REVIEW OF PRODUCTS AND OPERATIONS

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1 REVIEW OF PRODUCTS AND OPERATIONS Sales by product in this fiscal term (Total Sales: 145,302 million) Onon & Onon Dry Syrup : 33,599 million Opalmon Tablets : 28,330 million Kinedak Tablets : 22,934 million Foipan Tablets : 16,306 million Prostandin & Prostandin 500 : 10,349 million FOY & FOY 500 : 7,935 million Cataclot : 7,933 million Elaspol : 4,828 million Onoact : 406 million Diagnostic products : 570 million Others : 12,112 million 12

2 Sales of Major Products in FY2004 (April March 2005) The company s efforts in disseminating scientific information on major products at hosting workshops and lecture meetings resulted in the sales of billion for this fiscal year, a 5.9 billion (4.2%) increase from the previous year. For example, sales of Opalmon Tablets, peripheral circulation improving agent, for which an additional indication of improvement of subjective symptoms (pain and numbness of lower legs) and gait ability associated with acquired lumbar spinal canal stenosis was approved in April 2001, grew by 4.8 billion (20.8%) from the previous year to 28.3 billion. Onon Dry Syrup, indicated for the treatment of (pediatric) bronchial asthma, achieved sales of 8.3 billion, a 1.7 billion (26.0%) increase from the previous year, continuing the large growth from the previous year. Sales of Elaspol for Injection, the world s first drug for treating acute lung injury associated with systemic inflammatory response syndrome launched in June 2002, grew by 1.3 billion (37.4%) from the previous year to 4.8 billion, showing that the market is nurtured satisfactorily. Sales of Onon Capsules, used for treating bronchial asthma and allergic rhinitis, grew in the allergic rhinitis area, reaching 25.2 billion, a 2.1 billion (9.1%) increase from the previous year. As for other major products, sales of Cataclot for Injection, for the treatment of acute-phase cerebral thrombosis, were affected by generic competition and dropped by 1.4 billion (15.4%) from the previous year to 7.9 billion, but sales of Kinedak Tablets, for the treatment of diabetic peripheral neuropathy, ended the year almost as planned. Global strategy Towards realization of simultaneous global development Along with the progression of international harmonization, Ono has been carrying out research collaboration and joint development with overseas research institutions for many years. To further actively promote new drug development with an international scope, we will cooperate with research institutions, bioventures, and pharmaceutical companies that have superior technologies in their fields of expertise, and conduct R&D in new areas. Through reinforcing its overseas R&D network, mainly in the three major markets (i.e. Japan, USA, Europe), Ono will expand its research on highly original new drugs and aim at becoming a truly global company that measures up to world standards. Conduct of clinical studies on compounds through subsidiary bases in the US and UK In 1998, we established Ono Pharma USA, Inc. in New Jersey and Ono Pharma UK Ltd in London as bases for our overseas operations. At present, these overseas subsidiaries are now in a better position to carry out clinical studies on compounds under development more efficiently and speedily, while conforming to global standards. In order to overcome international 13

3 competition, speed and quality of data are required in developing new drugs. Ono regards obtaining approval in the US as its first priority, and has carried out clinical studies with this in mind. Results from these clinical studies are utilized for approval application in Japan and also for more efficient overseas out-licensing activities. Actively collaborate with highly unique bioventures that pursue expertise Ono has carried out research collaboration and joint development with competent researchers and research institutions in and outside Japan to expand areas of new drug development. Ono will further actively promote the globalization of its R&D in order to expeditiously develop new drugs with higher efficacy. Alliance with leading pharmaceutical companies overseas Proglia for Injection (Ono s development code: ONO-2506) under development for the treatment of acute phase cerebral ischemic stroke was out-licensed to Merck & Co., Inc. in November We granted the company worldwide development and marketing rights to Proglia for Injection excluding Japan, Korea, and Taiwan. Schering-Plough Corporation (USA) Merck & Co., Inc. (USA) Ono Pharma USA, Inc. (USA) 14

4 In connection with the license for Proglia, we in-licensed MK-0431 (Ono s development code: ONO-5435), for the treatment of type 2 diabetes, and MK-0869 (Ono s development code: ONO-7436), an antiemetic agent to be used during cancer chemotherapy. Merck s antidiabetic agent will be codeveloped with Banyu Pharmaceuticals in Japan, and the antiemetic agent will be developed by Ono alone. The anti-hiv/aids drug (oral CCR5 receptor antagonist) with a totally new action mechanism discovered by Ono and out-licensed to GlaxoSmithKline (GSK) at the end of 2002 is currently undergoing global development by GSK. According to GSK, if development continues to go well, NDA filing is expected to be in In addition, the leukotriene receptor antagonist, pranlukast (Onon Capsules for treatment of allergic rhinitis and Onon Dry Syrup for treatment of bronchial asthma) already marketed in Japan was outlicensed to Schering-Plough in November 2000 and is currently being marketed in Central and South American countries by the company. Ono Pharma UK Ltd (UK) GlaxoSmithKline (UK) R&D partners Ono s subsidiaries 15

5 Protecting the Environment As awareness of environmental problems grows throughout the world, protection of the environment and limited natural resources has become not only the clear responsibility but also a social mission of every company doing business. As part of our company-wide efforts to make environmental protection a top priority, Ono established an Environmental Management Office in July, 1998 and formulated an Environmental Selfregulating Action Plan. Certification of compliance with ISO environmental management standards has been obtained for both the Fujiyama Plant (November 2002) and the Joto Plant (February 2004). We remain committed to maintaining our Environmental Guidelines We recognize that our company has a social responsibility regarding the environment, and we will work to protect and preserve the global environment in all of our business operations. In addition to fully complying with all environment-related laws and regulations, we will establish targets and action plans in a continuous effort to protect and preserve the environment and natural resources. In all of our business operations we will promote resource conservation, energy conservation and recycling, and will implement environment-focused measures such as reducing waste and preventing pollution. We will endeavor to produce eco-friendly products and will cooperate with society. With the participation of every employee, we will strive to further understand environmental issues and to promote environment-related activities. environmental management system and engaging in environmental protection throughout our operations. Ono Medical Research Foundation To commemorate the 40th anniversary of Ono s incorporation, the Ono Medical Research Foundation was established in 1988 to contribute to the further advancement of medical science. In addition to providing support for research in the field of lipid metabolism disorders, which are considered closely linked to lifestyle-related illnesses such as arteriosclerosis, diabetes, cardiac infarction, hepatic disease and renal disease, the Ono Medical Research Foundation is also pursuing a variety of related activities. The Foundation continues to support highly motivated scholars by offering research grants to scholars of any age ( 2 million per researcher) and research subsidies to scholars under 40 years of age ( 1 million per researcher). The 16th Ono Medical Research Forum was held in Osaka, in June

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