May 17, 2006
Non-Consolidated Interim Financial Results for the Fiscal Year Ending March 31, 2005
Company name:

Fuji Pharma Co., Ltd.

Code number:

4554

(URL

http://www.fujipharma.jp)

Stock Exchange listing:

JASDAQ

Company Domicile:

Tokyo, Japan

Representative:

Hirofumi Imai
Representative Director and President

Contact:

Shigeru Hongo
Director, General Manager of Administration Department
Tel: 81-(3)-3556-3344

Date of board meeting for approving financial results: May 17, 2006
Interim dividend: The Company issues an interim dividend.
Starting date of dividend payment: June 9, 2006
Trading Unit: 100 shares
1. Financial Results for the First Half of the Fiscal Year Ending September 30, 2006 (October 1, 2005 to
March 31, 2006)(1) Operating Results
Net sales
Million Yen

First Half ended Mar. 2006
First Half ended Mar. 2005
Fiscal Year ended Sep. 2005

Operating income

YoY change
(%)

5,263
4,902
10,1287.4
3.5

Net income
Million Yen

Million Yen

693
185
987

None

First half period ended March 2005:

None

Fiscal year ended September 2005:

None

YoY change(%)

Million Yen

709
189
996

275.2
-68.8

Diluted net income
per share

Yen

Yen

35.87
10.88
47.33

-

429
232.3
129
-65.4
577
Notes: 1. Earnings on investments in equity-method affiliates:
First half period ended March 2006:

273.8
-70.0

Ordinary income

Net income per share

YoYchange (%)

First Half ended Mar. 2006
First Half ended Mar. 2005
Fiscal Year ended Sep. 2005

YoY change(%)

2. Average number of shares outstanding:First half period ended March 2006:

11,960,133 SharesFirst half period ended March 2005:

11,866,390 SharesFiscal year ended September 2005:

11,866,390 Shares

3. Changes in accounting principles applied:None

4. The percentage change of sales, operating income, ordinary income and (interim) net income
represents the percentage change over the same period of the previous year.
(2) Dividends
Interim dividend
per share

Annual dividend
per share

Yen

Yen

7.00
7.00
-

14.00

Total assets

Shareholders’equityShareholders’equity ratio

Million Yen

Million Yen(%)

First half ended March 2006
First half ended March 2005
Fiscal year ended September 2005

(3) Financial Position

First half ended March 2006
First half ended March 2005
Fiscal year ended September 2005

Notes: 1. Number of shares outstanding:

16,945
12,622
74.5
13,987
10,55875.5
14,19010,93677.1
12,869,990 shares as of March 2006

Shareholders’equity per share
Yen

980.80889.75920.32

11,866,390 shares as of March 2005
11,866,390 shares as of September 2005
2. Number of treasury stocks:

10 shares as of March 2006
1,003,610 shares as of March 2005
1,003,610 shares as of September 2005

(4) Cash FlowFirst half ended March 2006
First half ended March 2005
Fiscal year ended September 2005

Operatingactivities

Net cash used by
Investingactivities

Financing
activities

Cash and cash
equivalents balance at
end of the fiscal year

Million Yen

Million Yen

Million Yen

Million Yen

603
23
338

-1,592-604-1,336

1,762
-95
-178

3,456
3,184
2,683

2. Forecast for the Fiscal Year Ending September 2005 (October 1, 2005 to September 30, 2006)
Annual dividend
per share
Net sales
Ordinary income
Net income(Interim dividend
per share)
Million Yen

Million Yen

Million Yen

11,1001,500
930
Reference: Estimated net income per share for the fiscal year ending Sep. 2006: ¥72.26
Fiscal year ended Sep. 2006

Yen

14.00 (7.00)

Note: The above forecasts are based on the information available at the date of this release and on theassumption of several factors which may affect the company’s results in the future.

Actual results

could significantly differ from the above estimates because of subsequent changes in circumstances.

Ⅰ. Group Organization
This item is not applicable because the Company does not have any subsidiaries and affiliates.
Ⅱ. Management Policies
1. Fundamental Management Policy
Our corporate mission is “Making a contribution to society by economically and stably supplying effective
and safe pharmaceutical products useful for improving and overcoming diseases and disorders”.

Under

this mission, we intend to continue to provide high-quality pharmaceutical products and to fulfil our
responsibilities to our customers, shareholders, employees, society and other stakeholders.
2. Profit Allocation Policy
We regard the distribution of a stable dividend or a dividend increase as one of the most importantmanagement issues.

In deciding profit distribution, we will comprehensively take into account various

factors such as the net profit generated in the period concerned, earning outlook over the next few years
and retained earnings for future business development
We plan to re-invest retained earnings in ways to improve business efficiency and marketing/sales system,
to strengthen research and development activities leading to the growth of corporate value, and to expand
and upgrade production facilities.
We do not plan to change the current number of dividend payments (twice per fiscal year).
3. Opinion on the Change of Trading Unit
We reduced the trading unit from 1,000 shares to 100 shares on January 4, 2005 with the recognition thatthe maintenance of appropriate trading units is a useful measure to facilitate investment from private
investors and to improve the liquidity of our company shares.
in environmental improvement.

We will take other approaches for investing4. Performance Indicators and Targets
Meeting shareholders’ expectations about profit allocation as well as preparing for the upgrading or
expansion of production facilities, and the increase in research and development costs which will beaccompanied by future business expansion, we will pursue the profit-oriented management style.

