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Eisai supports the World Health Organization’s programme to eliminate lymphatic filariasis.

Striving to be a human health care company

Performing Better with Fewer Resources Annual Report 2013

The Eisai Group’s corporate philosophy is to “give first thought to patients and their families, and to increase the benefits health care provides.” Guided by this philosophy, all corporate officers and employees of the Eisai Group are working as one to meet diversified health care needs worldwide. By doing so, we aim to be a human health care (hhc ) company capable of making a meaningful contribution under any health care system.

Our hhc mark was designed based on the signature of Florence Nightingale (1820–1910).

Eisai—a Human Health

Care (hhc) Company

Corporate Philosophy Corporate Objective

The Company’s corporate philosophy is to give first thought to patients and their families, and to increase the benefits health care provides. Under this concept, the Company endeavors to become a human health care (hhc) company.

A human health care (hhc) company capable of making a meaningful contribution under any health care system while observing the highest legal and ethical standards in business activities.

Eisai Co., Ltd. Annual Report 2013

To Our Stakeholders Consolidated Financial Highlights Feature: Performing Better with Fewer Resources

Management Foundation Financial Section Corporate DataIntroduction

ContentsIntroduction

Forward-looking Statements and Risk Factors

Materials and information provided in this Annual Report may contain “forward-looking statements” based on current expec-tations, forecasts, estimates, business goals, and assumptions that are subject to risks and uncertainties, which could cause actual outcomes and results to differ materially from these statements. Risks and uncertainties include general industry and market conditions and general domestic and international economic conditions, such as interest rate and currency exchange fluctuations.

Risks that may cause significant fluctuations in the consoli-dated results of the Company or have a material effect on decisions of shareholders are described below. These are risk factors that have been identified and assessed as of the disclosure date of the Annual Report. Risk factors associated with our business include, but are not limited to, challenges arising out of global expansion, uncertainties in new drug development, risks related to dependence on specific prod-ucts, risks related to strategic alliances with partners, health care cost-containment measures, intensified competition and lawsuits with generic products, intellectual properties, possible incidence of adverse events, compliance with laws and regula-tions, litigations, closure or shutdown of factories, safety and quality issues of raw materials used, outsourcing-related risks, environmental issues, IT security/information management, and conditions of financial markets, foreign exchange fluctuations, internal control systems and natural disasters.

Environmental and Social Report

Eisai recognizes the importance of fulfilling its corporate social responsibili-ties as a good corporate citizen and of being recognized by society as a trustworthy organization. Since 2001, we have published an Environmental and Social Report that summarizes our activities in this area.

For further details, please refer to:

http://www.eisai.com/responsibility/esreport/index.html

Contents

02 To Our Stakeholders

05 Consolidated Financial Highlights

07 Feature: Performing Better with Fewer Resources

07 Looking Back at the Two years of the Mid-term Strategic Plan “HAYABUSA”

08 Further Enhancement of Product Creation Capabilities to Generate Innovation

09 Yearly Progress of R&D Projects

10 Major R&D Pipeline

13 Fundamental Strengthening of Domestic Marketing Capabilities to Support Further

Growth in Japan

14 New Regional Structure for Utilizing Resources More Efficiently and Maximizing

Product Value

15 Improvement of Access to Medicines in Emerging and Developing Countries

17 Creating Corporate Value with Vigorous Investment for Growth and Financial Strategy

19 Management Foundation

19 Corporate Social Responsibility

23 Shareholder Returns

24 Corporate Governance

29 Board of Directors and Executive Officers

32 Financial Section

53 Corporate Data

53 Intellectual Property, Risk Factors

55 Japan and Overseas Operations

58 Corporate Data

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Introduction To Our Stakeholders Consolidated Financial Highlights

01

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To Our Stakeholders Consolidated Financial Highlights Feature: Performing Better with Fewer Resources

Management Foundation Financial Section Corporate Data

01

Introduction

Introduction Contents

Fiscal 2012 (the year ended March 31, 2013)

was marked by an increase in global economic

uncertainty due to fiscal challenges in Europe

and the U.S., combined with an economic slow-

down in China and other emerging nations. For

the world’s pharmaceuticals market, these

global economic shifts have ushered in an era of

great globalization, characterized by slower

growth in advanced countries and increased

growth opportunities in emerging and develop-

ing markets. In Japan’s economy, the major

strategic challenge is promoting growth through

innovation. We think the pharmaceutical industry

has a major role to play in this regard. The

growth strategy demanded of the pharmaceuti-

cal industry today is to strengthen innovation

capabilities while at the same time trying to

improve access to medicines. I believe we must

pursue these goals based on the concept of

“Performing Better with Fewer Resources.” The

most critical of these resources is time. We must

recognize that we are in an era when it is vital for

businesses to try to raise efficiency and produc-

tivity in a short space of time.

