Annual Report 2001
Year Ended March 31, 2001

Bringing smiles to everyone.

KAKEN

PROFILE
The origin of Kaken Pharmaceutical Co., Ltd. can be traced back to the Institute of Physical andChemical Research (Riken), established in 1917. The Company started pharmaceutical business withfull-scale development of penicillin and streptomycin based on Riken’s own technologies in 1948, andsince then broadened the scope of its business and drug development activities through merger andalliance. Kaken’s prestige has soared accordingly.
While the Company has established strength in developing and selling pharmaceuticals for orthopedics, it is now expanding its involvement in other medical fields, such as hyperlipidemia and diabetes.
The Company contributes to improving people’s health by cultivating its own original technologies,
engaging in joint development initiatives, introducing new technologies and acquiring domestic sales
rights.
As a fruit of its technology and product introduction, the Company has been since June 2001
marketing Fiblast Spray consisting of Trafermin, a recombinant form of human basic fibroblast growth
factor (bFGF) for the first time in the world, licensed from a US bio-pharmaceutical company, Scios, inthe area of regenerative medicine (wound healing medicine).

PHILOSOPHY
Kaken’s ongoing quest is to bring smiles and happiness to as many people as possible. For this purpose,
the Company strives to improve the quality of life of patients through the development and distribution of superior drugs.

CONTENTS
Consolidated Financial Highlights ................................ 1
President’s Message ....................................................... 2
Review of Operations ................................................... 4
Main Products .............................................................. 6
Research and Development ......................................... 10
Marketing Activities ................................................... 14
Organizations ............................................................. 15
Consolidated Five-Year Summary ............................... 16
Financial Review ........................................................ 16
Consolidated Financial Statements ............................. 18
Corporate Data .......................................................... 33
Board of Directors and Corporate Auditors ................ 33

KakenPharmaceutical
Kaken Pharmaceutical Co., Ltd. and Consolidated Subsidiaries.

CONSOLIDATED FINANCIAL HIGHLIGHTS
Thousands of
U.S. dollars (Note )Millions of yen

2001

2000

2001

¥ 70,306
6,805
1,999

¥ 71,801
5,925
1,989

$571,594
55,325
16,252

36,112
121,80334,854106,240

293,593990,268

For the year ended March 31,

Net sales .........................................................................................
Operating income ...........................................................................
Net income .....................................................................................
At March 31,

Total shareholders’ equity ...............................................................
Total assets .....................................................................................

Yen

U.S. dollars (Note )Per share data:

Net income (Basic) ..........................................................................
Cash dividends ................................................................................

¥21.78.
7.50.

¥21.68.
7.50.

$0.177.
0.061.

(¥ millions)(¥ millions)

30,59334,854

31,20930,638100,59099

106,240

98,769
98

97

98

99

85,35399

70,30698

36,112(¥ millions)

121,803

Shareholders' Equity

71,801

Total Assets

66,870Net Sales

65,64967,772

ROE (%) ........................................................................................
5.63.
6.08.
Capital adequacy ratio (%) .............................................................
29.65.
32.81.
.Note: U.S. dollar amounts are translated, for convenience only, at the rate of ¥123 = $1 effective on March 31, 2001.

97

00

01

97

Kaken Pharmaceutical Co., Ltd. 1

00

01

00

01

KakenPharmaceutical
PRESIDENT’S MESSAGE
OPERATING ENVIRONMENT

In fiscal 2000, ended March 31, 2001, the Company’s

overall business environment continued to deteriorate for a number of issues. First, the industry suffered aseven percent average price reduction in April 2000. The government has advanced a policy to reduce drug
prices to cope with the revision of the health insurance systems and health care for the elderly, in which copayment of medical expenses increased. In addition, competition among companies in the industry intensified
with the entry of foreign companies into the market, although the market benefited from increased sales ofmajor new drugs introduced into the market in the preceding fiscal year.
In response, the Kaken Pharmaceutical Group strengthened its marketing activities on its core products anddeployed sales representatives in the field of internal medicine, intending to distribute new drugs and expecting
to introduce other drugs pending receipt of approval to manufacture such drugs.
To address declining margins caused by drug price reductions, the Company found means of centralizing
plants and squeezed purchasing costs to enhance profitability. In addition, it strove to raise group-wide efficiency and worked to improve its profit structure.
The Group’s other businesses, such as real estate, however, remained sluggish due to falling rents for officespace and declining land prices.

PERFORMANCE AND FINANCIAL POSITION

Consolidated net sales for theyear amounted to ¥70,306 million (US$571.6 million), down 2.1 percent, or ¥1,495 million, from fiscal 1999.
However, operating income jumped 14.8 percent, to ¥6,805 million, thanks to an improved gross profit marginand efforts to centralize production, raise marketing efficiency and minimize operating costs. For the year, theCompany reported extraordinary expenses, such a revaluation loss on investments in securities and a loss on
disposal of properties. As a result, consolidated net income moved up 0.5 percent, to ¥1,999 million (US$16.3
million).

PROFIT APPROPRIATION

Adopting a long-term perspective, Kaken places high manage-

ment importance on retaining ample earnings to fund future business growth while compensating shareholders
continuously. For this reason, our fundamental policy is to undertake active investments in R&D to develop
new products while strengthening our financial position and appropriating profits according to our businessperformance.

CAPITAL EXPENDITURES AND RATIONALIZATIONIn the year underreview, the Company allocated ¥763 million from internal capital to finance the relocation of its distribution
center, through a strategy designed to enhance sales and distribution efficiency. To upgrade product development and manufacturing facilities for the future, in July 2000 the Company raised ¥10 billion through anissuance of yen-denominated convertible bonds.
To improve our profit structure and reinforce our financial position, we continued extensive rationalization
efforts. Specifically, we integrated and consolidated sales offices and production facilities, prepared to create a
distribution facility on a former factory site, produced agrochemicals overseas on a consignment basis, andKaken Pharmaceutical Co., Ltd. 2

reorganized our subsidiaries. In these and other ways, we haveworked hard to cut operating costs.
During the year under review, we also endeavored to reduce thenumber of employees by adopting a new hiring system designed toreinforce our R&D and sales capabilities and by allocating humanresources more appropriately.

BUSINESS OUTLOOKThe future of the pharma-

ceutical industry in Japan will be affected by low birthrates and an
aging population, which will cause major changes to the makeup of
the nation. In this regard, drastic health care reforms are now underconsideration, leading to predictions that our operating environment will face major unprecedented changes in the future. We believe that intensifying competition among
companies in the industry will further stir up the business environment.
Facing these challenges, Kaken will strengthen its capabilities in R&D—the core component of a pharmaceutical company—and will work to shorten development lead times. To this end, we will focus on someresearch targets and establish platform technologies. We will also undertake efficient joint development
initiatives with other companies in Japan and overseas. In addition to targeting further advances in orthopedics, we also will pursue progress in other fields, such as hyperlipidemia and diabetes, to strengthen ouroperating base.
In fiscal 2001, ending March 31, 2002, we expect to increase revenues with the launch of Fiblast Spray, atreatment for bed sores and skin ulcers. Fiblast Spray received the world’s first approval as Trafermin, ahuman recombinant form of basic fibroblast growth factor (bFGF). In the future, we will work to nurture andexpand applications for this product by pursuing R&D aimed at realizing its full potential in the field of
regenerative medicine.
In addition, we will restructure our organization by introducing an executive officer system in order toreinforce the functions of the Board of Directors and to clarify their responsibilities, with a view to the anticipated amendment of the Japanese Commercial Code.
We look forward to the support of our shareholders and business partners as we strive to further raise ourcorporate value in the future.

June 28, 2001

Shiro Inui
President

Kaken Pharmaceutical Co., Ltd. 3

KakenPharmaceutical

Kaken’s overriding objective in developing pharmaceuticals is to help
improve the quality of life of patients. Paralleling dramatic advancesin medical treatment has been a major surge in demand for superior
drugs. While the ultimate cure-all for every disease remains elusive,
we have made a significant progress in supporting patients’ healing
processes. In addition to our core products, we are making inroads inthe area of regenerative medicine. As we expand our business, we
remain committed to making people’s lives healthier and happier.

Kaken Pharmaceutical Co., Ltd. 4

REVIEW OF OPERATIONSPHARMACEUTICALSIn fiscal 2000, the Company reported increases in sales of two mainstay

products: Procylin (Beraprost Sodium), a platelet aggregation inhibitor, and Adofeed a pain-reliving plaster fortreating of arthritic pain. However, we were unable to avoid a decline in sales of Artz (sodium hyaluronic acid),
a viscoelastic supplement that improves the function of joints, due to reductions in drug prices and the launchof competitive products.
Owing to its aggressive marketing activities, the Company achieved higher sales of Lipantil (Fenofibrate), a
lipid-lowering agent for the treatment of hyperlipidemia. The product continued to make a steady progress inpenetrating the market. Ebrantil (Urapidil), α1 blocker to treat dysuria due to BPH and hypertension that wasapproved for the treatment of neurogenic dysuria in fiscal 1999, contributed to total sales. Also boosting
revenues were sales of Seprafilm (hyaluronic acid & CMC), a medical device to prevent post-operative abdominal adhesion that was included in the scope of insurance coverage in February 2001.
In February 2001, Kaken launched a new product, Mirol (Levobunolol), β-blocker, for the treatment ofglaucoma and ocular hypertension.
With regard to agrochemicals, the Company reported increased sales of Polyoxin, a fungicide for fruit andvegetable plants. However, domestic sales of Pentoxazon, a rice paddy herbicide, stagnated due to the reinforcement of a government policy to reduce acreage under rice cultivation. Since its market launch in 1998,
Pentoxazon has become well-known for its safety and efficacy, as well as numerous features not found in
traditional herbicides, and has contributed to total sales. In recognition of Pentoxazon development, theCompany received an award from the Pesticide Science Society of Japan in 2001.
In fiscal 2000, we reported strong exports to the United States ofSalinomycin, a mainstay feed additive product. Its sales to Europe,
however, were down. In Japan, we released a new feed additive, Avatec(Lasalocid), which generated healthy sales.
As a result, sales in the pharmaceuticals and agrochmicals segments
amounted to ¥67,272 million (US$546.9 million), down 0.4 percent fromfiscal 1999.