We set2,870 million yen of ordinary income, 19.5% of “Ordinary Income to Sales” and 10.0% of “Return on total
capital” (996 million yen, 9.8% and 4.1% as of the fiscal year ended September 30, 2005 respectively) as
the goal of our “Mid-term Business Plan” for the four-year period ended September 30, 2009.
Furthermore, with regard to the rise in shareholder value, we see the “Net Income per Share” as animportant performance indicator and will target on 138 yen as of the fiscal year ended September 30, 2009(47.33 yen as of the fiscal year ended September 30, 2005).
5. Medium- and Long-term Management Strategy
We will invest our management resources in a focused way in our strong areas injectable solutions in termsof the drug type, obstetrics and gynecology in terms of the medical examination field, and hormone drugsin terms of the medicinal benefits type. We will also allocate a strategic budget to these areas for proactive
measures such as business alliances, license agreements, product development and investment in facilities.
As for injectable solutions, we plan to launch 30 new products used for inpatient hospital care in four years,
responding to the increasing introduction of Diagnosis Procedure Combination (DPC). We will reinforce
the sales systems for injectable solutions by forming a structure dedicated to key hospitals (e.g. public,
university and other major hospitals) and strengthen our support to academic research. Furthermore, we
aim to increase our supply capacity by introducing new production lines. With regard to the obsteric andgynecologic area, we will make efforts to secure the licensing of new drugs with new efficacy andformulation in order to improve our product portfolio, which mainly consists of proprietary genericproducts at present. For hormone drugs, we built a new tablet production factory designed forcross-contamination and proliferation prevention. We also plan to develop a drug delivery system based on
our present drug formation technology.
6. Key Challenges
The generic product market has been expanding amid calls for a cut in national medical expenses.
Meanwhile, more and more newcomers including leading foreign drug makers have entered into Japan's
growing generic product market. In addition, medical institutions’ needs for quality assurance, stableproduct supply and information provision are expected to further increase. Under these circumstances, inorder to maintain and improve our competitive position in the market, and to increase the effectiveness of
our active growth strategies, such as new development investment plans, we will address the following key
challenges:

1) We will strengthen our research and development ability through our alliance with otherpharmaceutical manufacturers.
2) We will reinforce the marketing and sales systems for key hospitals by forming project teams andstrengthening our support to academic research.
3) Responding to the increasing needs for quality improvement and demand expansion, we will upgradeand expand our production systems.
4) We will take a full-line strategy for product specification.
5) The importance of corporate social responsibility is now recognized.

We will adopt thoroughgoingmeasures to secure product quality/safety and environmental protection, and to educate our employees
to comply with pharmaceutical business related laws/regulations and ethical standards.
7. Other Significant Information on Management
There is no significant information on management to be reported.

Ⅲ. Review of Operating Performance and Financial Conditions
1. Review of Operating Performance
During the interim period concerned, the Japanese economy recovered, backed by expanded capitalspending and exports. Furthermore, there was an up-turn in consumer spending, with improved
employment conditions and employees’ income.
In the ethical drug industry, the use of prescriptions with a new format, which was suggested by the Health,
Labor and Welfare Ministry in its “draft proposal for health insurance reform” in October 2005, started in
April 2006. The introduction of the new prescription format indicates that the Ministry accepts genericproducts as standard ethical drugs.

In addition, more hospitals started to adopt DPC. In this way, theenvironment for stimulating the use of generic products is being put in place.
Under these circumstances, responding to the growing application of DPC, we increased the number of
medical representatives (MRs) specialized in public hospitals, advanced treatment hospitals and infertility
treatment hospitals, which is our competitive segment. In addition, we strengthened our support toacademic research in order to back up the MRs activities. On the production side, we built a tablet
production factory and additional production lines in an injectable solution factory in order to increase our
production capacity, produce drugs with new formulations, and maintain/improve product quality.
The sales for the interim period concerned recorded 5,263 million yen (7.4% YoY growth).

On the profit

side, we recorded 693 million yen of operating income (273.8% YoY increase), 709 million yen of
ordinary income (275.2% YoY increase) and 429 million yen of interim net income (232.3 % YoY
increase).

1) Analysis of Sales
The sales of diagnostic products, including our key urography and anigiography contrast agents,“Oypalomin” and “Iopaque”, increased 11.2% year-on-year to 2,120 million yen. Hormone drugs
recorded 1,329 million yen of sales, a solid 3.1% year-on-year increase, supported by “NAFARELIL”, a
new endometriosis curative drug launched in July 2005, in addition to our key infertility treatment drugs
such as pituitary gonadotropic hormone drug and “endometriosis therapeutic agent, “Human Menopausal
Gonadotrophin”and “Buserecur”. As for drugs with other beneficiary effects, in vitro diagnostic drugs
increased 8.1% year-on-year to 291 million yen thanks to the launch of a quick test kit for luteinizing
hormone in the urine and an influenza virus test kit, and the favorable sales of hemolytic streptococci test
reagent. On the other hand, circulatory drugs declined 4.1% year-on-year to 486 million yen due to thelevelled-off sales of prostaglandin E1 drug product, “ALYPROST injection”, and the decreased sales ofother products.
2) Analysis of Operating income
The cost to sales ratio improved by 0.9% points to 57.4%. Cost reduction factors such as the benefits fromthe increased production volume and the cut in the unit cost of material procurement covered the cost
increase factors, such as increased depreciation and leasing costs from new investments, and revised sales
price following the NHI price revision.
Selling and general administrative expenses decreased by 407 million yen to 1,540 million yen. This ismainly attributable to 452 million yen of decrease in research and development costs.
3) Analysis of Non-operating and Extraordinary Profits and Losses
We booked a total 23 million yen of non-operating profits, consisting of 9 million yen of subcontracting
fees and 6 million yen of proceeds from sales of investment securities. On the other hand, we recorded 18
million yen of loss on the retirement of facilities and 6 million yen of retirement benefits for directors,
totalling 25 million yen of extraordinary losses.
2. Financial Conditions(1) Financial Conditions
The closing balance of assets as at the end of the period concerned increased by 2,754 million yen fromthe opening balance to 16,945 million yen.

The closing balance of current assets increased by 1,547

million yen from the opening balance to 10,818 million yen. While the closing balance of cash on
hand/at bank and inventories increased by 1,173 million yen and 209 million yen, that of marketablesecurities and trade receivable decreased by 400 million yen and 113 million yen respectively. The
closing balance of fixed assets increased by 1,206 million yen from the opening balance to 6,126

million yen. Tangible fixed assets increased 992 million yen due to investments including theconstruction of a new tablet production factory and intangible fixed assets decreased 15 million yen
due to the amortization of distributorship acquired in the previous fiscal year. The closing balance ofinvestments and other assets increased by 229 million yen due to the increased long-term advancepayment for leased factory machinery and equipment.
The closing balance of liabilities as at the end of the period concerned increased by 1,068 million yen
from the opening balance to 4,322 million yen.

