IR Presentation ofAMS Life Science Co., Ltd.
April 2006

Contents
1. Outline
2. Business activities
3. Trend of dietary supplement marketand industry
4. Overview of Interim FY2006 ended
March 31
5. Forecasting the second half ofFY2006 and medium-term
management strategies
2AMS Life Science Co., Ltd.

1. Outline

3AMS Life Science Co., Ltd.

Corporate profile
Company： AMS Life Science Co., Ltd.

Activities： Manufacturer (OEM) of dietary supplements and cosmetics

Address： 3-6-36 Toyoda, Suruga-ku, Shizuoka, 422-8027 Japan

Paid-in capital： ￥ 1,385,587,008 (as of Feb.2006)

Chairman & CEO： Tadahiko Asayama

President & COO： Takehiko Asayama

Founded： June 8, 1969

Exchange listed： JASDAQ (code 2927)

Number of employees ： 296 (consolidated basis as of Aug. 2005)
Subsidaries： AFC Co., Ltd.
： Nihon Preventive Medical Laboratory Co., Ltd.
： Kenko TV Co., Ltd.

4AMS Life Science Co., Ltd.

AMS is a fully integrated dietary supplement and cosmetic
manufacturer (OEM) that covers all aspects of the businessfrom R&D, marketing, advertising, to sales activities
AMS Life Science Co.,Ltd

AFC Co.,Ltd.
Mail-order
Wholesale distribution
Overseas wholesale distribution

Manufacturing dietarysupplement & cosmetics
Approximately 250 clients

Fully integrated dietary supplement
and cosmetics manufacturer

KenkoＴＶ Co.,Ltd.
Nihon Preventive MedicalLaboratory Co.,Ltd.
Advertisement
R&D of dietary supplement& cosmetics
5AMS Life Science Co., Ltd.

HistoryJune 1969

"Asayama Shoji " was founded in Shizuoka City.

September 1975

"Asayama Shoji" changed its corporate structure to "Asayama Shoji Kabushiki
Kaisha" (part of the current Company) as part of the Company's strategy to strengthen
the health food department.

December 1980

"Miou Shokuhin Kabushiki Kaisha " (origin of the current Company) wasestablished in Shizuoka City by Tadahiko Asayama (current Chairman & and Chief
Executive Officer of the Company) to manufacture health foods.

February 1982

"Asayama Family Club " was newly founded in Shizuoka City by Tadahiko Asayama to establish
health food mail-order business. "Asayama Family Club" changed its corporate structure to "AFCCo., Ltd. " in Shizuoka City in August 2003.

December 1982

The factory with the head office of "Asayama Shoji Kabushiki Kaisha" was newly constructed inShizuoka City.

January 2001

The name of "Miou Shokuhin Kabushiki Kaisha" was changed to "AMS Life Science Co.,Ltd ." (current Company) following the completion of its new factory in Shizuoka City.

July 2001

The Company established a business department that specialized in cosmetic products
and obtained a business license in association with cosmetic products. The Company

September 2004

"Kenko TV Co., Ltd. " was established in Shizuoka City as a subsidiary of Nihon
Preventive Medical Laboratory Co., Ltd.

March 2005
July 2005

The Company launched an Initial Public Offering. The shares of the Company were listed
A large scale factory was constructed to extend the Company's health food business.

December 2005

Nihon Preventive Medical Laboratory Co., Ltd. Founded a new facility to futher their R&Dactivities.

6
AMS Life Science Co., Ltd.

2. Business activities

7AMS Life Science Co., Ltd.

NYK<< Research and Development >>AMS

Nihon Preventive Medical Laboratory Co.,Ltd.
Advanced technologies surrounding tableting,tableting, capsulation and granulation based on
30 years of data compilation and experience in the dietary supplement
supplement industry

AFCOEM

KTV
USER

MarketingMarketing ResearchResearch
Planning
Planning

Collaborative
Collaborative
Basic
Basic ResearchResearch

Investigation
InvestigationAnalysis
Analysis
Bench
Bench scale
scale test
test

AppliedApplied Research
Research・Collect data, plan/design products, research commodities
・Partner with academia and government agencies to develop safe andand effective (absorption,metabolism, etc.) products
・ Improve quality of products and shorten shipping time by introducing
introducing advanced test facilities
・Design manuals for manufacturing process
8AMS Life Science Co., Ltd.

next

NYK

<< OEM manufacturer >>AMS

AMS Life Science Co.,Ltd.

