September 26, 2007
Kyorin Co., Ltd.
Nisshin Seifun Group Inc.
Merger between Kyorin Pharmaceutical Co., Ltd. andNisshin Kyorin Pharmaceutical Co., Ltd.
We announce that Kyorin Co., Ltd. (“Kyorin”) and Nisshin Seifun Group Inc.
(“Nisshin-Seifun”), and Kyorin Pharmaceutical Co., Ltd. of Kyorin’s wholly owned
subsidiary (“Kyorin-Pharmaceutical”) and Nisshin Pharma Inc. of Nisshin-Seifun’s wholly
owned subsidiary (“Nisshin-Pharma”), at the respective Boards of Directors held on
September 26, 2007, passed a resolution to dissolve the joint venture established as Nisshin
Kyorin Pharmaceutical Co., Ltd. (“Nisshin-Kyorin”) and to merge Nisshin-Kyorin into
Kyorin-Pharmaceutical on October 1, 2008.
1.

Background and Purposes of the Merger

Nisshin-Kyorin was established in April 1996 as the joint venture by
Kyorin-Pharmaceutical* and Nisshin Flour Milling Co., Ltd. ** and eleven years have passed
since the commencement of the joint venture. During that period, Nisshin-Kyorin has
strengthened its capacity of research, development and marketing of pharmaceutical products,and has expanded the sales of its pharmaceutical products, among others, “Pentasa” as atherapeutic drug for ulcerative colitis and Crohn’s disease. As a result of those,
Nisshin-Kyorin achieved the sales of thirteen billion yen and the recurring profit of 1.3 billion
yen in the fiscal year ending March 2007.
On the other hand, we recognize that expanding of our business to a certain scale andstrengthening of business foundation are vital to survive in the pharmaceutical industry
increasing competition and escalating expenses for the research and development activities
for ethical drug while the medical-care system reform with the implementation of therestrictive measures of healthcare cost is continuously in place.
Under those circumstances, Kyorin-Pharmaceutical, Nisshin-Seifun andNisshin-Pharma judged from long-term prospective that it was the best option to enhance thecorporate value of Nisshin-Kyorin not by causing Nisshin-Kyorin to solely operate thepharmaceutical business but by integrating Nisshin-Kyorin into Kyorin-Pharmaceutical,
through reinforcements of the capacities of the research and development and the sales forceof ethical drugs, and decided to dissolve the joint venture and merge Nisshin-Kyorin into
Kyorin-Pharmaceutical.
Kyorin will mobilize the total power of Kyorin’s group and enhance the consolidated
financial performance by continuously implementing its effective allocation and utilization ofmanagement resources.
2.
Outline of the Merger(1) Schedule*With the transition to holding company structure, Kyorin-Pharmaceutical became a wholly owned subsidiary of Kyorin in March of 2006.
With the transition to holding company structure, Nisshin Flour Milling Co., Ltd. changed its corporate name to Nisshin Seifun Group Inc.
as well as separated its pharmaceutical business to Nisshin-Pharma.
**Approvals by the Boards of Directors on the basic merger agreement: September 26,
2007
Execution of the Merger Agreement: August of 2008 (Planned)
Effective date of the merger: October 1, 2008 (Planned)
Registration of the merger: October 1, 2008 (Planned)(2) Scheme of the Merger
The merger will be executed by absorption method through simplified merger by
Kyorin-Pharmaceutical (merging company) of Nisshin-Kyorin (merged company).
(3) Merger Consideration
The merger consideration is paid in cash without Kyorin-Pharmaceutical’s issuing newshares or allocating own shares. The amount of the merger consideration has not yet
been decided.
(4) Calculation of Merger Consideration
The amount of the merger consideration will be discussed by concerned parties andcalculated in consideration of the amount of the current net assets based on
Nisshin-Kyorin’s balance sheet at the end of June 2008 and certain future value of
Nisshin-Kyorin.
3.

Effect of the Merger
Kyorin-Pharmaceutical expects the merger of Nisshin-Kyorin to bring the following
merger effects:(1) Strengthening of Domestic Pharmaceutical Business① Efficient marketing activities
Unification of both parties’ “Pentasa” (core product) business will enable
Kyorin-Pharmaceutical to expand its efficient marketing activities. By strengthening
Kyorin-Pharmaceutical’s sales force through the establishment of 750 MR
marketing organization, we will bring into view the pharmaceutical company
featuring the sales of 10 billion yen.
② Expansion of Research Activities
Additional research area of lower digestive tract will enable
Kyorin-Pharmaceutical’s seeds for drug discovery to be upgraded and expanded andKyorin-Pharmaceutical’s developmental pipeline to be enriched.
(2) Realization of Efficient Management
By consolidating the management functional resources such as functions of headquarters,
R&D, marketing and production, and performing the optimization of the business
expenses for those functions, we will realize the effective corporate management.
(3) Reinforcement of Human Resources
Human resources necessary for the business expansion of Kyorin group will beeffectively reinforced and its organizational capacity to adopt changing conditions will
be strengthened.
4.