While short-term borrowing, other accounts payable

and purchase liabilities increased by 500 million yen respectively, 425 million and 266 million yen,accrued bonuses decreased by 167 million yen.
The closing balance of shareholder’s equity as of the end of the period concerned increased by 1,686
million yen from the opening balance to 12,622 million yen. This is attributable to the retirement oftreasury stock worth 1,344 million yen and 334 million yen increase in retained earnings.
(2) Cash Flow
The closing balance of cash and cash equivalents as at the end of the period increased by 773 million
yen from the opening balance to 3,456 million yen.

The cash flows from three types of activity are as

followsⅰ) Net cash provided by operating activities
266 million yen of increase in purchase liabilities and 253 million yen of depreciation were added
to 684 million yen of net income before income taxes for the interim period concerned.

On theother hand, negative factors for the cash flow in operating activities were as follows: 209 million
yen increase in inventories; 179 million yen increase in long-term prepaid expenses; 167 million
yen decrease in accrued bonuses.

Consequently, net cash provided by operating activities for theperiod concerned was 603 million yen.
ⅱ)Net cash used in investing activities
We spent 913 million, 847 million and 50 million yen for the purchase of tangible fixed assets, theacquirement of lease assets and the payment of guarantee money respectively.

On the other hand,

we received 213 million proceeds from sale of lease assets. Consequently, net cash used ininvestment activities was 1,592 million yen.
ⅲ)Net cash used in financing activities
Net cash used in financing activities was 1,762 million yen. While we received 1,344 million
proceeds from sale of treasury stock and had 500 million yen on short-term loan, we paid 82 million

yen as dividends.
[Trends observed in the company’s cash flow indicators are as follows]
FY2004H1 FY2005H1 FY2006H1
Equity ratio (%)
76.1
75.5
74.5
Market value basis equity ratio (%)
123.1
146.8
107.1
Debt redemption period (Years)
0.2
4.3
0.6
Interest coverage ratio (Times)
752.3
22.9
672.5

FY2004
74.0
110.9
0.2
632.6

FY2005
77.1
90.8
0.6
183.1

・ Equity ratio: Shareholders’ equity / Total assets
・ Market value basis equity ratio: Market capitalization / Total assets
・ Debt redemption period: Interest-bearing debt / Operating cash flow
(In case of interim periods, operating cash flow✕2)・ Interest coverage ratio: Operating cash flow / Interest paid
※ “Short-term borrowings” and “Guaranteed deposit received” in the Liability Section of the Balance Sheet isused as interest-bearing debt.
※ “Net cash provided by operating activities” in Cash Flow Statements and “Interest paid” in Notes to Income
Statements are used as Operating cash flow and Interest paid.

3. Outlook
Our projection for the fiscal year ending September 30, 2006 is 11,100 million yen of sales, 1,500 million
yen of ordinary income and 930 million yen of net income.

Sales in the first half of the fiscal year ending

September 30, 2006 were slightly below our projection.

However, we believe that we will be able torecover the shortage because of increasing interest in and demand for generic products in line with theintroduction of DPC at more medical institutions. We will conduct active sales activities targeting key
hospitals as well as our strong infertility and radiology markets.

Moreover, we plan to make constant cost

reduction efforts.
4. Operational Risk
Risks related to the information contained in the financial statements for the interim period concerned
which may have significant influences on investors’ decision are as follows:(1) Statutory Regulation
Our company manufactures and distributes pharmaceutical products under the Pharmaceutical Affairs
Law and related regulations.

Amendments to laws/regulations related to the pharmaceutical industry,

which may be made in future, may have influences on our financial condition and businessperformance.
(2) Research and Development for Pharmaceutical Products
There is a possibility that our research and development projects will be behind schedule, a new
product development period will be extended and the development will be suspended or eventerminated.

These events may have an impact on our business performance.

(3) Competition
We have a policy to sell our products at reasonable prices with consideration to the profitability of
products.

However, some of our products have been suffering from a considerable market pricedecline because of the hard competition with many competitors.

Moreover, some original drug

manufacturers have taken an aggressive approach to maintain their market share.
possibility that we will not manage to achieve our projection.

Therefore, there is a

Ⅳ. Financial Statements(1) Balance Sheets(Thousands of yen)

AssetsCurrent assets
Cash on hand and cash at banks
Trade notes receivable
Trade accounts receivable
Marketable securities
Inventory
OthersAllowance for doubtful receivables
Total current assets
Fixed assets
Property, plant and equipment※1
Buildings
Machinery and equipment
OthersTotal property, plant and equipment
Intangible fixed assets
Investment and other assets
Total fixed assets
Total assets

As of Mar. 31, 2005
Ratio
Amount(%)

As of Mar. 31, 2006
Ratio
Amount(%)

As of Sep. 30, 2005
Ratio
Amount(%)

2,084,246
721,189
3,076,214
1,100,310
2,034,278
278,089-1,1399,293,188

66.4

3,256,697
644,252
3,282,366
200,147
2,428,904
1,007,292-1,177
10,818,483

63.8

2,083,090
735,1073,305,024
600,341
2,219,827
328,488-1,2129,270,668

65.3

33.6
100.0

2,864,662
819,945656,889
4,341,498
184,322
1,601,102
6,126,922
16,945,406

36.2
100.0

1,874,358
487,763
987,316
3,349,438
199,554
1,371,271
4,920,263
14,190,931

34.7
100.0

1,915,134
566,387
658,004
3,139,526
103,365
1,451,458
4,694,351
13,987,540

(Thousands of yen)