I believe that the driving forces for innovating

in drug discovery are the ability to develop

To Our Stakeholders

Haruo NaitoPresident (Representative Corporate Officer)and CEO


Introduction Consolidated Financial Highlights Feature: Performing Better with Fewer Resources


02

To Our Stakeholders

therapeutic hypotheses based on human biology

and modern chemistry capabilities that enable

the translation of those hypotheses into viable

compounds. The Eisai Group drew on these

capabilities to discover and develop Halaven®,

an anticancer agent derived from natural prod-

ucts. We have gained regulatory approval for this

drug in more than 40 countries and regions,

including Japan, the U.S., and Europe. We have

also gained regulatory approval in Europe and the

U.S. for antiepileptic agent Fycompa®, a propri-

etary drug with a novel mechanism of action.

In recent years, there have been innovative

advances in both human biology and synthetic

chemistry. Genetic information is the most valu-

able asset in human biology. The identification of

drug-discovery targets based on information

about disease-related genes is now the basis of

drug discovery. We are also seeing the use of

induced pluripotent stem (iPS) cells or embry-

onic stem cells as tools for drug discovery, in

addition to their uses in regenerative medicine.

In terms of chemistry, modern drug discovery

relies on skills not only in medicinal chemistry

and process chemistry, but also in having com-

pound libraries with unique structures such as a

diversity-oriented synthesis (DOS) library.

Group subsidiary H3 Biomedicine Inc., which

is based in Cambridge, MA, one of the world’s

leading bio-clusters, is one example of a com-

pany that is aiming to discover drugs based on

using genetic information from cancer patients

to shorten the R&D process and

reduce the scale of clinical trials.

Focusing on this genetic informa-

tion allows us to identify in what

types of cancer patients drugs

could be most effective, allowing

the clinical R&D process to require

fewer trial subjects. This helps

shorten the R&D process—the

essence of “Performing Better with

Fewer Resources.”

In the dementia field, focusing drug discov-

ery on the beta-amyloid plaque deposition

process has in recent times been viewed as the

most promising approach for developing

disease- modifying agents. The Eisai Group is

proceeding with the clinical development of

beta-amyloid-related disease-modifying agents.

As a pioneer in the dementia field, we continue

to focus on developing next-generation

Alzheimer’s disease treatments.

The Eisai Group is also rising to the challenge

of tackling many diseases suffered by patients in

countries around the world. One example is

neglected tropical diseases (NTDs) that are

widespread in poorer areas. Many NTD endemic

countries are developing nations and because

they are poor and lack the proper medical care

systems, they face the problem of access to

medicines, that is, the necessary pharmaceuti-

cals do not reach the patients that need them.

This sort of global health problem is an issue

that should be tackled collectively. In other

words, it should be tackled not only by pharma-

ceuticals companies, but also together with

local governments, international institutions,

NPOs and other stakeholders.

The Eisai Group believes that enhancing

health and welfare and access to medicines in

these countries will contribute to the expansion

of the middle-income base and economic

growth, and is therefore a form of long-term

investment for developing future markets. That’s

why we are active in this domain.

The Eisai Group will manufacture 2.2 billion

diethylcarbamazine citrate (DEC) tablets, a

treatment for lymphatic filariasis, one of the

NTDs for which there is an insufficient supply of

DEC globally, at the Vizag Plant in India. These

tablets will be supplied to the World Health

Organization (WHO) for seven years from 2013

free of charge under our “price zero” program.




03

To Our Stakeholders

Furthermore, in April 2013, we co-established

the Global Health Innovative Technology Fund

(GHIT Fund), a public-private partnership for

advancing the R&D of new medicines, vaccines

and diagnostics from Japan to fight infectious

diseases that are prevalent in developing

countries.

Additionally, with innovative pharmaceuticals

such as Aricept® and Halaven®, we will set drug

prices that patients can easily afford according

to economic conditions and insurance systems

in each country, so that they reach patients in

emerging and developing countries. In this way,

we are aiming to create a sustainable business

model whereby new products reach patients

more quickly to help many more patients.

As a financial strategy for maximizing corpo-

rate value, from fiscal 2013 we plan to take a

more aggressive approach by putting greater

emphasis on growth-oriented investments within

the Group’s capital expenditures. To date, our

policy has been to allocate free cash flow equally

to fund (1) dividends, (2) investments for growth,

and (3) reinforcement of our financial base.

Because we forecast an improvement in our

liabilities ratio (Net Debt Equity Ratio (DER)) to

0.20 in fiscal 2013, our policy from

fiscal 2013 is to substantially

increase the allocation of cash flow

to investments for growth. Including

debt capacity, we believe that we

can secure a ceiling of ¥150 – 200

billion for total strategic investments.

