Interim Financial Results FAQ for Mass Communications

Q1. We wish to know about the life cycle management of Olmesartan in Japan.

A1. We develop CS-866AZ in Japan, which is a combination drug with CALBLOCK (calcium antagonist). CALBLOCK is only sold in Japan, so CS-866AZ is also developed only in Japan. In the US and Europe, we develop CS-8663, which is a combination drug with amlodipine, which is also a calcium antagonist.

Q2. We wish to know about the span of the mid-term management plan.

A2. At Daiichi Sankyo Group, we are engaged in a 3-year mid-term management plan. It is a 3-year plan that describes the vision of the company and what kind of company we wish to be in 10 years. This is not only a plan about numerical target, it is a plan that also covers strategy.

Q3. What is the reason for the downward revision on the expectation in July concerning the healthcare business?

A3.One factor for the downward revision is the contract cancellation of LAMISIL. When all products are viewed, there are products that would be a plus and products that would be a minus, however, overall it is a small minus.

Q4.Sales in healthcare have fallen. Do you have strategies for a recovery?

A4. ZEPHARMA will newly launch, for example, "Windom," which is an athelete's foot drug. In addition, a number of projects for new products are moving forward at DAIICHI SANKYO HEALTHCARE and ZEPHARMA.

Q5. When the effect of the 3 months in the US is excluded, we see increased revenue and reduced profit. What are the factors that caused this?

A5.We believe the biggest factor that caused a revenue increase is the growth in Olmesartan, and the biggest factor that caused a profit reduction is the increase in research and development investment.

Q6. We wish to know about plans on staff adequacy.

A6. At present there is a staff of 10,400, however, the organization is designed at 9,000 persons. When retirement, cutback on hiring and such are considered, about 1,000 persons would be subject to correction. Relatedly, the company will announce a system on voluntary retirement and career change support, and will raise voluntary retirement in the middle of December.

Q7. We hear that you will proactively engage in investments overseas. Will you also perform M&A in addition to working on products? If so, in which fields and what level of investment are you considering?

A7. We are considering not only overseas but also acquistion of new compounds. In the US and Europe, new products such as CS-747 and CS-8663 will be launch going forward, however, we are considering whether the sales structure of just our company is better or whether it would be better to expand by M&A.

Q8. With regard to cash and cash equivalents, what is the appropriate amount for Daiichi Sankyo Group?

A8. At present, we require approximately 150~200 billion yen a year as operating funds, and we wish to consider strategic investments and share buyback for funding beyond this figure.

Q9. What action plan do you have for transfer pricing taxation?

A9. This is a very important topic, and we is considering this very carefully.

Q10. How will you manage acquisition risk after lifting of the ban on triangular merger?

A10.Not only limited to lifting of the ban, there always will exist acquisition risks if share value is not adequate. We wish to work on having the value of the company be evaluated justly by the market.

Q11. Do you think that current cash and cash equivalents is adequate, or do you think it is excessive?

A11.We absolutely do not think it is excessive.