April 1st, 2005 Astellas Pharma Inc. ("Astellas"), today announced that the Company, headquartered in Tokyo, Japan, was created through the merger of Yamanouchi Pharmaceutical Co., Ltd. ("Yamanouchi") and Fujisawa Pharmaceutical Co., Ltd. ("Fujisawa")

Toichi Takenaka, Ph.D., president and CEO of Astellas, sent his message to all employees of the group, the summary of which is attached for reference.

With ethical drugs as its core business, Astellas is a new force in the world pharmaceutical market. The Company has outstanding R&D and independent marketing ability which has a strong competitive edge in not only the domestic but also global markets. Astellas is committed to aggressively developing business and ensuring sustained increases in the corporate value as a "global pharmaceutical company originated in Japan" which contributes toward improving the health of people around the world through the provision of innovative and reliable pharmaceutical products.


I.Profile of Astellas Pharma Inc.
 

(1) Trade name Astellas Pharma Inc.
(2) Main business Ethical pharmaceuticals 
(3) Headquarters 3-11, Nihonbashi-honcho 2-chome, Chuo-ku, Tokyo, Japan 
(4) Representatives Chairman: Hatsuo Aoki, Ph.D.
President and CEO: Toichi Takenaka, Ph.D. 
(5) Board of Directors and Management Board members: 8 (of whom 2 external)
Auditors: 4 (of whom 2 external)
Corporate officers: 30 (of whom 4 also serve as board members) 
(6) Business bases Japan, North America (USA and Canada), Europe (marketing bases in 18 countries), Asia (South Korea, Taiwan, China, The Philippines, Thailand and Indonesia) 
(7) Number of employees

On a consolidated basis: About 17,000


II.Basic Strategy

Astellas implements the following strategies over the mid-term to realize sustainable improvements in its enterprise value.


1.Realize Stronger Capabilities for Generating New Products

  • Pursue R&D under the policy of selectivity and concentration in specific fields and projects.
  • Build a more advanced R&D organization by integrating and consolidating the two different corporate cultures, and the particular skills and specialties, of Yamanouhci and Fujisawa.
  • Give priority, in research work, to diabetes, infectious diseases, gastrointestinal disorders, and disorders of the central nervous system (CNS), on top of our existing franchises in urology, inflammatory disorders and immunology (transplants). These priorities are pursued in an effort to develop superior new drugs.
     (Note) Franchise areas: Therapeutic areas in which Astellas is already competitive globally in the treatment of diseases, from research to sales
  • Strengthen the global development organization and improve their efficiency.


2.Establish Global Sales Network

  • Japan: Achieve the Number One position in Japan in terms of quantity and quality. With the sales force of 2,500 MRs
     (general MRs and therapeutic area specialists). Astellas will work continuously to optimize the number of MRs over the mid-term, taking into consideration both future product strategies and customer strategies.
  • - North America: Accelerate business operations in the US, the world's largest pharmaceuticals market. Astellas will work hard to achieve sustainable growth in our four business areas (transplants, cardiovascular, infectious diseases, and dermatology), and to also build up a profitable urology business as quickly as possible. In the primary care physician market, Astellas will conduct a market-penetration strategy that suits future progress involving in-house product development, while simultaneously leveraging our business bases in the urologic areas.
  • Europe: Improve its positioning in the European market, where the Company aims to achieve both sustainable growth and better efficiencies as a leader in the fields of urology, immunology (transplants), and dermatology. Astellas has sales bases in 18 countries.
  • Asia: Expand our presence in the growing Asian market, by concentrating the resources on transplants and urology. Astellas will strengthen its sales and marketing system and boost profitability through consolidation of management resources.


3.Realize More Efficient Organizational and Cost Structures

  • Separate clearly the roles and responsibilities of the board of directors and corporate officers, thereby enhancing the speed and transparency of decision-making and strengthening corporate governance.
  • Promote global strategies by group management to boost the overall competitiveness of the group. The Company's basic policy related to overseas group companies is to establish a capital structure that places top priority on cash flow in order to ensure sustained increases in the enterprise value as a group. In North America and Europe, group companies are placed under the aegis of the regional headquarters and by function (R&D, manufacturing, marketing, etc.) in order to ensure efficient operation of the group.
  • Pursue ongoing cost-structure reforms.
     

4.Pursue Strategic Initiatives

  • Introduce products aggressively in both global and local markets in order to further strengthen our product lineup.
  • Pursue strategic business investments backed by a strong financial positioning.


5.Implement a Capital Policy to Boost Enterprise Value

  • Make positive business investments using internal cash.
  • Implement measures that improve shareholder returns while promoting capital efficiency.
     Aim for Dividend-on-Equity (DOE) ratio of 3.5% during the mid-term.
     Expect annual dividends for FY2005 (the first year for Astellas) to be 50 yen.
     Aim to flexibly implement share buy-backs to further increase shareholder returns.


III.Figures for FY2007 in the mid-term business plan

Targets for FY2007 are shown below.

Sales of ethical drugs 1 trillion yen 
Operating Income 250 billion yen 
Operating Margin 25% 

 

  • R&D expenses for sales of ethical drugs are anticipated at around 145 billion yen. This is equivalent to an R&D cost-to-sales ratio of 14.5%