Summery of the parties concerned with the Merger(1)

Trade Name

(2)

Principal Business(3)

Date of Incorporation(4)

Representative

KYORIN Pharmaceutical Co., Ltd.
(merging company)
Manufacture, sale and purchase ofpharmaceutical products andrelated general healthcare business
December 4, 1940
Ikuo Ogihara,
Representative Director andPresident

2

NISSHIN KYORIN
Pharmaceutical Co., Ltd.
(merged company)
Manufacture, sale and entrusted
research of pharmaceuticalproducts
April 1, 1996
Takashi Matsuda,
Representative Director andPresident

(5)Location of PrincipalOffice(6)

Paid-in Capital(7)

Number of Authorized
Shares(8)

Shareholder’s Equity(9)Total Assets

Chiyoda-ku, Tokyo

Chiyoda-ku, Tokyo

4,317 million yen(as of March 31, 2007)
74,268,150 shares(as of March 31, 2007)
86,797 million yen(as of March 31, 2007)
106,042 million yen(as of March 31, 2007)
March 311,488
(as of March 31, 2007)
Suzuken Co., Ltd.
Alfresa Corporation
Mediceo Paltac Holdings Co., Ltd.
Toho Pharmaceutical Co., Ltd.
and others(10) Fiscal Year End(11) Number of Employees(12) Major Customers

300 million yen(as of March 31, 2007)
320,000 shares(as of March 31, 2007)
4,472 million yen(as of March 31, 2007)
8,047 million yen(as of March 31, 2007)
March 31274(as of March 31, 2007)
KYORIN Pharmaceutical Co.,Ltd.
Mediceo Paltac Holdings Co.,Ltd.
and others
KYORIN
100 % Pharmaceutical
50 %Co.,Ltd.
40 %Nisshin Pharma Inc.

KYORIN Co., Ltd.
(13) Major Shareholders
and Shareholding Ratios

NisshinGroup Inc.
(as of March 31, 2007)(14) Main Financing Banks

Seifun10 %(as of March 31, 2007)

Mizuho Bank, Ltd.

Sumitomo Mitsui BankingCorporation(15) Relationship between the Parties
CapitalKYORIN Pharmaceutical Co., Ltd. is a 50% shareholder of NISSHIN KYORIN
Pharmaceutical CO., Ltd.
Personnel A director of KYORIN Pharmaceutical Co., Ltd. doubles a director of NISSHIN KYORIN
Pharmaceutical CO., Ltd. and KYORIN Pharmaceutical Co., Ltd. sends on-loan its 25
employees to NISSHIN KYORIN Pharmaceutical CO., Ltd.
Business KYORIN Pharmaceutical Co., Ltd. sells products to NISSHIN KYORIN PharmaceuticalCO., Ltd. and purchases products from NISSHIN KYORIN Pharmaceutical CO., Ltd.
(As of March 31, 2007)(16) Financial Results for the Three Latest Fiscal Years
KYORIN Pharmaceutical Co., Ltd.
(Non-consolidated)
End of Fiscal Year
Sales
Operating Profit
Recurring Profit
Net Income
Net Income
per Share
Dividends
per Share
Shareholder’s Equity
per Share(Unit: million yen)
NISSHIN KYORIN
Pharmaceutical CO., Ltd.
(Non-consolidated)
March 31, March 31, March 31,
2005
2006
2007
12,112
12,577
13,050
988
1,114
1,365
919
1,093
1,370
597
688
858

March 31, March 31,
2005
2006
64,93867,357
5,911
8,773
5,723
8,377
1,615
4,771

March 31,2007
66,052
7,613
7,615
4,697

21.19 yen

63.64 yen63.25 yen

1,865.76

18.00 yen 39.00 yen30.00 yen

0 yen

1,195.26
yen

1168.71yen

9,697.91
yen

1,245.22yen

3

2,152.44650.00yen
11,912.53
yen2,684.34
0 yen
13,975.01
yen5.

Situation after the Merger(1) Trade Name:
KYORIN Pharmaceutical Co., Ltd.
(2) Business:
Manufacture, sale and purchase of pharmaceutical products andrelated general healthcare business(3) Location of Principal Office:5, Kanda Surugadai 2-chome, Chiyoda-ku, Tokyo(4) Representative: Ikuo Ogihara, Representative Director and President(5) Paid-in Capital: 4,317 million yen(6) Effect on Financial Results:
The merger is scheduled on October 1, 2008 and has no impact
to the respective consolidated financial results of KYORIN Co.,
Ltd. and Nisshin Seifun Group Inc. in the fiscal year ending
March 2008. The forecasts of financial results from fiscal year
2008 onward will be disclosed sequentially.
- End -4