Merrill Lynch
Japan Conference 2007
September 13, 20071

Safe Harbor Statement•Materials and information provided during this presentation may contain socalled “forward-looking statements.” These statements are based on current
expectations, forecasts and assumptions that are subject to risks anduncertainties which could cause actual outcomes and results to differ materiallyfrom these statements.

•Risks and uncertainties include general industry and market conditions, andgeneral domestic and international economic conditions such as interest rateand currency exchange fluctuations. Risks and uncertainties particularly apply
with respect to product-related forward-looking statements. Product risks anduncertainties include, but are not limited to, technological advances and patents
attained by competitors; challenges inherent in new product development,
including completion of clinical trials; claims and concerns about product safetyand efficacy; obtaining regulatory approvals; domestic and foreign healthcarereforms; trends toward managed care and healthcare cost containment; andgovernmental laws and regulations affecting domestic and foreign operations.

•Also, for products that are approved, there are manufacturing and marketingrisks and uncertainties, which include, but are not limited to, inability to build
production capacity to meet demand, unavailability of raw materials, and failure
to gain market acceptance.

•The Company disclaims any intention or obligation to update or revise any
forward-looking statements whether as a result of new information, future eventsor otherwise.
2

Confidence for the Achievement ofDramatic Leap Plan Increasing(DLP: FY 2006-2011)
Net Sales¥1,000 Billion

R&D Expenses¥

200 Billion

OperatingIncome¥

200 Billion

Net Income¥120 Billion

EPS¥

420

ROE

16% (approx.)

DPR

50% (approx.)

DOE

8% (approx.)
DPR: Dividend Payout Ratio
DOE: Dividend On Equity

3

Dramatic Leap Plan

Steady and On-track Progress(Fiscal year)

Operating Income

Net Sales
CAGR : +9%¥601.3¥1,000.0

CAGR : +13%

¥95.7

R&D Expenses¥93.2¥105.3

2011

2005

2011

2006
(Fiscal year)¥200.0CAGR : +11%
¥63.4

¥108.3

ROE
2005
2006

Net Income

2011¥120.0

¥70.6

2005
2006

2006
(Fiscal year)

2011

2005

13.0%
13.2%
16%

DPR+11%+16%
2005

5.3%
6.4%
8%+10%

2011
2006(Fiscal year)

CAGR : +14%

20052006¥674.1+12%
2005¥200.0

DOE

2011
2006
(Fiscal year)
Unit: billions of yen

2011

40.6%
48.4%
50%

CAGR: Compound Annual Growth Rate

4

Consecutive Successful Years
Ensure a Brilliant Future
We forecast enduring success for the years
after FY2011. This growth will be assured
by proactive R&D and strategic
investments funded by the current robust
sales of Aricept® and AcipHex®/Pariet®, aswell as regional sales that exceed theDramatic Leap Plan in Japan, the U.S. andAsia.

5

Solid Performance Continues
Achieved 8th Consecutive Increase in Salesand 7th in Net Income in FY2006
Net Sales

Operating Income

R&D Expenses

Net Income
Achieved Millennium Plan
One Year Ahead of Schedule(billions of yen)

1000.0Solid Progress of DLP

720.0

CAGR
+9%

674.1

601.3
466.6

533.0

500.2

CAGR

200.0 +14%

59.7
75.9

108.3

95.7

105.3

112.0

63.4

70.6

75.0

FY 2004
FY 2005
Millennium PlanFY 2006

FY 2007

69.0

78.3

83.1

86.8

41.0

50.1

FY 2002

FY 2003

124.0

93.2

55.5

CAGR: FY2002-2011(estimate)

Dramatic Leap Plan (DLP)

CAGR

200.0 +11%
CAGR
120.0 +13%

FY 2011

DLP target6Long-term EBITRD Growth(billions of yen)

