Otsuka Holdings Co., Ltd. First Medium-Term Management Plan for - PowerPoint PPT Presentation

Otsuka Holdings Co., Ltd. First Medium-Term Management Plan for Fiscal 2011 to Fiscal 2013 May 16, 2011 Tatsuo Higuchi President and Representative Director, CEO Otsuka Holdings Co., Ltd.

Disclaimer  This material contains forward-looking statements regarding the financial conditions, results of operations and business activities of Otsuka and its subsidiaries (collectively the “Otsuka Group"). All forward-looking statements, due to their inherent nature, will be influenced by future events and developments for which the occurrence is uncertain, and therefore involve risks and uncertainties. Otsuka cautions you in advance that actual financial conditions, results of operations and business activities could differ materially from those discussed in the forward-looking statements.  Otsuka disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, further events, or otherwise.  Further, this material contains statements and information regarding corporate entities other than those belonging to the Otsuka Group, which have been compiled from various publically-available sources. Otsuka has not verified any of such statements or information and does not provide any guarantees with regard to their accuracy and relevance.  The IMS Health, Euromonitor and other reports described herein (the “Reports”) represent data, research opinions or viewpoints published as part of a syndicated subscription service and are not representations of fact. The Reports speak as of their original publication dates (and not as of the date of this material), and the opinions expressed in the Reports are subject to change without notice.  This material contains information on pharmaceuticals (including compounds under development), but this information is not intended to make any representations or advertisements regarding the efficacy or effectiveness of these preparations nor provide medical advice of any kinds. 1

The Otsuka Group’s Corporate Philosophy A Global Healthcare Company  Pharmaceutical business: Focusing on addressing unmet medical needs  Nutraceutical* business: Functional beverages and foods Creating our own unique and innovative products Corporate Philosophy Developing a Building new truly global category business markets * Nutraceuticals = Nutrition + Pharmaceuticals 2

Growth Underpinned by a Diverse Business Portfolio International business Foundation phase Growth phase Expansion phase development phase 2002 Sales Launched Nutraceuticals, Consumer Products 1980 1984 1990 2010 ABILIFY Pharmaceuticals Publicly listed Launched Launched Launched the Company’s Mikelan, Meptin UFT Mucosta shares 2009 Acquired Nutrition 1946 1988 1999 & Santé SAS Entered the Launched Launched pharmaceutical business (I.V. solutions) Pletaal /Pletal TS-1 2008 Established Otsuka Holdings Co., Ltd. 1989 1953 1965 1980 1983 2006 Acquired Launched Launched Launched Launched Launched SOYJOY Pharmavite Oronine Oronamin-C Pocari Sweat Calorie Mate Ointment LLC 1968 Launched Bon Curry 1981 Established China 1998 1964 Otsuka Pharmaceutical Co., Ltd. Established Otsuka Established Otsuka Pharmaceutical Europe Pharmaceutical Co., Ltd. 1977 Ltd. 1982 1988 1993 Established Established JE-IL Established Otsuka Established Guangdong 1963 Arab Otsuka Otsuka Pharmaceutical Pakistan Ltd. Otsuka Pharmaceutical 1955 Entered the oncology field Pharmaceutical S.A.E. Co., Ltd . Co., Ltd. Established Taiho Established Otsuka Pharmaceutical Co., Ltd. Foods Co., Ltd. 1974 Established P.T. Otsuka Indonesia 1950 Established Taiwan Otsuka Established Otsuka Pharmaceutical Co., Ltd. Chemical Co., Ltd. 1921 1973 Commenced chemical raw Undertook overseas material activities at business development Otsuka Seiyaku Kogyo-bu activities in the U.S., and Thailand 1921 1930 1940 1950 1965 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 3 Source: In-house data