OTHERSWith regard to real estate management, revenues from real estate operations, such as

Bunkyo Green Court Building, declined in the year under review due mainly to falling land prices. As a resultof the foregoing, sales in this segment fell 29.2 percent, to ¥3,034 million (US$24.7 million).

Kaken Pharmaceutical Co., Ltd. 5

KakenPharmaceutical
MAIN PRODUCTS
Ph a rm a c e u t ic a l s>> Fiblast Spray (Wound healing agent)• Consisting of Trafermin, a recombinant form of human bFGF, Fiblast
Spray is a new type of drug for treating bed sores and skin ulcers.
• This strongly stimulates the growth of endothelial cells andfibroblasts, and accelerates wound healing by producing highly
vascularized granulation tissues.
• Fiblast Spray was the world’s first human recombinant bFGF productdeveloped by Kaken, which commenced sales in June 2001.

>> Artz (Anti-osteoarthritic)• Artz is made of ultra-pure sodium hyaluronic acid extracted fromrooster combs. Hyaluronic acid is a naturally occurring,biocompatible polymer found throughout the body, particularly insynovial fluid.
• Artz is a viscoelastic supplement for replacing the diseased synovial
fluid found in osteoarthritic knees and restoring the physical properties and elastoviscosity of such diseased synovial fluid.
• It is injected directly into the knee joint by a physician.

>> Procylin (Peripheral vasodilatation & Anti-platelet)• Procylin is an orally active and chemically stable prostacyclin analog that directly actson the PGI2 receptor to inhibit platelet aggregation.
• It is in wide clinical use for treating chronic artery occlusive disease. In September
1999, this product was approved for the additional indication of pulmonary hypertension, which cannot be treated with any remedies currently in use.

Kaken Pharmaceutical Co., Ltd. 6

>> Adofeed (Pain-relieving plaster)• Consisting of Flurbiprofen, Adofeed is a pain-relieving plaster, which is absorbed
through the skin.
• It has proven effective in treating osteoarthritis, tennis elbow, muscle pain and otherinflammatory diseases.
• It is applied to the affected area twice a day.

>> Mentax (Topical antifungal)• Consisting of Butenafine, Mentax is a topical antifungal agent for treating athlete’sfoot.
• It is Kaken’s original product that is sold around the world, including in the UnitedStates through Bertek/Mylan and in Canada through Schering-Plough.

>> Lipantil (Anti-hyperlipidemia)• Consisting of Fenofibrate, Lipantil is a fibrate lipid lowering
agent that lowers both triglycerides and cholesterol.
• Originally developed by Fournier in France, Lipantil was sublicensed
to Kaken in 1996 by Fournier’s Japanese licensee, Grelan Pharm.
Kaken launched Lipantil into the Japanese market in May 1999.

>> Ebrantil (α1-blocker)• Consisting of Urapidil, Ebrantil is a specific α1-adrenergic receptor antagonist forneurogenic dysuria. Twice-daily administration of Ebrantil capsules significantly
improves dysuria caused by central or peripheral neural disorders without causing
significant hypotension. It was approved for this indication in November 1999.
• Ebrantil has already been in use for treatment of hypertension and dysuria due to BPH.

>> Cytotec (Antiulcer)• Consisting of Misoprostol (PGE1 analog), Cytotec is effective for NSAID-induced
grastric ulcer.
• It was developed by G.D. Searle (now Pharmacia Corporation), and has been marketedby Kaken since 1995.

Kaken Pharmaceutical Co., Ltd. 7

KakenPharmaceutical>> Norinyl T28 (Low-dose oral contraceptive)• Norinyl T28 is a Sunday-start-type, low-dose oral contraceptive pill containing a
combination of two hormones: norethisterone and ethinylestradiol. Incidence ofmetrorrhagia, which is often observed by users of this type product, is low.
• It was developed by Monsanto and Daiichi Pharmaceutical and received approval inJune 1999. In September 1999, it was launched by Kaken into the Japanese market.
Kaken is currently marketing Norinyl T28 in collaboration with Morinaga Milk.

>> Eyecare 0.1 (Eye drop for corneal disorders)• Hyaluronic acid, a naturally occurring, biocompatible polymer, was first discovered in
the eye and has proved to promote to healing cornea epithelium wounds. (It is also amajor component of Kaken’s Artz for the treatment of osteoarthritis.)• Eyecare 0.1 eye drop solution, containing ultrapure hyaluronic acid (0.1%), wasapproved in March 2000, for the treatment of corneal disorders, including dry eyes. It
was launched into the Japanese market in July 2000 and co-marketed with Teika
Pharmaceutical under the same brand name.

>> Mirol (Anti-glaucoma)• Consisting of Levobunolol (0.5%), Mirol is a β-blocker for treating
glaucoma and ocular hypertension.
• Mirol is used once daily as eye drops without heavy viscosity.
• It was launched in February 2001.

>> Seprafilm (Post-operative anti-adhesive)• Seprafilm is a sheet-type, bioabsorbable, anti-adhesive, biomaterial
consisting of hyaluronic acid and CMC.
• This unique product, licensed from Genzyme Corp., was initially in
use in the gynecological field in Japan. In June 1999, it received
additional approval for preventing post-operative abdominal adhesions.

Kaken Pharmaceutical Co., Ltd. 8

Ag ro c h e m ic a l s>> Polyoxin (Fungicide)• Polyoxin is a fungicide produced by a certain type of bacterium isolated from the soilin the Aso region of Japan.
• It is particularly effective for treating damage caused by alternalia in apple, pear andother fruit trees, as well as flowering trees and tobacco plants. It is also effective
against botrytis rot and powdery mildew.
• With low toxicity, it does not damage crops and is highly safe for use.

>> Pentoxazon (Herbicide)• Pentoxazon is a new type of paddy herbicide. It is effective against first-year weeds andhas long-lasting effects.
• It is highly safe for use in rice paddies and can be used before, during or after
transplantation.

An im a l H e a l t h P ro d u c t s>> Salinomycin (Anti-coccidiosis in fowls)• Salinomycin was developed originally by Kaken. In addition to sales in Japan, it isbeing exported to Europe, North America, Asia and elsewhere. It is the most widelyused agent in the world to prevent and treat coccidiosis.
• Coccidiosis is a contagious disease that begins when protozoans become parasitic in theintestinal tracts of fowls. When transmitted, it causes stunted growth and even death.
The disease can be known to cause major economic damage in modern, large-scale
chicken farms.

>> Colistin (Anti-biotic agent)• Colistin is used to prevent diseases caused by Gram-negative bacteria, such as colon
bacillus and salmonella.
• It is highly safe and is one of the few drugs used against Gram-negative bacteria. It has
found widespread use. In addition to sales in Japan, it is being exported to Europeanand Asian countries.

Kaken Pharmaceutical Co., Ltd. 9

KakenPharmaceutical

Kaken strongly believes that R&D is the key to its success as a pharmaceutical company. Working in Japan’s ancient capital of Kyoto, ourresearchers utilize the latest information and technologies to discover
new drugs. Besides, in our research facilities near Mt. Fuji, researchers
work tirelessly to develop drugs. A noteworthy result of these initiatives is Fiblast Spray, the world’s first recombinant human bFGF product. In our enthusiasm to open new doors in research, we embrace thechallenge of change as we tackle the increasingly competitive business environment.

Kaken Pharmaceutical Co., Ltd. 10

RESEARCH AND DEVELOPMENT
Central Research Laboratories
DISCOVERY RESEARCH

The role of the Drug Discovery

Research Department is to discover new drugs. The department is located in
Kyoto, the ancient capital of Japan. There, surrounded by historic and cultural
remains, our dedicated researchers are constantly studying the latest scientificinformation and technologies.
Our drug discovery research focuses on inflammation, allergy, bone metabolism, diabetes and systemic mycosis to finally develop treatments for arthritis,
asthma, bone diseases, diabetes and so on. In response to recent fundamental
changes in drug discovery processes throughout the pharmaceutical science andbiotechnology sectors, our research laboratories employ new technologies to accelerate discoveries and optimization processes.
Computer-aided drug design (CADD) is an important part of the Department’s rational approach to drug
discovery. Our chemists constantly explore chemical candidates synthesized in various projects, in order todesign a superior peptidemimetic focusing library.
Our researchers are highly motivated and dedicated to excellence at every phase of drug discovery research.
Moreover, we have a highly refined education program that is producing many talented young researchers.

DEVELOPMENT RESEARCH

Kaken’s development

research facilities are located on the east bank of the Ohi River in Shizuoka
Prefecture, near Mt. Fuji. We undertake a wide range of research activities ina stimulating environment. Our aim here is to develop candidate compounds
discovered during drug discovery research into new drugs.
Our drug development research activities encompass pharmacokinetics
research, drug formulation, safety evaluation and quality assurance.
The Pharmacokinetics Research Group utilizes the latest equipment andtechnologies to study the absorption, distribution, metabolism and excretionof drugs in order to determine their effectiveness and safety in the body. The
Drug Formulation Group studies general pharmaceutical designs andformulations using drug delivery systems (DDSs) and targets technologies todevelop optimal dosage forms. The Safety Evaluation Group strictly

Kaken Pharmaceutical Co., Ltd. 11

KakenPharmaceuticalevaluates the safety of candidate compounds. The Quality Assurance Control
Group works to ensure that information generated in all Kaken laboratories isof the highest quality and reliability.
In addition to the Company’s own drug development research, our laboratories are exploring a number of innovative technologies in collaboration withleading academic scientists and pharmaceutical companies. As a result, ourexpertise has expanded to the fields of asthma, endocrinology, systemic
mycosis, cardiology, and oral care.

