisho Pharmaceutical (Taiwan) Co., Ltd.       No. 69 Kuang Fu North Road, Fukou Hsiang, Hsinchu,
  Head Office and Factory                      Taiwan, R.O.C. Tel: 886-3-598-2624 Fax: 886-3-598-1971
                                                                                                                                           86.6%
                                               3F., No. 129 Chung Yang North Road, Peitou, Taipei,
  Taipei Office                                Taiwan, R.O.C. Tel: 886-2-2897-7554 Fax: 886-2-2896-1635
Taisho Co., Ltd. Shanghai                      Room 2002, South Tower, Hong Kong Plaza, No. 283 Huai Hai Zhong Road,
  Shanghai Office                              Shanghai 200021, China Tel: 86-21-6390-7015~7 Fax: 86-21-6390-7020
                                                                                                                                            85%
                                               4733 Cao An Road, Shanghai 201804, China
  Head Office                                  Tel: 86-21-5959-8874 Fax: 86-21-5959-8637
                                               2100 Ram Kham Heang Road, Huamak-Bangkapi, Bangkok 10240,
Osotspa Taisho Co., Ltd.                       Thailand Tel: 66-2-374-7219 Fax: 66-2-732-2167                                               49%

Taisho Pharmaceutical (M) SDN. BHD.            Lot 9, Jalan P/12, Kawasan Perusahaan Seksyen 10, 43650 Bandar Baru Bangi,
  Head Office and Factory                      Selangor Darul Ehsan, Malaysia Tel: 60-3-8926-1228 Fax: 60-3-8926-1788                      100%

                                               Lot 9, Jalan P/12, Kawasan Perusahaan Seksyen 10, 43650 Bandar Baru Bangi,
Taisho Pharmaceutical Asia (M) SDN. BHD.                                                                                                   100%
                                               Selangor Darul Ehsan, Malaysia Tel: 60-3-8926-1228 Fax: 60-3-8926-1788
                                               Sitio Malanim Barangay Dela Paz, Sumulong Highway, Antipolo City, Philippines
Taisho Hizon Manufacturing Inc.                                                                                                             50%
                                               Tel/Fax: 63-2-696-3857
                                               No. 51 Paseo de Roxas, cor. Sen. Gil Puyat Ave., Urdaneta Village, Makati City,
Taisho Pharmaceuticals (Philippines), Inc.                                                                                                 100%
                                               Metro Manila, Philippines Tel: 63-2-817-1284 Fax: 63-2-812-4599
                                               Gedung Kirana Elok Lt. 4, JL. Rawa Sumur III, Blok DD-12 Kawasan Industri Pulogadung,
PT. Taisho Indonesia
                                               Jakarta Timur 13930, Indonesia Tel: 62-21-460-4461~4463 Fax: 62-21-460-4464
                                                                                                                                           100%
                                               Jl. Gadog No. 1, Cipanas, Sindanglaya, P.O. Box 15, Indonesia
  Cipanas Factory
                                                Tel: 62-255-513786 Fax: 62-255-515524
Taisho Vietnam Co., Ltd.                       National Road 1A, Suoi Hiep Ward, Dien Khanh Dist.,
  Head Office & Factory                        Khanh Hoa Pro., Vietnam Tel: 84-58-745-111, 112 Fax: 84-58-745-113
                                                                                                                                           100%
                                               Hai Thanh Office Center, Room 006, 02 Thi Sach St., Dist. 1, Ho Chi Minh City, Vietnam
  Ho Chi Minh Office                           Tel: 84-8-824-7493/4/5 Fax: 84-8-824-7492
                                               3878 Carson Street, #216, Torrance, CA 90503, U.S.A.
Taisho Pharmaceutical California Inc.                                                                                                      100%
                                               Tel: 1-310-543-2035 Fax: 1-310-543-9636
                                               6/8 Long Lane, London EC1A 9HF, United Kingdom
Taisho Pharmaceutical (Europe) Ltd.                                                                                                        100%
                                               Tel: 44-20-7726-8621 Fax: 44-20-7726-8622
                                                                                                      u
                                               c/o PricewaterhouseCoopers, Werdenerstrasse 10, 40227 D¨ sseldorf, Germany
Taisho Foods Deutschland GmbH                                                                                                              100%
                                               Tel: 49-211-981-0 Fax: 49-211-981-7700
                                               Level 14, 33 Berry Street, North Sydney, NSW 2060, Australia
Taisho (Australia) Pty. Ltd.                                                                                                               100%
                                               Tel: 61-2-9959-1992 Fax: 61-2-9959-3003
                                               Mount Kemble Corporate Center, 350 Mount Kemble Avenue
Taisho Pharmaceutical R&D Inc.                                                                                                             100%
                                               Morristown, New Jersey 07960, U.S.A. Tel: 1-973-285-0870 Fax: 1-973-285-1665