Liabilities
Current liabilities
Trade notes payable
Trade accounts payable
Short-term borrowings
Other accounts payable
Current portion of long-termother accounts payable
Accrued income taxes
Accrued bonuses for employees
Accrued bonuses for directors
Allowance for sales return
Other current liabilities
Total current liabilities
Long-term liabilities
Long-term other accounts payable
Guaranteed deposits received
Accrued retirement benefits for employees
Accrued retirement benefits for directors
Total long-term liabilities
Total liabilities
Shareholders’ equity
Common stock
Capital surplus
Capital reserve
Other capital surplus
Total of capital reserve
Retained earnings
Legal reserve
Voluntary reserve
Unappropriated (interim) retained earnings
Total of retained earnings
Unrealized holding gain on securities
Treasury stock
Total shareholders’ equity
Total liabilities and shareholders’ equity

As of Mar. 31, 2005
Ratio
Amount(%)

As of Mar. 31, 2006
Ratio
Amount(%)

As of Sep. 30, 2005
Ratio
Amount(%)

228,757
1,513,500
355,044
31,674

247,916
1,538,311
500,000
765,139
31,507245,145
1,274,342
339,51731,507

224,724
286,954
175,073
2,815,729

20.1

201,516
262,494
4,482
6,346
160,550
3,718,265

21.9

126,634
429,589
197,800
2,644,536

18.6

31,674200,843
308,050
73,144
613,7123,429,442

4.4
24.5

208,279
348,232
47,802604,314
4,322,580

3.6
25.5

204,952
328,036
76,997609,987
3,254,523

4.3
22.9

1,616,950

11.6

1,616,950

9.5

1,616,950

11.4

15.9

2,226,020
615,567
2,841,587

16.8

2,226,020
2,226,020

15.7

53.1
0.1
-5.2
75.5
100.0

164,079
5,000,000
2,969,852
8,133,931
30,364-7
12,622,825
16,945,406

48.0
0.2
-0.0
74.5
100.0

164,079
5,000,000
2,635,308
7,799,387
23,314-729,264
10,936,408
14,190,931

55.0
0.1
-5.1
77.1
100.0

2,226,020
2,226,020
164,079
5,000,000
2,270,292
7,434,371
10,020-729,264
10,558,097
13,987,540

(2) Income Statements(Thousands of yen)First half ended
Mar. 31, 2005
Ratio
Amount(%)

First half ended
Mar. 31, 2006
Ratio
Amount(%)

Fiscal year ended Sep.
30, 2005
Ratio
Amount
(%)

4,902,199
2,768,307
2,133,891

100.0
56.5
43.5

5,263,487
3,023,167
2,240,319

100.0
57.4
42.6

10,128,644
5,602,737
4,525,907

100.0
55.3
44.7

-

-

6,346

0.2

-

-

2,133,891

43.5

2,233,972

42.4

4,525,907

44.7

1,948,493

39.7

1,540,964

29.2

3,537,951

34.9

185,397

3.8

693,00713.2

987,956

9.8

Non-operating income※2
Non-operating expenses※2
Ordinary income

8,607
4,844
189,161

0.2
0.1
3.9

23,395
6,679
709,723

0.4
0.1
13.5

20,43012,155996,231

0.2
0.2
9.8

Extraordinary gains
Extraordinary losses※3,4
Income before income taxes

5,666
183,494

0.2
3.7

34
25,386684,371

0.0
0.5
13.0

94,210902,0200.9
8.9

Income taxes-current
Income taxes-deferred
Net income taxes
Net income

215,807-161,394
54,412129,082

1.1
2.6

191,354
64,016
255,370429,000

4.8
8.2

358,983-34,125
324,858
577,162

3.2
5.7

Retained earnings at the beginningof the period
Reversal of retained earnings
appropriated as bonuses for
directors in the previous fiscal year
Dividend

2,141,210

2,536,743

2,141,210

-

4,108

-

-

-

83,0642,270,292

2,969,852

2,635,308

Net sales
Cost of sales
Gross profit
Provision for
returns
Net gross profit

allowance

sales

Selling, general and administrative
expenses※1
Operating income

Unappropriated retained earnings
at the end of the period

(3) Cash Flow Statements
First half ended
Mar. 31, 2005
Ⅰ Cash flows from operating activities
Income before income taxes
Depreciation and amortization
Increase in accrued retirement benefits for employees
Increase (Decrease) in accrued retirement benefits for
directors
Increase (Decrease) in allowance for doubtful receivables
Increase (Decrease) in accrued bonuses to employees
Increase in accrued bonuses to directors
Increase in allowance for sales return
Interest and dividends income
Gain on sales of investment securities
Loss from revaluation of investment securities
Loss on disposal of property, plant and equipment
Decrease (Increase) in trade receivable
Increase in inventories
Decrease (Increase) in advance payment
Decrease (Increase) in other accounts receivable
Decrease (Increase) in long-term prepaid expenses
Increase in trade payable
Increase in other accounts payable
Increase (Decrease) in accrued expenses
Decrease in accrued consumption taxes
Increase in consumption taxes receivable
Increase (Decrease) in guaranteed deposits received
Payments of bonuses to directors and auditors
Others
Sub totalInterests and dividends received
Funds transferred to defined contribution pension accountIncome taxes paid
Net cash used by operating activities
Ⅱ Cash Flow from Investing Activities
Pay-in of time deposits
Reimbursement of time deposits
Proceeds from sale of investment securities
Purchase of property, plant and equipment
Disposal of property, plant and equipment
Purchase of intangible fixed assets
Purchase of leased assets
Proceeds from sale of leased assets
Guarantee money paid
OthersNet cash used in investing activities
Ⅲ Cash Flows from Financing Activities
Short-term borrowings
Purchase of treasury stock
Cash dividends paid
Net cash provided by financing activities
Ⅳ Effects of exchange rate changes on cash
and cash equivalents(Thousands of yen)First half ended
Fiscal year ended
Mar. 31, 2006
Sep. 30, 2005

183,494
203,006
22,269-157

684,371
253,407
20,196-29,195

902,020429,632
42,2553,695-27-89,441-1,817
1,726
92,011-301,309-2,823-28,766653
281,393
34,653-5,948-26,415-1,496
3,633-10,000
19,612374,2511,804-18-352,508
23,528-34-167,094
4,482
6,346
-1,944-6,62818,830113,513-209,077
24,310-429-179,292
266,739
106,938-20,764-13,553-57,5023,326-11,391-95,402710,152
1,941-108,140
603,95345
53,193-3,842
17,91647,658-150,716-486,858
9,103-2,53958,62330,92730,537-12,862
7,742-10,000
2,638
969,174
3,658-31,860-602,914
338,058-100,000
100,000-552,914-1,444-49,377-363-604,099