PHARMACEUTICALS DEVELOPMENT PROJECT

Kaken has been active in thedevelopment on the following main areas: tissue regeneration, pain treatment, endocrine diseases, metabolic
disorders and systemic mycosis. To accelerate our R&D efforts and to broaden our network, we are actively
engaged in joint development projects to form alliances with other companies. One recent result of these
initiatives was Fiblast Spray, a treatment for bed sores and skin ulcers. Fiblast Spray received the world’s first
approval as a recombinant form of human bFGF (Trafermin) in April 2001, and Kaken began selling thisproduct in June 2001. This bFGF is attracting high praise as an innovative product in the field of regenerative
medicine. We expect it to have broader applications for other ailments in the future.
Actually, bFGF, the main component of Fiblast Spray, has proven effective in several kinds of cell growth
and angiogenesis. For this reason, Kaken has positioned bFGF as an important object of its R&D activities,
and continues to pursue new applications. One potential application is the treatment of intractable bone
fractures, and clinical trials in this area are in progress. Another is the treatment of periodontal diseases, forwhich clinical trials are under preparation. In addition, we areengaged in clinical trials for a new drug in an effort to develop KP102, a growth hormone-releasing peptide (GHRP), for treating

Kaken Pharmaceutical Co., Ltd. 12

pituitary dwarfism. Clinical trials are also in progress for diagnosing hypothalamic pituitary functions.
We are now developing Arthrotec, a combination drug of Diclofenac and Misoprostol for treating arthritic
pain, which is licensed from Pharmacia.
We filed an NDA to manufacture Loside (CCK antagonist), a treatment for pancreatitis jointly developedwith Mitsubishi-Tokyo. We also made an additional application for Pronase-MS, a mucus solubilizer to be
used as pretreatment for gastro-endoscopy.
Kaken signed a sales agreement for Aldos (anti-diabetic neuropathy) with N.K. Curex Co., Ltd., which wasapplied for approval to manufacture by N.K. Curex and Sanwa Kagaku Kenkyusho Co., Ltd. We also formed
an agreement with IDD Inc. of the United States to undertake R&D aimed at developing treatments fordiabetes. In these ways, we continued to broaden our R&D pipeline.
In addition to our competence in pharmaceuticals fororthopedics, we are focusing on products for such diseases as
hyperlipidemia and diabetes, which have become more common
as the aging population advances and for lifestyle-relateddiseases. As well as expanding in-house development of suchproducts, we are emphasizing R&D and sales under licensing
agreements from other domestic and overseas companies.

AGROCHEMICALS DEVELOPMENT PROJECT

In our effort to develop agro-

chemicals, feed additives and drugs for animals, we continue to search for new compounds from synthetic andnatural resources. A number of promising candidates are now under further investigation. Meanwhile, we
continue to develop new herbicides to expand our presence in this category.

Kaken Pharmaceutical Co., Ltd. 13

KakenPharmaceutical
MARKETING ACTIVITIESKaken’s success to date has been largely due to its extensive marketing
network, which serves both to distribute the Company’s products andto gather market information necessary for future product development activities.
The Company’s domestic network now includes nine full-function
branch offices, 51 sub-branch offices and more than 660 medical
representatives (MRs). Through this network, we are able to effectively
serve our customers in every corner of Japan.
Our MRs keep updated on the Company’s products, overall medical and pharmaceutical sciences andindustry trends. They receive extensive training, including an intensive initial training program presented by inhouse instructors and eminent outside experts. We also sponsor regular symposia that allow representatives tokeep up with new developments.
Meanwhile, we work to nurture our MRs to be compatible with the MR accreditation system through thecompetent training program.
In addition to promoting original or in-licensed products, Kaken Pharmaceutical also markets products
registered by other Japanese and overseas pharmaceutical companies. We also sell our products to overseas
countries directly or under license/distributorship.

Kaken Pharmaceutical Co., Ltd. 14

ORGANIZATIONSGeneral Meetingof Stockholders

Chairman
Board of Directors

Managing
Directors
Meeting
President

Corporate Auditors
Board ofCorporate Auditors

Corporate Planning & Coordination Department
Human Resources Department
International Operation Department
Regulatory Affairs Department
Agrochemicals & Animal Health Products,
Planning & Coordination Department
Agrochemicals & Animal Health Products Department
General Affairs Department
Accounting & Finance Department
Purchasing Department
Subsidiaries Coordination Department
Construction & Maintenance Department
Information System Department
R&D Division
R&D Strategy Department
FGF Product Team
KP-102 Product Team
Arthrotec Product Team
Licensing & Business Development Department
Central Research Laboratories
Drug Discovery Research Department
Chemistry Department
Pharmacology Department
Pharmacokinetics Department
Drug Formulation Department
Safety Research Department
Administration Department of Clinical Development
Clinical Development Department
Post Marketing Surveillance Department
R&D Quality Assurance Department
Intellectual Property Department
R&D Administration Center
Marketing & Sales DivisionMarketing Planning & Coordination Department
Marketing & Sales Department
Sales Promotion & Information Service Department
Promotion & Information
Education & Training
Domestic Nine (9) Marketing & Sales Branches
Tokyo Administrative Office Center
Osaka Administrative Office CenterTokyo Sales Promotion & Information Service Center
Osaka Sales Promotion & Information Service Center
Production Planning & Coordination Department
Shizuoka Factory
Quality Assurance Control Department
Production Technology Laboratories

Kaken Pharmaceutical Co., Ltd. 15

Kaken Pharmaceutical Co., Ltd. and Consolidated Subsidiaries.

C O N S O L I D AT E D F I V E - Y E A R S U M M A R Y
Thousands of
U.S. dollars (Note )Millions of yen

2001

2000

1999

1998

1997

2001

Net sales .................................................. ¥ 70,306 ¥ 71,801 ¥ 66,870 ¥65,649 ¥67,772
Operating income ....................................
6,805
5,925
5,487
3,541
4,049
Net income ..............................................
1,999
1,989
647
72
729

$571,594
55,325
16,252For the year ended March 31,

At March 31,

Total shareholders’ equity ........................
Total assets ..............................................

36,112
121,80334,854106,240

30,593
100,590

30,63898,76931,20985,353

Yen

293,593990,268
U.S. dollars (Note )Per share data:

Net income (Basic) ........................................ ¥21.78.
Cash dividends (Non-Consolidated) .............
7.50.

¥21.68.
7.50.

¥7.06.
7.50.

¥0.79.
7.50.

¥7.94.
7.50.

ROE (%) ......................................................
Capital adequacy ratio (%) ...........................
.

6.08.
32.81.

2.11.
30.41.

0.23.
31.02.

2.34.
36.57.

5.63.
29.65.

$0.177.
0.061.

Note: U.S. dollar amounts are translated, for convenience only, at the rate of ¥123 = $1 effective on March 31, 2001.

FINANCIAL REVIEWREVENUESIn fiscal 2000, Kaken PharmaceuticalIn the agrochemicals category, sales of Pentoxazon

reported consolidated net sales of ¥70,306 million, down 2.1

struggled due to the Japanese government policy to reduce

percent from fiscal 1999. The Company’s combined pharma-

acreage under rice cultivation. Exports of Polyoxin, however,ceuticals and agrochemicals businesses accounted for 95.7

were up.

percent of this total, with other businesses constituting theremaining 4.3 percent.

Avatec (Lasalocid), a feed additive launched domesticallyin the year under review, contributed to total sales. Exports ofSalinomycin to North America kept well, but those to Europe

PHARMACEUTICALSIn the pharmaceuticals segment,

declined.

sales of the mainstay Artz declined due to a reduction in the

As a result, consolidated sales of pharmaceuticals andprice and the launch of a competitive product. However, sales

agrochemicals in fiscal 2000 amounted to ¥67,272 million,

of Procylin, Adofeed and Lipantil increased. Ebrantil, which

down 0.4 percent from fiscal 1999. Operating income jumped

was approved for a new indication in fiscal 1999, contributed

54.3 percent, to ¥5,329 million.

to total sales. Also boosting revenues were sales of Seprafilm,
which was included in the scope of insurance coverage for

OTHER

general abdominal operation in February 2001.

enues related to Bunkyo Green Court Building, which was

Kaken Pharmaceutical Co., Ltd. 16

Sales in this segment derive mainly from rev-constructed on land owned by Kaken and developed by a joint

minority interests, which stood at ¥4,541 million and re-venture including Kaken. In the year under review, rental sales

mained close to the level of a year earlier. Other contributing

declined due to the effects of falling land prices. Segment sales,

factors included proceeds from the issuance of convertible

therefore, dropped 29.3 percent, to ¥3,034 million. Operating

bonds. Together, these items outweighed various factors

income fell 40.3 percent, to ¥1,476 million.

holding down cash and cash equivalents, such as an increase innotes and accounts receivable, higher purchases of investments

EARNINGS

Despite the aforementioned decline inrevenues, operating income grew 14.8 percent, to ¥6,805

in securities, increased production equipment expenditures at
the Shizuoka plant and payment of income taxes.

million, due to extensive efforts to reduce sales costs andNet cash provided by operating activities was ¥6,118

general and administrative expenses. However, net income

million, an increase of 1,105.4 percent from the previous year.

remained mostly unchanged at ¥1,999 million (US$16.3

This considerable increase stemmed mainly from the afore-

million), due to a revaluation loss on investments in securities

mentioned figure for income before income taxes and minority

and other non-operating expenses.

interests, as well as ¥3,624 million in depreciation. Anothercontributing factor was that the last day of the fiscal year was

FINANCIAL POSITIONAt the end of fiscal 2000, cash

and deposits totaled ¥19,884 million, about twice the level ofa year earlier, thanks to funds raised through an issuance ofa public holiday, which led to a ¥2,367 million increase innotes and accounts payable.
Net cash used in investing activities amounted to ¥2,521

convertible bonds. Total assets at fiscal year-end amounted tomillion, down from ¥5,541 million in fiscal 1999. Major¥121,803 million, up 14.6 percent, due largely to increases incomponents included ¥1,366 million in purchases of property,

marketable securities and notes and accounts receivable.

plant and equipment for the Shizuoka plant, as well as ¥846

However, long-term debt rose 11.8 percent, to ¥41,817

million in purchases of securities.

million, stemming from the issuance of the convertible bonds.