AFCOEM

High quality of products certified“GMP (Good Manufacturing Practices)”
Practices)”

KTVUSER①RawRaw Materials
Materials
Inspection
Inspection③Manufacturing
Manufacturing

Packaging
Packaging
⑤Bulk
Bulk

Mail-order companies
Wholesale companies
Major food and beverage companies
Major pharmaceutical companies
Planning companies, etc.

AMS Life Science Co., Ltd.

④

Commodity
Commodity
Shipping
Shipping

OEM for 250 companies②⑥Quality
Quality Assurance
Assurance

・Offer full range services, including consultation, planning andcommercialization of products
・Provide various products in accordance with clients’clients’ uniqueneeds and challenges by utilizing our advanced facilities
・Manage deadlines efficiently with our advanced production
management system to handle products with a shortshort-lead time
9next

Certified dietary supplement “GMP”！
AMS is the very first company to be certified by theJapan Health Food & Nutrition Food Association in
its Good Manufacturing Practice (GMP) ※ for theformulation and packaging of dietary supplements
on July 29, 2005.

Safety・Reliability
High Quality
AMS maintains strict quality assurance standards
for every manufacturing process as outlined in
the GMP authorization system. As a result of ourefforts, we are able to provide value-added
services and solutions to our customers.
※GMP stands for “Good Manufacturing Practice” andrepresents international standard for manufacturing
management and quality management for health foodand nutrition food.
10AMS Life Science Co., Ltd.

NYK<< Sales >>AMS

AFC Co.,Ltd.

AFCOEM

Sales of PB (private brand named “AFC”AFC”) products

KTV
USER

Mail-order
Mail-order Div.
Div.

Newspaper
Newspaper advertisement
advertisement
InternetInternetTV
TV shopping
shopping
DM
DM toto members
members

Wholesale
Wholesale Div.
Div.

Overseas
Overseas Div.
Div.

Wholesalers/Agencies
Wholesalers/Agencies

Overseas
Overseas agencies
agencies

Supermarkets,
Supermarkets, Drug
Drug storesstoresConvenience
Convenience stores,stores, DIY
DIY storesstoresSupermarkets,
Supermarkets, Drug
Drug storesstoresConvenience
Convenience storesstores・MailMail-order sales through newspaper advertisements, internet and DM （970,000 members）
members）
・Promote sales to new customers through newspaper advertising, internet
internet and by DM
・Promote our PB products through major wholesalers and agencies（currently selling at approximately 6,000 retail shops in Japan）
Japan）

Domestic and Overseas Customers
11AMS Life Science Co., Ltd.

NYK<< Information Distribution >>Kenko TV Co.,Ltd.
Health and beauty information distribution

AMSAFCOEM

KTV
USER

Advertisement
Advertisement

MotionMotion pictures
picturesManage advertisements on major and local
newspapers and magazines
Manage advertisements on TV(BS,CS,Conventional waves) and radio
Plan and design brochuers

Plan and produce health care programs andTVCM, etc.
Plan and provide internet content material

・Promote health information programs and TV shopping programs which
which are produced at
our studio・Support AFC sales by using various channels

Customers
12AMS Life Science Co., Ltd.

What is AMS Group scompetitiveness?
・Strict quality assurance system in accordance with GMP standards
・Compliance with the following standards: Medicines Act,
Health Promotion Policies and Advertising Policies
・Product development and information distribution capability
・Superior sales promotion through wide variety of sales channels
High quality and reliable
Further growth in the future

AMS Group
13AMS Life Science Co., Ltd.

3. Trend of dietary supplement
market and industry

14
AMS Life Science Co., Ltd.

Market overview in dietary supplement
EuropeU.S.A.