11,922-913,952-5,353-847,723
213,465-50,112-856-1,592,610-200,000
100,000-1,053,286-1,618-180,499-90,142
90,142-1,199-1,336,603-95,086-95,086

500,000
1,344,824-82,753
1,762,070-178,236-178,236

-1

-

-0

(Thousands of yen)

Ⅴ Increase in cash and cash equivalents
Ⅵ Cash and cash equivalents balance at the
beginning of the period
Ⅶ Cash and cash equivalents balance at theend of the Period

First half ended
Mar. 31, 2005
-675,658

First half ended
Mar. 31, 2006
773,413

Fiscal year ended
Sep. 30, 2005
-1,176,782

3,860,214

2,683,431

3,860,214

3,184,556

3,456,844

2,683,431(4) Significant Accounting Policies
1. Asset Valuation
Criteria and Methods

2. Depreciation andAmortizationof
Fixed Assets

First half ended
Mar. 31, 2005
1) Securities Holding:i Marketable securities:
Market value method on thebasis of market price as of thebalance sheet date
(Changes in unrealized gain orloss are included directly inshareholders’ equity and the costprice of securities sold is
calculated by the moving
average method.)
ii Non-marketable securities:
Moving average cost method
2) Inventories:
First-in, first-out cost method
1) Depreciation on property,
plant and equipment:
Declining-balance method:
However, depreciation on thebuildings which we bought after
April 1, 1998 (excluding thefacilities attached to the buildings)
is calculated by the straight-line
method. The useful lives ofproperty, plant and equipment aresummarized as follows:
Buildings: 7 to 50 years
Machinery and equipment: 7 years
2) Amortization of intangible
fixed assets:
Straight-line method:
Amortization of the computer
software utilized within ourcompany is calculated by thestraight-line method on the basis of
the available duration (5 years).
3) Amortization of long-term
prepaid expenses:
Straight-line method

First half ended
Mar. 31, 2006
1) Securities Holding:Same as left.

2) Inventories:
Same as left.
1)
Depreciationonproperty, plant andequipment:
Same as left.

Fiscal year ended Sep. 30, 2005
1) Securities Holding:i Marketable securities:
Market value method on thebasis of market price as of
the balance sheet date
(Changes in unrealized gainor loss are included directly
in shareholders’ equity andthe cost price of securities
sold is calculated by themoving average method.)
ii Non-marketable securities:
Moving average cost method
2 Inventories:
Same as left.
1) Depreciation on property,
plant and equipment:
Same as left.

2)
Amortizationof
intangible fixed assets:
Same as left.

2) Amortization of intangible
fixed assets:
Same as left.

3)
Amortizationoflong-term
prepaid
expenses:Same as left.

3) Amortization of long-term
prepaid expenses:
Same as left.

3.
Basis
Significant
AllowancesforFirst half ended
Mar. 31, 2005
1) Allowance for doubtfulreceivables:
The allowance for doubtfulreceivables is provided forpossible losses on bad debts at an
amount determined by thefollowing methods. For ordinary
receivables, loan loss ratio method(the historical experience of bad
debts) is applied and forreceivables of high default risk,bankruptcy
claim
and
reorganization claim, we examine
the possibility of recovery of therepresentative receivables.
2)
Accruedbonusestoemployees:
Accrued bonuses are provided forbonuses with the amount estimatedto be paid to employees as of theend of the interim fiscal year
concerned.
3) Accrued retirement benefits
for employees:
Accrued retirement benefits for
employees are provided for
retirement benefits to be paid
under the company’s defined
benefit program with the amountcalculated based on potential
retirement benefit obligation as ofthe end of the interim fiscal year
concerned.
4) Accrued retirement benefits
for directors:
Accrued retirement benefits for
directors are provided with theamount estimated to be paid as ofthe end of the interim fiscal year
concerned in accordance with theinternal rules for such retirement
benefits for directors.
Provision for this allowance
reserve is prescribed by Article 43
in the enforcement regulations ofCommercial Law.

First half ended
Mar. 31, 2006
1)
Allowancefordoubtful receivables:
Same as left.

2) Accrued bonuses:
Same as left.

3) Accrued retirement
benefits for employees:
Same as left.

4) Accrued retirement
benefits for directors:
Same as left.

5) Allowance for sales
returns:
Allowanceforsales
returns is provided withexpected gross profit
from volume of returns
calculated based on past
rejection
rates
in
preparation for sales
returns.

Fiscal year ended Sep. 30, 2005
1) Allowance for doubtfulreceivables:
Same as left.

2) Accrued bonuses to
employees:
Accrued bonuses are provided
for bonuses with the amountestimated to be paid to
employees as of the end of the
fiscal year concerned.
3)
Accruedretirement
benefits for employees:
Accrued retirement benefits for
employees are provided for
retirement benefits to be paid
under the company’s defined
benefit program with theamount calculated based on
potential retirement benefit
obligation as of the end of the
fiscal year concerned.
4)
Accruedretirement
benefits for directors:
Accrued retirement benefits for
directors are provided with theamount estimated to be paid asof the end of the fiscal year
concerned in accordance with
the internal rules for such
retirement benefits for directors.
Provision for this allowance
reserve is prescribed by Article
43
in
the
enforcement
regulations of Commercial Law.

First half ended
Mar. 31, 2005
3.
Basis
Significant
Allowancesfor

4. Accounting for
Lease Transactions

5. Cash and Cash
Equivalents in Cash
Flow Statements

6. Other Significant
Items

The
accounting
procedures
conform to the accounting method
for the usual lease contract are
appliedtofinanceleaseagreements
excludingthose
stipulatingthetransferofownership of the leased assets tothe lessee.
Cash and cash equivalents consistof cash on hand and bank deposits
which can be withdrawn at any
time and short-term investmentswith the duration of three months
or less which can be easily
converted to cash and are exposed
to little risk of change in value.
(Accounting for Consumption
Tax)
Tax-exclusive method is applied tothe accounting for transactions
subject to consumption tax. The
net balance between consumption
taxes paid tentatively and thosereceived tentatively is represented
as “Other current assets" inCurrent liabilities.

