Top Japanese generic manufacturer

Nichi-Iko Pharmaceutical Co., Ltd.

December 2012

Nichi-Iko Profile 1

Name: Nichi-Iko Pharmaceutical Co., Ltd.

Establishment: July 15, 1965

Main Activities:

R&D, manufacturing, sales & marketing of ethical drugs

Head quarters: Toyama and Tokyo (Double HQ system)

Branches: Sapporo, Sendai, Kanto, Tokyo 1st & 2nd ,

Nagoya, Osaka, Hiroshima and Fukuoka (Total 9)

Production Sites: 6 manufacturing sites in Japan

Subsidiary Company:

Yakuhan Pharmaceutical Co., Ltd. (consolidated in March 2012)

Stocks: Tokyo Stock Exchange, 1st section.

As of December 2012

Nichi-Iko Profile 2

No.1 Generic company in Japan

Sales: USD 972 million* (year end Nov 2011)

USD 804 million (2010)

Capital: USD 169 million* (* 1USD = 80 JPY)

Employees: 824

Number of Products: 928 items as of Dec 14th 2012

・Generics:72%

Oral:573(GE443)

Injectables:171(GE132)

Value added and Externals:180(GE119)

・Others: 28%

Off-patent original drugs, Original drugs and JP list products

Key Figures as of Nov 30th 2011

Nichi-Iko Origin & History 1

1965 Dr. Shiro Tamura established Nichi-Iko Pharmaceutical Co,. Ltd.

1970 Namerikawa Plant was built in Toyama.

1980 Nichi-Iko was listed on the Nagoya Stock Exchange, 2nd section.

1981 Nichi-Iko was listed on the Osaka Stock Exchange,2nd section.

1987 “*1Sedapain Inj. :Eptazocine HCL” was approved by Japanese Authority.

1994 “*2Unicon SR Tab. : Theophyline” was approved by Japanese Authority.

*1 Non-Narcotics and analgestic Inj. *2 Anti-Asthma and COPD SR Tab.

Sedapain Unicon

Tab 100

Unicon

Tab 200

Unicon

Tab 400

Nichi-Iko Origin & History 2

2000 Dr. Yuichi Tamura was appointed as President and CEO.

2001 The approval of long-listed drugs both *3Ferrum Cap. ” and

*4Pengood Tab. / Gran.” was transferred from Tanabe-Mitubishi.

2003 The approval of long-listed drug *5FESIN ” was transferred form

Tanabe-Mitubishi.

*3 Iron Sustained released Cap. *4 synthetic penicillin Tab. / Cap. *5 Iron IV Inj.

Ferrum Pengood Fesin

Nichi-Iko Origin & History 3

2005 Nichi-Iko merged Nihon Galen.

2005 Nichi-Iko acquired Maruko Pharm. and Oriental Pharm.

2006 Pharmaceutical Development Center was built in Toyama.

2006 Nichi-Iko was promoted to 1st section in both Nagoya and Osaka Stock Exchange.

2008 Nichi-Iko acquired Teikoku Medix.

2009 Maruko Pharm, Oriental Pharm, and Teikoku Medix were consolidated

and became Nichi-Iko Pharma Factory Co., Ltd.

2009 Active Pharma Co., Ltd., a manufacturer of APIs for generics

was established as a joint venture company with Mitani Sangyo.

Nichi-Iko Origin & History 4

2010 Remodeled Manufacturing plant “Pentagon” started its full operation.

2010 Joint venture company Sanofi Aventis – Nichi-Iko Co., Ltd. was established.

2010 Partnership with DKSH Group for distribution service in Thailand,

Malaysia and Hong Kong.

2010 Nichi-Iko concluded a Capital and Business Alliance with Aprogen Inc.(Korea)

2010 Nichi-Iko was listed on the Tokyo Stock Exchange, 1st section.

2011 Nichi-Iko Medical Practice Institute was established.

2011 R&D, QC management center “Honeycomb” completed.

2011 Co-promotion started with Sanofi Aventis.

Nichi-Iko Origin & History 5

2012 Biosimilar Co-development starts with Sanofi Aventis.

2012 Nichi-Iko announced the 6th medium term business plan “Pyramid”

2012 Nichi-Iko acquired Yakuhan Pharmaceutical Co.,Ltd.

2012 Nichi-Iko merged Nichi-Iko Pharma Co.,Ltd.

2012 Tokyo head quarter newly established to apply 2 head quarter system

2012 Namerikawa Plant 1 & 2 renamed Toyama Plant 1 & 2

The Pyramid Plan

Nichi-Iko Philosophy

Mission Statement

Nichi-Iko heads straight toward its goal, with the two wings catching

the wind. The two wings are the symbol of our company culture.