                                                                                                                                                         41
     INVESTOR INFORMATION
     (As of March 31, 2003)




     Date of Foundation:           October 12, 1912                         Distribution of Shareholders

     Paid-in Capital:              ¥29,804 million
                                                                            Individuals         32.48%                              Financial Institutions 25.10%

     Number of Employees:          4,806
                                                                                                                                    Securities Companies     0.39%
     Common Stock
        Authorized:                1,195,459,000
        Issued:                      340,965,510                            Foreign Companies   10.90%                                  Other Companies 31.13%
        Number of
          Shareholders:                    44,032

     General Meeting of                                                     Major Shareholders
         Shareholders:             Held annually in June                                                                            Number of         Percentage of
                                                                                                                                   Shares Held        Voting Rights
                                                                                                                                   (Thousands)             (%)*
     Listing:                      Tokyo Stock Exchange
                                                                            Uehara Memorial Foundation                              43,000                13.21
                                                                            Shoji Uehara                                            36,614                11.25
     Ticker Symbol Number: 4535
                                                                            Sumitomo Mitsui Banking Corporation                     13,500                 4.15
                                                                            The Bank of Tokyo-Mitsubishi, Ltd.                      13,500                 4.15
     Stock Transfer Agent:         The Mitsubishi Trust and
                                                                            Sumitomo Chemical Co., Ltd.                             12,100                 3.72
                                     Banking Corporation
                                                                            Uehara Museum of Modern Art Foundation                  10,000                 3.07
                                   Marunouchi Bldg., 4-5,
                                                                            The Master Trust Bank of Japan, Ltd.**                   9,508                 2.92
                                   Marunouchi 1-chome, Chiyoda-ku,          Northern Trust Company (AVFC)
                                   Tokyo 100-6326, Japan                     Sub-Account American Client                              9,383                2.88
                                                                            Japan Trustee Services Bank, Ltd.**                       8,407                2.58
     Headquarters:                 24-1, Takada 3-chome, Toshima-ku,        Akira Uehara                                              7,145                2.20
                                       Tokyo 170-8633, Japan                *After excluding Treasury Stock of 11,646 thousand shares
                                                                            **Trust Account




     Weekly Stock Data (TSE) (April 2002 — June 2003)

     (Yen)                                                       Weekly stock price range                                                     TOPIX
     2,500



     2,000



     1,500



     1,000



       500



         0
             '02.4        5    6           7          8    9           10      11         12      '03.1     2       3          4          5           6


     (Thousand shares)                                            Weekly trading volume
     3,500


     3,000


     2,500


     2,000


     1,500


     1,000


       500


         0
             '02.4        5    6           7          8    9           10      11         12      '03.1     2       3          4          5           6




42
Head Office: 24-1, Takada 3-chome, Toshima-ku, Tokyo 170-8633, Japan
 Telephone: 81-3-3985-1111
  Facsimile: Prescription Pharmaceutical Business Strategy Division: 81-3-3985-0716
             International Sales Support Division: 81-3-3980-6624
             Licensing Division (Self-Medication): 81-3-3988-2963
             Public Relations Section: 81-3-3985-6485
Home Page: http://www.taisho.co.jp




                                                                                      Printed on recycled paper in Japan

				
DOCUMENT INFO
Shared By:
Categories:
Tags:
Stats:
views:7
posted:8/23/2012
language:English
pages:45