Japan

1.7 trillion yen (NBJ), 4 trillion
yen including nutritionsupplements (2003)

2.5 trillion yen (NBJ), 5 trillion
yen including nutrition
supplements (2004)

1.29 trillion yen, 2 trillion yen
including nutrition supplements(2005)

Market is growing.
Strong demand in the market

Market is growing
Burgeoning medical expenses
has intensified the public’s
interest in the management of thehealthMarket is growing

Herbs

Vitamins

Overall(nutritional fortification, Diet、immunity ）Nutrition supplements（Capsules, tablets）

Nutrition supplement（Capsules, tablets）

Nutrition supplement（Capsules, tablets）

Marketenvironment

Aging society

Aging society

Aging society

Sales method

Drug stores, organic stores, etc.

Grocery stores, organic store, etc.

Mail order, drug stores, etc.

Market Size

Marketoverview

Mainproduct※ NBJ = Nutrition Business Journal
15AMS Life Science Co., Ltd.

Dietary Supplements-----Health-promoting foods----Medical Supply(Includingquasi-drugs)

Specified HealthFoods

Nutrition
Functional Foods(Specificity approval)(Standard)

General Foods（Including “healthfoods”）

・ Specified Health Foods・・・ Foods that specifically indicate their expected function
・ Nutrition Functional Foods・・・Foods that indicate specific nutritional ingredientsand that follow standards established by Japanese Health Minister. E.g. foods
contain vitamins
・”Health foods” include tablets, capsules, traditional health foods and foods used
for alternative treatment
Currently there is not a valid definition for “health foods” except for “Health Promoting Foods”(Health, Labour and Welfare Ministry)
16
AMS Life Science Co., Ltd.

“Health foods” industry in Japan
Niche market
Undeveloped
legal system

Upsurge of small
specialized companies

Ex,
1. Companies that specialize in productmanagement and development (includingraw materials development）
2. Companies that specialize in OEM
3. Companies that specialize in sales/retail

Aging population, decreasing birth rates, metabolic syndrome lifestylePolicies
FoodFood Sanitation
Sanitation Law
Law

PharmaceuticalPharmaceutical law
law

Health-promotion
Health-promotion law
law

Truth-in-advertising
Truth-in-advertising laws
laws

JASJAS law
law

Etc...
Etc...

Growing market

Increase in medical expenses⇒ attention towards preventive medicine.

New entrants from players traditionally outside of the industry
Ex, Major Food producers, major pharmaceutical companies

Increasing concerns for safety and comfort※ JAS = Japanese Agricultural Standard※Currently , no laws and actsmonitor “health foods” in Japan

Clear “winners” and “losers” are emerging within
the dietary supplement industry
17AMS Life Science Co., Ltd.

Industry Trends
Development of Health Foods Market (Not include specified health foods)

Millions of Yen％

50

14,000
1 2,850

Market Size
Growth rate

12,000

1 2,300
1 1,00 0
9 ,8 70

10,00040

1 0,300

8 ,1 00

8,000
5,800

6,000
4,000

30

7 ,5006,200

6 ,500 6,600

6 ,90020

5,00 04,00 0 4,20 0

102,000
0091

92

93

94

9596

97

98

9900

0102

0304（Health, Labour and Welfare Ministry ）AMS Life Science Co., Ltd.

05 年
184. Overview of Interim
FY2006 ended March 31

19AMS Life Science Co., Ltd.

Interim consolidated financial highlights
Fiscal year 2005 ended August 31(Millions of Yen)

Consolidated
Net sales
OperatingincomeOrdinary
incomeOrdinary
income ratio

First half of
FY04

First half of
FY05

First half of
FY06

Rate of inc.
or dec.

1,979

2,550

2,721

106.7%

228

437

351

80.3%

221403

352

87.3%

11.2%

15.8%

13.0%

−20AMS Life Science Co., Ltd.

Interim consolidated net sales(Millions of Yen)

3,000
2,500

2,550

2,721

1,979

2,000
1,500
1,000500
0AMS Life Science Co., Ltd.

2004

2005

2006

InterimInterimInterim21

Interim consolidated ordinary income(Millions of Yen)

450400350
300
250200150
100500403352221

2004

Interim

AMS Life Science Co., Ltd.