Company logo

Nichi-Iko Office, plant, Lab and Distribution Centers

Head Quarters: 2

Branch offices: 9

Production sites: 6

Laboratory:1

Distribution centers:3

Toyama

Tokyo

Toyama

Namerikawa

Tokyo- Toyama : 1 hour flight

As of December 2012

Nichi-Iko Organization

Board of Auditors

General meeting of Shareholders

Board of Directors

President & CEO

Quality Assurance

Pharmacovigilance

Regulatory Affairs

Division

Sales

and

Marketing

Division

Corporate

Finance

and

Management

Division

Development

and Business

Planning

Division

Production

Division

Internal Audit Corporate Planning

As of December 2012

GE drug market overview in Japan

781.3848.6

926.61,000.9

0.0

300.0

600.0

900.0

1,200.0

FY3/13 FY3/14 FY3/15 FY3/16

(¥ billion)Generic Market

(Nichi-Iko Estimates)

24.8%26.3%

28.3%30.0%

9.4% 10.0% 10.7% 11.3%

0.0%

10.0%

20.0%

30.0%

40.0%

FY3/13 FY3/14 FY3/15 FY3/16

Generic Share of Volume and Value (Nichi-Iko Estimates)

GE Volume Share GE Value Share

14.2% 14.6% 14.9%15.5%

0.0%

5.0%

10.0%

15.0%

20.0%

FY3/13 FY3/14 FY3/15 FY3/16

Nichi-Iko's Share* of Generic Market Value (Plan) *Based on Nichii-Iko sales converted by drug price

GE drug share in comparison to the world

Market Share of Generic Drugs in Japan is 23% in September 2011.

Market size is approximately 800 billion yen.

Government Goal is up to 30% by March 2013.

Market size us approzimately1000 billion yen.

Nichi-Iko Sales performance

143 156 183 221 229

304 366

404

536

685

804

972

1156

00

200

400

600

800

1000

1200

1400

1600

1800

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15

Sto

ck p

rice

(USD

)

Sa

les (

US

D m

illio

n)

year Pyramid

1USD=80JPY

1288

1438

1625

－13－

Nichi-Iko The 6th medium term business plan

Our Vision is…

to become one of the top 10 generic pharmaceutical companies in the world by 2016.

4 key strategies

• Brand : building Nichi-Iko brand

• User : being on the customer’s side

• Cost : focusing on cost reduction

• Differentiation : meeting customer’s needs

Why named “Pyramid”?

Pyramid is robust, stable and solid. It expresses our strong will to achieve our goal through 4 key strategies.

We achieve our goal through...

Sales : USD 1.625 billion

Capital expenditure : USD 268 million

R&D expenditure : USD 280 million ($1=¥80)

Namerikawa Distribution Center

Toyama

East Japan Distribution Center

Saitama

West Japan Distribution Center

Hyogo

Aichi Plant

Nichi-Iko Distribution details

Yamagata Plant

East

40%

Central

32%

West

28%

<No. of Clients>

Hospitals

Including DPC

10,061/ 10,288

Coverage:97.7%

Clinics

63,604/ 103,419

Coverage:61.5%

Pharmacies

50,848/ 54,584

Coverage:93.2%

Others

9,676/ 79,169

Coverage: 12.2%

Total

134,189/247,460

Coverage: 54.2%

Nationwide

Wholesalers

80%

Agent sales 12%

Direct sales 1%

Others 7%

Toyama Plant 1&2

Yakuhan

Pharmaceutical.co.,Ltd.

Saitama Plant

Nichi-Iko Sales by Medical Institution

Sales

Composition

No. of

Clients

Sales

Composition

No. of

Clients Ratio

Sales

Growth

No. of

Clients

247,460 100% 130,477 100% 134,189 54.2% 127.0% 102.8%

Hospitals 8,643 19% 8,471 19.4% 8,444 97.7% 129.9% 99.7%

DPC Hospitals 1,504 10.1% 1,485 10.8% 1,479 98.3% 135.1% 99.6%

Hospitals under

DPC Preparation141 0.2% 137 0.2% 138 97.9% 138.9% 100.7%

Clinic 103,419 17.8% 64,419 15.3% 63,604 61.5% 109.0% 98.7%

Pharmacy 54,584 46.4% 50,622 47.6% 50,848 93.2% 130.1% 100.4%

Others 79,169 6.4% 5,343 6.7% 9,676 12.2% 132.1% 181.1%

July 2010 to June 2011

Type of

Institution

Total No. of

Institutions

in Japan

YOY RateJuly 2011 to June 2012

Nichi-Iko Comprehensive developing / manufacturing system

Active Pharma. Nichi-Iko Shareholding ; 49%

June 2009

July 2009

100% Subsidized

Dec 2009

Transferred from NIK

Sept 2011

Constructed

Jan 2010

Remodeled

Sagami Kasei Chemical

Industry Co., Ltd.

