2-10, Dosho-machi 3-chome, Chuo-ku, Osaka 541 …...Focusing on Growth TANABE SEIYAKU Annual Report...

Focusing on Growth

TANABE SEIYAKU

Annual Report 2000

Printed in Japan

TANABE SEIYAKU CO., LTD.2-10, Dosho-machi 3-chome, Chuo-ku, Osaka 541-8505, Japan

Financial Highlights

ContentsProfile 1An Interview with the President: 2 Focusing on GrowthPharmaceuticals Marketing 6Principal Ethical Drugs and Market Trends 7Research and Development 9Tanabe’s R&D Pipeline in Japan 10Environmental Conservation Activities 12Review of Fiscal 2000 13Tanabe Group Companies 33Board of Directors 34Corporate Data 35

A N N U A L R E P O R T 2000

Tanabe Seiyaku Co., Ltd. and Consolidated SubsidiariesYears ended March 31, 2000, 1999 and 1998

Thousands ofU.S. dollarsexcept per

Millions of yen except per share amounts share amounts % change

2000 1999 1998 2000 2000/1999

Net sales ¥185,099 ¥190,559 ¥216,553 $1,743,749 –2.9%Gross profit 97,456 98,677 105,001 918,097 –1.2Operating income 20,354 17,478 20,117 191,747 +16.5Income before income taxes 10,022 10,193 18,155 94,414 –1.7Net income 4,069 2,410 7,302 38,332 +68.8

Per share amounts (yen / dollars):Net income ¥16.82 ¥9.96 ¥30.18 $0.16 +68.9%Net income–diluted 15.23 9.96 30.18 0.14 +52.9Cash dividends 7.5 7.5 7.5 0.07 0.0

Shareholders’ equity ¥146,015 ¥141,971 ¥143,136 $1,375,553 +2.8%Total assets 275,891 255,802 263,073 2,599,067 +7.9Long-term debt, less current maturities 42,487 32,296 30,885 400,254 +31.6

Note: U.S. dollar amounts are converted from yen, for convenience only, at the rate of ¥106.15 to US$1, the rate prevailing on March 31, 2000.

‘9696 ‘9797 ‘9898 ‘9999 ‘0000 ‘9696 ‘9797 ‘9898 ‘9999 ‘0000 ‘9696 ‘9797 ‘9898 ‘9999 ‘0000

Net Sales

(Billion ¥)

0

150

50

200

100

250

Net Income

(Billion ¥)

0

2

6

4

8

Shareholders’ Equity

(Billion ¥)

0

30

60

90

120

150

Corporate Data(As of March 31, 2000)

TANABE SEIYAKU CO., LTD.

Headquarters2-10, Dosho-machi 3-chome,Chuo-ku, Osaka 541-8505, JapanTelephone: (06) 6205-5555Facsimile: (06) 6205-5262

International Trade DivisionTelephone: (06) 6205-5484Facsimile: (06) 6222-0470

Tokyo Headquarters26, Sanban-cho,Chiyoda-ku, Tokyo 102-8355, JapanTelephone: (03) 3230-6611Facsimile: (03) 3230-6605

Established1678

IncorporatedDecember 1933

Number of Employees (Parent company only)4,019

Shareholders’ Equity¥146,015 million

Common StockAuthorized: 600,000,000 sharesIssued: 241,927,928 shares

Stock Exchange ListingsTokyo, Osaka, Nagoya,Fukuoka, Sapporo

Domestic BranchesHokkaido, Tohoku, Tokyo I, II, and III, Tokai,Kyoto, Osaka, Chushikoku, Kyushu

PlantsOsaka, Onoda

Research LaboratoriesTokyo• Discovery Research LaboratoryOsaka• Discovery Research Laboratory• Safety Research Laboratory• Product & Technology Development Laboratory

Overseas OfficesU.S. Representative Office401 Hackensack Ave.,10th Floor, Hackensack,New Jersey 07601, U.S.A.Telephone: 1-201-342-6002Facsimile: 1-201-342-6866

London OfficeCP House, 97-107 Uxbridge Road,Ealing, London, W5 5TL, U.K.Telephone: 44-181-566-0356Facsimile: 44-181-566-0376

35T A N A B E S E I Y A K U


Contributing to the Healthand Comfort of People

Around the World...That is Tanabe’s management philosophy. Health care systems around

the world are increasingly being called on to treat diseases that are

more diverse and more complex, and as a result the role played by phar-

maceuticals in modern medicine is growing in importance. In the more

than 320 years since its founding in 1678, Tanabe Seiyaku Co., Ltd., as

one of Japan’s leading pharmaceutical companies, has contributed to

the progress of medical science through the development and market-

ing of a wide range of pharmaceuticals. In the years ahead, Tanabe will

strive to further accelerate its development of innovative drugs and to

expand its presence in domestic and overseas pharmaceutical markets.

Throughout its long history, Tanabe has developed special strengths in a

number of fields, and the Company’s capabilities in cardiovascular system

agents are particularly highly regarded. As Japan’s society rapidly ages,

the markets for drugs for hypertension, heart disease, cerebral function

disorders, and cardiovascular disorders are receiving increased attention,

and the Company is bolstering its positions in these markets. Tanabe has

developed a lineup of hypertension products with different mechanisms

of action, such as diltiazem (Herbesser), imidapril (Tanatril), and bisoprolol

(Maintate). In the field of cerebral circulation and metabolism ameliora-

tors, Tanabe offers nicergoline (Sermion). In recent years, the Company

has launched fluvastatin (Lochol), an agent for the treatment of hyper-

cholesterolemia, which has been highly evaluated in the marketplace.

The operating environment for pharmaceutical companies around the

world is undergoing dramatic change, with competition among compa-

nies increasing on a global scale. In addition, the rapid advance of scien-

tific technology is leading to significant changes in new compound

research. In response to this operating environment, Tanabe is imple-

menting a number of management innovations to ensure that it can con-

tinue to record growth as an R&D-oriented company. In research and

development, Tanabe is working to increase efficiency and speed in the

development of new drugs by making full use of its management re-

sources and aggressively pursuing strategic tie-ups with outside research

institutions and other companies. In the future, Tanabe will maintain a

global market perspective as it strives to continue developing drugs that

improve patients’ quality of life and meet significant medical needs.

2 A N N U A L R E P O R T 2000

Focusing on Growth

Tanabe’s net sales declined slightly in the year under review, but improvement inthe composition of the Company’s sales led to a decline in the cost of sales. As aresult, operating income increased by a large margin, reaching the highest level inthe past 10 years, and net income also rose substantially.

Sales of key products were strong. These include fluvastatin (Lochol), an agent for thetreatment of hypercholesterolemia that was launched in 1998, as well as two productsthat are the focus of intensive marketing efforts—imidapril (Tanatril), an ACE inhibitor,and nicergoline (Sermion), a cerebral circulation and metabolism ameliorator.

To create a more profitable corporate structure, we have implemented aggressivestructural reforms, and those measures are showing steady results. Workforcereductions have been achieved through a voluntary early retirement system, and thenumber of employees, including those seconded to related companies, has beenreduced by about 500 over the past two years, to 4,439 at the end of March 2000.

In R&D, to further expedite the organizational reform measures previously imple-mented, we reorganized our Discovery Research Laboratory into seven depart-ments, including Basic Technology and Biology and Pharmacology. As a result, wehave created the fundamental system needed to research and develop new drugsmore efficiently and quickly.

“We have worked to become a more profitable, efficient company andto expand the sales of products that have been well received in themarketplace. As a result, during the year under review we recordedour highest level of operating income in the past 10 years.”

An Interview with the President

Tanabe has faced a difficult operating environment in recent years, and the Company is aggressively implementing reformstargeting strong growth in the 21st century. Based on the keywords of choice, decision, and focus, these reforms are aimedat rapidly establishing a corporate organization and management structure suitable for the new age. Using these measuresto strengthen our market competitiveness and speed up our research and development of innovative new drugs is themost important challenge that we face. During the past year, we continued to implement reforms, and they began to showsteady results.


4Reinforce our emphasis on resultsand strengthen human resourcestraining programs

1 By focusing on high-value-added operations and the promotion ofcore products, centered on products developed in-house, we havebolstered our Companywide management capabilities and made atransition to a management constitution that can steadily generateprofits. In addition, we have reduced the number of employees byabout 500 over the past two years, and, at the end of March 2000, wehad realized our goal of 4,500 employees.

While we do not believe that an overly optimistic outlook is warranted, we are pleased

with the way in which our employees worked extremely hard during the past year and

achieved strong results in a number of key areas. The domestic ethical drug market re-

mains sluggish under the influence of government measures to control spending on

pharmaceuticals, and in these conditions it is not possible to achieve significant improve-

ments in performance without developing new drugs. In addition, competition between

companies is intensifying on a global scale, and pharmaceutical companies around the

world are faced with the need to research and develop new products through a process

that requires huge investments.

In this environment, we strove to make continued progress toward becoming a more

profitable, efficient company and worked to expand the sales of products that have been

well received in the marketplace. Although our consolidated net sales declined about

3%, to ¥185.1 billion, the products that we have selected for intensive marketing efforts,

such as imidapril (Tanatril), ecabet sodium (Gastrom), and nicergoline (Sermion), all

recorded favorable results. Also, sales of fluvastatin (Lochol) were set in the right direction in

its second year on the market. Our increased operational efficiency and the results of our

workforce reductions enabled us to achieve operating income of ¥20.4 billion, the highest

level in the past 10 years, as well as an increase in net income.

As I mentioned, despite the difficult operating environment, where the domestic market

for ethical drugs is contracting, we have a number of products that are steadily expanding

their sales each year. Our fundamental strategy for our ethical drugs operations calls for

increasing sales by intensively marketing these high-growth-potential products in their

target markets. Our antihypertensive agent imidapril (Tanatril) is recording steady sales

growth even though competition with new types of agents is increasing, and it now has

the second largest share of the ACE inhibitor market. Imidapril (Tanatril) is highly regarded

How would you evaluate Tanabe’sperformance in the past year?

What is Tanabe’s strategy forpharmaceuticals in light of thesales trends and forecasts for theCompany’s principal products?

Q.

Q.

Each of the products that have been selected for intensive market-ing—imidapril (Tanatril), fluvastatin (Lochol), ecabet sodium (Gas-trom), and nicergoline (Sermion)—achieved sales increases during theyear under review. The combined sales of these four products rose16%, to ¥45.4 billion, and they were the driving force behind theCompany’s performance during the year.

We have instituted a complete organizational reform of our DiscoveryResearch Laboratory, the center of our R&D activities. The result is aflatter organization that can conduct R&D activities more rapidly. Inthe new drug pipeline, we have an anti-inflammatory agent in phase Iclinical trials in Europe and are preparing to start clinical trials of EDand diabetes agents in Europe and the United States.

We believe that the added value created by individual employees is thesource of corporate growth. Accordingly, we have thoroughly imple-mented a performance-based personnel and compensation system. Inparticular, in the R&D departments, we have made progress in motivat-ing researchers by instituting an aggressive incentive system. In addition,we have decided to introduce a stock option plan for executives.

2

3

4

2 Strengthen our corebusiness in ethical drugs

1Build a more profitable companyby focusing resources on selectedfields and rationalizing manage-ment practices

3Bolster our R&D systemand expand our newdrug pipeline

Tanabe’s Growth Strategies The Year’s Results


“We have a number of products that are steadily expanding their saleseach year in a difficult operating environment. Our fundamental strate-gy for our ethical drugs operations calls for intensively promoting thesehigh-growth-potential products in their target markets.”

in overseas markets, and the number of countries where it is available is steadily expand-

ing. With diltiazem (Herbesser), a calcium antagonist, and bisoprolol (Maintate), a selective

ß1 antagonist, we have three once-daily-administration antihypertensive agents with dif-

ferent mechanisms of action. This lineup provides us with an important competitive edge.

The market competitiveness of nicergoline (Sermion) was significantly boosted in

1998, when Japan’s Ministry of Health and Welfare completed a reevaluation of the

effectiveness of five drugs of this type, and out of the five drugs reevaluated only nicer-

goline (Sermion) had its effectiveness reconfirmed. Conditions in the market for cerebral

circulation and metabolism ameliorators are sluggish in general, but we expect steadily

expanding demand for nicergoline (Sermion), which acts on both cerebral circulation and

cerebral metabolism.

Diltiazem (Herbesser), with sales of ¥23.7 billion in the year under review, continues to

make a strong contribution to our performance as our top-selling product. The year

under review was the 26th since we began sales of diltiazem (Herbesser). Even today, in

markets around the world, it is the most highly regarded drug of Japanese origin for

treating angina and hypertension. Recently, bulk exports have declined significantly due

to the sale of generics in the United States, but this decline is expected to taper off in the

next couple of years. Domestically, diltiazem (Herbesser) is influenced by National Health

Insurance drug price reductions, but we are confident that it will remain a widely used

product in the 21st century.