450

Double-digit growth: CAGR 12.1%
R&D Expenses

Operating Income

400400350300

2002502001501281361005560500152165

6978189937376838796

FY2001

FY2002

FY2003

FY2004

FY2005

214108236124105112

FY2006

FY2007(estimate)

200

FY2011 (target)
CAGR: FY2001-20117

Proactive Investments &Efficient Cash Management(billions of yen)

FY2001

FY2002

FY2003

FY2004

FY2005

FY2006

FY2007
1Q

36.5
27.2
15.3

41.0
21.9
18.0

50.1
28.7
18.5

55.5
49.0
22.4

63.4
37.0
25.0

70.652.0
26.8

19.3
46.2
7.3

121.8

127.3

146.1

142.4

183.3

171.1

119.6

Net Income
Capital Expenditures
Depreciation
Cash & Cash
Equivalent

Zonegran product acquisition¥23.6 billion• Enforce Neuro-franchise• First step to epilepsy
market• EU: 10-year exclusivity

Ligand product acquisition¥22.9 billion• Initiated oncology businesswith 4 oncology products• Oncology specialists
moved to Eisai Inc.

Morphotek acquisition¥37.3 billion• Acquired antibody
technology & pipeline inoncology area
• R&D activities in biologics inaddition to small molecules

8Aggressive Investments
for the Future (1)E7389 Breast cancer
E2007 Parkinson’s disease
E5564 Severe sepsis
D2E7 Rheumatoid arthritis
clevudine Hepatitis B

Consecutive Launchof Innovative Products

Strong Growth of Global
Aricept® and AcipHex®/Pariet®
esSalstnem
t
sev
nIev
itca
Pro
FY2006

FY2007

FY2008FY2009FY2010FY2011

Dramatic Leap Plan (Mid-term Plan FY2006-2011)

E2012
Alzheimer’s diseaseAS-3201 Diabetic complications
E7820
Alpha 2 integrin expression inhibitor
E7080 VEGF receptor tyrosine kinase inhibitor
E7974
Tubulin polymerization inhibitor
E7107
RNA splicing modulator
MORAb-003 Antibody, Ovarian cancer
MORAb-009 Antibody, Pancreatic cancer
E5555
Acute coronary syndrome
E3710
Acid related diseases/New PPI
E3210
Irritable bowel syndrome

FY2012FY2013

FY2014(billionsof yen)

1,000

500

FY2015Further Leaping (FY2012 - )9Aggressive Investments
for the Future (2)E2007 <AMPA receptor antagonist>

NMEs
Neuroscience

Parkinson’s disease
Neuropathic pain
Epilepsy
Migraine prophylaxis
Multiple sclerosis

E7389 <Microtubule growth suppressor>

E2012 <γ-Secretase modulator> Alzheimer’s disease
reductase inhibitor>
AS-3201 <Aldose
Diabetic complications, Schedule being revised

Breast cancer
Non-small cell lung cancer
Prostate cancer
Sarcoma

E7820 <Alpha 2 integrin expression suppressor> Cancer
receptor tyrosine kinase inhibitor>
E7080 <VEGF
CancerOncology

polymerization inhibitor>
E7974 <Tubulin
Cancerreceptor a mAb>
MORAb-003 <Anti-folate
Ovarian cancer

MORAb-009<Anti-mesothelin mAb>
Pancreatic cancer

E5564 <Endotoxin antagonist> Severe sepsis
E5555 <Thrombin receptor antagonist>

Other unmet
medical needs

Acute coronary syndrome
Atherothrombotic disease

E3710 Acid related diseases
E3210 Irritable bowel syndrome
D2E7 <Anti-TNFα human mAb> Rheumatoid arthritis, Psoriasis, Crohn’s disease (Japan)
clevudine Hepatitis B (Asia)

Business Development
Zonegran®, Prialt®, Fragmin®, Inovelon®, Eril®, Glufast®, Neurobloc®, Lunesta®
Morphotek: Antibody Technologies and Pipeline
M&A
Ligand: Oncology Products (ONTAK®, Targretin® capsule, Targretin® gel, Panretin® gel) and Expertise
FY2006