Net cash provided by financing activities rose 313.6
percent, to ¥9,010 million from a year earlier. Proceeds from

CASH FLOWSCash and cash equivalents at the end of

fiscal 2000 amounted to ¥23,941 million, up ¥12,607 million.

the issuance of convertible bonds constituted the principal
component of this increase.

This was due mainly to solid income before income taxes and

Kaken Pharmaceutical Co., Ltd. 17

Kaken Pharmaceutical Co., Ltd. and Consolidated Subsidiaries.

C O N S O L I DAT E D B A L A N C E S H E E T S
As of March 31, 2001 and 2000

Thousands of
U.S. dollars (Note 3)

Millions of yen

ASSETS

2001

Current Assets:
Cash on hand and at bank (Note 4) ............................................
Marketable securities (Notes 4 and 5) ........................................
Receivables:
Notes and accounts receivable-trade ....................................
Accounts receivable-other ....................................................

2000

2001

9,648
2,210

$161,658
34,83737,442566
38,008(11)
37,997
8,522
904
775
72,36733,624
1,479
35,103(16)
35,087
8,533
619
354
56,451

304,406
4,602
309,008(89)
308,919
69,285
7,350
6,301
588,350

34,864
18,13953,003(26,655)
26,3483,583—
29,931

34,725
18,393
53,118(26,685)
26,4333,624
1,549
31,606

283,447
147,471430,918(216,707)
214,211
29,130—243,341

6,561
773
3,415
4,775
366
3,615
19,505

5,763
779
4,132
3,046
388
4,075
18,18353,341
6,285
27,76438,821
2,976
29,390158,577¥121,803¥106,240$990,268¥ 19,884
4,285

Less: Allowance for doubtful accounts ................................
Inventories (Note 6) ....................................................................
Deferred tax assets (Note 14) .....................................................
Other current assets ....................................................................
Total current assets ..............................................................

Property, Plant and Equipment:
Buildings and structures ..............................................................
Machinery and equipment ..........................................................
Less: Accumulated depreciation ..................................................
Land ...........................................................................................
Construction in progress ............................................................

Investments and Other Assets:
Investments securities (Note 5) ...................................................
Investments in unconsolidated affiliates (Note 5) ........................
Intangible assets and long-term prepaid expenses .......................
Deferred tax assets (Note 14) .....................................................
Deferred charges .........................................................................
Other assets ................................................................................

TOTAL ASSETS ..................................................................

The accompanying notes are an integral part of the Consolidated Financial Statements.
Kaken Pharmaceutical Co., Ltd. 18¥

Thousands of
U.S. dollars (Note 3)

Millions of yen

LIABILITIES AND SHAREHOLDERS’ EQUITY

2000

2001

7,426
203

$ 52,106
53,675

Accrued expenses ........................................................................
Accrued bonuses .........................................................................
Accrued sales rebates ..................................................................
Accrued income taxes (Note 14) .................................................
Other current liabilities ...............................................................
Total current liabilities ........................................

13,953526
2,383
16,862
463
2,112
481
3,402
622
36,953

11,5861,300
2,188
15,074
658
2,009
485
1,185
537
27,577

113,439
4,276
19,374137,089
3,764
17,171
3,911
27,6585,057
300,431

Non-Current Liabilities:
Long-term debt (Note 7) .............................................................
Accrued pension and severance costs (Note 10) ..........................
Accrued retirement benefits to directors .....................................
Deferred tax liabilities (Note 14) ................................................
Other long-term liabilities ...........................................................
Total non-current liabilities .................................

41,817
5,780
511
373
256
48,73737,393
5,224
434
397
360
43,808339,976
46,992
4,154
3,033
2,081
396,236

Minority interests in consolidated subsidiaries .................................

1

1

8

15,923
14,661
5,537
36,121(9)
36,112

15,923
14,661
4,272
34,856(2)
34,854

129,455
119,195
45,016
293,666(73)
293,593¥121,803¥106,240$990,268

Current Liabilities:
Short-term bank loans (Note 7) ..................................................
Current portion of long-term debt (Note 7) ................................
Payables:Notes and accounts payable-trade .........................................
Notes and accounts payable-construction ..............................
Accounts payable-other .........................................................

Shareholders’ Equity:
Common stock (par value of 50 yen)
Authorized: 360,000,000 shares
Issued : 91,799,041shares ......................................................
Additional paid-in capital ...........................................................
Retained earnings .......................................................................
Less: treasury stock, at cost ........................................................
Total shareholders’ equity ...................................

2001
¥

6,409
6,602

¥

Commitments and contingencies (Note 15)
TOTAL LIABILITIES ANDSHAREHOLDERS’ EQUITY ..............................

Kaken Pharmaceutical Co., Ltd. 19

Kaken Pharmaceutical Co., Ltd. and Consolidated Subsidiaries.

C O N S O L I D AT E D S TAT E M E N T S O F I N C O M E
For the years ended March 31, 2001 and 2000

Thousands of
U.S. dollars (Note 3)

Millions of yen

2001

2000

2001

¥70,306
36,321
33,98527,1806,805¥71,801
38,151
33,65027,725
5,925$571,594
295,293276,301
220,976
55,325

157
(862)
—

111
(855)
(1,031)

1,276(7,008)
—

(423)
—
(340)
(316)
—
(480)
(2,264)
4,541

497
205
(819)
—
807
(334)
(1,419)4,506(3,439)—(2,764)(2,569)—(3,902)(18,406)
36,919

Income before minority interests .......................................................
Minority interests .............................................................................

4,579(2,037)
2,542
1,999
0

2,775
(258)
2,517
1,989
0

37,228(16,561)
20,667
16,2520

Net income .......................................................................................

¥ 1,999¥ 1,989$ 16,252

Net sales ...........................................................................................
Cost of sales......................................................................................
Gross profit .................................................................................
Selling, general and administrative expenses (Note 12) .....................
Operating income .............................................................................
Other Income (Expenses):
Interest and dividend income .......................................................
Interest expense ...........................................................................
Bad debt loss (Note 13) ...............................................................
Gain (loss) on sales/disposal of property,
plant and equipment, net .........................................................
Gain (loss) on sales of investments in securities, net ...................
Revaluation loss of investments in securities ................................
Revaluation loss of golf membership ...........................................
Gain on settlement of legal proceeding ........................................
Others, net ...................................................................................
Income before income taxes and minority interests ...........................
Income taxes (Note 14):
Current ........................................................................................
Deferred ......................................................................................

Yen

Per share data:
Net income:Basic .......................................................................................
Diluted ...................................................................................
Cash dividends ............................................................................

¥ 21.78¥ 18.89¥0007.5

The accompanying notes are an integral part of the Consolidated Financial Statements.
Kaken Pharmaceutical Co., Ltd. 20

U.S. dollars (Note 3)¥ 21.68¥ 20.37¥0007.5

$
$
$

0.177
0.154
0.061

Kaken Pharmaceutical Co., Ltd. and Consolidated Subsidiaries.

C O N S O L I D AT E D S TAT E M E N T S O F S H A R E H O L D E R S ’ E Q U I T Y
For the years ended March 31, 2001 and 2000

Millions of yen
Number ofcommonstock

Balance at March 31, 1999 ....................... 91,799,041
Net income ..........................................
Cash dividends .....................................
Directors’ bonuses ................................
Cumulative effect of initial application
for deferred tax accounting .................
Treasury stock acquired, net .................
Balance at March 31, 2000 ........................ 91,799,041
Net income ...........................................
Cash dividends .....................................
Directors’ bonuses ................................
Treasury stock acquired, net .................
Balance at March 31, 2001 ........................ 91,799,041

Balance at March 31, 2000 ......................
Net income .........................................
Cash dividends ....................................
Directors’ bonuses ...............................
Treasury stock acquired, net ................
Balance at March 31, 2001 .......................

Commonstock

Additional
paid-in
capitalRetainedearnings¥15,923¥14,661

¥

11
1,989
(688)
(50)

Treasurystock
at costTotal
Shareholders’equity¥(2)¥30,593
1,989
(688)
(50)

3,010

(7)
¥(9)

3,010
0
¥34,854
1,999
(688)
(46)
(7)
¥36,112

Thousands of U.S. dollars (Note 3)
Additional
Treasurypaid-in
Retained
stock
capitalearnings
at costTotal
Shareholders’equity¥15,923¥14,661¥4,272
1,999
(688)
(46)

¥15,923¥14,661¥5,537

Number ofcommonstock

Commonstock

91,799,041$129,455$119,195$34,732
16,252(5,594)(374)

91,799,041$129,455$119,195$45,016

Kaken Pharmaceutical Co., Ltd. 21

0
¥(2)

$(16)

(57)
$(73)

$283,366
16,252(5,594)(374)(57)$293,593

Kaken Pharmaceutical Co., Ltd. and Consolidated Subsidiaries.