We will also be launching new drugs. Taltireline (Ceredist) and bepotastine (Talion)

were approved in July 2000, and we are planning to begin sales in fall 2000. Taltireline

(Ceredist), which we developed in-house, is the first oral drug for the treatment of

spinocerebellar degeneration, which has been designated as an intractable disease.

Taltireline (Ceredist) is expected to make a significant contribution to improving patients’

quality of life. Bepotastine (Talion), an agent for treating allergic rhinitis introduced from

Ube Industries, is especially effective at improving nasal obstruction. We will work to

expand sales of bepotastine (Talion) by moving quickly to get an additional indication

approved for dermatologic conditions, such as urticaria.

Our fundamental stance in R&D is to strictly select promising new compounds and then

to concentrate our R&D resources in those areas. We also work to increase efficiency and

speed in new drug development by aggressively pursuing tie-ups with research institu-

tions and companies in Japan and overseas. Progress in science and technology is moving

at a dramatic pace, and to do everything in-house from the basic research stage would

require a very large investment and considerable time. In today’s markets, we need to

clarify our development policies and our strengths, cooperate with research institutions

and companies in Japan and overseas, and thereby accelerate the research and develop-

ment of new drugs. In the future, while considering strategic tie-ups with drug makers in

Japan and overseas, we will continue to focus on strengthening our R&D capabilities.

In our new drug pipeline, we currently have filed NDAs for three drugs, and we have

five compounds in clinical trials (phase II or later). Remicade (TA-650), introduced from

What are your plans for diltiazem(Herbesser), which has been theengine of Tanabe’s performancefor many years, and your expecta-tions for the sales of new drugs?

Would you discuss your funda-mental R&D stance and the condi-tion of your new drug pipeline?

Q.

Q.


“We strictly select promising new compounds and then concentrate ourR&D resources in those areas. We also work to increase efficiency andspeed in new drug development by aggressively pursuing tie-ups withresearch institutions and companies in Japan and overseas.”

Centocor, of the United States, is a promising drug and we have filed an NDA for

Crohn’s disease. In the United States, Centocor has received approval of an additional

indication for rheumatoid arthritis, and in Japan we are in bridging trials using the

clinical data from the United States. Its launch in Japan as an agent for treating rheu-

matoid arthritis is expected to improve the treatment of that disease, as current

treatment options are limited. In addition, for development candidates that we have

formulated in-house, we will increase efficiency and speed in R&D by first conducting

clinical trials in the United States and Europe. Currently, we have three drugs that have

just started or are in preparation for phase I clinical trials in the U.S. and Europe.

Over the past several years, Tanabe has implemented thorough reforms targeting the

creation of a corporate constitution suitable for an operating environment that is increas-

ingly challenging. Working to focus our resources on the achievement of higher profit-

ability, these measures have included Companywide organizational reforms as well as

reforms to personnel systems, IT improvements, workforce reductions, and the integra-

tion of production facilities. Although the end results of these reforms have not yet been

fully reflected in the numbers, the significant progress that has been made in changing

the attitudes of our employees is worth noting. Our improved performance in the year

under review was due not only to the effect of our workforce reductions but also to the

energetic approach of our employees, which resulted in more efficient administration. In

the future, we will maintain an aggressive approach to reforms as we continue working

to improve our performance and increase corporate value.

In the current year, we expect a small increase in sales. Although there was a revision in

National Health Insurance drug prices in April 2000, our domestic ethical drug sales should

be strong due to higher sales of fluvastatin (Lochol) and imidapril (Tanatril) and to sales of

the soon-to-be launched bepotastine (Talion), an anti-allergy agent, and taltireline

(Ceredist), an agent for treating spinocerebellar degeneration. The scale of the increase will

be limited, however, by continued decline in bulk exports of dilitiazem (Herbesser).

We are also projecting a slight rise in operating income, due principally to an improved

cost of sales. We are, however, projecting a small net loss as a result of a one-time ¥34.7

billion expense to eliminate our unfunded pension liability. Although this step will affect

the bottom line in the current year, we will have significantly strengthened our manage-

ment foundation and laid the groundwork for improved performance in the years ahead.

July 2000

Toshio TanakaPresident and Chief Executive Officer,

Representative Director

Finally, would you discuss the re-sults of the structural reforms thatTanabe has implemented over thepast several years and the Compa-ny’s performance projections?

Q.


In April 1999, we clarified the role of our domestic ethical drugs operations as our core field of business. We subsequentlyimplemented aggressive organizational reforms designed to augment our marketing capabilities. By eliminating the multi-layer system comprising section chiefs and team managers and moving to a flatter organization centered on team managers,we bolstered our systematic marketing activities. We also reorganized our headquarters, branches, and sales offices to builda system that will provide better results. In addition, to increase the effectiveness of our medical representatives, we intro-duced a management-by-objectives system and worked to further improve both their attitudes and their actions.

Since it peaked in 1995, the domestic pharmaceutical market has continued to shrink. Nonetheless, Tanabe has a numberof products that continue to record steady sales growth each year even in Japan’s difficult market environment. We haveachieved these results by selecting high-growth-potential products for intensive sales efforts that target specific marketsectors. In the year under review, sales growth was recorded by four drugs selected as focus products: imidapril (Tanatril), anACE inhibitor for treating hypertension; fluvastatin (Lochol), an agent for treating hypercholesterolemia; ecabet sodium(Gastrom), an agent for treating gastritis and gastric ulcer; and nicergoline (Sermion), a cerebral circulation and metabolismameliorator. Increased sales were also recorded by other major products, including bisoprolol (Maintate), a selective ß1 an-tagonist, and iopromide (Proscope), a non-ionic X-ray contrast medium for urography and angiography. Fluvastatin (Lochol)faced intense competition in its second year on the market but nonetheless recorded a significant increase in sales. We willwork to steadily develop fluvastatin (Lochol) into a major product by emphasizing its three features of clinical effect toreduce total cholesterol, the reduction of LDL oxidation, and low patient charge (patients’ cost containment). Fluvastatin(Lochol), the only HMG-CoA reductase inhibitor possessing an anti-oxidant effect deriving from its structure, is able to con-trol the formation of oxidized LDL, which is thought to play a role in the genesis and progress of arteriosclerosis. We expectan increase in sales of fluvastatin (Lochol) in the current fiscal year.

We will achieve our goals by clearly promoting the distinctive merits and superior characteristics of our products. In addition,in July 2000 we received approval for taltireline (Ceredist), an agent for treating spinocerebellar degeneration, and bepotastine(Talion), an anti-allergy agent for treating allergic rhinitis, and we plan to begin sales in fall 2000. Promising products for whichNDAs have been filed include Remicade (TA-650), an agent for treating Crohn’s disease.

Tanabe will follow its fundamental strategy of “focused, intensive application of management resources.” We will use ad-vanced information provision capabilities and fast-moving “aggressive marketing” to bolster the Company’s position in theindustry and extend Tanabe’s record of strong results into the 21st century.

Tanabe is implementing fast-moving, systematic marketing activities based on a fundamental strategy of“focused, intensive application of management resources.” We select highly profitable drugs with strong growthpotential for intensive promotion and then implement efficient ethical drugs operations targeted at specificareas. In this way, we are working to bolster our position in the industry and steadily improve our performance.

PharmaceuticalsMarketingPharmaceuticalsMarketing


Diltiazem (Herbesser) is an original, innovative ethical drug that is widelyused around the world. It is currently sold in more than 110 countriesas an agent for treating angina and hypertension. Since its launch in1974, diltiazem (Herbesser) has maintained a significant share of thecalcium antagonist market. Although overseas sales of diltiazem(Herbesser) are declining due to competition from generics, it contin-ues to be widely used in markets around the world.

Principal Ethical Drugs and Market Trends

Imidapril (Tanatril), which along with diltiazem (Herbesser) is one ofTanabe’s most strategically important international products, hasrecorded steadily increasing sales since its launch in 1993. Launchedas the eighth ACE inhibitor in Japan, imidapril (Tanatril) has been highlyevaluated in the marketplace for its minimal incidence of dry cough, acommon side effect of ACE inhibitors. Overseas, sales have alreadybegun in the United Kingdom, France, and elsewhere in Europe, aswell as in China, South Korea, and other Asian countries.

Tanabe introduced nicergoline (Sermion) from Pharmacia and beganmarketing it in the domestic market in 1988. Nicergoline (Sermion) isan international drug that is currently sold in more than 50 countries,principally as an agent for treating the aftereffects of cerebral infarc-tion. It is a derivative of an ergot alkaloid for which a number of phar-macological actions have been confirmed, particularly cerebralcirculation and cerebral metabolism. In June 1998, Japan’s Ministry ofHealth and Welfare completed a reevaluation of five drugs of thistype, and only nicergoline (Sermion) had its effectiveness reconfirmedout of the five drugs reevaluated. As a result, nicergoline (Sermion) isenjoying growing recognition in the market.

Bisoprolol (Maintate) is a selective ß1 antagonist licensed from MerckKGaA, of Germany, that features distinctive strengths. Sales ofbisoprolol (Maintate) have grown steadily since its launch in 1990,and it now has the second largest share of the domestic market for ßblockers. Bisoprolol (Maintate) is sold in more than 60 countries, andits efficacy has been confirmed through major multicenter trials over-seas. In 1999, for example, the results of CIBIS-II, a major overseasmulticenter trial, confirmed its potential as an agent for treating chroniccardiac insufficiency. Bisoprolol (Maintate) is currently receiving moreattention than any other ß blocker.

● Launched: 1974● Origin: In-house● Annual sales: ¥23.7 billion

(of which, exports were¥6.2 billion)

DILTIAZEM (HERBESSER)Calcium antagonist(treatment of angina and hypertension)


(of which, exports were¥500 million)

IMIDAPRIL (TANATRIL)ACE inhibitor(treatment of hypertension)

● Launched: 1988● Origin: Pharmacia● Annual sales: ¥12.0 billion

NICERGOLINE (SERMION)Cerebral circulation and metabolismameliorator

● Launched: 1990● Origin: Merck KGaA● Annual sales: ¥9.8 billion

BISOPROLOL (MAINTATE)Selective ß1 antagonist(treatment of hypertension)


● Currently availableJapan, Pakistan, South Korea, Indonesia, Philippines, Vietnam, Australia, United Kingdom, Singapore, Germany,China, Hong Kong, France, Thailand, Macau, Myanmar, Argentina

● Expected to be available in the near futureItaly, Portugal, Luxembourg, Finland, Greece, Belgium, Spain, Turkey, Israel, Taiwan, Malaysia, Brunei, Sri Lanka,Bangladesh, Mexico, Brazil, Venezuela, Peru, Chile, Colombia, Dominican Republic

Ecabet sodium (Gastrom) was launched in 1993 as an agent for treat-ing gastric ulcer. In 1995, an additional indication for gastritis wasapproved and we introduced a new formulation that is easier to swal-low. As a result, sales have increased. Ecabet sodium (Gastrom) hasbeen shown to have bactericidal activity in vitro against Helicobacterpylori, which is thought to be a contributing factor in the onset andreoccurrence of gastritis and gastric ulcer. Ecabet sodium (Gastrom) isclearly distinct from the conventional protective drugs and is the focusof growing attention. In addition, the dual use of ecabet and cimetidinetrial (DUET) has shown significant improvement in the treatment ofgastric ulcer when ecabet sodium is used together with an H2 blocker.The potential for growth in demand for ecabet sodium (Gastrom)is expanding.

Tanabe has positioned imidapril (Tanatril) as an international strategic productand is marketing it globally. In comparison with other ACE inhibitors, this drugshows a low incidence of the dry cough side effect, and as a result it has beenhighly evaluated in the marketplace and has developed into a key product forTanabe, with sales of ¥18.4 billion. Overseas, it was launched in Pakistan in1995, and as of July 2000 it was sold in 17 countries and regions. The numberof markets where imidapril (Tanatril) is available will begin to expand in 2001;therefore, its export sales, currently about ¥500 million, are expected to reachabout ¥2.0 billion in the next few years.


ECABET SODIUM (GASTROM)Agent for treating gastritis andgastric ulcer

Fluvastatin (Lochol) is an HMG-CoA reductase inhibitor developedjointly with Novartis Pharma K.K. This drug is entirely synthetic and itsstructure (indole ring) is thought to have an anti-oxidant action. Inaddition to superior effectiveness in lowering total cholesterol andLDL cholesterol, it controls the formation of oxidized LDL, which isthought to play a role in the genesis and progress of arteriosclerosis.As a result, fluvastatin (Lochol) is expected to be effective at control-ling the genesis of coronary artery disease. It is already on sale in morethan 90 countries, including the United States. In numerous clinicaltrials, fluvastatin (Lochol) has been shown to be safe and effective. Itis used clinically as an agent for treating hypercholesterolemia.

