May 17, 2002 May 17, 2002 Fiscal Year Ended March 31, 2002 Fiscal Year Ended March 31, 2002 Information Meeting Information Meeting Kazumasa Kazumasa Kobayashi Kobayashi President & CEO President & CEO Kobayashi Pharmaceutical Co., Ltd. Kobayashi Pharmaceutical Co., Ltd.
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May 17, 2002May 17, 2002
Fiscal Year Ended March 31, 2002Fiscal Year Ended March 31, 2002
Consolidated Financial Consolidated Financial Results for Fiscal 2002Results for Fiscal 2002
Kobayashi Pharmaceutical Co., Ltd. 3
OverviewOverviewll Acquisition of Acquisition of Kiribai Kiribai ChemicalChemicalll Acquisition of goodwill from Chugai PharmaceuticalAcquisition of goodwill from Chugai Pharmaceuticalll Liquidation of Aquarius Medical (scheduled for July) Liquidation of Aquarius Medical (scheduled for July) ll Sale of shares of Nisshin Sale of shares of Nisshin Insatsu Insatsu ShikiShikill Sale of shares of KobayashiSale of shares of Kobayashi Sofamor Danek Sofamor Danek ll Kensho Kensho became a subsidiary of Kobayashi; became a subsidiary of Kobayashi;
Partnership with OTC drug wholesalers in the Partnership with OTC drug wholesalers in the Shikoku region Shikoku region
ll Reduction of the effective tax rate (48% Reduction of the effective tax rate (48% ⇒⇒ 44%)44%)ll Competitive advantages achieved for deodorizing Competitive advantages achieved for deodorizing
air fresheners, air fresheners, NetsusamaNetsusama Sheet, Sheet, EyebonEyebon, , SarasartySarasarty, , and Breath Careand Breath Care
ll Strong sales of nutritional supplement food products Strong sales of nutritional supplement food products ((¥¥3.4 billion through direct marketing and 3.4 billion through direct marketing and ¥¥1.1 billion 1.1 billion through sales at drugstores) through sales at drugstores)
Wholesale Operation Wholesale Operation for Fiscal 2002for Fiscal 2002
Kobayashi Pharmaceutical Co., Ltd. 20
To become an OTC drug wholesaler To become an OTC drug wholesaler with sales of with sales of ¥¥300 billion300 billion
Expansion of geographical Expansion of geographical coverage through coverage through acquisition of regional acquisition of regional wholesalers (subsidiaries) wholesalers (subsidiaries) and partnerships and partnerships
Kensho Kensho became a became a subsidiary of subsidiary of KobayashiKobayashi25% 25% ⇒⇒ 51%51%
Partnerships with Partnerships with three OTC drug three OTC drug
Medical Devices Medical Devices Operation Operation
for Fiscal 2002for Fiscal 2002
Kobayashi Pharmaceutical Co., Ltd. 22
ll Enrichment of the product lineEnrichment of the product line--upup Handling of products of 21 manufacturersHandling of products of 21 manufacturers Acquisition of goodwill from Chugai Acquisition of goodwill from Chugai
Consumer Products OperationConsumer Products Operation’’s s policiespoliciesll New product development New product development aiming at a big fish in aiming at a big fish in
small pondssmall pondsReduction in number of new itemsReduction in number of new items
3030--35 35 ⇒⇒ 20 items a year20 items a yearUtilization of development project teamsUtilization of development project teams
ll Beat competitors and achieve larger market shareBeat competitors and achieve larger market shareDeodorizing air freshenersDeodorizing air fresheners 46% 46% ⇒⇒ 49%49%EyebonEyebon 53% 53% ⇒⇒ 5555%%NetsusamaNetsusama SheetSheet 53% 53% ⇒⇒ 55%55%
ll Thorough reduction of manufacturing costs Thorough reduction of manufacturing costs ¥¥1.2 1.2 billionbillion
ll Redeployment of brandsRedeployment of brands
Kobayashi Pharmaceutical Co., Ltd. 31
A new approach to product A new approach to product developmentdevelopment
MarketingMarketing
Technology Technology developmentdevelopment
ResearchResearch
Ad agencyAd agency
Aroma companyAroma company
Alliances with other companiesAlliances with other companies
Launch of a creative Launch of a creative development organizationdevelopment organization
Marketing Dept.Marketing Dept.
Ph
armaceu
ticalsP
harm
aceuticals
Oral h
ygien
e O
ral hyg
iene
and
foo
dan
d fo
od
San
itary and
S
anitary an
d
skin care
skin care
Deo
do
rizing
air D
eod
orizin
g air
freshen
ersfresh
eners
Ho
useh
old
H
ou
seho
ld
sun
dries
sun
dries
Creative
Creative
develo
pm
ent
develo
pm
ent
Kobayashi Pharmaceutical Co., Ltd. 33
Strengthen and expand Strengthen and expand international businessinternational business
ll Competition strategy and expansion strategyCompetition strategy and expansion strategy
ChinaChina Launch a new deodorizing air freshener productLaunch a new deodorizing air freshener product
UKUK Launch an additional Launch an additional NetsusamaNetsusama Sheet productSheet product
USUS Media mix, advertising in focused 13 areasMedia mix, advertising in focused 13 areas
ll Creation of new marketsCreation of new markets
Start sales of body warmersStart sales of body warmers
Kobayashi Pharmaceutical Co., Ltd. 34
Forecasts of sales and operating income in Forecasts of sales and operating income in the US for the year ending December 2002 the US for the year ending December 2002
-700
-600
-500
-400
-300
-200
-100
0
100
200
300
400
1999 2000 2001 2002(forecast)
Sales Operating loss
¥¥ millionmillion
Kobayashi Pharmaceutical Co., Ltd. 35
-250
-200
-150
-100
-50
0
50
100
150
200
2001 2002 (forecast)
Sales
Operating loss
Forecasts of sales and operating income in Forecasts of sales and operating income in the UK for the year ending December 2002the UK for the year ending December 2002
¥¥ millionmillion
Kobayashi Pharmaceutical Co., Ltd. 36
-200
-100
0
100
200
300
400
500
1999 2000 2001 2002(forecast)
Sales
Operating loss
Forecasts of sales and operating income in Forecasts of sales and operating income in China for the year ending December 2002China for the year ending December 2002
¥¥ millionmillion
Kobayashi Pharmaceutical Co., Ltd. 37
Medical Devices OperationMedical Devices Operation’’s s policiespolicies
ll Strengthen manufacturing and developmentStrengthen manufacturing and development Product development in house: Product development in house:
Launch of 2 productsLaunch of 2 products Acquisition of Japanese/overseas manufacturersAcquisition of Japanese/overseas manufacturersll Find new partner manufacturersFind new partner manufacturers ll Strengthen sales of products procured from Strengthen sales of products procured from
partner manufacturerspartner manufacturers Sharpest focus on orthopedicsSharpest focus on orthopedics
Kobayashi Pharmaceutical Co., Ltd. 38
0
1 , 0 00
2 , 0 00
3 , 0 00
4 , 0 00
5 , 0 00
6 , 0 00
7 , 0 00
1998 1999 2000 2001 2002 2003(forecast)
Surgery Otolaryngology Orthopedics Neurosurgery
Medical Devices OperationMedical Devices Operation’’s s salessales NonNon--consolidatedconsolidated