With these funds, we will make

substantial investments in launching

new products in the domains of

oncology and central nervous system (CNS), and

in growth fields by acquiring firms in China and

other emerging markets.

We put importance on earnings per share

(EPS) and return on equity (ROE) as indicators of

efficiency for the Eisai Group. We expect to

achieve double-digit growth in EPS from fiscal

2013. Our target for ROE is to raise it to the

15% level in fiscal 2015. In line with these goals,

we aim to keep the dividend-on-equity (DOE)

ratio in the 8-10% range. We have set an annual

dividend floor of ¥150 per share and our goal is

not to reduce the dividend, in principle.

In June 2013, we launched BELVIQ® in the

U.S. as the first new anti-obesity agent to gain

approval in 13 years. BELVIQ® has an original

mechanism of action as a selective 5-HT2C

receptor agonist. It has been shown to be effec-

tive as a pharmaceutical adjunct to aid weight

loss in patients undertaking dietary management

and exercise programs. Communicating the

concept of weight management will be key to

BELVIQ® growing into a major product.

In Japan, meanwhile, a Ministry of Health,

Labour and Welfare study group estimates that

the number of people suffering from dementia

among elderly aged 65 years of age or older

was approximately 4.62 million as of 2012; the

number of patients suffering from mild cognitive

impairment (MCI) was estimated at about 4 mil-

lion. While Aricept ®, a treatment for Alzheimer’s

disease, has lost its exclusivity in Japan, we are

revamping our sales structure in Japan to one

that is more patient driven as we aim to ensure

that untreated patients and their families under-

stand the importance of early diagnosis and

treatment. We will continue to apply the wealth

of knowledge and expertise that Eisai has

acquired in the field of dementia.

We aim to enhance corporate value on a

sustained basis, based on the “human health

care” concept. We ask all of our stakeholders

for their continued support.

August 2013

Haruo Naito

President (Representative Corporate Officer)

and CEO




04

To Our Stakeholders

Consolidated Financial Highlights 1

Japan North America Europe Asia and others East Asia Pharmaceuticals Business*2 U.S. Pharmaceuticals Business*2 Europe Pharmaceuticals Business*2 New Markets & ASEAN Pharmaceuticals Business*2 Others*4 Americas Pharmaceuticals Business*3 EMEA Pharmaceuticals Business*3 Indo-Pacific Pharmaceuticals Business*3 Others*4

Net Sales(Billions of yen)

Net Income (Loss)

Ratio of Net Income (Loss) to Net Sales

0’11/3 ’12/3 ’13/3’10/3’09/3

80

60

40

20

0

15

10

5

47.740.3

5.06.1

48.3

8.4

67.458.5

8.8 9.0

Operating Income

Ratio of Operating Income to Net Sales

Operating Income and Ratio of Operating Income to Net Sales(Billions of yen) (%)

Net Income (Loss) and Ratio of Net Income (Loss) to Net Sales(Billions of yen) (%)

0’11/3 ’12/3 ’13/3’10/3’09/3

120

90

60

30

0

20

15

10

5

91.886.4

12.3

113.1

95.7

70.514.7 14.8

10.811.7

0’11/3 ’12/3 ’13/3’10/3’09/3

1,000

800

600

400

200

781.7 803.2

573.7

768.9

648.0

Billions of yen

Financial Indicators 2003/3 2004/3 2005/3 2006/3 2007/3 2008/3 2009/3 2010/3 2011/3 2012/3 2013/3

Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 466.6 500.2 533.0 601.3 674.1 734.3 781.7 803.2 768.9 648.0 573.7Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 250.6 260.9 268.3 285.1 292.2 312.7 332.5 359.7 — — —Japanese Pharmaceuticals Business*1 . . . . . . . . . . . . . . . . . . . . 322.2 350.4 372.6 328.8East Asia Pharmaceuticals Business*2 . . . . . . . . . . . . . . . . . . . . . 375.7 400.4 362.9North America . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 179.5 194.5 214.5 253.1 303.4 339.4 369.9 361.2 — — —U.S. Pharmaceuticals Business*1 . . . . . . . . . . . . . . . . . . . . . . . . 358.8 303.0 — —U.S. Pharmaceuticals Business*2 . . . . . . . . . . . . . . . . . . . . . . . . 303.0 157.4 —Americas Pharmaceuticals Business*3 . . . . . . . . . . . . . . . . . . . . 153.3Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27.3 34.8 38.3 45.5 54.8 54.4 51.0 50.7 — — —European Pharmaceuticals Business*1 . . . . . . . . . . . . . . . . . . . . 49.5 44.4 — —Europe Pharmaceuticals Business*2 . . . . . . . . . . . . . . . . . . . . . . 44.4 42.2 —EMEA Pharmaceuticals Business*3 . . . . . . . . . . . . . . . . . . . . . 25.8China and Asia/Oceania/Middle East . . . . . . . . . . . . . . . . . . . . . 9.1 9.9 11.9 17.6 23.7 27.8 28.4 31.6 — — —Asian Pharmaceuticals Business*1 . . . . . . . . . . . . . . . . . . . . . . . 31.1 31.3 — —New Market Pharmaceuticals Business*1 . . . . . . . . . . . . . . . . . . 0.8 1.0 —New Markets & ASEAN Pharmaceuticals Business*2 . . . . . . . . . . 6.9 7.2 —Indo-Pacific Pharmaceuticals Business*3 . . . . . . . . . . . . . . . . . . 7.3Others*4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40.7 38.9 40.9 24.4