FY2007

FY2008FY2009FY2010FY2011FY2012 - Further Leaping*Exact filing schedule subject to change

10New Products Update (1)Project

Mode of Action

Target Indication
Parkinson’s disease
Neuropathic pain

E2007
Perampanel

AMPA receptor
antagonist

Epilepsy

Development Status
3 Phase III studies ongoing
Study 301 completed clinical phase,
Study 302 completed enrollment
Phase II POC achieved
Phase III study including higher dose inpreparation
Phase II study with 2mg completed
Higher doses to be evaluatedMultiple Sclerosis

Phase II POC study in preparation
Phase IIb Studies for 3rd line, Subpart H ongoing

E7389
eribulinmesylateE5564
eritoran tetra
sodiumE5555Microtubule growth
suppressor

Endotoxin
antagonist
Thrombin receptor(PAR-1) antagonist

FY2007

Phase II POC study initiatedMigraine prophylaxis

Breast cancer

TargetSubmission

3QFY2007(Subpart H)

FY2009Phase III studies ongoing for 2nd and 3rd line
treatment (full development)(EU 3rd line)

FY2010(2nd line)

Prostate cancer

Phase II POC study enrollment completed

NSCLC

Phase Ib study in combination with carboplatin
ongoing

SarcomaCancerPhase II POC study ongoing

Severe sepsis

Phase I study ongoing in Japan
Phase III study ongoing
Enrollment on track (Target: 250 sites,
2000 patients, 1500 patients at interim analysis)
Fast track designation (FDA)

Acute coronary syndrome Safety issue in monkey study was cleared
Atherothrombotic disease Phase II study resumed

FY2009FY2012

11

New Products Update (2)Project

Mode of Action

Target Indication

Development Status

TargetSubmission

FY2011

E2012

Gamma secretasemodulator

Alzheimer’s disease

Phase I study on hold due to lenticular opacity inrats at highest dose
Preclinical investigation ongoing for safety dose
finding and mechanism of toxicity
Plan to restart Phase I study within FY2007
Utilize bio-marker and adaptive design in Phase II& III to expedite clinical phaseAS-3201

Aldose reductase
inhibitor

Diabetic complications

Phase II/III in US and Phase II in Japan completed
Good safety profile
New clinical study plan in development

Rheumatoid arthritis

J-NDA filed in Dec 2005 for RA

D2E7

Anti TNF-alphamonoclonal antibody

ProjectPsoriasis
Crohn’s disease

Phase II/III completed, J-NDA in preparation

Sep 2007

Phase II/III ongoing

FY2009Formulation

Target Indication

Development Status

TargetSubmission

Sustained release

Alzheimer’s disease

Phase III initiated with 23 mg sustained releasetablet for maximization of AUC without high peak

FY2009Transdermal patch

Alzheimer’s disease

Phase I in preparation
Evaluate higher compliance and convenience
Target: once a week patch

FY2009Extended release

Acid related diseases

Phase III in preparation

FY2009

Aricept

AcipHex/Pariet

12

Sustained and Proactive
Shareholder Return
Target DOE of approx. 8% in FY2011(DPS,EPS: Yen)

450

DPS

400

EPS

350

200
150

40.6%

DOE

23.3% 22.7%
20.9%
172
124

222

193

2.5%36 2.6%
29 2.4%32248

263

30%

20%

141130

120
5650%

40%

29.0%

1005049.4%

50.0% 420

DPR300250

48.4%(DPR,DOE: %)90
3.7% 5.3%

6.4%

6.5%

8%

010%0%
FY2001 FY2002 FY2003 FY2004 FY2005 FY2006 FY2007(est.)

DPS: Dividend Per ShareEPS: Earnings Per Share
DPR: Dividend Payout Ratio DOE: Dividend On Equity

FY2011(target)*EPS figures are rounded13