C O N S O L I DAT E D S TAT E M E N T S O F C A S H F L O W S
For the years ended March 31, 2001 and 2000

Thousands of
U.S. dollars (Note 3)

Millions of yen

2001
I. Cash flows from operating activities
Income before income taxes and minority interests .............................. ¥ 4,541
Adjustments for:
Depreciation ...................................................................................
2,100
Amortization of long-term prepaid expenses ...................................
1,228
Amortization of deferred charges ....................................................
296
Revaluation loss of golf membership ...............................................
316
Accrual for pension and severance costs, less payments ..................
556
Bad debt loss ...................................................................................
—
Interest and dividend income ..........................................................
(157)
Interest expense ...............................................................................
862
Gain on sale of investment securities ...............................................
—
Revaluation loss of investment securities .........................................
340
Loss on disposals of property, plant and equipment ........................
468
Gain on sale of property, plant and equipment ................................
(45)
Increase in notes and accounts receivable-trade ...............................
(3,818)(Increase) Decrease in inventories ....................................................
11(Decrease) Increase in notes and accounts payable-trade .................
2,367
Paid bonuses to directors ................................................................
(46)
Other, net ........................................................................................
(642)
8,377

2000

2001

¥ 4,506$ 36,919

2,004
1,176
490
—
41
1,031
(111)
855
(205)
819
91
(588)
(2,819)(1,030)
(101)
(50)
(306)
5,803

17,073
9,984
2,407
2,569
4,520
—
(1,276)
7,008
—
2,764
3,805
(366)
(31,041)89
19,244(374)(5,219)68,106

Interest and dividends received .............................................................
Interest paid .........................................................................................
Gain on settlement of legal proceeding .................................................
Income taxes paid .................................................................................
Net cash provided by operating activities ....................................

151
(854)
807
(2,363)
6,118

138
(871)
—
(4,563)507

1,227(6,943)
6,561(19,211)49,740II. Cash flows from investing activities
Acquisition of investment securities ......................................................
Proceeds from sales of investments in securities ....................................
Acquisition of property, plant and equipment .......................................
Proceeds from sales of property, plant and equipment ..........................
Payment of long-term prepaid expenses ................................................
Other, net .............................................................................................
Net cash used in investing activities ............................................

(846)
11
(1,366)
136
(530)
74
(2,521)(3,268)406(1,677)779(1,779)(2)(5,541)(6,878)89(11,106)
1,106(4,309)602(20,496)

2,140
(124)
—
851
(688)
0
2,179
(2,855)
14,189244(285)
79,073(130)(5,593)(57)
73,252
102,496
92,146—¥11,334—$194,642

III. Cash flows from financing activities
Proceeds from long-term debt ...............................................................
30
Repayment of long-term debt ...............................................................
(35)
Proceeds from issuance of convertible bonds ........................................
9,726
Increase (Decrease) in short-term bank loan .........................................
(16)
Cash dividends paid .............................................................................
(688)
Other, net .............................................................................................
(7)
Net cash provided by (used in) financing activities ......................
9,010
Net (decrease) increase in cash and cash equivalents .................................. 12,607
Cash and cash equivalents at beginning of year ......................................... 11,334
Increase in cash and cash equivalents resulting fromconsolidation of an additional subsidiary.................................................
—Cash and cash equivalents at end of year (Note 4) ..................................... ¥23,941
The accompanying notes are an integral part of the Consolidated Financial Statements.
Kaken Pharmaceutical Co., Ltd. 22

Kaken Pharmaceutical Co., Ltd. and Consolidated Subsidiaries.

N O T E S TO T H E C O N S O L I D AT E D F I N A N C I A L S TAT E M E N T S

1. Basis of Presenting Consolidated Financial Statements:
The accompanying consolidated financial statements of KAKEN
PHARMACEUTICAL CO., LTD. (the “Company”) and its
consolidated subsidiaries (collectively the “Group”) are basicallyan English version of those which were prepared from accounts
and records maintained by the Group and in accordance withaccounting principles and practices generally accepted in Japan,
which are different in certain respects as to application anddisclosure requirements of International Accounting Standards,
and filed with the Japanese Ministry of Finance and the Tokyo

2. Summary of Significant Accounting Policies:(a) Principles of Consolidation
The Company had five subsidiaries as of March 31, 2001. The
consolidated financial statements include the accounts of theCompany and all of its subsidiaries. The consolidated subsidiaries
as of March 31, 2001 are as follows:
KAKEN REALTY & SERVICE CO., LTD.
KAKEN PHARMA CO., LTD.
KAKEN LOGISTICS CO., LTD.
EIKO FILTER CO., LTD.
FUJIKA CORPORATIONThe Company had an affiliate as of March 31, 2001.
Investment in N.K Curex Co., Ltd. is accounted for by the equity
method. Investment in the other affiliate, Bunkyo Green Court
Build Co., Ltd., was liquidated in March, 2001.
All significant intercompany transactions, account balances
and unrealized profits among the Group have been eliminated inconsolidation.
The difference between the cost of an investment in a subsidiary and the amount of underlying equity in net assets of thesubsidiary is allocated to identifiable assets based on fair value atthe date of acquisition. The unassigned residual value of theexcess of the cost over the underlying net equity is recognized as
goodwill, and, amortized over a period of five years on a straightline basis.
(b) Cash and Cash Equivalents
Cash and cash equivalents in the consolidated statements of cash
flows are composed of cash on hand, bank deposits which areable to be withdrawn within three months and short-term
investments with original maturity of three months or less and areconsidered to have minimal market risk fluctuations.
(c) Marketable and Investment Securities
Up to March 31, 2000 marketable securities are stated at thelower of cost or market, cost being determined by the moving

Stock Exchange. The consolidated statements of shareholders’equity have been prepared to provide additional information.
Certain items presented in the consolidated financial statements filed with the Minister of Finance in Japan have been
reclassified for the convenience of readers outside Japan.
The consolidated financial statements are not intended topresent the consolidated financial position, results of operations
and cash flows in accordance with accounting principles andpractices generally accepted in countries and jurisdictions otherthan Japan.

average method. Other investment securities are shown at costand provision is made only where there is a permanent diminution
in value. Shareholdings in subsidiary companies are stated at
cost.
Effective from the year ended March 31, 2001, the Group
adopted the new Japanese accounting standard for financial
instruments, under which securities are classified as one of four
categories; (1) Trading, (2) Hold-to maturity debt, (3) Securities ofsubsidiaries and affiliated, and (4) Other. Trading securities arerecorded at market value with unrealized gains and losses
recognized in the current years earnings. Debt securities that are
expected to be held-to-maturity are carried at amortized cost.
Securities of subsidiaries and affiliates are carried at cost.
“Other securities” are expected to be sold in the long term andthose, whose fair values are readily determinable, are curried atfair value with unrealized gains or losses included as a separate
item in equity, net of applicable taxes. However, the standard
provides a transition treatment in the year ended March 31, 2001,
under which other securities are stated at cost, if certain information such as book value, market value, unrealized gain or loss andrelated deferred tax.
As a result of adoption of the new standard, income before
income taxes and minority interests for the year ended March 31,
2001 increased by ¥48 million, as compared with the amountwhich would have been reported if the previous standard had
been applied consistently.
(d) Inventories
Inventories are stated at cost, cost being determined by theaverage method.
(e) Property, Plant and Equipment
Depreciation is computed on the declining-balance method at
rates on the estimated useful lives of assets, prescribed by theJapanese Corporation Tax Law. However, depreciation ofbuildings, structures, machinery and equipment for Komagome
office is computed on the straight-line method. Consolidated

Kaken Pharmaceutical Co., Ltd. 23

subsidiaries principally adopted the straight-line method.
Furthermore, depreciation of buildings, except for ancillaryfacilities to buildings, acquired after April 1,1998, is computed
using the straight-line method, following revisions of the JapaneseCorporation Tax Law.
(f) Pension and Retirement Benefits
Employees who terminate employment are entitled, under mostcircumstances, to lump-sum payments, or pension payments as
described below, determined by reference to current basic rate ofpay, length of service and conditions under which the termination
occurs. The minimum payment is an amount based on voluntary
retirement. In addition to the minimum payment based onvoluntary retirement, employees receive additional benefits for
retirement due to age limit, death or other defined reasons.
The Company has a non-contributory defined benefit fundedpension plan (entrusted) which covers 30% of the benefits
payable under the existing retirement plan to employees.
Up to March 31, 2000, the liability for severance indemnities
for employees is stated at the amount equivalent to 40% of theliability the Company and certain consolidated subsidiaries
would have been required to pay (i.e., 70% of the retirement
benefits) if all eligible employees had voluntarily retired at thebalance sheet dates.
At the beginning of the year ended March 31, 2001, theCompany adopted the new Japanese accounting standard for
retirement benefits, under which the accrued pension andseverance costs represents the amount that actuarially calculated
projected benefit obligations less (1) the fair value of the plan
assets (2) unrecognized actuarial loss or gain and (3) the unrecognized transition amount arising from adopting the new standard.
If the fair value of the plan assets exceeds the projected benefit
obligations, prepaid pension and severance costs are recorded.
The transition amount (unfunded and unrecognized benefit
obligation) of ¥7,902 million at April 1, 2000 is amortized on astraight-line basis over 15 years (for subsidiaries mainly 10 years).
Unrecognized actuarial loss or gain is amortized on a straight-line
basis over 10 years from the next year in which they arise. For
the Company, prepaid pension and severance costs were recognized for a portion of the plan covered by the non-contributory
pension plan assets and the accrued pension and severance costs
were recognized for a portion of the plan not covered the plan
assets. As a result of adoption of the new standard, income
before income taxes and minority interests decreased by ¥386
million, as compared with the amount which would have beenreported if the previous standard had been applied consistently.
Accrued retirement benefits to directors and statutory auditors
is provided in an amount equivalent to the liability the relevant
company would have been required to pay upon retirement at thebalance sheet date, as prescribed by its internal rules.