Overseas sales ratio (%) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50.0 52.4 54.1 57.2 60.9 61.9 60.8 58.0 52.2 39.9 40.4

Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75.9 83.1 86.8 95.7 105.3 17.7 91.8 86.4 113.1 95.7 70.5Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41.0 50.1 55.5 63.4 70.6 (17.0) 47.7 40.3 67.4 58.5 48.3

Millennium Plan HAYABUSADramatic Leap Plan

*1 From the fiscal year ended March 31, 2011, the Company has adopted the “Accounting Standard for Disclosures about Segments of an Enterprise and Related information” (Accounting Standards Board of Japan (ASBJ) Statement No. 17 released on March 27, 2009) and the “Guidance on the Accounting Standard for Disclosures about Segments of an Enterprise and Related information” (ASBJ Guidance No. 20 released on March 21, 2008).

*2 The Group’s business areas comprise the pharmaceuticals and other businesses, with the pharmaceuticals business of each geographical region being identified as a reporting segment. Effective from the fiscal year ended March 31, 2012, the Group has designated four new regions as follows: East Asia (Japan, China, South Korea, Taiwan, and Hong Kong); the U.S.; Europe; and New Markets & ASEAN (Brazil, Mexico, Russia, Canada, Australia, India, the Middle East, and Southeast Asia). Accordingly, the financial amounts recorded under segment information for fiscal year ended March 31, 2011, in this report have been restated on the basis of the four new reporting segments.

*3 Of the Pharmaceuticals and Other businesses comprising the Group, the Company separates reporting segments for the Pharmaceuticals Business by geographical region. Effective from the year ended March 31, 2013, the Group has designated the following four new segments: 1. East Asia (Japan, China, South Korea, Taiwan, and Hong Kong); 2. Americas (North, Central, and South America); 3. EMEA (Europe, Middle East, and Africa); and 4. Indo-Pacific (South Asia, ASEAN countries, and Oceania). In line with this change, amounts by business segment from the fiscal year ended March 31, 2013 have been stated in this report based on the new geographical reporting segments.

*4 “Others” is a business segment not included in reporting segments. Pharmaceutical raw materials and machinery businesses are included in this segment.

Download Consolidated Financial Highlights data

Mid-term Strategic Plan


Introduction To Our Stakeholders Feature: Performing Better with Fewer Resources


05

Consolidated Financial Highlights

Consolidated Financial Highlights 2Consolidated Financial Highlights 1

http://www.eisai.com/pdf/eannual/eisai_ar2013e_highlights.xls

Eisai believes in cash-generating capability as the most intrinsic element that determines the true value of a company. With this basic way of thinking, to reflect the true earnings capacity, we indicate “cash income” and “cash EPS,” which are not affected by non-cash profit-and-loss items, such as depreciation of property, plant and equipment, amortization of goodwill, loss on impairment of long-lived assets (including loss on devaluation of investment securities), and in-process R&D expenses, which appear in the statements of operations.*1 Shareholders’ equity = Net assets – Minority shareholdings – Share warrants*2 We consider “cash income” as the total amount of cash available for investments for growth, business development, dividend payment, and repayment of borrowings, etc. We also

consider this as a measurement for evaluating corporate growth potential and strategic appropriateness.