● Launched: 1998● Origin: Novartis Pharma● Annual sales: ¥6.5 billion

FLUVASTATIN (LOCHOL)HMG-CoA reductase inhibitor(treatment of hypercholesterolemia)

Imidapril (Tanatril), an agent for treating hypertension,expands its presence in global markets


For Tanabe to continue to achieve steady growth in the years ahead, it is essential that the Company make progress inworld-class, innovative drug discovery and expand its new drug pipeline. Scientific and technical progress has led to dra-matic advances in drug discovery technology, and “chance” is playing a decreasing role in new drug development. In thefuture, Tanabe will make aggressive use of technology related to leading-edge drug discovery, such as genome-relatedtechnology and high-throughput screening. At the same time, it is essential that we further improve our ability to evaluatethe value of drugs.

Faced with these changes in the operating environment, in October 1999 we conducted a major reevaluation of our drugdiscovery process, including the implementation of organizational reforms. As of April 2000, the Discovery Research Labora-tory had been reorganized into seven departments: Basic Technology, Biology and Pharmacology, Medicinal Chemistry,Pharmacokinetics, Discovery Toxicology, DDS Research, and Advanced Medical Research. With this new organization, we willbe able to more quickly and effectively develop new drugs. In addition, we have established an approach to drug discoveryand research based on stricter selection standards. We will, for example, develop only those drugs for which the mechanismsof action on diseases can be verified and the related medical needs are expected to be substantial.

To bolster our new drug pipeline, in addition to drugs developed in house, we are aiming to quickly launch promising newdrugs developed through aggressive strategic tie-ups with research institutions and companies in Japan and overseas. To thatend, our Drug Discovery Laboratory is implementing a number of measures, including improving our research themes,strengthening our system for obtaining new ideas and technologies, clarifying which diseases will be the subject of our R&Dactivities, and augmenting our ability to collect R&D information. In regard to clinical trials, our approach is to work to obtainrapid approval by proceeding with overseas clinical trials of our own compounds at the same time as we make aggressive useof overseas data for licensed products.

Our R&D pipeline is shown in the accompanying table. We also have a number of compounds that are candidates to beginclinical trials shortly. These include an anti-inflammatory agent with a new mechanism of action, an agent for treating EDwith few side effects (PDE-V inhibitor), and an agent for treating diabetes. For these candidates, we will make the new drugdevelopment process more efficient and rapid by first conducting clinical trials in the United States and Europe.

Tanabe is striving to rapidly launch innovative new drugs that will be successful in markets around the world.To that end, during the year under review, we completely reevaluated the drug discovery process and reorga-nized the Discovery Research Laboratory. With an emphasis on strategic tie-ups with research institutions andcompanies in Japan and overseas, we continue working to bolster our new drug pipeline.

Researchand Development

Researchand Development

10 A N N U A L R E P O R T 2000

Tanabe’s R&D Pipeline in Japan (As of July 31, 2000)

In Preparation for Launch

Ceredist(TA-0910)

Talion(TAU-284)

NDA Filed

Penemac(FC/TA-891)

Magnescope(EK-5504)

Remicade(TA-650)Crohn’s disease

Phase III

TA-2620

Phase II/III (Bridging Trials)

Remicade(TA-650)Chronic rheumatoidarthritis

Phase II

TA-993

TA-803

TA-2516

Additional Indications

Tanatril

Talion(TAU-284)

Additional Formulation

MH-200

Ceredist is a TRH derivative that can be administered orally. Ceredist has a powerful effect on the centralnervous system and extremely weak hormone action, which may cause adverse effects. It was designatedby the Ministry of Health and Welfare as an orphan drug for the treatment of spinocerebellar degenerationand approved in July 2000.

Talion is an anti-allergy agent with antihistamic action and eosinophilic infiltration controlling action. It wasdeveloped jointly with Ube Industries. Drowsiness is low, and it was approved in July 2000 as an agent fortreating allergic rhinitis.

Penemac is an orally administered penem antibiotic introduced from Pharmacia, of the United States. It hasa broad antibacterial spectrum against both gram positive and gram negative bacteria. The NDA was filed inDecember 1995.

Magnescope is an MRI contrast medium introduced from Schering AG, of Germany, and developed jointlywith Eiken Chemical. One of its distinctive features is low toxicity due to a stable molecular structure. Thesyringe formulation is highly convenient. The NDA was filed by Eiken.

Remicade is an anti-TNF chimeric monoclonal antibody introduced from Centocor, of the United States. Centocorbegan sales in the U.S. in September 1998 as an agent for treating Crohn’s disease. Remicade is quick acting andthe effects from a single administration last for several weeks. It was designated by the Ministry of Health andWelfare as an orphan drug for the treatment of Crohn’s disease, and the NDA was filed in September 1999.

TA-2620 is a once-daily-administration morphine sulfate that utilizes a slow-release pharmaceutical tech-nology, known as multipore technology, from Amarin Corporation (formerly Ethical Pharmaceutical), of theUnited Kingdom. Lasting control of chronic pain is possible with once-daily administration.

Remicade is in clinical trials for chronic rheumatoid arthritis. Centocor, of the United States, receivedapproval of an additional indication for chronic rheumatoid arthritis from the FDA in November 1999 andthe EMEA in June 2000. As with Crohn’s disease, Remicade is fast acting and the effects from a singleadministration last for several weeks.

TA-993 is a benzothiazepine derivative that improves peripheral vascular flow and inhibits platelet aggrega-tion. It is in phase II trials for peripheral arterial occlusive diseases.

TA-803, acetyl-L-carnitine, is a central nervous system agent introduced from Sigma-Tau, of Italy. It is inphase II trials for the acute phase of cerebral infarction.

TA-2516 is a matrix metallo-protease (MMP) inhibitor introduced from British Biotech, of the United King-dom. The MMP inhibition is expected to control the growth and spread of cancer. Unlike previous anti-cancer agents, TA-2516 does not show cytotoxicity, so side effects on the human body are reduced. It iscurrently in clinical trials for lung cancer and stomach cancer.

In cooperation with Nihon Schering, Tanabe is conducting phase III trials of Tanatril for insulin-dependentdiabetic nephropathy. It has been shown to be significantly more effective than a placebo.

Talion is currently in phase III trials for urticaria.

MH-200 is a highly concentrated, injectable form of morphine hydrochloride. It was developed jointly withTakeda, Sankyo, Shionogi, and Dainippon Pharmaceutical. The NDA was filed in January 2000.


A new R&D organization facilitates faster,more efficient drug development

To further accelerate new drug development, in April 2000 Tanabe reorganized the Discovery Research Labo-ratory into a flatter organizational structure composed of seven departments. Under the new matrix organi-zation, staff from each department participate in projects organized by theme. The responsibilities of eachdepartment are outlined below.

7Advanced

Medical ResearchDepartment

6DDS ResearchDepartment

2Biology and

PharmacologyDepartment

1Basic Technology

Department

1 Basic Technology DepartmentThis department provides technical support for the Biology andPharmacology Department. To that end, the department facilitates“drug discovery based on genome information” by improving ourgenetic analysis technology, works to develop molecular designtechnology by expanding our chemical library, and strives to im-prove the success rate in the search for drug discovery candidatesand to reduce the time required to find leads by strengtheningour information technology.

2 Biology and Pharmacology DepartmentThis department uses a wide range of biological know-how andtechniques in the evaluation of the efficacy of new compoundsand the development of clinical candidates. In addition, at thedevelopment stage and after launch, the department contributesto development support and to product growth by conductingtests to substantiate efficacy and safety in humans.

3 Medicinal Chemistry DepartmentThis department is in charge of generating new lead compoundsand conducting optimization-related synthesis research. In synthe-sis methodology, the department will work to improve efficiency inR&D by introducing the latest methods and technologies, such asrational drug design, combinatorial chemistry, and automaticsynthesis equipment.

4 Pharmacokinetics DepartmentThis department is in charge of exploratory ADME testing, which isimportant at the initial stages of drug discovery; nonclinical phar-macokinetic testing, which is an essential part of applying for per-mission to manufacture; pharmacokinetic analysis in clinical trials;toxicokinetic analysis, which is an important element of safety test-ing; and kinetic analysis and exploratory ADME testing, which areindispensable in dosage form design.

5 Discovery Toxicology DepartmentThis department clarifies the toxicity characteristics of new leadcompounds, and its principal responsibility is to efficiently selectand prioritize the most suitable compounds. The department isalso in charge of pathological research.

6 DDS Research DepartmentThis department works to optimize the use of drugs by conduct-ing pharmaceutical and biological research related to the devel-opment of DDS products that implement pharmaceuticaltechniques. By making progress in DDS research, the departmentworks to raise the success rate of new drug development.

7 Advanced Medical Research DepartmentThis department is in charge of biological research relating to newdrug lead compound generation based on genetic information. Inaddition, it conducts biological research related to tissue engineering.

3MedicinalChemistry

Department

5Discovery

ToxicologyDepartment

4Pharmacokinetics

Department

12 A N N U A L R E P O R T 200012 A N N U A L R E P O R T 2000

Environmental Conservation Activities

The wide range of environmental conservation activities conducted by Tanabe is based on the Company’sfundamental philosophy: “In every aspect of our business, we will aggressively strive to conserve and improvethe global environment so that the natural resources with which we have been blessed can be passed on tothe next generation.” The Company’s Environmental Independent Action Plan, which is based on Tanabe’sEnvironmental Action Guidelines, spells out numerical targets for reducing energy consumption and wastegeneration, and Tanabe is making steady progress toward the achievement of those targets.

Environmental Independent Action PlanOur Environmental Independent Action Plan includes specificnumerical targets for the seven environmental conservation ac-tivities outlined below. We are working to achieve these targetsover the medium to long term.

1. Reduced energy consumption, prevention of global warming2. Reduced waste production3. Reduced emissions of substances causing air pollution4. Development of environmentally friendly products5. Dissemination of environmental information6. Routine use of green purchasing practices7. Promotion of environmental conservation activities

For example, in comparison with the levels in fiscal 1991, wewill work to reduce energy consumption at least 8% and theamount of waste sent to landfills by at least 85% by fiscal2006. In addition, we will introduce an environmental manage-ment system that conforms to ISO 14001 series standards notonly in plants but also in other areas of the Company. Sincethese goals were formulated in 1998, we have made steadyprogress each year.

Topics

● First in the industry to use recycled paper in product documentationAs one facet of our environmental conservation activities, we have worked to use recycled paper in our product packaging. Inaddition, we have also made progress in switching to the use of recycled paper in our product documentation. Because conven-tional recycled paper contains foreign substances, there has been some concern that the use of this paper could make it difficultto read the printed text. Tanabe moved forward quickly, however, and became the first company in the pharmaceutical industryto use recycled paper suitable for product documentation.

● Thorough crisis management trainingThe Onoda Plant, in Yamaguchi Prefecture, has a wastewater treatment system. In the unlikely event that an outflow of waste-water in excess of standard levels is predicted, a 24-hour monitoring system results in an immediate cutoff of wastewateroutflow. To ensure that all personnel can handle an emergency situation at the plant, training in the opening and closing of theswing gate is practiced every month, ensuring a high level of preparedness.

● Tanabe’s recycling activities recognized by Japan’s Minister of Health and WelfareOn October 21, 1999, Tanabe received an award from the Minister of Health and Welfare in recognition of the Company’s fiscal1999 environmental conservation activities, including Companywide recycling, the receipt of ISO 14001 certification at theOnoda and Osaka plants, and green purchasing.

● Systematic outsourcing of waste processingWhen we arrange to have another company handle waste processing, a manifest meeting the governmental requirementsneeds to be issued. At the Osaka Plant, we have computerized a range of outsourcing-related operations. This has madepossible the integrated management of data related to waste processing and increased the efficiency of management effortsto reduce waste.


Review of Fiscal 2000

ContentsManagement’s Discussion and Analysis 14Eleven-Year Financial Summary 18Consolidated Balance Sheets 20Consolidated Statements of Income 22Consolidated Statements of Shareholders’ Equity 23Consolidated Statements of Cash Flows 24Notes to Consolidated Financial Statements 26Report of Independent Certified Public Accountants 32

14 A N N U A L R E P O R T 2000

Management’s Discussion and Analysis

(Million ¥) 1998 1999 2000 2000/1999

Net sales . . . . . . . . . . . . . ¥216,553(100.0%) ¥190,559 (100.0%) ¥185,099 (100.0%) –2.9%

Sales by business segment:Pharmaceuticals . . . . . 193,451 ( 89.3 ) 172,016 ( 90.3 ) 156,279 ( 84.4 ) –9.1Other products . . . . . . 23,102 ( 10.7 ) 18,543 ( 9.7 ) 28,820 ( 15.6 ) +55.4

Sales by area:Domestic . . . . . . . . . . 186,737 ( 86.2 ) 163,039 ( 85.6 ) 166,666 ( 90.0 ) +2.2Overseas . . . . . . . . . . . 29,816 ( 13.8 ) 27,520 ( 14.4 ) 18,433 ( 10.0 ) –33.0

In the fiscal year ended March 31, 2000, business conditions in the Japanese pharmaceu-tical industry remained challenging. The government strengthened its measures to reducespending on drugs, leading to a contraction in the market, and competition amongcompanies increased on a global scale. In addition, with fundamental reform of theNational Health Insurance system under consideration, the operating environment forpharmaceutical companies is becoming even more difficult. Although Tanabe’s consoli-dated net sales declined slightly during the year under review, operating income andnet income both increased. This performance provides a clear demonstration of theresults we have achieved with the management reforms that we have implemented inrecent years.