(g) Income Taxes
Up to March 31, 1999, income taxes of the Group were provided
for in an amount currently payable based on the tax returns filedwith the tax authority.
In fiscal year ended March 31, 2000, the Group adopted thedeferred tax accounting, similar to IAS 12, in accordance with
amended Japanese accounting regulations. Income taxes are
determined using the asset and liability approach, where deferred
tax assets and liabilities are recognized for temporary differences
between the tax basis of assets and liabilities and their reported
amount in the financial statements. The cumulative effect of
adopting deferred tax accounting at the beginning of fiscal 2000
was directly credited to retained earnings in the amount of ¥3,010
million.
(h) Consumption Taxes
Consumption taxes have been excluded from amounts shown on
the accompanying consolidated statements of income.
(i) Research and Development Expenses
Previously significant research and development expenses for new
products and new technologies had been capitalized and amortized over five years on the straight-line basis.
However, on April 1, 1999, a new accounting standard for
Research and Development expenses (the “R&D expenses”) was
adopted. Under the new standard, R&D expenses are charged toincome as incurred, while the capitalized amounts at March 31,
1999 are amortized over remaining period.
This accounting change resulted in a decrease in “operating
income” and “income before income taxes and minority interests”
by ¥219 million for the year ended March 31, 2000.
(j) Derivative financial instruments
Derivative financial instruments, which include foreign exchange
forward contracts and interest rate swap agreements, are used in
the Company’s risk management of foreign currency and interest
rate risk exposures of its financial assets and liabilities.
Foreign exchange forward contracts
The Company enters into foreign exchange forward contracts tolimit exposure, affected by changes in foreign currency exchange
rates, on accounts receivable and payable and cash flows generated from anticipated transactions denominated in foreign
currencies. Foreign exchange forward contracts which aredesignated and effective as hedges of such currency exchange raterisk on existing assets and liabilities are marked to market andincluded as an offset to foreign exchange gains/losses recorded on
the existing assets and liabilities.
Forward exchange contracts which do not correspond withtrade accounts receivable and payable denominated in foreign
currencies at fiscal year end but designed as “hedging instru-

Kaken Pharmaceutical Co., Ltd. 24

ments” for anticipated transactions are evaluated at market value
at the balance sheet date. Gains or losses arising from changes infair value of the derivatives are deferred as an asset or liability andincluded in net profit or loss in the same period during which thegains and losses on the hedged items or transactions are recognized.
Interest rate swap agreements
The Company enters into interest rate swap agreements in orderto lower funding costs and to limit the Company’s exposure in
relation to underlying debt instruments resulting from adverse
fluctuations in interest rates. The related interest differentials
paid or received under the interest rate swap agreements arerecognized over the terms of the agreements in interest expense.
Interest rate swap agreements designated as “hedging instruments” for anticipated transactions are evaluated at market value
at the balance sheet date. Gains or losses arising from changes infair value of the derivatives are deferred as an asset or liability.
After an underlying hedged transaction is settled or ceases toexist, all changes in fair value of related derivatives which havenot been settled are recognized in foreign exchange gains/losses.
(k) Bond Issue Costs
Bond issue costs are capitalized and amortized over three years on
the straight-line basis.
(l) Appropriations of Retained Earnings
Under the Japanese Commercial Code (the “Code”) and the
Articles of Incorporation of the Company, the appropriation ofretained earnings proposed by the Board of Directors is subject toapproval by the shareholders at a meeting which must be held

within three months after the end of each fiscal year. The appropriations of retained earnings reflected in the accompanying
consolidated financial statements include the results of suchappropriations applicable to the immediately preceding fiscal year
as approved at the shareholders’ meeting. Dividends are paid toshareholders on the shareholders’ register as at the end of eachfiscal year. As is customary practice in Japan, the payment ofbonuses to directors and statutory auditors is made out ofretained earnings through appropriation, instead of being charged
to income of the year.
The Code provides that interim cash dividends may be paid asa part of the annual dividend upon approval by the Board of
Directors. The Company pays such interim dividends to shareholders on the shareholders’ register at September 30.
(m) Net Income and Dividends per Share
Net income per share of common stock is based upon theweighted average number of shares of common stock outstanding
during each financial year appropriately adjusted for subsequent
free distribution of shares (stock splits), if applicable.
Cash dividends per share shown for each year in the accompanying consolidated statements of income represent dividends
approved or declared as applicable to the respective years.
Fully-diluted net income per share is computed, based on theassumption that the convertible bonds were fully converted into
common stock on the date of issue or at the beginning of therespective years subsequent to the issue, with appropriate
adjustments of related interest expense (net of tax).

3. United States Dollar Amounts:
The Group maintains its accounting records in yen. The dollar
amounts included in the consolidated financial statements andnotes thereto represent the arithmetical results of translating yen
to dollars on the basis of ¥ 123 =U.S.$ 1. The inclusion of suchdollar amounts is solely for convenience and is not intended to
imply that yen amounts have been or could be converted, realized
or settled in dollars at ¥ 123 = U.S. $ 1 or any other rate.

4. Cash and Cash Equivalents:
Cash on hand and at banks and marketable securities are reconciled to cash and cash equivalents of consolidated statements ofcash flows as follows:
Thousands of
U.S. dollars (Note 3)

Millions of yen

2001

2000

2001

Cash on hand and at banks ....................................................................................... ¥19,884
Marketable securities ................................................................................................
4,285
24,169Time deposits which fall due more than three months ...............................................
(78)
Marketable securities due more than three months ....................................................
(150)
(228)
Cash and cash equivalents .......................................................................................... ¥23,941¥9,6482,210
11,858
(77)
(447)
(524)
¥11,334$161,659
34,837
196,496(634)(1,220)(1,854)$194,642

Kaken Pharmaceutical Co., Ltd. 25

5. Marketable Securities, Investments Securities and Investments
in Unconsolidated Affiliates:
Marketable securities (current assets) and investment securities
and unconsolidated affiliates (non-current assets) which havemarket quotations on stock exchanges at March 31, 2000 are
summarized as follows:
Carrying
amounts

Marketable securities:
Market value available:
Equity securities ................
Bonds and debentures ........
Other securities .................
..................................
Market value not available ....
Total ..................................

¥

—
—
297
297
1,913
2,210

Marketvalue(Millions of yen)
Unrealized
gain (loss)

—
—
275
275

—
—
(22)
(22)

Carrying
amounts

Marketvalue(Millions of yen)
Unrealized
gain (loss)

5,554
—
—
5,554

(30)
—
—
(30)

Investments in securities:
Market value available:
Equity securities ....................... 5,584
Bonds and debentures ...............
—
Other securities ........................
—......................................... 5,584
Market value not available ...........
179
Total ......................................... 5,763
Investments in unconsolidated affiliates:
Market value not available ........... ¥ 779

Securities classified as “Other securities” and those, whose
fair value are readily determinable, are carried at cost as ofMarch 31, 2001. Information for those securities is as follows:
Millions of yen

Carrying amount in the balance sheet
Fair value .......................................
Unrecognized loss, net of tax ...........
Deferred tax assets ...........................

6. Inventories:
Inventories as of March 31, 2001 and 2000 are comprised of thefollowing:

7. Short-term Bank Loans and Long-term Debts:
Short-term bank loans outstanding as of March 31, 2001 and2000 are represented notes issued by the Group to banks.
Customarily, these notes are renewed at maturity subject torenegotiations of interest rates and other factors. The weightedaverage interest rates applicable to short-term bank loans as ofMarch 31, 2001 and 2000 are 1.13 % and 1.05 %, respectively.
Outstanding balance of short-term bank loans as of March 31,¥6,337
5,844
286
207

Millions of yen

March 31
2001
2000
Finished products .................. ¥5,362¥5,293Work in process ..................... 1,769
1,502
Raw materials ........................
805
1,057
Supplies .................................
439
423
Raw materials in transit .........
147
258¥8,522¥8,533Thousands of
U.S. dollars (Note 3)$51,520
47,512
2,325
1,683

Thousands of
U.S. dollars (Note 3)

March 312001
$43,594
14,382
6,545
3,569
1,195
$69,285

2001 and 2000 were ¥ 6,409 million and ¥7,426 million,
respectively.
Long-term debts as of March 31, 2001 and 2000 consisted of
the following:Thousands of
U.S. dollars (Note 3)

Millions of yen

March 31

March 31

2001

2000

2001

Loans from banks and other financial institutions due 2001 to 2007 ....................... ¥ 4,169
2.7% unsecured convertible bond due 2002 (a) .........................................................
6,256
1.0% unsecured convertible bond due 2003 (b) ......................................................... 18,491
0.0% unsecured convertible bond due 2007 (c) ......................................................... 10,000
Other long-term debt with interest bearing due 2001 to 2033 ...................................
9,503
48,419Less: current portion ................................................................................................. (6,602)¥41,817¥ 3,174
6,256
18,491—
9,675
37,596(203)¥37,393$ 33,895
50,862
150,333
81,301
77,260393,651(53,675)$339,976

Kaken Pharmaceutical Co., Ltd. 26

a) 2.7% Unsecured convertible bond
Holders of this bond are entitled to convert these bonds into
common stock (par value of ¥50) at a price of ¥1,357.10
during the period from April 1, 1993 to March 28, 2002.
b) 1.0% Unsecured convertible bond
Holders of this bond are entitled to convert these bonds into acommon stock (par value of ¥50) at a price of ¥1,610 during
the period from April 1, 1994 to March 28, 2003.
c) 0.0% Unsecured convertible bond
Holders of this bond are entitled to convert these bonds into acommon stock (par value of ¥50) at a price of ¥791 during theperiod from August 9, 2000 to September 14, 2007.