Machida Plant (Tokyo)

Toyama Plant (Toyama) Global R&D/ QA center

“Honeycomb” (Toyama)

Toyama Plant 1

“Pentagon” (Toyama)

Direct control over whole pharmaceutical process;

R&D and production from API to final products

Quality Policy under the name of President& CEO

Quality management system

Nichi-Iko Toyama Plant 1 (tablet /capsule) & Plant 2 (powder/granule)

Pentagon Building : Flagship production sites

Full operation restarted in April 2010.

Floor space: 15,000 m2

Capacity & Number of items:

- Tablets: 3.3 billion Tabs/ year, 170 items

- Capsules: 0.2 billion Caps/ year, 23 items

- Powder & Granules: 87t /year, 32 items

Plant 1

Plant 2

Toyama Plant 1 for tablet & capsule

Toyama Plant 2 for powder & granule

Nichi-Iko Toyama R&D and QC laboratory

Facilitated for tests of high potency

products (Biosimilar.)

Newly constructed with 25 million USD

investment as one of the 5th medium term

business plan “Honeycomb”.

Full operation started in Oct. 2011.

Floor space: 10,600m2 Namerikawa, Toyama

Honeycomb Building Flagship facility for R&D , QC test and administration activity

Honeycomb

Oct 2011

Pentagon

Feb 2010

Pyramid

Feb 2013

Nichi-Iko Toyama New Plant

Pyramid Building operation will start in Feb 2013

Capacity : 2-3 billion tablets / year

Purpose 1 : to prepare for mass production to achieve $1.625 billion sales by 2016

Purpose 2 : to maintain sustainable supply by self manufacturing

Purpose 3 : to reduce cost

Nichi-Iko Aichi Factory

Nichi-Iko Aichi Plant

Dedicated production site for injectable products

Operation of 2 lines equipped with high speed ampoule filling machines

started in Nov. 2008. Capacity: 77million ampoules / year

Operation of 3 lyophilization production lines will be carried out in June 2013.

Capacity: 4 million bottles / year

Purpose: to maintain sustainable supply by self manufacturing

Aichi

Nichi-Iko Saitama,Yamagata plants and Yakuhan Pharmaceutical Co.,Ltd.

Nichi-Iko Saitama Plant

Oral jelly:

•Aciclovir

• Cilostazol

•Granisetron HCL

Dedicated production site for unique dosage forms

( Divided Liquid, Oral Jelly medicines, external products etc )

Omiya, Saitama

Nichi-Iko Yamagata Plant & Yakuhan Pharmaceutical Co.,Ltd

Dedicated production site for JP listed external products. Antiseptic Liquids, JP listed products etc

Yakuhan Pharmaceutical Co., Ltd Tendo, Yamagata

Nichi-Iko Distribution Centers

1. Namerikawa Distribution Center located near the flagship production sites.

Full automated pallets warehouse.

Floor space: 3,330 m2

Storage area: 1,400 m2 (cold storage185 m2)

Truck yard: 4

Capacity & Number of products:

-Storage: 1,700 pallets, more than 1,000 items

-Maximum dispatch: 8,000 / day

Namerikawa, Toyama

2. West Japan DC in Hyogo

3. East Japan DC in Saitama

4. Toyama DC,Hitachi Transportation System Ltd. (Contract DC)

Nichi-Iko A quick overview of Global Expansion

1. Asia Expansion Project

Submission

Thailand 1 product in 2013

8 products in 2014

Malaysia

1 product in 2011

2 products in 2012

4 products in 2013

Hong Kong 3 Products in 2011

2 Products in 2012

Full agency agreements with DKSH Hong Kong, DKSH Malaysia and

DKLL Thailand was signed off in July 2010.

Registration is on going. Product launch is scheduled as below.

Comprehensive business alliance with DKSH for distribution,

sales and marketing in South East Asia

2. USA Export Project

雪の大谷

Nichi-Iko A picture of Toyama

Thank you!

Deep valley of snow