2005

Interim

2006

Interim22

Interim non-consolidated financial highlights
Fiscal year 2005 ended August 31(Millions of Yen)
Non-consolidated

Net sales
Operatingincome
Ordinaryincome
Ordinary
income ratio

First half of
FY04

First half of
FY05

First half ofRate of
FY06inc. or dec.

1,544

1,788

2,153120.4%

165327330

100.7%

159298332

111.7%

10.3%

16.7%

15.5%

−23
AMS Life Science Co., Ltd.

Interim non-consolidated net sales(Millions of Yen)

2,500

2,153
1,788

2,000
1,544
1,500
1,000
50002004

Interim

AMS Life Science Co., Ltd.

2005

Interim

2006

Interim24

Interim non-consolidated ordinary income(Millions of Yen)

332

350

298

300
250
200

159

150
1005002004

Interim
AMS Life Science Co., Ltd.

2005

Interim

2006

Interim25

Summary of Interim FY2006 ended March 31① Increase reliability through the listing on JASDAQ on March 3, 2006
② Increase safety and reliability upon achieving GMP certification③ Acquire new clients by introducing brand-new state-of-the-art facilities
Positive factors
Negative factors① Illegal advertisement by a dietary supplement company② Negative press coverage surrounding “forged ingredients” in the dietary
supplement industry
Negative impact on the dietary supplement industry
Enforcement of laws against illegal marketing activities③ Weak sales reported for “co-enzyme Q10” related products④ Weak sales reported for “amino acid, α- lipoic acid, L-carnitine relatedproducts⑤ Delay in utilizing the new plant/facility that was built in August 2005
26
AMS Life Science Co., Ltd.

Amino acid
(Millions α-lipoic acidof Yen) L-carnitine

400Net sales by category in OEM
main products in each category
2005/8Interim results-6.4%

2006/8Interim plan

2006/8Interim results

350
300-3.6%

250

CoQ10
Chlorella

200-6.3%
24.6%
Hyaluronic
Glucosamineacid
Shark cartliage
Collagen150-34.8%
Calcium
Zinc

100

52.6%
62.9%

Vitamin

Maca
Adder-4.6%

MineralNutritionall
supplementation fortification

Immunity

16.7%

Agaricus Lutein
OtherBlueberrymushroom

500DietInternalreform

AMS Life Science Co., Ltd.

BeautificationArthralgia

Asthenopia

Others27

Sales composition by business segment

2005/8InterimAMS

AFCOEM sector

Mail ordersales sector

1,011

1,202
1,202

292
292

47.1%

11.5%

39.6%

2006/8Interim1.8%

8.2% UP 175.0% UP

1.7% UP

5.1% UP

Exportand others
45

wholesalemerchant

1,063
1,063

1,223
1,223

316
316

39.1%

44.9%

11.6%

0500

1,000

1,500

2,000

119

4.3%

2,500

3,000

(Millions of Yen)28
AMS Life Science Co., Ltd.

Changes of net sales (Consolidated)（Millions of Yen）
First halfof fiscal year

Second halfof fiscal yearSum of 1st &2nd half offiscal year

% of 1st half of % of 2nd half offiscal year
fiscal year

FY2003
FY2004
FY2005
FY2006

23th
24th
25th
26th

1,529
1,979
2,550
2,721

1,740
2,357
3,405
-

3,269
4,336
5,955
-

46.8%
45.6%
42.8%
-

53.2%
54.4%
57.2%
-

FY2006

Plan

3,000

4,000

7,000

42.9%

57.1%

29AMS Life Science Co., Ltd.

5. Forecasting the second half ofFY2006 and medium-term
management strategies

30AMS Life Science Co., Ltd.