As is customary in Japan, short-term and long-term bank loans
are made under general agreements which provide that security
and guarantees for future and present indebtedness will be given
upon request of the bank, and that the bank shall have the right,
as the obligations become due, or in the event of their default, tooffset cash deposits against such obligations due to the bank. The
Group has not received any such requests to date.
At March 31, 2001 and 2000, assets pledged as collateral for
certain short-term (¥1,410 million) and long-term debts (¥12,319
million), including current portion of long-term debts, were as
follows:

Millions of yen

March 31
2001
2000

Aggregate annual maturities of convertible bonds in the next
five fiscal years, are as follows:
Within one year .................................
Over one year less than two years .....
Over two years less than five years ....
More than five years and thereafter ...

Millions of yen

Thousands of
U.S. dollars (Note 3)¥ 6,256
18,491—
10,000¥34,747$ 50,862
150,333—
81,301$282,496

Aggregate annual maturities of long-term bank loans and otherinterest bearing debt, are as follows:
Thousands of
U.S. dollars (Note 3)

Millions of yen
Long-termbank loans

Within one year .............
Over one year
less than two years .......
Over two years
less than three years .....
Over three years
less than four years ......
Over four years
less than five years .......
More than five years
and thereafter ..............

¥ 169

Other interest
bearing debt

Long-termbank loans

Other interest
bearing debt

¥ 177 $ 1,374$ 1,439

613

183

4,984

1,488

1,608

188

13,073

1,528

779

194

6,334

1,577

1,000

200

8,130

1,626

8,561
—
¥9,503 $33,895

69,602$77,260—¥4,1698. Accounting for Leases:
As allowed under Japanese accounting standards, finance lease
contracts other than those by which the ownership of the leased
assets is to be transferred to lessees (“ownership-transfer”) areaccounted for by the method similar to the operating leasemethod.
Assumed data “as if capitalized” as to acquisition cost,
accumulated depreciation, net book value and depreciation
expense of the leased assets, which included the portion of interest
thereon, were summarized as follows:

Thousands of
U.S. dollars (Note 3)

March 31
2001

Assets pledged
Buildings and structures ..... ¥13,962
Machinery and equipment ..
2,326Land ..................................
108
Investments in securities .....
2,048¥18,444¥13,548
2,152
108
2,048
¥17,856$113,512
18,911878
16,650$149,951

Liabilities and secured
Short-term bank loans ........ ¥ 1,410
Long-term bank loans ........
2,816
Other interest bearing debt .
9,503¥13,729¥1,4002,820
9,675¥13,895$ 11,463
22,89577,260$111,618

Under the terms of the agreement for the 2.7% convertible
bonds due 2002, the cumulative amount of cash dividends may
not exceed ¥400 million ($3,252 thousand) plus the aggregate
amount of ordinary income after income taxes (as defined in theagreement) of the Company, beginning with the fiscal year ended
March 31, 1993. Under the terms of the agreement for the 1.0%
convertible bond due 2003, the cumulative dividends may notexceed ¥700 million ($5,691 thousand) plus the aggregate amountof ordinary income after income taxes of the Company, beginningwith the fiscal year ended March 31, 1994.

Millions of yen

March 31
2001
2000
Acquisition cost ........................ ¥15¥30
Accumulated depreciation .......
4
17
Net book value ......................... ¥11¥13
Depreciation ............................ ¥ 2

Kaken Pharmaceutical Co., Ltd. 27¥ 3

Thousands of
U.S. dollars (Note 3)

March 31
2001
$122
33
$ 89
$ 16

Depreciation is computed on the straight-line method over thelease term of the leased assets with no residual value.
Periodic lease expenses on finance lease contracts withoutownership-transfer for the year ended March 31, 2001 and 2000
were summarized as follows:
Thousands of
U.S. dollars (Note 3)

Millions of yen

Periodic lease expense .................

2001
¥2

2000
¥3

2001
$16

9. Derivative Financial Instruments:
Derivative financial instruments are utilized by the Company
principally to reduce interest rate and foreign exchange rate risks.
The Company has established a control environment which
includes policies and procedures for risk assessments and for theapproval, reporting and monitoring of transactions involving
derivative financial instruments. The Company does not hold or
issue derivative financial instruments for speculative purposes.
The Company is exposed to certain market risks arising fromits forward exchange contracts and interest rate swap agreements. The Company is also exposed to the risk of credit loss inthe event of non-performance by the counterparties to thecurrency and interest; however, the Company does not anticipate
nonperformance by any of these counterparties all of whom arefinancial institutions with high bond ratings.
Derivative financial instruments have not been implemented byconsolidated subsidiaries.
(1) At March 31, 2001 and 2000, the forward exchange contracts
outstanding were as follows:
Millions of yen

March 31
2001
U.S dollar forward
exchange contracts
to buy U.S. dollars ...

2000

Notional
amountFair
value

Unrealized
loss

¥—

¥—

¥—

Notional
amountFair Unrealized
value
loss

¥39 ¥37

The amount of outstanding future lease payments due atMarch 31, 2001 and 2000, which included the portion ofinterest thereon, was summarized as follows:
Thousands of
U.S. dollars (Note 3)

Millions of yen

March 31
2001
2000
Within one year ........................... ¥ 2¥ 1
Over one year .............................. 10
12
¥12
¥13

March 31
2001
$16
82
$98

The above amounts exclude contracts entered into in order tohedge receivables and payables denominated in foreign currencies
which have been translated and reflected at the corresponding
contracted rates in the accompanying consolidated balance sheets
as of March 31, 2000.
Fair value of forward exchange contracts was based on quoted
market price.
(2) At March 31, 2001 and 2000, the interest rate swap agreements outstanding were as follows:
Millions of yen

March 31
2001
Pay/fixed
Received/variable ....

2000

Notional
amountFair
value

Unrealized
loss

Notional
amount

¥—

¥—

¥—

¥320

Fair Unrealized
value
loss

¥(7)

¥(7)

The above information at March 31, 2001 in item (1) and (2)excludes derivative financial instruments for which the hedge
accounting is applied. Thus, there are no items to be disclosed.
Fair value of interest rate swap agreements was based onquotes from the financial institution, a counterparty.

¥(2)

10. Pension and Retirement Benefits:
As described in Note 2 (f) pension and retirement benefits, theGroup changed their accounting for retirement benefits in the year
ended March 31, 2001.
The benefit obligation and plan assets, funded status andcomposition of amounts recorded in the consolidated balance
sheet as of March 31, 2001 is as follows:

Projected benefit obligations ............
Plan assets .......................................
Funded status ...................................
Unrecognized transition amount .....
Unrecognized actuarial loss ..............
Amounts recognized in
the balance sheet consists of –Prepaid pension cost ...................
Accrued pension andseverance costs ........................

Kaken Pharmaceutical Co., Ltd. 28

Millions of yen

Thousands of
U.S. dollars (Note 3)¥(21,441)
7,980(13,461)
7,372
467(5,622)$(174,317)
64,878(109,439)
59,935
3,797(45,707)

158

1,285

¥ (5,780)$ (46,992)

The components of net pension and severance costs for theyear ended March 31, 2001 were as follows:

Service cost ......................................
Interest cost ......................................
Expected return on plan assets ........
Amortization of transition amount ...
Net pension expense ........................

Millions of yen

Thousands of
U.S. dollars (Note 3)

¥ 740
742
(203)
530
¥1,809$ 6,016
6,032(1,650)4,309$14,707

11. Shareholders’ Equity:
The following appropriations of the Company’s retained earnings
in respect of the year ended March 31, 2001 which were approved by the shareholders at the general meeting held on June
28, 2001, have not been incorporated in the accompanying
consolidated financial statements.
Millions of yen

Thousands of
U.S. dollars (Note 3)¥5,190$42,195

22
5,212

179
42,374

Appropriations:
Transfer to legal reserve ................
Dividends (¥ 3.75 per share) .........
Bonuses to directors ......................
[of which to statutory auditors] ....

(40)
(344)
(46)
[6]

(325)
(2,797)(374)[49]

Retained earnings carried forward to
the following year ...........................

¥4,782$38,878

Retained earnings at the end of the year
Utilization of general reserve
Utilization of deferred gain on salesof property, plant and equipment

Assumptions used in calculation of the above information asof March 31, 2001 were as follows:
Discount rate
Expected rate of return on plan assets
Method of attributing the projected benefits
to periods of services

3.5 %
2.5 %
years of service

For the period from April 1, 2001 to May 31, 2001, someconvertible bonds were converted to common stock as follows:
Number of shares issued
Increase in common stock
Increase in additional paid-in capital

1,850,814 shares¥733 million¥731 million

12. Selling, General and Administrative Expenses:
Major elements of “Selling, general and administrative expenses” for two years in the period ended March 31, 2001 are as follows:
Thousands of
U.S. dollars (Note 3)

Millions of yen

Salaries ......................................................................................................................
Bonuses .....................................................................................................................
Pension and severance costs .......................................................................................
Provision for retirement benefits to directors .............................................................
Research and development expenses ..........................................................................
Sales promotion .........................................................................................................
Advertisement ............................................................................................................
Rent and lease ...........................................................................................................
Travel ........................................................................................................................
13. Bad Debt Loss:
In fiscal 2000, a special loss was incurred which principally
related to the bankruptcy of Toho Life Mutual Insurance Company (“Toho Life”). The Company contributed ¥1,000 million to
the statutory fund operated by Toho Life. The contribution was

2001

2000

2001

¥6,934
3,303
955
79
4,977
1,722
571
1,734
1,449

¥6,988
3,166
399
76
5,401
1,706
800
1,739
1,456

$56,374
26,854
7,764
642
40,46314,0004,642
14,098
11,780interest bearing therefore, interest receivable of ¥24 million had
been also recognized. Accordingly, total of ¥1,024 million was
included in bad debt loss under the line of “Other Income(Expenses)”.

