Case Study：Annual Report 2009 of Eisai Co., Ltd.
(the relation between financial and non-financial)
Financial Review
Financial Highlights
The pharmaceutical industry is expected to create revolutionary therapeutic drugs and provide high-quality
information, services and products. However, the industry is facing dramatic environmental changes with theworldwide promotion of measures designed to curb medical expenses; rising costs for development of new drugs;
and a surge in major business acquisitions and corporate restructuring to bolster R&D capabilities. In addition, it isbecoming increasingly necessary for companies to manage risks relating to such issues as drug side effects andintellectual property. Compounding these issues, the global financial crisis and economic downturn are expected
to impact the pharmaceutical industry going forward.
Against this backdrop, for the current fiscal year, Eisai Co., Ltd. and its subsidiaries (“Eisai”) reported consolidated
net sales of ¥781.7 billion, an increase of 6.5% compared with the previous fiscal year. Operating income surged
417.2%, to ¥91.8 billion. Net income stood at ¥47.7 billion, compared with a ¥17.0 billion net loss recorded in the®

previous fiscal year. Sales of Aricept , an Alzheimer’s disease treatment, steadily increased, advancing 4.4%
year on year, to ¥303.8 billion, while sales of the proton pump inhibitor (PPI) Pariet
dropped 9.1%, to ¥159.9 billion. Antiemetic agent Aloxi

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(U.S. trade name: AcipHex )recorded sales of ¥36.5 billion, while DNA methylating®

agent Dacogen posted sales of ¥15.1 billion. By region, North America and China both substantially increased insales, while Japan recorded a steady performance. Despite proactively investing resources in R&D programs,
Eisai recorded an increase in operating income for the year. This reflected the effect of the special merger-related
accounting treatment such as in-process R&D expenses and other expenses recorded in connection with Eisai’s
acquisition of MGI PHARMA, INC. in the previous fiscal year. As a result of the above, basic earnings per share(EPS) for the fiscal year under review amounted to ¥167.35, compared to a loss of ¥59.80 in the previous fiscalyear. On an “adjusted” basis excluding non-cash consolidated items subject to special merger-related accounting
treatment associated with the previous year’s acquisition of MGI PHARMA, INC., from the (current accountingstandard) GAAP-based results, Eisai’s consolidated business results were as follows: ¥781.7 billion in net sales(up 6.5%), ¥120.3 billion in operating income (up 8.6%), and ¥69.3 billion in net income (down 2.0%). Operating
income increased due to higher net sales and more efficient use of selling, general and administrative expenses.
However, net income on an “adjusted” basis declined due to increases in interest expenses, loss on devaluationof investment securities and loss on impairment of long-lived assets. As a result of the above, earnings per share*1(EPS) on an “adjusted” basis came to ¥243.36 (down ¥5.24 year on year). Eisai uses cash income as anindicator of cash-generating ability. Cash income is the total amount of cash that can be used for suchapplications as growth investments and business development, dividend payments, debt repayments, and the like.

The Group’s management considers it a tool to evaluate growth potential and strategies. For the fiscal year underreview, cash income amounted to ¥119.0 billion (up 11.3% from the previous fiscal year), and cash income per*2share amounted to ¥417.78 (up ¥41.96 from the previous fiscal year).
*1 Cash income is calculated as follows: Net income (loss) + depreciation of PP&E and amortization of intangible assets + IPR&D
expenses + amortization of goodwill + loss on impairment of long-lived assets (including loss on devaluation of investment securities)*2 Cash income per share is calculated as follows: Cash income ÷ number of shares issued and outstanding (excluding treasury stock)※The above underlined sentences are stated by WICI Japan.