Cash income = Net income (loss) + Depreciation of PP&E and amortization of intangible assets + In-process R&D expenses + Amortization of goodwill + Loss on impairment of long-lived assets (including loss on devaluation of investment securities)

*3 Dividend on equity (DOE) ratio = Dividend payout ratio (DPR) x Return on equity (ROE)*4 Cash income per share (“cash EPS”) = Cash income / Number of shares issued and outstanding (after deducting treasury stock)

Shareholders’ Equity and ROE(Billions of yen) (%)

R&D Expenses

Ratio of R&D Expenses to Net Sales

Shareholders’ Equity

ROE

R&D Expenses and Ratio of R&D Expenses to Net Sales(Billions of yen) (%)

Cash Dividends per Share and DOE(Yen) (%)

Cash Dividends per Share

DOE

0’11/3 ’12/3 ’13/3’10/3’09/3

200

150

100

50

0

40

30

20

10

120.4

179.1

125.1145.0

156.1

18.921.0

19.320.022.3

0’11/3 ’12/3 ’13/3’10/3’09/3

500

400

300

200

100

0

20

15

10

5

428.0

10.9

415.9

9.6

404.2 416.8

16.414.3

469.4

10.9

0’11/3 ’12/3 ’13/3’10/3’09/3

160

120

80

40

0

12

9

6

3

140

9.1

150

10.1

150

9.6

150 150

10.4 10.4

Consolidated Financial Highlights 2

Billions of yen

Financial Indicators 2003/3 2004/3 2005/3 2006/3 2007/3 2008/3 2009/3 2010/3 2011/3 2012/3 2013/3

Research and development (R&D) expenses . . . . . . . . . . . . . . 59.7 69.0 78.3 93.2 108.3 225.4 156.1 179.1 145.0 125.1 120.4 Shareholders’ equity*1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 388.2 419.5 459.6 519.2 552.5 448.9 428.0 415.9 404.2 416.8 469.4Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 591.7 615.8 662.7 747.2 792.1 1,123.9 1,148.2 1,101.9 1,046.3 1,004.7 990.2Cash income*2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97.6 106.9 119.0 126.4 120.0 107.7 100.7

Ratio of R&D expenses to net sales (%) . . . . . . . . . . . . . . . . . . 12.8 13.8 14.7 15.5 16.1 30.7 20.0 22.3 18.9 19.3 21.0Return on equity (ROE) (%) . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.9 12.4 12.6 13.0 13.2 (3.4) 10.9 9.6 16.4 14.3 10.9Return on assets (ROA) (%) . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.1 8.3 8.7 9.0 9.2 (1.8) 4.2 3.6 6.3 5.7 4.8Shareholders’ equity ratio (%) . . . . . . . . . . . . . . . . . . . . . . . . . . 65.6 68.1 69.4 69.5 69.7 39.9 37.3 37.7 38.6 41.5 47.4Dividends on equity (DOE)*3(%) . . . . . . . . . . . . . . . . . . . . . . . . 2.5 2.6 3.7 5.3 6.4 7.4 9.1 10.1 10.4 10.4 9.6

Yen

Basic earnings per share (EPS) . . . . . . . . . . . . . . . . . . . . . . . . . 141.2 172.1 193.4 221.9 247.8 (59.8) 167.3 141.6 236.5 205.3 169.4Cash dividends per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32.0 36.0 56.0 90.0 120.0 130.0 140.0 150.0 150.0 150.0 150.0Cash income per share (Cash EPS)*4 . . . . . . . . . . . . . . . . . . . . 342.7 375.8 417.8 443.7 421.3 377.8 353.5

Non-Financial IndicatorsCO2 emissions volume (tons) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91,611 89,089 92,608 81,153 79,470 82,082 91,797 91,311Total waste volume (tons) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,226 8,704 8,273 6,785 6,568 7,346 6,289Ratio of final landfill to total waste volume (%) . . . . . . . . . . . . . . . . 0.90 1.20 0.50 0.23 0.35 0.44 0.30Number of employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,433 7,700 8,295 9,081 9,649 10,686 10,977 11,415 11,560 10,730 10,495

Download Consolidated Financial Highlights data

Millennium PlanMid-term Strategic Plan HAYABUSADramatic Leap Plan


Introduction To Our Stakeholders Feature: Performing Better with Fewer Resources


06

Consolidated Financial Highlights

Consolidated Financial Highlights 1 Consolidated Financial Highlights 2

http://www.eisai.com/pdf/eannual/eisai_ar2013e_highlights.xls

Performing Better with Fewer Resources—Innovation, Access and Partnership—

• Further enhancement of product creation capabilities

• Fundamental strengthening of marketing capabilities

• Improvement of access to medicines in emerging and developing countries

Issues to be

tackled quickly

Feature: Performing Better with Fewer Resources

Looking Back at the Two Years of the Mid-term Strategic Plan “HAYABUSA”To transform itself into a global top-tier, high-performing company in this era of great globaliza-tion, the Group embarked on the Mid-term Strategic Plan “HAYABUSA” ( Plan “HAYABUSA”) in the year ended March 2012.