RESULTS OF OPERATIONSConsolidated net sales declined 2.9% during the year under review, to ¥185.1 billion. Domesticsales rose 2.2%, to ¥166.7 billion, while overseas sales were down 33.0%, to ¥18.4 billion.

In Japan, parent-company sales of ethical drugs increased 3.3%, to ¥134.1 billion. Two prod-ucts for which we are implementing focused marketing activities recorded solid growth; sales ofACE inhibitor imidapril (Tanatril) increased 5.0%, to ¥17.8 billion, and sales of ecabet sodium(Gastrom), an agent for the treatment of gastritis and gastric ulcer, were up 5.8%, to ¥8.3billion. Sales of fluvastatin (Lochol), an HMG-CoA reductase inhibitor that we introduced in theprevious year, nearly doubled from ¥3.3 billion to ¥6.5 billion in the year under review. Sales ofnicergoline (Sermion), a cerebral circulation and metabolism ameliorator, rose 10.4%, to ¥12.0billion, and sales of iopromide (Proscope), an X-ray contrast medium for urography and angio-graphy, were up 14.2%, to ¥4.9 billion. It is worth noting that these drugs were able to recordsolid sales increases despite the contraction in the domestic pharmaceutical market. Looking atother products, sales of bisoprolol (Maintate), a selective ß1 antagonist, rose 6.1%, to ¥9.8billion. Sales of Unicaliq, a highly concentrated infusional drug, declined 2.2%, to ¥4.4 billion,and sales of Herbesser, a calcium antagonist and one of our principal products, were down2.3%, to ¥17.5 billion, in a reflection of severe market conditions. Exports of diltiazem (Herbesser)fell by nearly half, to ¥6.2 billion, as a result of competition from generics in the United States.

Cardiovascular andRespiratory Systems 45.6%

Diagnostic Agents 9.4

Digestive System 8.8

Tonics,Nutritional Supplements 7.5

Antibiotics andBiological Drugs 6.5

Central and PeripheralNervous Systems 3.6

Hormones 1.9

Chemotherapeutics 0.8

Other Pharmaceuticals 1.2

Other Products 14.7

PharmaceuticalsOther Products

‘96 ‘97 ‘98 ‘99 ‘000

50

150

100

250

200

Net Sales (Billion ¥)

Share of Sales by Indication (Non-Consolidated) (%)

The cost of sales decreased 4.6%, to ¥87.6 billion, while the cost of sales as a percentage ofnet sales improved to 47.3%, from 48.2% in the previous year. Selling, general and administra-tive (SG&A) expenses decreased 5.0%, to ¥77.1 billion, due to lower labor costs resulting fromthe Company’s early retirement program. SG&A expenses as a percentage of net sales decreasedto 41.7%, from 42.6% in the previous year. Spending on research and development, which is

‘95 ‘96 ‘97 ‘98 ‘990

2

4

6

Ethical DrugProduction in Japan (Trillion ¥)


PharmaceuticalsOther Products

Net Income per Share–Diluted (¥)

Return on EquityReturn on Assets

‘96 ‘97 ‘98 ‘99 ‘000

25

20

15

5

10

Operating Income (Billion ¥)

‘96 ‘97 ‘98 ‘99 ‘000

2

6

4

8

0

10

30

20

40

Net Income (Billion ¥) (¥)

‘96 ‘97 ‘98 ‘99 ‘000

2

4

6

Return on Equity and Assets (%)

SALES OF TANABE’S MAJOR PRODUCTS IN THE DOMESTIC MARKET

Name

Non-consolidated sales(Billion ¥)

% change

1998 1999 2000 2000/1999

Imidapril (Tanatril) ¥16.0 ¥17.0 ¥17.8 +5.0%

Diltiazem (Herbesser) 19.1 17.9 17.5 –2.3

Nicergoline (Sermion) 12.2 10.9 12.0 +10.4

Bisoprolol (Maintate) 9.1 9.2 9.8 +6.1

Ecabet sodium (Gastrom) 7.7 7.8 8.3 +5.8

Fluvastatin (Lochol) – 3.3 6.5 +98.0

Iopromide (Proscope) 4.0 4.3 4.9 +14.2

Ceftazidime (Modacin) 5.2 5.2 4.8 –7.7

Trimebutine (Cerekinon) 5.3 4.6 4.4 –3.4

Unicaliq 3.5 4.5 4.4 –2.2

Carbazochrome sodium sulfonate (Adona AC-17) 3.5 3.4 3.3 –3.3

Denopamine (Kalgut) 3.4 2.9 2.5 –14.1

Docarpamine (Tanadopa) 1.8 1.9 1.9 –1.9

(Million ¥) 1998 1999 2000 2000/1999

Cost of sales . . . . . . . . . . . . . . . . . . . . . ¥111,552 ¥91,882 ¥87,643 –4.6%—as % of net sales . . . . . . . . . . . . . . . 51.5% 48.2% 47.3% –

SG&A expenses . . . . . . . . . . . . . . . . . . ¥ 84,884 ¥81,199 ¥77,102 –5.0%—as % of net sales . . . . . . . . . . . . . . . 39.2% 42.6% 41.7% –

Operating income. . . . . . . . . . . . . . . . . ¥ 20,117 ¥17,478 ¥20,354 +16.5%—as % of net sales . . . . . . . . . . . . . . . 9.3% 9.2% 11.0% –

included in SG&A expenses, declined 1.9%, to ¥19.5 billion, or 10.5% of net sales, about thesame level as in the previous year.

Operating income rose 16.5%, to ¥20.4 billion, the highest level in 10 years, and the operat-ing profit margin increased to 11.0%, from 9.2% in the previous year.

Net other expenses were ¥10.3 billion, an increase of 41.8% from the previous year. This risewas due primarily to two items that were recorded as special losses—a prior period adjustmentfor change in accounting for unfunded retirement plan of ¥10.7 billion and a special contribu-tion to the pension plan of ¥4.7 billion. On the other hand, we recorded a ¥2.2 billion gain ondisposal of property, plant and equipment and a ¥3.1 billion gain on sales of securities.

16 A N N U A L R E P O R T 2000

(Million ¥ except net income per share) 1998 1999 2000 2000/1999

Net income. . . . . . . . . . . . . . . . . . . . . . . . ¥7,302 ¥2,410 ¥4,069 +68.8%—as % of net sales . . . . . . . . . . . . . . . . . 3.4% 1.3% 2.2% –—as % of shareholders’ equity . . . . . . . . . 5.2 1.7 2.8 –

Net income per share (¥) . . . . . . . . . . . . . ¥30.18 ¥9.96 ¥16.82 +68.9%Net income per share–diluted . . . . . . . . . . 30.18 9.96 15.23 +52.9

‘96 ‘97 ‘98 ‘99 ‘000

25

50

100

75

WORKING CAPITAL

(Billion ¥)

‘96 ‘97 ‘98 ‘99 ‘000

20

40

60

CASH AND CASHEQUIVALENTS(Billion ¥)

‘96 ‘97 ‘98 ‘99 ‘000

5

10

15

PURCHASES OF PROPERTY, PLANT AND EQUIPMENT(Billion ¥)

Income before income taxes declined 1.7%, to ¥10.0 billion. Income taxes were down 25.1%,to ¥5.8 billion, and the effective income tax rate after the application of the interperiod alloca-tion of income taxes was 58.2%, compared with 76.4% in the previous year. The principalreasons for the lower effective income tax rate were a decline in the corporate tax rate from34.5% in the previous year to 30.0% and an increase in deferred income taxes accompanyingthe full application of the interperiod allocation of income taxes.

Net income increased 68.8%, to ¥4.1 billion, and diluted net income per share rose 52.9%,to ¥15.23. Return on net sales was 2.2%, up from 1.3% in the previous year, and return onequity was 2.8%, compared with 1.7% a year earlier.

CASH FLOWS AND FINANCIAL POSITIONNet cash provided by operating activities was ¥16.6 billion in the year under review.

Net cash used in investing activities was ¥4.0 billion. Major items included proceeds fromsales of investment securities of ¥4.0 billion, purchases of property, plant and equipment of ¥7.0billion, and investments in time deposits of ¥5.6 billion. The planned level of capital investmentin the current year is about the same as in the year under review, with investment focused onproduction and R&D facilities.

Net cash provided by financing activities was ¥2.4 billion in the year under review. During theterm, we issued ¥20.0 billion in convertible bonds, and repayed ¥14.9 billion in short-term bankloans. Dividends paid were unchanged at ¥1.8 billion.

At year-end, cash and cash equivalents totaled ¥51.7 billion, an increase of 39.9% from theend of the previous year.

(Million ¥) 1998 1999 2000 2000/1999

Purchases of property,plant and equipment . . . . . . . . . . . . . . . ¥13,565 ¥ 9,165 ¥ 7,033 –23.3%

Depreciation and amortization . . . . . . . . . 8,226 9,016 7,992 –11.4Cash and cash equivalents . . . . . . . . . . . . 35,033 36,928 51,666 +39.9

Current assets at year-end were up 14.8%, to ¥153.0 billion, due principally to a significantincrease in cash and cash equivalents. Current liabilities declined 6.4%, to ¥64.5 billion. Thisdecrease was attributable to the repayment of ¥15.0 billion in short-term bank loans, whichoffset the ¥10.0 billion worth of bonds maturing in the current year. As a result, the current ratioimproved to 237.3% from 193.5% in the previous year. Accompanying the increase in currentassets, working capital at year-end was up 37.4%, to ¥88.5 billion. Net property, plant andequipment declined 4.1%, to ¥64.7 billion.


(¥) 1998 1999 2000

Dividends per share . . . . . . . . . . . . . . . . . . . . . . . . . . ¥7.5 ¥7.5 ¥7.5Dividend payout ratio . . . . . . . . . . . . . . . . . . . . . . . . . 24.8% 75.3% 44.6%

Long-term liabilities were ¥63.5 billion, an increase of 46.5%. This increase was due to theissuance of ¥2.0 billion in convertible bonds and prior period adjustment for change in account-ing for unfunded retirement plan of ¥10.7 billion, which offset the effect of ¥10.0 billion inbonds maturing in the current year. The debt-to-equity ratio rose to 37.3%, from 35.4% in theprevious year.

Shareholders’ equity rose 2.8%, to ¥146.0 billion, due to the increase in retained earnings.Total assets were up 7.9%, ¥275.9 billion. As a result, the ratio of shareholders’ equity to totalassets edged down from 55.5% to 52.9%. Shareholders’ equity per share was up 2.8%, to ¥604.

DIVIDEND POLICY AND DIVIDENDSTanabe’s fundamental policy regarding the payment of dividends calls for stable payments inline with the Company’s performance. For the year under review, we maintained ordinary divi-dends per share at ¥7.5, for a dividend payout ratio of 44.6%. As a percentage of shareholders’equity, dividends were 1.3%, about the same as in the previous year.

Debt-to-Equity Ratio (%)

Equity Ratio (%)

‘96 ‘97 ‘98 ‘99 ‘000

10

20

40

30

50

0

10

30

40

20

50

LONG-TERM DEBT

(Billion ¥) (%)

‘96 ‘97 ‘98 ‘99 ‘000

50

100

150

0

25

50

75

SHAREHOLDERS’ EQUITY (Billion ¥) (%)

‘96 ‘97 ‘98 ‘99 ‘000

100

50

200

150

250

300

TOTAL ASSETS

(Billion ¥)

The Company uses its retained earnings to fund research and development and to invest inproduction equipment in accordance with corporate policies for bolstering its competitivenessand marketing capabilities. Although the operating conditions in the pharmaceutical industryare expected to remain challenging, we will continue working to improve our performance andstrengthen our financial position in order to provide attractive returns to our shareholders.

UNFUNDED PENSION LIABILITYNew pension benefit accounting standards have taken effect in Japan from the fiscal year end-ing March 31, 2001. Based on these new standards, Tanabe faced an unfunded pension liabilityof ¥58.4 billion, calculated on a parent-company basis and at a discount rate of 3.5%. We havemade the resolution of this issue our most important management policy, and we are workingto eliminate the unfunded liability as soon as possible. In the year under review, we recorded aprior period adjustment for change in accounting for unfunded retirement plan of ¥10.7 billionand a special contribution to the pension plan of ¥4.7 billion, each of which was recorded as aspecial loss. As a result, as of March 31, 2000, our unfunded pension liability on a parent-company basis had decreased to ¥34.7 billion. The elimination of the remaining unfunded pen-sion liability is an essential step toward further strengthening our management foundation, andwe have decided to make a securities contribution to the employee retirement benefit trust toentirely eliminate the liability in the year ending March 31, 2001. As a result, our profits in thecurrent fiscal year will decline temporarily. We forecast a net loss, but we believe that this impor-tant step will lead to improved performances in the years ahead.