First half ended
Mar. 31, 2006
6) Accrued bonuses todirectors:
Accrued bonuses areprovided for bonuseswiththeamountestimated to be paid to
directors as of the end of
the interim fiscal year
concerned.

Fiscal year ended Sep. 30, 2005

Same as left.

Same as left.

Same as left.

Same as left.

(Accounting
Consumption Tax)Same as left.

for(Accounting for Consumption
Tax)
Tax-exclusive method is appliedtotheaccountingfortransactions
subject
toconsumption tax.

First half ended
Mar. 31, 2006
(Accounting for the Impairment of Fixed Assets)
The Company started to account for the impairment of fixed
assets (suggested in "Opinion Paper on the Establishment of
Accounting Standards for Impairment Loss on Fixed Assets
released by the Financial Services Agency's BusinessAccounting Council on August 9, 2002) and "theimplementation guidelines for asset impairment accounting"(Business Accounting Application Guideline No. 6 releasedby the Accounting Standards Board of Japan in October 31,2003) in the interim fiscal year concerned.
This adoption had no significant impact on the Company's
financial performance.

Fiscal year ended Sep. 30, 2005

(5) Changes in Significant Accounting Policies
First half ended
Mar. 31, 2005

First half ended
Mar. 31, 2005

First half ended
Mar. 31, 2006
(Accounting for bonuses to directors)
The Company started to account for bonuses to directors(Business Accounting Standard No. 4 released on November
29, 2005) in the interim fiscal year concerned. Before theadoption, the Company had recognized bonuses to directors
as the decrease in unappropriated profits as of the date of ageneral meeting of stockholders. However, the Company
started to book bonuses to directors on an accrual basis in theinterim fiscal year concerned.
This adoption decreased operating income, ordinary income
and net income before tax by 4,482 thousand yen each.

Fiscal year ended Sep. 30, 2005

(6) Supplementary Information
First half ended
Mar. 31, 2005
(Pro forma standard taxation)“Local Taxation Reform Law” (No. 9
issued in 2003) was promulgated on
March 31, 2003. Under this law, thepro forma standard taxation shall beapplied to any corporation for any fiscal
year commencing April 1, 2004 or after.
Our company booked corporate tax
calculated by added-value and capitalbasis method in the section of selling,
general and administrative expense forthe period concerned in accordancewith “Accounting Practices for theBooking of Pro Forma Basis Tax inIncomeStatements”(Accounting
Practices No.12 issued by the Corporate
Accounting Standards Committee on
February 13, 2004).
This adoption increased sales andgeneral administrative expenses by
9,722 thousand yen and decreased
operating income, ordinary income andnet income before tax by the sameamount each.

First half ended
Mar. 31, 2006
(Allowance for sales return)
The Company had recognized loss on sales
returns as a sales deduction on an accrualbasis until the previous fiscal year.
However, the Company started to provide
the allowance for sales return in preparation
for possible returns in the interim fiscal year
concerned. The adoption of this accounting
is attributable to the increasing significanceof sales returns in line with expanding sales.
The Company believes that we can reflect
more accurately the impact of sales returns
in our financial statements by adopting thisaccounting.
This adoption decreased operating income,ordinary income and net income by 6,346
each.

Fiscal year ended Sep. 30, 2005
(Pro forma standard taxation)“Local Taxation Reform Law”
(No. 9 issued in 2003) was
promulgated on March 31, 2003.
Under this law, the pro forma
standard taxation shall be applied
to any corporation for any fiscal
year commencing April 1, 2004 or
after.
Our company booked
corporate tax calculated byadded-value and capital basis
method in the section of selling,
general and administrative expense
for the period concerned inaccordance with “Accounting
Practices for the Booking of Pro
Forma Basis Tax in Income
Statements” (Accounting Practices
No.12 issued by the Corporate
Accounting Standards Committee
on February 13, 2004).
This adoption increased sales andgeneral administrative expenses by
18,862
thousandyen
anddecreased
operatingincome,ordinary income and net income
before tax by the same amounteach.

(7) Notes to Financial Statements(Notes to Balance Sheets)
As of Mar. 31, 2005
※1 Accumulated depreciation ofproperty, plant and equipment¥ 3,190,281 ths.

As of Mar. 31, 2006
¥ 3,010,765 ths.

As of Sep. 30, 2005
¥ 2,891,707 ths.

(Notes to Income Statements)
For the first half ended
Mar. 31, 2005

For the first half ended
Mar. 31, 2006

For the fiscal year
ended Sep. 30, 2005

¥ 339,461 ths.
¥ 744,588 ths.
¥ 178,757 ths.
¥ 116,939 ths.
¥ 91,411 ths.
¥ 74,388 ths.
¥ 68,481 ths.
¥ 16,130 ths.

¥ 368,526 ths.
¥ 292,496 ths.
¥ 163,124 ths.
¥ 108,326 ths.
¥ 89,938 ths.
¥ 83,454 ths.
¥ 70,717 ths.
¥ 17,226 ths.

¥ 814,890 ths.
¥ 955,359 ths.
¥ 265,347 ths.
¥ 237,063 ths.
¥ 192,946 ths.
¥ 154,902 ths.
¥ 146,700 ths.
¥ 30,895 ths.

¥ 48 ths.

¥ 9,200 ths.
¥ 6,628 ths.
¥ 1,173 ths.
¥ 624 ths.
¥ 146 ths.

¥ 5,200 ths.
¥ 1,907 ths.
¥ 1,634 ths.
¥ 300 ths.

¥ 1,028 ths.
¥ 184 ths.
¥ 1 ths.

¥ 2,000 ths.
¥ 927 ths.
¥ 898 ths.
¥ 827 ths.
¥ 333 ths.