Although Eisai has faced a difficult situation over the past two years due to the expiry of the sub-stance patent for Aricept ® in Japan, the U.S., and Europe, this period has been marked by steady progress in terms of solidifying the platform for future growth (see chart below). We have gained regu-latory approvals and launched the in-house-developed products Halaven ® and Fycompa ®, which are positioned as core products for the future. We have expanded into the oncology area and new prod-uct lines. We have also shifted our regional sales balance more toward Japan and Asia, and made operations more efficient.

However, sales in fiscal 2012 (the year ended March 31, 2013) underperformed Plan “HAYABUSA’s” target due to a variety of factors, including delayed launch schedules and changes in product profiles. Most significant were the dramatic changes in operating conditions, which were greater than anticipated. These included new healthcare spending restraints amid worldwide fiscal consolida-tion, and measures in Japan to cut National Health Insurance (NHI) drug prices and promote the

increased use of generics.Based on the concept of “Performing Better with Fewer Resources,” we are focusing on mea-

sures to quickly address three key issues: further enhancement of our “product creation” capabilities to generate innovation; fundamental strengthening of marketing capabilities to support the next phase of growth bolstered by new drugs; and improving access to medicines in emerging and developing countries. This feature section discusses the measures that we are taking in each of these areas.

1Transformed ourselves in

an era of globalization

Business-wise, we advanced into 7 more countries, making a total of 66. In fiscal 2013, we expect to add 19 more new countries.

2Transforming our region balance

We achieved sales by geographic region as planned, with Japan and the rest of Asia driving our growth.

3Transforming our franchise portfolio

We achieved steady growth as planned in the oncology and epilepsy fields.

4“Product creation”

(R&D efforts)

We have steadily gained approvals for Halaven ® and Fycompa ® and launched them in national markets.

We have gained approval for BELVIQ ®, an original anti-obesity agent, and launched it in the U.S. We have also introduced other new products.

Elsewhere, in the field of personalized medi-cine, we have made steady progress with our biomarker-led “product creation” R&D efforts, based on related advances in science and technology.

Work has also progressed on the development of the next generation of Alzheimer’s disease treatments.

5Growth-oriented investments and

creation of shareholder value

We have achieved annual cash income of ¥100 billion and kept the dividend at ¥150 per share.

As an indicator of financial health, we reduced the Net Debt Equity Ratio (DER) below 0.3 ahead of schedule (year ended March 2013: 0.27). We expect to reduce it to 0.2 in the year ending March 2014.

From fiscal 2013, we plan to make signifi-cantly higher investments for future growth as we adopt a more aggressive financial posture.

Americas27% East Asia

63%

Other Business4%

Indo-Pacific1%

EMEA5%

March 31, 2013

Fiscal 2006–2010

Fiscal2011–2012

Fiscal2013(Plan)

0

120

60

66 countries

73countries

92countries

114 countries

Plan “HAYABUSA” until fiscal 2015

Plan “HAYABUSA” until fiscal 2015

Fiscal2010

Fiscal2012

10% 18% 22%

43% 25%29%

20%22%

12%

22% 27% 21%

2%

3%

9%

2%5%

6%

Oncology Neurological diseases Epilepsy Gastrointestinal and liver diseases

Immunological diseases and allergies

Other

Progress Over Two Years (fiscal 2011 to fiscal 2012)


Introduction To Our Stakeholders Consolidated Financial Highlights Management Foundation Financial Section Corporate Data

07


Fundamental Strengthening of Domestic Marketing Capabilities to Support Further Growth in Japan Improvement of Access to Medicines in Emerging and Developing CountriesYearly Progress of R&D Projects

Further Enhancement of Product Creation Capabilities to Generate Innovation New Regional Structure for Utilizing Resources More Efficiently and Maximizing Product Value Creating Corporate Value with Vigorous Investment for Growth and Financial StrategyMajor R&D Pipeline

Looking Back at the Two Years of the Mid-term Strategic Plan “HAYABUSA”

*1 Induced pluripotent stem (iPS) cells are stem cells created artificially through the introduction of genes into somatic cells. Stem cells can differentiate into specialized cells and can divide to produce more stem cells.