18 A N N U A L R E P O R T 2000

Eleven-Year Financial Summary

Tanabe Seiyaku Co., Ltd. and Consolidated SubsidiariesYears ended March 31

2000 1999 1998 1997

Results of operations:Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥185,099 ¥190,559 ¥216,553 ¥218,544Cost of sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87,643 91,882 111,552 112,711

% of net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47.3 48.2 51.5 51.6Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97,456 98,677 105,001 105,833Selling, general and administrative expenses . . . . . . . . . . 77,102 81,199 84,884 86,039

% of net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41.7 42.6 39.2 39.4Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,354 17,478 20,117 19,794

% of net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.0 9.2 9.3 9.1Other income (expenses) . . . . . . . . . . . . . . . . . . . . . . . . . (10,332) (7,285) (1,962) 307Income before income taxes . . . . . . . . . . . . . . . . . . . . . . 10,022 10,193 18,155 20,101Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,831 7,783 10,853 13,518

Effective income tax rate (%) . . . . . . . . . . . . . . . . . . . . 58.2 76.4 59.8 67.3Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,069 2,410 7,302 6,583

ROE (%) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.8 1.7 5.2 4.8ROA (%) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.5 0.9 2.8 2.5

Per share amounts (yen):Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥16.82 ¥9.96 ¥30.18 ¥27.21Net income–diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.23 9.96 30.18 27.21Cash dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.5 7.5 7.5 7.5

Dividend payout ratio (%) . . . . . . . . . . . . . . . . . . . . . . . . 44.6 75.3 24.8 27.6Equity dividend ratio (%) . . . . . . . . . . . . . . . . . . . . . . . . . 1.3 1.3 1.3 1.3

Financial position:Current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥152,987 ¥133,293 ¥142,136 ¥140,325Current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64,465 68,879 74,040 101,350Working capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88,522 64,414 68,096 38,975Net property, plant and equipment . . . . . . . . . . . . . . . . . 64,712 67,484 68,327 62,955Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 275,891 255,802 263,073 257,702Long-term debt, less current maturities . . . . . . . . . . . . . . 42,487 32,296 30,885 2,844Shareholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . 146,015 141,971 143,136 138,471

Other statistics:R&D expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥19,475 ¥19,857 ¥20,365 ¥20,738

% of net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.5 10.4 9.4 9.5Purchases of property, plant and equipment . . . . . . . . . . 7,033 9,165 13,565 7,345Depreciation and amortization . . . . . . . . . . . . . . . . . . . . 7,992 9,016 8,226 7,187Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . 51,666 36,928 35,033 34,832Current ratio (%) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 237.3 193.5 192.0 138.5Equity ratio (%). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52.9 55.5 54.4 53.7Debt-to-equity ratio (%) . . . . . . . . . . . . . . . . . . . . . . . . . 37.3 35.4 28.9 26.6

Number of employees (parent company only) . . . . . . . . . 4,019 4,138 4,421 4,375Number of common shares outstanding (thousands) . . . . 241,928 241,928 241,928 241,928


Millions of yen except per share amounts

1996 1995 1994 1993 1992 1991 1990

¥205,876 ¥211,209 ¥217,719 ¥243,511 ¥253,744 ¥239,562 ¥226,920112,957 115,209 122,041 135,894 146,453 141,404 124,694

54.9 54.5 56.1 55.8 57.7 59.0 55.092,919 96,000 95,678 107,617 107,291 98,158 102,22679,907 81,352 84,753 90,067 92,351 84,387 84,915

38.8 38.5 38.9 37.0 36.4 35.2 37.413,012 14,648 10,925 17,550 14,940 13,771 17,311

6.3 6.9 5.0 7.2 5.9 5.7 7.61,292 (1,184) (83) (362) 887 (253) 4,920

14,304 13,464 10,842 17,188 15,827 13,518 22,2319,673 9,447 7,478 11,507 10,238 7,965 14,630

67.6 70.2 69.0 66.9 64.7 58.9 65.84,631 4,017 3,364 5,681 5,589 5,553 7,601

3.5 3.1 2.6 4.5 4.6 4.8 6.81.8 1.5 1.2 2.1 2.1 2.2 3.0

¥19.14 ¥16.60 ¥13.90 ¥23.48 ¥23.11 ¥23.04 ¥31.5419.05 – – – – – –

7.5 7.5 7.5 7.5 7.5 7.5 8.539.2 45.2 54.0 31.9 32.5 32.6 26.9

1.3 1.4 1.4 1.4 1.5 1.6 1.8

¥143,116 ¥134,978 ¥144,067 ¥150,255 ¥160,213 ¥165,981 ¥162,440100,638 84,396 95,774 87,843 97,237 89,181 80,425

42,478 50,582 48,293 62,412 62,976 76,800 82,01562,963 63,277 62,576 61,922 60,802 57,794 54,474

261,760 257,762 270,466 277,496 265,106 258,792 247,43711,803 26,316 31,264 48,263 32,374 39,259 40,942

134,549 132,020 129,238 127,995 122,950 118,272 114,814

¥20,010 ¥19,710 ¥20,130 ¥22,704 ¥22,490 ¥20,730 ¥18,9179.7 9.3 9.2 9.3 8.9 8.7 8.3

6,890 6,194 9,142 9,356 8,996 9,602 7,1897,411 7,085 7,166 7,460 6,581 6,414 7,404

41,912 29,463 28,559 27,585 21,134 28,378 41,464142.2 159.9 150.4 171.0 164.8 186.1 202.0

51.4 51.2 47.8 46.1 46.4 45.7 46.435.7 36.7 49.1 48.7 39.5 40.3 42.6

4,496 4,682 4,948 4,989 5,080 5,146 5,112241,928 241,928 241,918 241,918 241,918 241,076 241,064

20 A N N U A L R E P O R T 2000

Tanabe Seiyaku Co., Ltd. and Consolidated SubsidiariesMarch 31, 2000 and 1999

Thousands ofMillions of yen U.S. dollars (Note 1)

ASSETS 2000 1999 2000

Current assets:Cash and cash equivalents (Note 3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 57,063 ¥ 36,928 $ 537,569Marketable securities (Note 4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,054 2,303 19,350Notes and accounts receivable:

Trade . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63,766 65,347 600,716Unconsolidated subsidiaries and affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . 465 409 4,381Allowance for doubtful receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (319) (394) (3,005)

63,912 65,362 602,092

Inventories (Note 7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25,562 25,804 240,810Deferred income taxes (Note 6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,252 572 11,795Other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,144 2,324 29,618

Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 152,987 133,293 1,441,234

Property, plant and equipment (Note 8):Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,020 19,234 179,181Buildings and structures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67,459 67,734 635,506Machinery and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73,207 73,439 689,656Construction in progress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,451 1,633 13,669

161,137 162,040 1,518,012Less accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (96,425) (94,556) (908,384)

64,712 67,484 609,628

Investments and other assets:Investment in securities (Note 4):

Unconsolidated subsidiaries and affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,127 6,421 57,720Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28,242 30,679 266,057

Deferred income taxes (Note 6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,524 481 52,040Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,299 17,444 172,388

58,192 55,025 548,205

¥275,891 ¥255,802 $2,599,067

The accompanying notes are an integral part of these statements.

Consolidated Balance Sheets



LIABILITIES AND SHAREHOLDERS’ EQUITY 2000 1999 2000

Current liabilities:Short-term bank loans (Note 8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 1,513 ¥ 16,466 $ 14,253Current maturities of long-term debt (Note 8) . . . . . . . . . . . . . . . . . . . . . . . . . . 10,499 1,530 98,907Notes and accounts payable:

Trade . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,634 22,240 175,544Unconsolidated subsidiaries and affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,635 154 43,665

23,269 22,394 219,209

Income taxes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,118 3,224 57,635Reserve for sales returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 184 173 1,733Accrued expenses and other current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . 22,882 25,092 215,564

Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64,465 68,879 607,301

Long-term liabilities:Long-term debt, less current maturities (Note 8) . . . . . . . . . . . . . . . . . . . . . . . . 42,487 32,296 400,254Retirement and severance benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,507 7,301 164,927Directors’ retirement benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 315 426 2,968Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,158 3,286 29,750

Total long-term liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63,467 43,309 597,899

Minority interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,944 1,643 18,314

Contingent liabilities (Note 9)

Shareholders’ equity:Common stock, ¥50 par value

Authorized, 600,000,000 sharesIssued, 241,927,928 shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34,251 34,251 322,666

Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38,051 38,051 358,464Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73,714 69,670 694,432

146,016 141,972 1,375,562

Treasury stock, at cost, 1,547 and 1,438 shares . . . . . . . . . . . . . . . . . . . . . . . . (1) (1) (9)

Total shareholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 146,015 141,971 1,375,553

¥275,891 ¥255,802 $2,599,067

22 A N N U A L R E P O R T 2000

Consolidated Statements of Income



2000 1999 1998 2000

Net sales (Note 11) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥185,099 ¥190,559 ¥216,553 $1,743,749Cost of sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87,643 91,882 111,552 825,652

Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97,456 98,677 105,001 918,097

Selling, general and administrative expenses (Note 12) . . . . . . 77,102 81,199 84,884 726,350

Operating income (Note 11) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,354 17,478 20,117 191,747

Other income (expenses):Interest and dividend income . . . . . . . . . . . . . . . . . . . . . . . . . . . 762 1,061 1,143 7,179Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (918) (996) (893) (8,648)Foreign exchange gains (losses) . . . . . . . . . . . . . . . . . . . . . . . . . . 173 (231) (1,048) 1,630Gain (loss) on disposal of property, plant and equipment . . . . . . 2,183 (499) (469) 20,565Write-down of investment in securities . . . . . . . . . . . . . . . . . . . . (30) (590) (1,567) (283)Loss on early retirement benefits . . . . . . . . . . . . . . . . . . . . . . . . . – (6,937) – –Prior period adjustment for change in

accounting for unfunded retirement plan . . . . . . . . . . . . . . . . . (10,656) – – (100,386)Special contribution to the pension plan . . . . . . . . . . . . . . . . . . . (4,735) – – (44,607)Gain (loss) on sales of securities . . . . . . . . . . . . . . . . . . . . . . . . . 3,059 454 (26) 28,818Equity in earnings of unconsolidated subsidiaries and affiliates . . 172 221 279 1,620Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (342) 232 619 (3,221)

(10,332) (7,285) (1,962) (97,333)

Income before income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,022 10,193 18,155 94,414

Income taxes – Current . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,872 7,909 10,823 93,000– Deferred . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (4,041) (126) 30 (38,068)

5,831 7,783 10,853 54,932

Minority interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122 – – 1,149

Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 4,069 ¥ 2,410 ¥ 7,302 $ 38,333

Yen U.S. dollars (Note 1)

Net income per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥16.82 ¥9.96 ¥30.18 $0.16Net income per share–diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.23 9.96 30.18 0.14



Consolidated Statements of Shareholders’ Equity


Millions of yen

Number ofshares of Additional

common stock Common paid-in Retained(thousands) stock capital earnings

Balance at March 31, 1997 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 241,928 ¥34,251 ¥38,051 ¥66,171

Net income for the year ended March 31, 1998 . . . . . . . . . . . . . . . . . . . . – – – 7,302Cash dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – – – (1,814)Directors’ and statutory auditors’ bonuses . . . . . . . . . . . . . . . . . . . . . . . . – – – (89)Effect of change in number of affiliatesaccounted for by the equity method, and other . . . . . . . . . . . . . . . . . . . – – – (735)

Balance at March 31, 1998 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 241,928 ¥34,251 ¥38,051 ¥70,835

Net income for the year ended March 31, 1999 . . . . . . . . . . . . . . . . . . . . – – – 2,410Cash dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – – – (1,814)Directors’ and statutory auditors’ bonuses . . . . . . . . . . . . . . . . . . . . . . . . – – – (81)Effect of changes in consolidated subsidiariesand affiliates accounted for by the equity method . . . . . . . . . . . . . . . . . – – – (1,680)

Balance at March 31, 1999 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 241,928 ¥34,251 ¥38,051 ¥69,670

Cumulative effect of adopting deferred income tax accounting . . . . . . . . – – – 1,680Net income for the year ended March 31, 2000 . . . . . . . . . . . . . . . . . . . . – – – 4,069Cash dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – – – (1,814)Directors’ and statutory auditors’ bonuses . . . . . . . . . . . . . . . . . . . . . . . . – – – (79)Effect of decrease in affiliates accounted for by the equity method . . . . . . – – – 188

Balance at March 31, 2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 241,928 ¥34,251 ¥38,051 ¥73,714

Thousands of U.S. dollars (Note 1)

AdditionalCommon paid-in Retained

stock capital earnings

Balance at March 31, 1999 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $322,666 $358,464 $656,335

Cumulative effect of adopting deferred income tax accounting . . . . . . . . . . . . . . . . . . – – 15,826Net income for the year ended March 31, 2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – – 38,333Cash dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – – (17,089)Directors’ and statutory auditors’ bonuses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – – (744)Effect of changes in consolidated subsidiariesand affiliates accounted for by the equity method . . . . . . . . . . . . . . . . . . . . . . . . . . . – – 1,771