Strategy for the second half of FY06
（2006/03〜08）

1. Enhance sales activities
2. Strengthen nationwide sales promotions
3. Acquire OEM customers specifically in for thecosmetic business
4. Organize sales campaigns on large lot orders

31
AMS Life Science Co., Ltd.

Sustainable growth strategy（〜2011）

1. Differentiate by producing original raw-materials
By developing and producing raw-materials, it is possible to monopolize orders for products
created by those materials

2. Extend product range
Sugar-coated tablets, hard capsules made by plant materials, soft gel capsules made byfish gelatin, etc.
Large lot of drinks

3. Expand sales branches
Expand into FUKUOKA, the biggest market in western JapanTOKYO

4. Strengthen cost competitiveness via economies of scale
Reduce manufacturing cost by fully utilizing the equipment andresources

SHIZUOKAOSAKAFUKUOKA

5. M＆A
Mergers and acquisition of a mail-order system company, a wholesales company
and/or an OEM maker potentially producing a synergy effect
32
AMS Life Science Co., Ltd.

Strategy for the second half of FY06

（2006/03〜08）

Raising recognition through various channels
Feature a prominent actor and popular comedian for advertisement to raise
recognition of AFC’s brand image

Expected Effect
Increase effectiveness through advertising by placing ads in national newspapers,
broadcasting TV commercials and sending direct mail repeatedly
Generate sales through existing customers and revitalize sales among inactive
customers through direct mail and/or phone sales

Practical Contents
・TV commercials
・Radio commercials

Launch in large quantities. Focus on certain areas intensively
The first real test of radio commercials through a local radiostation
・Newspaper advertisements Appear in national and sports newspapers frequently
・Leaflets in newspapers
New medium in its testing stage
33

AMS Life Science Co., Ltd.

Sustainable growth strategy（〜2011）

1. Acquire 1 million active customers andachieve annual sales of 10 billion yen
Currently, there are 970,000 members of which 350,000 members are active
customers
We anticipate an increase of 100,000-200,000 new customers each year

2. Sales promotion through “Kenko TV”
Develop various of sales methods through the television media such as shopping
channels, health information programs, internet and/or other mass media inreplacement of paper based media

3. Advertise aggressively

34
AMS Life Science Co., Ltd.

Strategy for the second half of FY06
（2006/03〜08）
1. Formulation Study
・Develop high contented and high concentrated formulation process・Formulation study for ultra fine grinding technology
・Study of micromeritics and hydrodynamic analytic methods

2. Production development
・Develop new products for medical institutions (Sales promotion)（Research and development for specified health foods）
・Inform concept of new product concepts
・Research new raw materials and develop merchandising strategies
・Develop products utilizing ultra fine grinding technology

3. Scientific testing・Examine the effectiveness of our products “Touka”(Anti-aging, Suppression of elevated blood-sugar levels)(Research presentation at the Pharmaceutical Society of Japan, March 2006)
・File a patent application for “Touka”
35
AMS Life Science Co., Ltd.

Sustainable growth strategy （〜2011）“Research and application of new technologies”“Cooperation and support to enhance sales promotion”

1. Formulation Study
・Develop high contented and high concentrated formulation process・Formulation study for ultra fine grinding technology
・Study of micromeritics and hydrodynamic analytic methods

2. Production development
・Develop new products for medical institutions (Sales promotion)（Research and development for specified health foods）
・Inform concept of new product concepts
・Research new raw materials and develop merchandising strategies
・Develop products utilizing ultra fine grinding technology

3. Scientific testing・Examine the effectiveness of products in development（through animal testing）
・Examine the effectiveness and safety of products manufactured through ultra fine grinding
technology (through animal testing)36
AMS Life Science Co., Ltd.

Strategy for the second half of FY06
（2006/03〜08）●Advertising business

Strategic advertising to increase AFC’s sales

・ Manage AFC marketing and planning as the main advertising agent for AMS group
・ Gain know-how and experience in advertising
・ Approaching other clients to expand the business and aiming increasing saling
・ Aim to increase the number of new customers. Barter transaction with other mail-order sellingcompanies●Program production business

Enrich of visual contents.
Respond to multiple digital channels

・Produce programs that include of health information. Produce TV commercials
・Strengthen media promotion through newspaper advertising and direct mail・Strengthen “AFC brand” through sales promotion37
AMS Life Science Co., Ltd.

Sustainable growth strategy（〜2011）

1. Provide extended health information programs and CMs

2. Establish broadcasting network for information distribution
Ex, Internet broadband casting
Acquire BS/CS channel
Acquire cable TV channel

38
AMS Life Science Co., Ltd.