News Release

Yamanouchi Pharmaceutical Co., Ltd.

Yamanouchi Contracts Out All Distribution Functions to Mitsubishi Logistics Corp
- Yamanouchi to Close All Its Own Distribution Centers by 2005 and Mitsubishi Logistics to
Construct New Distribution Centers in Saitama Prefecture and Osaka -

February 5, 2003

Tokyo, February 5, 2003 - Yamanouchi Pharmaceutical Co., Ltd. ("Yamanouchi"; President and CEO: Toichi Takenaka) and Mitsubishi Logistics Corporation ("MLC"; President: Yasuaki Suzuki) announced that Yamanouchi has agreed to contract out to MLC and MLC has agreed to undertake all distribution work related to Yamanouchi's products. Following this agreement, Yamanouchi will close all four of its distribution centers in Japan in a phased manner and complete the transfer of distribution work to MLC by 2005. MLC will open spaces dedicated to Yamanouchi products in its distribution centers in Saitama Prefecture, and Osaka for this purpose.

At present, Yamanouchi operates 4 distribution centers in Sapporo (Hokkaido), Koshigaya (Saitama Prefecture), Ibaraki (Osaka Prefecture), and Kita-Kyushu (Fukuoka Prefecture). These centers enable the company to make overnight delivery of its products to any drug wholesaler and other customers across the country. In recent years, drug wholesalers are operating larger and larger distribution centers in order to increase the efficiency in distribution work through closer inventory management and more advanced distribution systems. This trend has reduced the importance of the four-center system with Yamanouchi delivering goods to about 300 sites at present compared to nearly 700 three years ago. In addition, specialized distribution companies such as MLC have greatly improved their drug distribution services in recent years constructing special warehouses for drugs and initiating special delivery services for drugs and making it possible for drug companies to consider outsourcing.

Yamanouchi decided to fully contract out its distribution work to MLC in response to such changes in order to further reduce its distribution costs and flexibly deal with changes in the number and volume of products to be distributed in the future. Yamanouchi expects that the outsourcing will result in a saving of aboutYen1 billion per year. On the strength of this deal with Yamanouchi, which is one of the leading drug companies in Japan, MLC wants to further strengthen its approach to drug companies in Japan and expand its drug distribution business.

MLC operates more than 20 drug distribution centers across the country and offers a great variety of services required by individual customers, including not only storage and shipping services but also joint delivery and order processing services on a contractual basis. The new distribution centers in western Japan (Osaka) and eastern Japan (Saitama) will become operational in January 2004 and 2005, respectively. In Osaka, MLC will start constructing Sakurajima Distribution Center No. 2 within its Sakurajima Business Site in Konohana-ku in February 2003 with a total floor area of 16,200m2, of which about 10,000m2 will be reserved for Yamanouchi. In Saitama, about 15,000m2 will be reserved for Yamanouchi at a new center which is under construction. Both centers will offer a clean environment and an advanced security system that meet the requirements of the Pharmaceutical Affairs Law. They are located near a junction linked to a major highway and are convenient for the receipt and shipment of goods.

MLC will provide all distribution services to Yamanouchi's supervising pharmacists. It will promote automation using its proprietary information systems and various devices and equipment linked to these systems.


[Company Profile]

Yamanouchi Pharmaceutical Co., Ltd.
Established in: April, 1923
Headquarters: 3-11, Nihonbashi-Honcho 2-chome, Chuo-ku, Tokyo 103-8411, Japan
Representative: Toichi Takenaka, President and CEO
Consolidated sales: aboutYen480 billion (in the fiscal year ending March 2002)
Number of employees
(on a consolidated basis):
about 8,900 (as of September 30, 2002)
Businesses: manufacturing, marketing, import, export, etc. of drugs, quasi-drugs, foods, and medical devices

Mitsubishi Logistics Corporation
Established in: April, 1887
Headquarters: Nihonbashi, 1-19-1, Chuo-ku, Tokyo 103-0027, Japan
Representative: Yasuaki Suzuki, President
Consolidated sales: aboutYen152 billion (in the fiscal year ending March 2002)
Number of employees
(on a consolidated basis):
about 2,790 (as of March 31, 2002)
Businesses: warehousing and distribution, land transportation, harbor transportation, international transportation, and real estate