Balance at March 31, 2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $322,666 $358,464 $694,432


24 A N N U A L R E P O R T 2000

Consolidated Statements of Cash Flows



2000 2000

Cash flows from operating activities:Net income before income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 10,022 $ 94,414Adjustments to reconcile net income before income taxesto net cash provided by operating activities:Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,992 75,290Provision for retirement and severance benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,101 95,158Decrease in allowance for doubtful receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (55) (518)Interest and dividend income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (762) (7,179)Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 918 8,648Gain on sales of property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,535) (23,881)Gain on sales of marketable securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,548) (14,583)Gain on sales of investment securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,511) (14,235)Equity in earnings of unconsolidated subsidiaries and affiliates . . . . . . . . . . . . . . . . . . . . (172) (1,620)Decrease in notes and accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,362 12,831Increase in inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (645) (6,076)Increase in notes and accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,887 17,777Interest and dividends received . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 829 7,810Interest paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (944) (8,893)Income taxes paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (6,954) (65,511)Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,432) (13,492)

Net cash provided by operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,553 155,940

Cash flows from investing activities:Purchases of marketable securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,041) (9,807)Proceeds from sales of marketable securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,918 27,489Investments in time deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (5,616) (52,906)Maturity of time deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 216 2,035Purchases of property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (7,033) (66,255)Proceeds from sales of property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,683 34,696Purchases of intangible fixed assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (337) (3,175)Purchases of investment securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (798) (7,518)Proceeds from sales of investment securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,976 37,456Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 151

Net cash used in investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (4,016) (37,834)

Cash flows from financing activities:Net repayment of short-term bank loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (14,922) (140,575)Proceeds from long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,851 17,438Repayments of long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,706) (25,492)Issue of bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,100 189,355Dividends paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,814) (17,089)Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (81) (764)

Net cash provided by financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,428 22,873

Effect of exchange rate changes on cash and cash equivalents . . . . . . . . . . . . . . . . . . . . (227) (2,138)

Increase in cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,738 138,841Cash and cash equivalents at beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36,928 347,885

Cash and cash equivalents at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 51,666 $ 486,726



Millions of yen

1999 1998

Cash flows from operating activities:Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 2,410 ¥ 7,302Adjustments to reconcile net income to net cashprovided by (used in) operating activities:Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,016 8,226Reversal of retirement and severance benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,456) (108)Loss on disposal of property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 276 469Write-down of investment in securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 590 1,567Equity in earnings of unconsolidated subsidiaries and affiliates . . . . . . . . . . . . . . . . . . . . . (221) (279)Effect of changes in consolidated subsidiaries and affiliates . . . . . . . . . . . . . . . . . . . . . . . . (1,680) –(Increase) decrease in notes and accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,717) 240Decrease in inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,453 309(Increase) decrease in deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (136) 65(Increase) decrease in other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,958 (472)Decrease in notes and accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (9,070) (2,021)Decrease in income taxes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (806) (4,631)Increase (decrease) in accrued expenses and other current liabilities . . . . . . . . . . . . . . . . . . (2,766) 1,231Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,527) (156)

Net cash provided by (used in) operating activities . . . . . . . . . . . . . . . . . . . . . . . . . (3,676) 11,742

Cash flows from investing activities:Purchases of property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (9,165) (13,565)Proceeds from sales of property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,903 552Purchases of marketable and investment securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,744) (5,745)Proceeds from sales of marketable and investment securities . . . . . . . . . . . . . . . . . . . . . . . . 10,333 7,865Investments in and advances to unconsolidated subsidiaries and affiliates . . . . . . . . . . . . . . . – (353)Repayment of advances to unconsolidated subsidiaries and affiliates . . . . . . . . . . . . . . . . . . . 361 659Increase in other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (6,193) (6,056)Decrease in other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,063 829Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79 1,579

Net cash used in investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,363) (14,235)

Cash flows from financing activities:Net proceeds from (repayment of) short-term bank loans . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,506 (1,235)Repayment of commercial paper . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – (15,000)Proceeds from long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,129 28,746Repayments of long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (743) (7,938)Dividends paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,814) (1,814)

Net cash provided by financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,078 2,759

Effect of exchange rate changes on cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . (144) (65)

Increase in cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,895 201Cash and cash equivalents at beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35,033 34,832

Cash and cash equivalents at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥36,928 ¥ 35,033

Supplemental disclosures of cash paid during the year for:Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 982 ¥ 941

Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 8,717 ¥ 15,389


26 A N N U A L R E P O R T 2000

1. BASIS OF PRESENTING CONSOLIDATED FINANCIAL STATEMENTS

Tanabe Seiyaku Co., Ltd. and Consolidated Subsidiaries

Notes to Consolidated Financial Statements

Tanabe Seiyaku Co., Ltd. (the “Company”) and its consolidateddomestic subsidiaries maintain their accounts and records inaccordance with the provisions set forth in the JapaneseCommercial Code and the Securities and Exchange Law and inconformity with accounting principles and practices generallyaccepted in Japan, which are different from the accounting anddisclosure requirements of International Accounting Standards.The accounts of overseas consolidated subsidiaries are based ontheir accounting records maintained in conformity with generallyaccepted accounting principles and practices prevailing in therespective countries of domicile.

The accompanying consolidated financial statements are a trans-lation of the audited consolidated financial statements of theCompany which were prepared in accordance with accountingprinciples and practices generally accepted in Japan from theaccounts and records maintained by the Company and its con-solidated subsidiaries and were filed with the Minister of Finance

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(“MOF”) as required by the Securities and Exchange Law.In preparing the accompanying consolidated financial state-

ments, certain reclassifications have been made in the consoli-dated financial statements issued domestically in order to presentthem in a form which is more familiar to readers outside Japan.The consolidated statements of cash flows for 1999 and 1998have been prepared for the purpose of inclusion in the consoli-dated financial statements, although such statements were notcustomarily prepared in Japan and not required to be filed withMOF prior to 2000.

The U.S. dollar amounts herein are included solely for conve-nience and represent translations at the rate of ¥106.15=U.S.$1,the rate prevailing on March 31, 2000. It should be noted, how-ever, that this translation should not be construed as a represen-tation that the Japanese yen amounts actually represent, havebeen or could have been converted into United States dollars atthat or at any other rate.

CONSOLIDATIONThe Company has twenty-two (twenty-three in 1999, and 1998)consolidated subsidiaries and six (eight in 1999, eleven in 1998)affiliates accounted for by the equity method. Subsequent to March31, 1998, fifteen of the Company’s subsidiaries changed theirfinancial reporting period from a fiscal year ending March 31 tothe calendar year. The subsidiaries are consolidated using a fiscalperiod ending December 31 which differs from that of the Com-pany. Any material effects occurring during the January 1 to March31 period are adjusted in these consolidated financial statements.These subsidiaries and affiliates mainly manufacture and sell phar-maceutical supplies and other products. Significant intercompanyitems have been eliminated in the consolidation.

In the elimination of investments in subsidiaries, the assets andliabilities of the subsidiaries, including the portion attributable tominority shareholders, are evaluated using the fair value at thetime the Company acquired control of the respective subsidiaries.

The excess of cost over net assets of subsidiaries and affiliatesacquired is amortized over a period of five years.

ACCOUNTING CHANGEThrough the years ended March 31, 1999, the Company anddomestic subsidiaries provided for employees’ retirement benefitsin accordance with the Corporation Tax Law of Japan, at 40% ofthe amount which would be required if all eligible employees vol-untarily retired as of the balance sheet date. Effective April 1,1999, the Company and domestic subsidiaries changed theiraccounting for employees’ retirement benefits to provide for thefull amount which would be required to be paid if all eligibleemployees voluntarily retired as of the balance sheet date less theestimated amount of the funded pension assets.

The effect of this change was to decrease income before incometaxes by ¥10,404 million ($98,012 thousand) for the year endedMarch 31, 2000. The effect on years prior to the change is shownseparately in the consolidated statements of income in the amountof ¥10,656 million ($100,386 thousand).

FOREIGN CURRENCY TRANSLATIONForeign currency amounts of the Company and domestic subsid-

iaries are translated into Japanese yen on the basis of the year-end rate for current receivables and payables. Non-current receiv-ables and payables are translated, in principle, using historical rates.However, in the case of significant fluctuation of exchange rates,long-term receivables and payables are translated at the year-endrate. Gains or losses resulting from exchange adjustments are cred-ited or charged to income as incurred.

Financial statements of foreign consolidated subsidiaries andaffiliates are translated at the year-end rate except for shareholders’equity accounts which are translated at historical rates.

The differences resulting from foreign currency translations arerecorded as foreign currency translation adjustments and includedin other assets in the accompanying consolidated balance sheets.

CASH AND CASH EQUIVALENTSFor the year ended March 31, 2000, cash and cash equivalentsinclude time deposits maturing within three months.

Cash and cash equivalents in prior years included time depositsmaturing within one year.

MARKETABLE AND INVESTMENT SECURITIESEquity securities that have quoted market prices are principallyvalued at the lower of cost or market. Commencing with the yearended March 31, 1999, the Company records recoveries of write-downs of securities in accordance with a revision in the Corpora-tion Tax Law. There was no effect on net income resulting fromadopting this accounting policy. All other investments are statedat cost adjusted for any substantial and non-recoverable declinein value. Cost is calculated based on the moving average method.

INVENTORIESMerchandise is valued at the lower of weighted average cost ormarket. Finished goods are valued at the lower of moving aver-age cost or market. Other inventories, including raw materialsand supplies, are valued at moving average cost.

ALLOWANCE FOR DOUBTFUL RECEIVABLESAllowance for doubtful receivables is provided to cover possiblelosses on collection. For the Company and domestic subsidiaries,it is determined by adding individually estimated uncollectibleamounts to an amount calculated by a formula as permitted by


the Corporation Tax Law of Japan with respect to the remainingreceivables. Foreign consolidated subsidiaries record the allow-ance for doubtful receivables based on managements’ estimate.

PROPERTY, PLANT AND EQUIPMENT AND DEPRECIATIONProperty, plant and equipment are stated at cost. Depreciation isprincipally computed over the estimated useful lives of the assetson a declining-balance basis, except that buildings acquired afterMarch 31, 1998 are depreciated using the straight-line method.Maintenance, repairs and minor renewals are charged to expenseas incurred.

RESERVE FOR SALES RETURNSThe reserve for sales returns is provided for pharmaceuticals thathave passed their expiration dates, principally in the maximumamount (at the prescribed rate) permitted by Japanese tax laws.

RETIREMENT AND SEVERANCE BENEFITS AND PENSION COSTSEmployees severing their connection with the Company anddomestic subsidiaries, on retirement or otherwise, are entitled, inmost circumstances, to lump-sum severance and annuity paymentsbased on current rates of pay, length of service and certain otherfactors. The Company and domestic subsidiaries provide for theliability for lump-sum severance benefits, in the amount requiredassuming all employees voluntarily terminated their employmentat the balance sheet date. Such liability is not funded.

In addition to the unfunded lump-sum severance paymentsdescribed above, most employees of the Company and certainsubsidiaries are covered by contributory and non-contributory trust-eed pension plans.

The net assets of the Company’s funded contributory pensionplan amounted to ¥24,892 million ($234,498 thousand) at March31, 2000. Prior service costs are being amortized over 3 years and2 months.

The net assets of the Company’s funded non-contributorypension plan amounted to ¥50,343 million ($474,263 thousand) atMarch 31, 2000. Prior service costs are being amortized over 3 years.

Under separate plans, directors and statutory auditors leavingthe Company and certain domestic subsidiaries receive lump-sumpayments depending on length of service and other factors, sub-ject to shareholders’ approval. The Company and one domesticsubsidiary accrue the liability for their plans in amounts sufficientto provide for benefits arising from services performed throughthe balance sheet date.

RESEARCH AND DEVELOPMENT EXPENSES ANDSOFTWARE COSTSResearch and development expenses for the improvement ofexisting products and the development of new products, includ-ing basic research and fundamental development costs, arecharged to expense as incurred.

In accordance with the provisional rule of the JICPA’s Account-ing Committee Report No.12 “Practical Guidance for Accountingfor Research and Development Costs, etc.” (the “Report”), theCompany and domestic subsidiaries account for internal use soft-ware, which was included in long-term prepaid expenses ininvestments and other, in the same manner in 2000 as in 1999.Pursuant to the Report, however, the Company and domesticsubsidiaries included software in intangible assets in 2000 anddepreciated it using the straight-line method over the estimateduseful lives (five years). The amount for 1999 has been reclassi-fied to conform to the 2000 presentation.

BOND ISSUE COSTS AND DISCOUNTS ON BONDSBond issue costs are charged to expense as incurred. Discountson bonds are amortized by the straight-line method over the termsof the bonds.

LEASE TRANSACTIONSFinance leases of the Company and domestic subsidiaries, exceptthose leases for which the ownership of the leased assets isconsidered to be transferred to the lessee, are accounted for asoperating leases.