*2 Embryonic stem (ES) cells are stem cells that are harvested from fertilized eggs.*3 Diversity-oriented synthesis (DOS) is a strategy for efficient synthesis based on a library of chemical compounds with diverse skeletal structures.*3 Alzheimer’s Disease (AD)

*1 Proof of concept (POC) involves veryfying the hypothesized action mechanism in a clinical trial setting*2 Adaptive design trials use a multi-stage process in which the design of the ongoing trial is adapted based on the results of interim data analyses*3 The composite score is derived from ADAS-Cog (Alzheimer’s Disease Assessment Scale–cognitive subscale), MMSE (Mini-Mental State Examination) and CDR

(Clinical Dementia Rating)

Improves identification of compounds with high efficacy and safety, and allows for shortening the development timeline

Overcomes difficulties in early-stage diagnosis of AD patients, enabling earlier judgments on clinical progress and treatment efficacy

Further Enhancement of Product Creation Capabilities to Generate InnovationFeature: Performing Better with Fewer Resources

The Group has set out a clear mission to deliver new medicines that satisfy unmet medical needs to patients as quickly as possible, and defines its R&D efforts as “product creation.” The Group has adopted a management structure that emphasizes autonomy and swift decision-making in each of the units organized in its research areas and technological platforms. The units partner with each other in a complementary manner to work on product creation.

Eisai believes that the very essence of its product creation lies in its ability to develop therapeutic hypotheses that are based on human biology as well as in its modern chemistry capabilities that enable it to translate these hypotheses into viable compounds. Through these

strengths, the Group will continue to improve its ability to engage in discovery that generates innovation. Furthermore, in its clinical research, the Group desires to raise clinical trial success rates and shorten drug development times by actively utilizing biomarkers that reflect clinical pathological conditions and rigorously managing large-scale clinical trials globally, thereby leading to the creation of pharmaceutical products.

The Group will focus resources on the five new compounds for which clinical utility has been confirmed (Halaven®, Fycompa®, BELVIQ®, Lenvatinib and Avatrombopag), expanding indica-tions and acquiring new approval in order to maximize their value.

Sales Forecasts for Five New Potential Blockbuster Product Groups

Target Finding Based on Human Biology Combined with Modern Chemistry to Generate Innovation Example of Clinical Trial Designed for Efficiency

Year ending March 2016:¥140 billion level

Year ending March 2021:¥430 billion level

AvatrombopagLenvatinib

BELVIQ®

Fycompa®

Halaven®

Disease-related gene

Basic

Medicinal

Process

iPS cells*1/ES cells*2

Compound libraryNeurology focusOncology focus

Natural products/Diversity oriented synthesis (DOS)*3

In vitro/in vivo assay based on

human biologyAntibody creation technology

New anticancer agent for specific genetic mutation

New anticancer agent for cancer stem cells

New highly useful

antiepileptic agents

New AD*4 treatments focused on synaptic function

Phase II study for next-generation AD treatment BAN2401Uniquely Designed POC*1 study leveraging Eisai’s wealth of experience as a pioneer in AD treatment

Use of adaptive design*2

Imaging-based patient screening

Evaluation using a unique composite score Eisai developed*3

’12/3

0

100.0

200.0

300.0

400.0

500.0

(Billions of yen)

’16/3’14/3 ’18/3’13/3 ’17/3’15/3 ’19/3 ’20/3 ’21/3

Modern chemistry to prove treatment hypotheses

Target finding and validation based on human biology

Innovation

Strengthen discovery

Chemistry



08


Looking Back at the Two Years of the Mid-term Strategic Plan “HAYABUSA” Fundamental Strengthening of Domestic Marketing Capabilities to Support Further Growth in Japan Improvement of Access to Medicines in Emerging and Developing CountriesYearly Progress of R&D Projects

New Regional Structure for Utilizing Resources More Efficiently and Maximizing Product Value Creating Corporate Value with Vigorous Investment for Growth and Financial StrategyMajor R&D PipelineFurther Enhancement of Product Creation Capabilities to Generate Innovation

Yearly Progress of R&D Projects (As of June 2013)


Global DevelopmentHalaven®

Microtubule dynamics inhibitorAs of June 2013, Halaven® was approved in 48 coun-tries as a breast cancer treatment.

A Phase III study investigating the agent as a potential treatment of non-small cell lung cancer is ongoing in Japan, the U.S., Europe and Asia. In addition, Phase III studies in the U.S., Europe and Asia, and Phase II studies in Japan are underway to investigate the agent as a potential treatment for sarcoma. Based on the results of Phase III studies in the U.S. and Europe for expanding the indication to second-line chemotherapy for the treatment of breast cancer, Eisai received notification from the European Medicines Agency (EMA) for the additional indication of Halaven® for earlier lines of chemotherapy in April 2013, while the approval application and develop-ment policy in the U.S. remains pending.

Preclinical research findings pointing to a novel inhibitory effect of Halaven® on tumor metastasis were announced at the American Association for Cancer Research 104th Annual Meeting held in April 2013.

Fycompa®/E2007AMPA receptor antagonistIndication for use as an adjunctive therapy in epilepsy patients with partial-onset seizures, age 12 or older, was approved by the European Commission (EC) in July 2012, for market launch in September 2012. Fycompa® received U.S. FDA approval in October 2012. As of June 2013, the antiepileptic agent was approved in 32 countries, while Phase III studies for the indication are underway in Japan, China and Asia.