Kaken Pharmaceutical Co., Ltd. 29

14. Income Taxes:
The Group are subject to several taxes based on income, which in
the aggregate resulted in statutory tax rates of approximately
42.05 % for the two years in the period ended March 31, 2001,
respectively. Reconciliation of the differences between thestatutory tax rate and the effective tax rate and the effective tax
rate for the years ended March 31, 2001 and 2000 is as follows:

Statutory tax rate .................................................
Increase (decrease) in taxes resulting from:
Expenses not deductible for income
tax purpose (ex. Entertainment expenses) ......
Income not included for income
tax purpose (ex. Dividend income) ................
Inhabitant equalization taxes ...........................
Other ...............................................................
Effective tax rate ..................................................

2001
2000
42.05% 42.05%

12.75

12.25

(0.28)(0.28)
1.78
1.83(0.33)
0.00
55.97% 55.85%

Significant components of deferred tax assets as of March 31, 2001 and 2000 are as follows:
Thousands of
U.S. dollars (Note 3)

Millions of yen

2001

2000

2001

Deferred tax assets:
Non-deductible portion of reserve for bonuses ................................................... ¥ 475
Provision for reserve for sales rebates .................................................................
202
Enterprise taxes payable .....................................................................................
213
Devaluation of financial instruments ..................................................................
285
Amortization of R&D ........................................................................................
98
Amortization of long-term prepaid expenses .......................................................
973
Pension and severance costs ................................................................................
710
Provision for retirement benefits to directors ......................................................
215
Non-deductible portion of allowance for bad debt .............................................
79
Unrealized gain of property, plant and equipment ...............................................
2,568
Deferred gain on sale of property, plant and equipment ......................................
—
Other ..................................................................................................................
28
Total deferred tax assets ............................................................................. 5,846

¥ 291
204
91
—
—
—
384
182
79
2,568
(182)
48
3,665

$ 3,862
1,642
1,732
2,317
797
7,910
5,772
1,748
642
20,878—228
47,528

(540)
0
(540)

(397)
0
(397)

(4,390)0(4,390)

Deferred tax assets, net ............................................................................. ¥5,306¥3,268$43,138

Deferred tax liabilities:
Deferred gain on sale of property, plant and equipment ......................................
Other ..................................................................................................................
Total deferred tax liabilities .......................................................................

15. Commitments and Contingencies:
The Group had contingent liabilities arising from notes discounted at banks in the ordinary course of business in the amountof ¥2,360 million as of March 31, 2001.

In addition, the Company was contingently liable for guarantee of loans borrowed by N·K Curex Co., Ltd, an affiliate, in theamount of ¥2,555 million as of March 31, 2001.

Kaken Pharmaceutical Co., Ltd. 30

16. Segment Information:
Information about operations in industry segments of the Group for years ended March 31, 2001 and 2000, is as follows:
Millions of yen
2001

I. Sales and Operating Income
Sales to customers ........................................
Inter-segment/transfer ..................................

Pharmaceutical

Other*

Total¥67,272—
67,272¥ 3,034
892
3,926¥70,306
892
71,198Eliminations
or Corporate
¥

—
(892)
(892)

Consolidated¥ 70,306—
70,306

Operating expenses .......................................

61,9432,450

64,393Operating income .........................................

¥ 5,329¥ 1,476¥ 6,805¥(892)

II. Assets, Depreciation and Capital Expenditures
Assets ............................................................
Depreciation .................................................
Capital Expenditures .....................................

¥68,325¥ 2,697¥ 1,465¥22,290
¥ 927
¥ 151

¥90,615¥ 3,624¥ 1,616¥31,188¥—¥—¥121,803¥ 3,624¥ 1,616

Eliminations
or Corporate

Consolidated—

63,501
¥

6,805

2000
Pharmaceutical

Other*

Total¥67,513—67,513¥4,288846
5,134¥71,801846
72,647

Operating expenses .......................................

64,0592,663

66,722

Operating income .........................................

¥ 3,454¥2,471¥ 5,925¥

II. Assets, Depreciation and Capital Expenditures
Assets ............................................................
Depreciation ..................................................
Capital Expenditures .....................................

¥64,302¥ 2,770¥ 2,928¥23,159
¥ 900
¥ 375

¥87,461¥ 3,670¥ 3,303

I. Sales and Operating Income
Sales to customers ........................................
Inter-segment/transfer ..................................

Pharmaceutical
I. Sales and Operating Income
Sales to customers ........................................
Inter-segment/transfer ..................................

$546,927—
546,927

—
(846)
(846)

¥71,801—
71,801(846)

65,876—¥5,925¥18,779¥—¥—¥106,240¥ 3,670¥ 3,303

Thousands of U.S. dollars (Note 3)
2001
Eliminations
Other*
Total
or Corporate

Consolidated$ 24,667
7,252
31,919$571,594
7,252
578,846¥$

Operating expenses .......................................

503,602

19,919523,521

Operating income .........................................

$ 43,325$ 12,000$ 55,325$

II. Assets, Depreciation and Capital Expenditures
Assets ............................................................
Depreciation .................................................
Capital Expenditures .....................................

$555,488$ 21,927$ 11,910$181,220$ 7,537$ 1,228$736,708$ 29,464$ 13,138* Other business field mainly consists of real estate business.

Kaken Pharmaceutical Co., Ltd. 31—(7,252)(7,252)$571,594—
571,594(7,252)516,269—$ 55,325$253,560$—$—$990,268$ 29,464$ 13,138

R E P O R T O F I N D E P E N D E N T A C C O U N TA N T S
To the Board of Directors of
KAKEN PHARMACEUTICAL CO., LTD.

We have audited the accompanying consolidated balance sheets of KAKEN PHARMACEUTICAL CO., LTD. and its
consolidated subsidiaries (collectively, the “Group”) as of March 31, 2001 and 2000 and the related consolidated statements of income, shareholders' equity and cash flows for the years then ended, all expressed in Japanese yen. Our audits
were made in accordance with auditing standards, procedures and practices generally accepted and applied in Japan, and,accordingly, included such tests of accounting records and such other auditing procedures as we considered necessary in thecircumstances.
In our opinion, the accompanying consolidated financial statements referred to above present fairly the consolidated
financial position of the Group as of March 31, 2001 and 2000 and the consolidated results of their operations and their
cash flows for the years then ended in conformity with accounting principles and practices generally accepted in Japan (SeeNote 1) applied on a consistent basis.
As discussed in Note 2(c), (f), (g) and (i) to the consolidated financial statements, the Group adopted new Japanese accounting standards for pension and retirement benefits, and financial instruments in the year ended March 31, 2001, and deferredtaxation accounting, and research and development in the year ended March 31, 2000.
The amounts expressed in U.S. dollars, which are provided solely for the convenience of the reader have been translated on
the basis set forth in Note 3 to the accompanying consolidated financial statements.

ChuoAoyama Audit Corporation

Hijiribashi Audit Corporation

Tokyo, Japan
June 28, 2001

Kaken Pharmaceutical Co., Ltd. 32

C O R P O R A T E D A T A (As of March 31, 2001)

REGISTERED HEAD OFFICE
28-8, Honkomagome 2-chome, Bunkyo-ku,
Tokyo 113-8650, Japan
Tel: 81-3-5977-5001
Fax: 81-3-5977-5131
http://www.kaken.co.jp

Employees (Non-Consolidated)
Administration: 118
Sales & Marketing: 977
Production & Technology: 291
Research & Development: 280

Licensing & Business
Developmtnt Department

FoundedMarch 1917

¥17,000 million (As of Sept. 30, 2001)

2-28-8, Hon-Komagome, Bunkyo-ku,
Tokyo 113-8650, Japan
Director & General Manager
Masao Ishida
Tel: 81-3-5977-5046
Fax: 81-3-5977-5133
E-mail: masao-ishida@kaken.co.jp

Common Stock

Branch Offices

Authorized: 360,000,000 shares
Issued: 94,518,374 shares (As of Sept. 30, 2001)
Number of Shareholders: 22,357

Sapporo Branch
Sendai BranchTokyo-1 BranchTokyo-2 Branch
Nagoya Branch
Osaka-1 Branch
Osaka-2 Branch
Hiroshima Branch
Fukuoka Branch

Incorporated
March 1948

Paid-in Capital

Plant
Shizuoka Factory

Research Laboratories
Shizuoka Research Laboratories
Kyoto Research Laboratories
Production Technology Laboratories

Overseas Office:Kaken New York Office
245 Park Avenue, 24 th Floor, New York,NY10167
Tel: 1-212-372-8910
Fax: 1-212-372-8970

BOARD OF DIRECTORS AND CORPORATE AUDITORS
Chairman and Representative Director
Yoshiharu Wakiyama
President and Representative Director
Shiro Inui
Executive Managing Director
Takuo Aioi
(Marketing)Executive Managing Director
Susumu Yamazaki(Agrochemicals and Animal Health Products)
Executive Managing Director
Hidefumi Kurosawa(Research and Development)
Executive Managing Director
Noriaki Ohsono(Accounting)Executive Director
Nobuo Nunomura(Production)

Executive Director
Takeji Saito(Marketing and Sales)

Executive Director
Osamu Okamoto(Market Planning and Coordination)

Auditor
Isao Nakamura(Standing)

Executive Director
Tametsugu Watatani(Marketing)

AuditorIchiro Aota
(Standing)

Executive Director
Takeshi Hirahara(Corporate Planning and Coordination)

AuditorRyuji Yabe

Executive Director
Yoshinori Kambayashi(Research and Development)
Executive Director
Yutaka Handa(Personnel)
Kaken Pharmaceutical Co., Ltd. 33

Auditor
Nobukazu Sakai

Kaken Pharmaceutical Co., Ltd.
28-8, Honkomagome 2-chome, Bunkyo-ku,
Tokyo 113-8650, Japan
Tel: 81-3-5977-5001
Fax: 81-3-5977-5131
http://www.kaken.co.jp

Printed in Japan