INCOME TAXESDeferred income taxes relating to book and tax timing differencesare not provided for in the consolidated financial statements exceptfor items related to the elimination of intercompany profits and lossesand in the accounts of certain foreign consolidated subsidiaries.

The Company and domestic consolidated subsidiaries are sub-ject to a number of different income taxes which, in the aggre-gate, reflect a statutory tax rate of approximately 42.0% (47.4%for 1999, 51.4% for 1998). The actual effective tax rates in theaccompanying consolidated statements of income differ from thestatutory rate primarily due to the limit on deductions of certainexpenses for tax purposes.

The Company provided income taxes at the amounts currentlypayable for the years ended March 31, 1999 and 1998. EffectiveApril 1, 1999, the Company and domestic subsidiaries adopted thenew accounting standard, which recognizes tax effects of temporarydifferences between the carrying amounts of assets and liabilitiesfor tax and financial reporting. The asset and liability approach isused to recognize deferred tax assets and liabilities for the expectedfuture tax consequences of temporary differences between thecarrying amounts of assets and liabilities for financial reporting pur-poses and the amounts used for income tax purposes. The amountof deferred income taxes attributable to the net tax effects of thetemporary differences at April 1, 1999 is reflected as an adjust-ment to the retained earnings brought forward from the previousyear. Prior years’ financial statements have not been restated. Thecumulative effect of adopting the new accounting standard is ¥1,680million ($15,827 thousand), which is directly added to the retainedearnings brought forward from March 31, 1999. The effect for theyear ended March 31, 2000 was to increase net income by ¥4,041million ($38,068 thousand).

CASH FLOW STATEMENTIn preparing the consolidated statements of cash flows, cash onhand, readily-available deposits and short-term highly liquidinvestments with maturities not exceeding three months at thetime of purchase are considered to be cash and cash equivalents.

The Company prepared the 2000 consolidated cash flow state-ment as required by and in accordance with the “Standards forPreparation of Consolidated Cash Flow Statements, etc.” effec-tive from the year ended March 31, 2000. The 1999 and 1998consolidated cash flow statements, which were voluntarily pre-pared for the purpose of inclusion in the consolidated financialstatements in a form familiar to readers outside Japan, have notbeen restated. Significant differences in the consolidated cash flowstatements for 2000 and prior years include the use of pretaxincome in 2000 instead of net income in prior years and addi-tional disclosure in operating activities of interest expense, incometax expense, interest and dividends income and interest and divi-dends received.

28 A N N U A L R E P O R T 2000

5. DERIVATIVE TRANSACTIONS OF THE COMPANYThe Company and subsidiaries enter into forward currency exchangecontracts and currency option contracts to hedge the risk of fluc-tuations in foreign exchange rates with respect to monetary receiv-ables and payables denominated in foreign currencies. The Companyand subsidiaries deal with highly rated international financial insti-tutions as counterparty to these transactions to minimize credit risk.The Company and subsidiaries have internal regulations regarding

entering into derivative transactions and the financial divisionestablishes policies which are approved by responsible officials ofthe Company and subsidiaries. A separate division of the Companyand subsidiaries are responsible for reviewing the activities of thedivision entering into derivative transactions.

The Company and subsidiaries have no interest swaps, outstand-ing options or futures transactions at March 31, 2000.

SHAREHOLDERS’ EQUITYUnder the Commercial Code of Japan (the “Code”), at least 50%of the issue price of new shares, with a minimum of the par valuethereof, is required to be designated as stated capital. The por-tion which is to be designated as stated capital is determined byresolution of the Board of Directors. Proceeds in excess of theamounts designated as stated capital are credited to additionalpaid-in capital.

The maximum amount that the Company can distribute asdividends is calculated based on the unconsolidated financialstatements of the Company in accordance with the Code.

BONUSES TO DIRECTORS AND STATUTORY AUDITORSBonuses to directors and statutory auditors are subject to approval

by the shareholders and are accounted for by an appropriation ofretained earnings.

RECLASSIFICATIONSCertain prior year amounts have been reclassified to conform tothe 1999 presentation. These changes had no impact on previ-ously reported results of operations or shareholders’ equity.

NET INCOME PER SHARENet income per share is computed based upon the average num-ber of shares of common stock outstanding during the period.There were no dilutive convertible bonds or stock purchase war-rants outstanding at March 31, 1999 and 1998. Diluted net incomeper share is calculated based on the assumption that all dilutiveconvertible bonds were converted at March 31, 2000.

6. INCOME TAXESThe Company and subsidiaries are subject to a number of taxes based on income, which, in the aggregate, indicate statutory rates inJapan of approximately 42.0%, 47.4% and 51.4% for the years ended March 31, 2000, 1999 and 1998, respectively.

4. MARKET VALUE INFORMATION OF SECURITIESMarket value information of securities at March 31, 2000 is as follows:

Millions of yen Thousands of U.S. dollars

Market Unrealized Market UnrealizedCost value gain Cost value gain

2000 2000

Marketable securities . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 1,521 ¥ 2,859 ¥ 1,338 $ 14,329 $ 26,934 $ 12,605Investment in securities . . . . . . . . . . . . . . . . . . . . . . . . 28,422 47,926 19,504 267,753 451,493 183,740

¥29,943 ¥50,785 ¥20,842 $282,082 $478,427 $196,345

The above amounts do not include securities for which market values are not available or certain securities whose market values donot differ significantly from book values.

3. CASH AND CASH EQUIVALENTSThe reconciliation of cash and cash equivalents in the consolidated balance sheet and cash and cash equivalents in the consolidatedstatement of cash flows at March 31, 2000, is as follows:

Thousands ofMillions of yen U.S. dollars

Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥57,063 $537,569Time deposits maturing after three months . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (5,397) (50,843)

Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥51,666 $486,726


7. INVENTORIESInventories consist of the following:


Years ended March 31, 2000 1999 2000

Finished goods and merchandise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥14,309 ¥13,535 $134,800Semi-finished products and work-in-process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,756 8,357 73,066Raw materials and supplies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,497 3,912 32,944

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥25,562 ¥25,804 $240,810

The following table summarizes the significant differences between the statutory tax rate and the Companies’ effective tax rate forfinancial statement purposes for the year ended March 31, 2000:

Statutory tax rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42.0%Non-taxable dividend income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2.4)Non-deductible expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.0Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.6

Effective tax rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58.2%

Significant components of the Companies’ deferred tax assets and liabilities as of March 31, 2000 are as follows:Thousands of

Millions of yen U.S. dollars

Current assetsDeferred tax assets:

Excess bonuses accrued . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 268 $ 2,525Enterprise taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 530 4,993Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 467 4,399

Total deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,265 11,917

Deferred tax liabilities:Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (13) (122)

Net deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥1,252 $11,795

Investment and other assetsDeferred tax assets:

Retirement benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 5,398 $50,853Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,150 10,833

Total deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,548 61,686

Deferred tax liabilities:Deferred capital gains on sale of property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (997) (9,392)Reserve for special depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (27) (254)Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (5) (48)

Total deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,029) (9,694)

Net deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 5,519 $51,992

8. BANK LOANS AND LONG-TERM DEBTShort-term bank loans outstanding are generally represented by unsecured notes, mostly for 90 days, with interest at rates rangingfrom 0.975% to 4.885% at March 31, 2000. Such loans are normally renewed at maturity.

30 A N N U A L R E P O R T 2000

9. CONTINGENT LIABILITIESContingent liabilities for loans guaranteed and notes receivable discounted at banks at March 31, 2000 were as follows:


Loans guaranteed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥426 $4,013Notes receivable discounted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70 660

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥496 $4,673

The 0.3% and 0.6% unsecured convertible bonds are convert-ible into common stock at conversion price of ¥779 ($7.38) pershare. The conversion prices of the convertible debentures aresubject to adjustment as provided in the issuing agreements. The

Company reserves the right to redeem all convertible bonds, ifthe market price of the common stock of the Company for aperiod of 20 consecutive stock exchange trading days of the TokyoStock Exchange is above 120% of the conversion price.

Long-term debt consists of the following:Thousands of


Years ended March 31, 2000 1999 2000

Loans from banks, insurance companies and other financial institutions,1.492% to 6%, maturing serially through 2018:Secured . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 716 ¥ 615 $ 6,745Unsecured . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,170 11,211 95,808

2.0% unsecured bonds due in 2001 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,000 10,000 94,2062.5% unsecured bonds due in 2003 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,000 10,000 94,206Unsecured discount bonds due in 2002 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,000 2,000 18,8421.9% secured bonds due in 2004 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100 – 9420.3% unsecured convertible bonds due in 2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,000 – 94,2060.6% unsecured convertible bonds due in 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,000 – 94,206

52,986 33,826 499,161Less current maturities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (10,499) (1,530) (98,907)

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 42,487 ¥32,296 $400,254

Assets pledged as collateral mainly for secured long-term debt at March 31, 2000 were as follows:Thousands of


Property, plant and equipment, at net book value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥1,646 $15,506

The annual maturities of long-term debt at March 31, 2000 were as follows:Thousands of

Years ending March 31, Millions of yen U.S. dollars

2001 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥10,499 $ 98,9072002 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,648 34,3662003 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,932 168,9312004 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129 1,2152005 and thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,778 195,742

¥52,986 $499,161


11. SEGMENT INFORMATIONThe Company and consolidated subsidiaries primarily manufac-ture and sell in two business segments: Pharmaceuticals andOther Products.

Operations in the manufacture and sale of Pharmaceuticalsinvolve products which relate to the ethical products, OTC prod-ucts and diagnostics.

Operations in the manufacture and sale of Other Productsinvolve products which relate to food additives and others. OtherProducts include veterinary medicine and fine chemicals, whichwere included in the Pharmaceuticals segment prior to the yearended March 31, 2000.

The original lease obligations for machinery and equipment,as of March 31, 2000, including interest, was ¥4,085 million($38,483 thousand).

Lease payments for such leases for the years ended March 31,2000, 1999 and 1998 were ¥843 million ($7,942 thousand), ¥691million and ¥596 million, respectively.

10. FINANCE LEASESInformation for non-capitalized finance leases at March 31, 2000 and 1999 is as follows:


2000 1999 2000

Future minimum payments(Including finance charges):Payments due within one year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 852 ¥ 734 $ 8,026Payments due within after one year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,278 1,496 12,040

¥2,130 ¥2,230 $20,066

Business segment information is as follows:Thousands of


2000 1999 1998 2000

Net sales:Pharmaceuticals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥156,279 ¥172,016 ¥193,451 $1,472,247Other products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28,820 18,543 23,102 271,502

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥185,099 ¥190,559 ¥216,553 $1,743,749

Operating expenses:Pharmaceuticals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥135,964 ¥154,989 ¥174,026 $1,280,867Other products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28,781 18,092 22,410 271,135

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥164,745 ¥173,081 ¥196,436 $1,552,002

Operating income:Pharmaceuticals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 20,315 ¥ 17,027 ¥ 19,425 $ 191,380Other products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 451 692 367

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 20,354 ¥ 17,478 ¥ 20,117 $ 191,747

Identifiable assets:Pharmaceuticals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥246,018 ¥225,785 ¥230,109 $2,317,645Other products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29,873 30,017 32,964 281,422

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥275,891 ¥255,802 ¥263,073 $2,599,067

Depreciation and amortization:Pharmaceuticals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 7,951 ¥ 8,136 ¥ 7,412 $ 74,903Other products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 715 880 814 6,736

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 8,666 ¥ 9,016 ¥ 8,226 $ 81,639

Capital expenditure:Pharmaceuticals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 6,940 ¥ 8,367 ¥ 16,212 $ 65,379Other products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 774 715 1,514 7,292

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 7,714 ¥ 9,082 ¥ 17,726 $ 72,671

The Company and consolidated subsidiaries operate mainly withinJapan and have an immaterial amount of intersegment sales.

In addition, sales to foreign customers were approximately10.0%, 14.4% and 13.8% of consolidated sales for the yearsended March 31, 2000, 1999 and 1998, respectively.

32 A N N U A L R E P O R T 2000

Report of Independent Certified Public Accountants

Board of DirectorsTanabe Seiyaku Co., Ltd.

We have audited the accompanying consolidated balance sheets of Tanabe Seiyaku Co., Ltd. (a Japanese corporation) and subsidiariesat March 31, 2000 and 1999, and the related consolidated statements of income, shareholders’ equity and cash flows for each of thethree years in the period ended March 31, 2000, expressed in Japanese yen. Our audits were made in accordance with generallyaccepted auditing standards in Japan and, accordingly, included such tests of the accounting records and such other auditing proce-dures as we considered necessary in the circumstances.

In our opinion, the consolidated financial statements referred to above present fairly the consolidated financial position of TanabeSeiyaku Co., Ltd. and subsidiaries at March 31, 2000 and 1999, and the consolidated results of their operations and their cash flows foreach of the three years in the period ended March 31, 2000 in conformity with accounting principles generally accepted in Japanapplied on a consistent basis during the periods, except for the new accounting policies and change in accounting policy, with whichwe concur, in the following paragraph.