The Otsuka Group’s Business Model Developing businesses that encompass every healthcare theme as a global healthcare company that pursues the excellence in manufacturing Pharmaceutical business Nutraceutical business From diagnosis to treatment of Maintain and improve daily health diseases and well-being • ABILIFY driving earnings growth • Create unique and innovative products • A leading company in the I.V. solutions and • Build new market categories oncology fields • Establish powerful brand equity • Taking on the challenge of exploring new fields in drug discovery to address unmet medical needs High profitability and growth potential Stable revenue platform Contribute to health through the Company’s two mainstay businesses Develop global business of this twin-engine business portfolio • Proprietary production and sales platforms in each key region • A wealth of experience in cultivating markets (I.V. solutions → nutraceuticals → pharmaceuticals) 4

Outline of the Medium-Term Management Plan 1. Performance targets of the first medium-term management plan for FY2011 to FY2013 2. Priority measures to be implemented under the medium-term management plan 1. Provide added-value in the Pharmaceutical business and maximize profits  Secure sustainable growth by maximizing pharmaceutical value  Create unique and innovative new products 2. Expand the Nutraceutical business and increase profit  Growth through the introduction of new products and regional focus  Improve profitability 3. Lay the groundwork for the next medium-term management plan  Foster new businesses  Establish a framework for facilitating reform 4. Engage in activities to maximize corporate value, and secure shareholders’ return  Investment for growth, Alliance strategies, Financial Strategy and Shareholders’ Return Policy 3. Long-term business strategy 5

1. Positioning of the First Medium-Term Management Plan Over the three-year period of the plan, we will complete the establishment of a structure and system to be a world-class global healthcare company which has two mainstay businesses of pharmaceuticals and nutraceuticals Principal Measures Development of innovative proprietary pharmaceuticals Profit structure reform aimed at securing profit growth in the nutraceutical business Next-generation business incubation through strategic alliances and other measures 6

1. Performance Targets of the First Medium-Term Management Plan  Achieve constant profit growth rates of over 15%  Expand forward-looking investment in preparation for the following period of the medium-term management plan FY2010 actual FY2013 plan CAGR (¥ billion) Net sales 1,090.2 1,330.0 6.9% 47% 50% (Ratio of overseas sales to net sales) 164.5 200.0 6.7% R&D expenses vs. net sales 15.1% 15.0% 117.5 200.0 19.4% Operating income vs. net sales 10.8% 15.0% Net income 81.0 130.0 17.1% EPS 162 yen 230 yen 12.4% ROE 7.8% 10% or more Note: Assumptions regarding foreign currency exchange rates: $1 = ¥85; Euro 1 = ¥115 Note: Excluding external growth 7

1. Growth Drivers under the First Medium-Term Management Plan by Business Segment  Contributions to profit growth from each business segment (profitability diversification) Note: Segment operating income is before deducting corporate expenses FY2010 FY2013 Segment Growth drivers actual plan (¥ billion)  Continued ABILIFY growth in North America: profit share increase according to the agreement with Bristol-Myers Squibb (BMS). Net sales 847.0 (FY2010: 42%  FY2013: Approx. 60%) 721.4  Contributions from oncology business collaborations with BMS Operating Pharmaceuticals (Earnings increase of approx. ¥22 billion) income  Domestic sales growth by quality new products that more than cover 2,000 200.0 1,344 134.4 the revenue loss from the NHI price revision of existing products  Secure R&D expenses that underpin steady advances in product development (Increase in expenditure by approx. ¥34 billion) 310.0  Increase the overseas sales ratio to total sales by expanding global- 249.5 scale core brands ( Pocari Sweat , SOYJOY , etc.) (38%  42%)  Focus on brand strategies and customer cultivation while securing Nutraceuticals revenue growth in Japan  Improve the operating income ratio (7.1%  10%) by reducing costs 310 31.0 17.9 179 173.0  Turn low-earning businesses to profits 119.3  Increase sales through growth in existing products ( Crystal Geyser , Consumer and Mannan Hikari , functional chemicals) and contributions from new other products products 8.3 83 23 2.3 8