¥ 2,224 ths.
¥ 1,846 ths.
¥ 343 ths.
¥ 0 ths.

※3. Major items of extraordinary losses
Loss on retirement of fixed assets
Retirement benefits for directors
Loss on revaluation of inventories¥ 1,726 ths.
¥ 3,939 ths.

¥ 18,830 ths.
¥ 6,555 ths.
-

¥ 47,658 ths.
¥ 3,939 ths.

※4. Breakdown of loss on disposal of
fixed assets
Buildings
Machinery and equipment
Tools, furniture and fixtures
Automotive equipment¥ 1,568 ths.
¥ 157 ths.
-

¥ 9,264 ths.
¥ 8,854 ths.
¥ 431 ths.
¥ 280 ths.
-

¥11,428 ths.
¥ 31,706 ths.
¥ 2,824 ths.
¥ 1,699 ths.

¥ 189,787 ths.
¥ 13,219 ths.

¥ 225,307 ths.
¥ 28,099 ths.

¥ 391,088 ths.
¥ 38,624 ths.

※1. Breakdown of selling, general andadministrative expenses:
Salaries and bonuses
Research and development expenses
Provision for bonuses
Sales commission
Welfare expenses
Rent
Packaging and transportation expenses
Provision for retirement benefits※2. Major items of non-operating
income and expenses(1) Non-operating income
Subcontracting fees
Gain on sale of investment securities
Interest received and discount income
Interest on securities
Dividends received(2) Non-operating expenses
Clients' inventory compensation
Sales discountInterests paid
Depreciation expense
Exchange rate loss

5. Depreciation and amortization
recognized
Tangible fixed assets
Intangible fixed assets¥ 866 ths.
-

(Notes to Cash Flow Statements)
Cash and cash equivalents balance at end of the period and the relationship between the balance
and the amount booked in the balance sheets:
Cash on hand and at banks
Securities
Cash and cash equivalents(As of Mar. 31, 2005)¥ 2,084,246 ths.
¥ 1,100,310 ths.
¥ 3,184,556 ths.

(As of Mr. 31, 2006)¥ 3,256,697 ths.
¥ 200,147 ths.
¥ 3,456,844 ths.

(As of Sep. 30, 2005)¥ 2,083,090 ths.
¥ 600,341 ths.
¥ 6,683,431 ths.

(Notes to Lease Transactions)
For the first half ended
Mar. 31, 2005
1. Finance lease transactions except for
those agreements stipulating thetransfer of ownership of the leased
assets to the lessee

For the first half ended
Mar. 31, 2006

For the fiscal year ended
Sep. 30, 2005

(1) The pro forma amounts of theacquisition costs, accumulated
depreciation and net book value ofthe leased assets(Machinery and equipment)
Acquisition costs: ¥ 1,258,807 ths.
Accumulated depreciation:¥314,961 ths.
Net book value:¥ 943,845 ths.

(Machinery and equipment)
Acquisition costs: ¥ 2,156,589 ths.
Accumulated depreciation:¥471,513 ths.
Net book value:¥1,685,075 ths.

(Machinery and equipment)
Acquisition costs:¥ 1,348,149 ths.
Accumulated depreciation:¥ 386,214 ths.
Net book value:¥ 961,934 ths.

(Vehicles and other transportationequipment)
Acquisition costs:¥ 96,390 ths.
Accumulated depreciation:¥ 54,941 ths.
Net book value:¥ 41,449 ths.

(Vehicles and other transportationequipment)
Acquisition costs:¥ 99,287 ths.
Accumulated depreciation:¥ 57,857 ths.
Net book value:¥ 41,430 ths.

(Vehicles and other transportationequipment)
Acquisition costs:¥ 95,486 ths.
Accumulated depreciation:¥ 50,863 ths.
Net book value:¥ 44,623 ths.

(Tools, furniture and fixtures)
Acquisition costs:¥ 49,110 ths.
Accumulated depreciation:¥18,245 ths.
Net book value:¥ 30,865 ths.

(Tools, furniture and fixtures)
Acquisition costs:¥ 49,110 ths.
Accumulated depreciation:¥26,567 ths.
Net book value:¥ 22,543 ths.

(Tools, furniture and fixtures)
Acquisition costs:¥ 49,110 ths.
Accumulated depreciation:¥ 22,406 ths.
Net book value:¥ 26,704 ths.

(Total)Acquisition costs:¥ 1,404,307 ths.
Accumulated depreciation:¥ 388,147 ths.
Net book value:¥ 1,016,160 ths.

(Total)Acquisition costs: ¥ 2,304,986 ths.
Accumulated depreciation:¥ 555,937 ths.
Net book value:¥ 1,749,049 ths(Total)Acquisition costs: ¥ 1,492,746 ths.
Accumulated depreciation:¥ 459,483 ths.
Net book value:¥1,033,262 ths.

(2) The pro forma amounts of
unexpired lease payments
Due in one year or less:Due in one year or less:¥ 164,905 ths.
¥ 253,497 ths.
Due after one year:¥ 884,037 ths. Due after one year: ¥ 1,535,658 ths.
Total
¥ 1,048,943 ths. Total¥1,789,156 ths.

Due in one year or less:¥ 177,595 ths.
Due after one year: ¥ 894,384 ths.
Total
¥1,071,979 ths.

(3) Lease payments and depreciationof leased assets
Lease payments:¥ 96,866 ths. Lease payments:
Depreciation:¥ 81,756 ths. Depreciation:
Interest paid:¥ 8,669 ths. Interest paid:¥ 116,099 ths.
¥ 99,435 ths.
¥ 10,151 ths.

Lease payments:
Depreciation:
Interest paid:¥ 196,619 ths.
¥ 165,990 ths.
¥ 17,138 ths.

For the first half ended
Mar. 31, 2005

For the first half ended
Mar. 31, 2006

For the fiscal year ended
Sep. 30, 2005

(4) Method of calculation ofdepreciation
Depreciation of leased assets is Same as left.
calculated by the straight-line method
assuming the respective lease terms
as the useful lives. As for the
residual value assured, in the case ofagreements stipulating the residual
value, the residual value concerned isadopted, and in any other cases, theresidual value is assumed at zero.