As explained in Note 2 in the year ended March 31, 2000, Tanabe Seiyaku Co., Ltd. and subsidiaries prospectively adopted newJapanese accounting standards for consolidation and equity method accounting, income taxes and research and development expensesand software costs. Also, Tanabe Seiyaku Co., Ltd. and domestic subsidiaries changed their method of accounting for retirementbenefits as referred to in Note 2 for the year ended March 31, 2000.

Also, in our opinion, the U.S. dollar amounts in the accompanying consolidated financial statements have been translated fromJapanese yen on the basis set forth in Note 1.

Asahi & Co.Osaka, JapanJune 29, 2000

Certified Public Accountants

STATEMENT ON ACCOUNTING PRINCIPLES AND AUDITING STANDARDS

This statement is to remind users that accounting principles and auditing standards and their application in practice may vary among nations andtherefore could affect, possibly materially, the reported financial position and results of operations. The accompanying financial statements areprepared based on accounting principles generally accepted in Japan, and the auditing standards and their application in practice are thosegenerally accepted in Japan. Accordingly, the accompanying consolidated financial statements and the auditors’ report presented above are forusers familiar with Japanese accounting principles, auditing standards and their application in practice.

14. SUBSEQUENT EVENTSOn June 29, 2000, the shareholders of the Company authorizedthe following:(a) Payment of cash dividends of ¥3.75 ($0.04) per share to share-holders of record at March 31, 2000 or a total of ¥907 million($8,545 thousand) .

(b) Payment of bonuses to directors and statutory auditors of ¥40million ($377 thousand).

12. RESEARCH AND DEVELOPMENT EXPENSESResearch and development expenses for the year ended March 31, 2000 were ¥19,475 million ($183,467 thousand).

13. RELATED PARTY TRANSACTIONSFor the year ended March 31, 2000 the Company purchased goods in the amount of ¥10,387 million ($97,852 thousand) from EikenChemical Co., Ltd. which is 37.4% owned by the Company and accounted for by the equity method.


Tanabe Group Companies(As of March 31, 2000)

% votingEstablishment Paid-in capital control*** Principal business

JAPANAce Art Co., Ltd.* March 1955 ¥40 million 100.0% Advertising agency; graphic design

(20.0%)Sun Chemical Co., Ltd.* June 1970 ¥342 million 64.2% Manufacture of intermediates for pharmaceuticals and dyesSun Total Information Center Co., Ltd.* December 1984 ¥10 million 100.0% Preparation and retail sales of pharmaceuticals

(50.0%)Sun Clinical Statistics Center Co., Ltd.* November 1988 ¥20 million 100.0% Medical information research and analysis servicesTanabe R&D Service Co., Ltd.* August 1984 ¥40 million 100.0% Testing of pharmaceuticals and related products;

translation and medical technology information servicesTanabe Seiyaku Engineering Co., Ltd.* June 1991 ¥30 million 100.0% Engineering and maintenance services for production

(35.0%) equipmentTanabe Seiyaku Trading Co., Ltd.* March 1995 ¥350 million 100.0% Sale of pharmaceuticals and related productsTanabe Total Service Co., Ltd.* February 1964 ¥60 million 100.0% Real estate

(50.0%)Marugo Butsuryu Service Co., Ltd.* November 1986 ¥30 million 100.0% Warehouse operations

(20.0%)Yashima Chemical Engineering Co., Ltd.* July 1958 ¥45 million 99.8% Manufacture of general machinery, tools, and equipment

(1.1%)Yoshiki Pharmaceuticals Ind. Co., Ltd.* July 1964 ¥400 million 100.0% Manufacture of pharmaceuticalsEiken Chemical Co., Ltd.** February 1939 ¥4,462 million 37.4% Manufacture of reagents for clinical testingOgura Art Printing Co., Ltd.** February 1957 ¥145 million 30.8% PrintingKoei Shoji Co., Ltd.** August 1954 ¥10 million 50.0% Non-life insurance agencyTama Kagaku Kogyo Co.,Ltd.** December 1962 ¥126 million 22.2% Manufacture of raw materials for pharmaceuticalsMatsumura Yakuhin Kogyo Co., Ltd.** September 1964 ¥10 million 30.0% Manufacture of animal food additives

UNITED STATESTanabe U.S.A., Inc.* January 1970 US$1,400,000 100.0% Export, import, and sale of pharmaceuticals7930 Convoy Court, San Diego, California 92111, U.S.A.Telephone:1-858-571-8410 Facsimile:1-858-571-3476Tanabe Research Laboratories U.S.A., Inc.* November 1990 US$3,000,000 100.0% Research and development of pharmaceuticals4540 Towne Centre Court,San Diego, California 92121, U.S.A.Telephone:1-858-622-7000 Facsimile:1-858-558-0650Tanabe Group Service U.S.A., Inc.* November 1991 US$7,000,000 100.0% Real estate leasing and maintenance7930 Convoy Court, San Diego, California 92111, U.S.A.Telephone:1-858-571-8410 Facsimile:1-858-571-3476

EUROPETanabe Europe N.V.* December 1972 EUR260,000 100.0% Export, import, and sale of pharmaceuticalsExcelsiorlaan 83, 1930 Zaventem, BelgiumTelephone:32-2-725-5100 Facsimile:32-2-725-5757Synthelabo-Tanabe Chimie S.A.** June 1987 FFR10,000,000 50.0% Manufacture and sale of bulk pharmaceuticals22 Avenue Galilee, 92350 Le Plessis-Robinson, FranceTelephone:33-1-45-37-55-55 Facsimile:33-1-45-37-57-45Tanabe Finance (Holland) B.V.* March 1991 DGL400,000 100.0% Fund-raising and investment management in Officia 1, De Boelelaan 7, international financial markets1083 HJ Amsterdam, The NetherlandsTelephone:31-20-646-59-96 Facsimile:31-20-642-76-75

ASIATanabe Seiyaku Singapore Pte. Ltd.* January 1993 S$400,000 100.0% Export, import, and sale of pharmaceuticals10 Hoe Chiang Road, #14-02 Keppel Towers,Singapore 089315Telephone:65-323-0339 Facsimile:65-323-0619Tanabe Seiyaku (Malaysia) Sdn. Bhd.* August 1996 M$500,000 100.0% Export, import, and sale of pharmaceuticals17 Jalan SS 25/34, Taman Mayang Industrial Park,Taman Mayang, 47301, Petaling Jaya,Selangor Darul Ehsan, MalaysiaTelephone:60-3-703-1887 Facsimile:60-3-703-1987P.T. Tanabe-Abadi * July 1970 US$2,500,000 80.0% Manufacture and sale of pharmaceuticalsHead OfficeJL.Rumah Sakit No.104, Ujungberung,Bandung 40612, IndonesiaTelephone:62-22-7800001 Facsimile:62-22-7800081Jakarta OfficeJL.Tanah Abang III No.8, Jakarta Pusat 10160, IndonesiaTelephone:62-21-3841842 Facsimile:62-21-3807550Taiwan Tanabe Seiyaku Co., Ltd.* September 1962 NT$90,000,000 65.0% Manufacture of pharmaceuticals11th Floor, No.108, Nanking, East Road, Section 5,Taipei, Taiwan, R.O.C.Telephone:886-2-2756-8555 Facsimile:886-2-2753-4789Tai Tien Pharmaceuticals Co., Ltd.* July 1987 NT$20,000,000 65.0% Sale of pharmaceuticals11th Floor, No.108, Nanking, East Road, Section 5,Taipei, Taiwan, R.O.C.Telephone:886-2-2756-8555 Facsimile:886-2-2753-4789Tianjin Tanabe Seiyaku Co., Ltd.* October 1993 US$12,000,000 66.7% Manufacture and sale of pharmaceuticals491 Huang-he Road, Nankai District,Tianjin, The People’s Republic of ChinaTelephone:86-22-2762-5555 Facsimile:86-22-2761-9536

* Consolidated subsidiary ** Affiliated company accounted for by the equity method*** Figures in parentheses show indirect control.

34 A N N U A L R E P O R T 2000

Board of Directors(As of June 29, 2000)

1. Toshio Tanaka2. Natsuki Hayama3. Susumu Hatanaka4. Shoei Nakashima5. Katsunori Tanino6. Masatoshi Nakamura7. Kazuhide Koami

TOSHIO TANAKAPresident and Chief Executive Officer,Representative Director

NATSUKI HAYAMASenior Managing DirectorAssistant to the President

SUSUMU HATANAKAManaging DirectorAdministration and Environmental Management

SHOEI NAKASHIMAManaging DirectorResearch & Development andDiscovery Research Laboratory

KATSUNORI TANINOManaging DirectorMarketing & Sales

MASATOSHI NAKAMURADirectorInternational Trade Division

KAZUHIDE KOAMIDirectorHuman Resources Division

Standing Corporate Auditor

KAZUO NODA

Corporate Auditors

SHOZO YOSHIMATSUMASANAO IECHIKAIKUO UNO

2

3

1

75 46

Financial Highlights

ContentsProfile 1An Interview with the President: 2 Focusing on GrowthPharmaceuticals Marketing 6Principal Ethical Drugs and Market Trends 7Research and Development 9Tanabe’s R&D Pipeline in Japan 10Environmental Conservation Activities 12Review of Fiscal 2000 13Tanabe Group Companies 33Board of Directors 34Corporate Data 35

A N N U A L R E P O R T 2000


Thousands ofU.S. dollarsexcept per

Millions of yen except per share amounts share amounts % change

2000 1999 1998 2000 2000/1999

Net sales ¥185,099 ¥190,559 ¥216,553 $1,743,749 –2.9%Gross profit 97,456 98,677 105,001 918,097 –1.2Operating income 20,354 17,478 20,117 191,747 +16.5Income before income taxes 10,022 10,193 18,155 94,414 –1.7Net income 4,069 2,410 7,302 38,332 +68.8

Per share amounts (yen / dollars):Net income ¥16.82 ¥9.96 ¥30.18 $0.16 +68.9%Net income–diluted 15.23 9.96 30.18 0.14 +52.9Cash dividends 7.5 7.5 7.5 0.07 0.0

Shareholders’ equity ¥146,015 ¥141,971 ¥143,136 $1,375,553 +2.8%Total assets 275,891 255,802 263,073 2,599,067 +7.9Long-term debt, less current maturities 42,487 32,296 30,885 400,254 +31.6

Note: U.S. dollar amounts are converted from yen, for convenience only, at the rate of ¥106.15 to US$1, the rate prevailing on March 31, 2000.

‘9696 ‘9797 ‘9898 ‘9999 ‘0000 ‘9696 ‘9797 ‘9898 ‘9999 ‘0000 ‘9696 ‘9797 ‘9898 ‘9999 ‘0000

Net Sales

(Billion ¥)

0

150

50

200

100

250

Net Income

(Billion ¥)

0

2

6

4

8

Shareholders’ Equity

(Billion ¥)

0

30

60

90

120

150

Corporate Data(As of March 31, 2000)

TANABE SEIYAKU CO., LTD.

Headquarters2-10, Dosho-machi 3-chome,Chuo-ku, Osaka 541-8505, JapanTelephone: (06) 6205-5555Facsimile: (06) 6205-5262

International Trade DivisionTelephone: (06) 6205-5484Facsimile: (06) 6222-0470

Tokyo Headquarters26, Sanban-cho,Chiyoda-ku, Tokyo 102-8355, JapanTelephone: (03) 3230-6611Facsimile: (03) 3230-6605

Established1678

IncorporatedDecember 1933

Number of Employees (Parent company only)4,019

Shareholders’ Equity¥146,015 million

Common StockAuthorized: 600,000,000 sharesIssued: 241,927,928 shares

Stock Exchange ListingsTokyo, Osaka, Nagoya,Fukuoka, Sapporo

Domestic BranchesHokkaido, Tohoku, Tokyo I, II, and III, Tokai,Kyoto, Osaka, Chushikoku, Kyushu

PlantsOsaka, Onoda

Research LaboratoriesTokyo• Discovery Research LaboratoryOsaka• Discovery Research Laboratory• Safety Research Laboratory• Product & Technology Development Laboratory

Overseas OfficesU.S. Representative Office401 Hackensack Ave.,10th Floor, Hackensack,New Jersey 07601, U.S.A.Telephone: 1-201-342-6002Facsimile: 1-201-342-6866

London OfficeCP House, 97-107 Uxbridge Road,Ealing, London, W5 5TL, U.K.Telephone: 44-181-566-0356Facsimile: 44-181-566-0376


Focusing on Growth

TANABE SEIYAKU

Annual Report 2000

Printed in Japan

TANABE SEIYAKU CO., LTD.2-10, Dosho-machi 3-chome, Chuo-ku, Osaka 541-8505, Japan

2-10, Dosho-machi 3-chome, Chuo-ku, Osaka 541 …...Focusing on Growth TANABE SEIYAKU Annual Report...

Documents

Transcript of 2-10, Dosho-machi 3-chome, Chuo-ku, Osaka 541 …...Focusing on Growth TANABE SEIYAKU Annual Report...