Wednesday, July 31, 2013 from 6:00pm to 6:45pm[Attendees]
Ken-kichi Kosakai, Board Director and Managing Executive Officer, CorporateManagement
Masayuki Mitsuka, Board Director and Managing Executive Officer, Division Manager ofDevelopment Division
Seiichi Murakami, Managing Executive Officer, Corporate Strategy, Global ProductStrategy Department, Business Development & Licensing Department
Tetsuo Yoshikawa, Executive Officer, Division Deputy Manager of Sales & Marketing
Division[Q1 FY2013 financial results]
Overall earnings
Q. Why was the sales cost ratio in Q1 (41.9%) roughly 2 points higher than yourestimate for 1H (39.0%)? Also, will the sales cost ratio remain higher than expected
due to special factors? Or was this only specific to Q1 and will it drop for 1H overall?
A. Our 1H sales cost ratio estimate factors in a revision to the purchasing price forRemicade. The sales cost ratio in Q1 was higher than we anticipated as there was
not price revision. There was also impact from foreign exchange rates and sales ofvaccines with a high sales cost ratio. However, we expected our sales cost ratio in
1H to be within our expectation.
Invokana (TA-7284, licensed out to Janssen Pharmaceuticals)
Q. Invokana sales appear to be off to a solid start in the US but what is your analysis?
Although impact in the short term might be unlikely, do you envisage royalty income
outperforming your estimates further out?
A. From what Janssen has explained to us, the number of prescriptions issued by
specialists is already in the lead, surpassing that for other DPP-4 inhibitors. Although
we anticipated brisk demand, we view this as a very good start.
Q. When do you plan to post royalties on these sales?
A. Based on our contract, we will receive a royalty payment within 60 days after the endof each quarter. In other words, we expect to post royalties in Q2 for the sales inApril-June 2013.

1

Remicade supply price arbitration
Q. When do you plan to factor this into your results? Do you plan to revise your earnings
forecast?
A. At present, we are awaiting a final award. We believe we will be able to announce theoutcome of the arbitration in Q2 at the latest. We will revise our earnings forecasts
depending on the impact from the final award.
Tenelia
Q. What were sales of Tenelia in Q1? Around ¥200 million or ¥300 million?
A. In FY2013, the sales have been positive, although below ¥200 million or ¥300 million.
We forecast the sales should increase as a ban on the long-term prescription will belifted in September.
Q. Are you sticking with your full-year sales plan (¥3.5 billion)?
A. We are not changing our sales plan.
Radicut
Q. Although your sales are down, they are basically in line with your plan. Is this atemporary issue?
A. The decline in sales is not a one-off factor. Recently, the generic erosion rate has
increased to nearly 40% and we believe this is likely to rise moving forward.
However, the progress of Radicut sales on 1H forecast is within our expectaion.
[Development pipeline]
Gilenya (multiple sclerosis)
Q. Novartis recently reported that patients that were not given Tysabri developed
progressive multifocal leukoencephalopathy (PML). Are there similar reports ofpatients developing PML in Japan?
A. This is the first incidence, out of 71,000 cases, in which a patient, with no history ofbeing administered Tysabri, developed PML. We are exchanging information withNovartis regarding this case but based on MRI tests, this is an atypical finding. We
understand Novartis is accumulating data to ascertain whether this was actually due
to the administration of Gilenya.
INVOKANA (TA-7284) (Type 2 diabetes)
Q. Is there any indication that academic societies will revise the treatment guidelines,
mainly in the US at some point?
2A. We have not heard any talk of changes to treatment guidelines. We have heard
Janssen Pharmaceuticals focuses on the positioning of INVOKANA in medical
expenses reimbursements. Janssen Pharmaceuticals purses the strategy ofcombination therapy with INVOKANA and Metformin, which is a first-line drug in theUS, and is doing its best to allocate this combination therapy to the second tier in
reimbursement list. We believe that demand for the drug is will grow further, if it ispositioned as a second-tier drug like other DPP-4 inhibitors.
TA-1790 (erectile dysfunction, licensed out to VIVUS)
Q. TA-1790 has been approved in the US and Europe. How is the situation toward startof the sales?
A. In Europe, VIVUS has announced that it decided a partnership with Menarini. Thisagreement covers 40 countries in Europe, as well as Australia and New Zealand. In
the US, VIVUS has fortified its management structure so we expect it to pour its
energies into finding a sales partner.
[The acquisition of Medicago]
Q. Is it your strategy to expand your vaccine business overseas?
A. We have been trying to expand our overseas business with low-molecularcompounds so far, and will continue to. We view the acquisition of Medicago as anopportunity to expand our overseas business with other than low-molecularcompounds.
Q. What sequence of events led you to acquire Medicago with Philip MorrisInternational?
A. Prior to this, Philip Morris had already been an investor in Medicago, with which it
shared technologies. Philip Morris plans to maintain its collaboration with Medicago
so we decided to manage Medicago together.
Q. Do you retain the rights to buyout Philip Morris International’s shareholdings inMedicago?
A. We and Philip Morris are examining the exit but the details are undisclosed.
Q. What impact will the acquisition of Medicago have to your balance sheet and are
there other accounting issues? Do you plan to revise your earnings forecast forFY2013?
A. We will analyze the impact of this acquisition on our consolidated financial results,
and also if it is goodwill or in-process R&D. It takes roughly two months and as aresult, if need be, we will revise the forecasts.
3