Same as left.

(5) Method of calculation of interests
The difference between the total Same as left.
amount of the lease payments (fromwhichmaintenanceandadministrative cost are excluded) andthe acquisition cost is treated asinterests and the way of allocating theinterests to the respective fiscal years
applied is by the interest method.
2. Operating lease transaction(Unexpired lease payment)
Due in one year or less:¥ 24,000 ths.
Due after one year: ¥131,980 ths.
¥155,980 ths.

Same as left.

(Unexpired lease payment)
Due in one year or less:¥ 24,000 ths.
Due after one year: ¥107,980 ths.
¥131, 980 ths.

(Unexpired lease payment)
Due in one year or less:¥ 24,000 ths.
Due after one year: ¥119,980 ths.
¥143,980 ths.

(Notes to Securities Holding)
1. Breakdown of marketable securities
As of Mar. 31, 2005
Stock
Debt
securities
Total(Thousands of yen)
As of Sep. 30, 2005

As of Mar. 31, 2006

Acquisitioncost
42,248Value
booked57,349Unrealized
gain (loss)
15,100Acquisition
cost
36,954

Value
booked90,021

Unrealized
gain (loss)
53,067

Acquisitioncost
42,248Value
booked80,931

Unrealized
gain (loss)
38,68399,980142,228

101,777
159,126

1,797
16,897

99,980136,934

98,117
188,139-1,862
51,204

99,980142,228

100,613
181,545633
39,316

2. Breakdown of non-marketable securities
Money Management Fund
Commercial paperFree Financial Fund
Unlisted stock

As of Mar. 31, 2005
200,127
499,984
400,197
30,200(Notes to Derivative Transactions)
The Company did not have any derivative transactions.

As of Mar. 31, 2006
200,127
12,284(Thousands of yen)
As of Sep. 30, 2005
200,136400,204
12,284

(Notes to Earnings on investments in equity-method affiliates)
There is no applicable item.
Ⅴ. Goods Manufactured, Orders Received and Sales(1) Breakdown of goods manufactured
Business segment
Diagnostic drugs
Hormone drugs
Circulatory drugs
Antibiotics &Chemotherapeutics
Dermatological preparation
Urogenital drugs
Others
Total

First half ended March
31, 2005
Amount
(%)
1,912,797
42.2
1,325,879
29.3
513,510
11.3
184,8734.1
138,196
151,618
303,6314,530,508

3.1
3.3
6.7
100.0

First half ended March
31, 2006
Amount(%)
2,180,821
42.9
1,413,355
27.8
539,092
10.6
279,0425.5
178,031
149,434
346,851
5,086,630

3.5
2.9
6.8
100.0

(Thousand of yen)
Fiscal year ended September
30, 2005
Amount(%)
3,872,854
39.7
2,944,508
30.1
1,009,657
10.3
445,638
4.6
300,993443,950
748,228
9,765,830

3.1
4.5
7.7
100.0

(Notes): 1. The above amounts are calculated based on selling prices and do not include consumption taxes.
2. Fractions less than one thousand yen are omitted.

(2) Breakdown of goods purchased
Business segment
In vitro diagnostics
Dermatological preparation
Hormone drugs
Antibiotics &Chemotherapeutics
Others
Total

First half ended March
31, 2005
Amount(%)
145,657
77.6
22,740
12.1
5,526
3.0
13,753
187,6777.3
100.0First half ended March
31, 2006
Amount(%)
162,802
69.6
18,8398.1
19,117
8.2
5,952
2.5
27,076
233,788

11.6
100.0

(Thousands of yen)
Fiscal year ended September
30, 2005
Amount(%)
283,76470.3
47,42811.8
11,0072.7
61,251
403,452

15.2
100.0

(Notes): 1. The above amounts are calculated based on selling prices and do not include consumption taxes.
2. Fractions less than one thousand yen are omitted.

(3) Manufacturing based on orders received
The Company manufactures products not on the build-to-order basis, but on the sales projection basis.

(4) Breakdown of sales(Thousands of yen)
Business segment
Goods manufactured
Diagnostic drugs
Hormone drugs
Circulatory drugs
Antibiotics &Chemotherapeutics
Urogenital drugs
Dermatological preparation
Others
Sub total
Goods purchased
In vitro diagnostic
Dermatologic preparation
Hormone drugs
Antibiotics &Chemotherapeutics
Others
Sub total
Total

First half ended March
31, 2005
Amount(%)

First half ended March
31, 2006
Amount(%)

Fiscal year ended September
30, 2005
Amount
(%)

1,907,143
1,289,555
506,994
246,447

38.9
26.3
10.3
5.0

2,120,489
1,329,005
486,157
256,321

40.3
25.3
9.2
4.9

3,867,817
2,712,619
1,001,446
507,852

38.2
26.8
9.9
5.0

145,501
129,080
331,698
4,556,423

3.0
2.6
6.8
92.9

147,960
137,082
401,358
4,878,375

2.8
2.6
7.6
92.7

309,416
280,398
701,237
9,380,789

3.0
2.8
6.9
92.6

269,413
45,140
6,564
7,760

5.5
0.9
0.1
0.2

291,176
44,966
10,806
7,490

5.5
0.9
0.2
0.1

571,931
106,737
13,35916,289

5.6
1.1
0.1

16,896
345,776
4,902,199

0.3
7.1
100.0

30,671
385,111
5,263,487

0.6
7.3
100.0

39,538
747,855
10,128,644

0.2
0.4
7.4
100.0

(Notes): 1. The above amounts are calculated based on selling prices and do not include consumption taxes.
2. Fractions less than one thousand yen are omitted.

(Information on major clients)
ClientKonica Minolta Medical&Graphics Inc.

First half ended March 31,
2005
AmountComposition

First half ended March
31, 2006
AmountComposition(Thousands of yen, %)Fiscal year ended
September 30, 2005
AmountComposition

1,392,221

1,556,897

2,717,209

28.4

29.6

26.8