Meanwhile, Phase III studies of Fycompa® as an adjunct therapy of epilepsy in general are currently underway in Japan, the U.S., Europe and Asia. In December 2012, the U.S. FDA designated the agent an orphan drug (for the treatment of rare diseases), with an indication for a rare form of epilepsy known as Lennox-Gastaut syndrome.

Lenvatinib/E7080

Multi-kinase inhibitorLenatinib was designated an orphan drug with an indication for thyroid cancer by Japan’s Ministry of

Health, Labour and Welfare in August 2012, the U.S. FDA in December 2012, and the EC in April 2013.

Meanwhile, Phase III studies to apply for an indication for hepatocellular carcinoma were initiated and are now underway in Japan, the U.S., Europe, Asia and China. Furthermore, a new Phase II study for the treatment of non-small cell lung cancer has commenced and is ongoing in Japan, the U.S., Europe and Asia.

BAN2401Humanized anti-Aß protofibrils monoclonal antibodyPhase II studies were initiated and are underway in the U.S. and Europe.

Farletuzumab/MORAb-003Humanized anti-FRA monoclonal antibodyA Phase III studies to apply for an indication for first-relapse platinum-sensitive ovarian cancer was com-pleted in the U.S., Europe, Japan and Asia, while detailed data analysis is currently underway.

MORAb-004Humanized anti-endosialin monoclonal antibodyPhase II studies for melanoma, colorectal cancer, and sarcoma were initiated and are ongoing in the U.S. and Europe.

Aciphex ®

Proton pump inhibitorEisai gained an additional six months of U.S. market exclusivity for Aciphex®, to expire November 8, 2013, when the pediatric clinical data on the proton pump inhibitor met the U.S. FDA’s Written Request for pediatric exclusivity in December 2012. Moreover, in March 2013, the FDA approved an indication to Aciphex ® SprinkleTM Delayed-Release Capsules 5 mg and 10 mg for the treatment of Gastroesophageal Reflux Disease (GERD) in children 1 to 11 years of age for up to 12 weeks.

Inovelon®

Antiepileptic agentInovelon® was launched in Japan as an adjunct therapy with anti-epileptic drugs in the treatment of Lennox-Gastaut syndrome in May 2013, after an application for manufacturing and sales submitted in August 2012 was approved in March 2013.

Development in JapanAricept ®

Alzheimer’s disease treatmentAricept® Dry Syrup 1% was approved in Japan as a new formulation in February and launched in June 2013. Meanwhile, Phase II and III studies of Aricept ® as a treatment of regression-like symptoms in Down’s syndrome were initiated in May 2013.

DC Bead® (Specially controlled medical device)Embolic beadManufacturing and sales in Japan were approved in April 2013 as a device for transcatheter arterial emboli-zation therapy in patients with hepatocellular carcinoma.

HUMIRA®

Fully human anti-TNFα monoclonal antibodyHUMIRA® was approved in August 2012 for the addi-tional indication of inhibition of structural damage of joints in patients with rheumatoid arthritis (RA). In prin-ciple, the use of HUMIRA® is limited to RA patients who have had an inadequate response to conventional therapy. However, the approval of this latest indication will enable the drug to be administered to patients with rapid progression of structural damage even if they have not received prior treatment with anti-rheumatic drugs.

Moreover, Eisai received notification from Japan’s Ministry of Health, Labour and Welfare in October 2012 that the condition for approval of HUMIRA®’s indication for the treatment of Crohn’s disease in terms of a drug use results survey (all-case surveillance) had been lifted.

Regulatory approval in Japan was received in May 2013 for HUMIRA®’s indication of intestinal Behçet’s disease. Further approval was received in June 2013 for the treatment of moderate to severe ulcerative colitis.

Careram®

Anti-rheumatic agentCareram® was launched with an indication for rheumatoid arthritis in September 2012.

Pariet ®

Proton pump inhibitorIn February 2013, Helicobacter pylori (H. pylori) gastri-tis was approved by Japan’s Ministry of Health, Labour and Welfare as an additional indication for H. pylori eradication by triple therapy with proton pump inhibi-tors. This therapy consists of a proton pump inhibitor, amoxicillin hydrate, and either clarithromycin or metro-nidazole. (Public application: August 2012.)

Furthermore, in May 2013, Eisai applied for the approval in Japan of two types of triple formulation packs containing Pariet® for H. pylori eradication. The two types are a primary eradication pack containing Pariet®, amoxicillin hydrate and clarithromycin, and a secondary eradication pack containing metronidazole as the third ingredient.

A Phase III study was initiated in Japan in June 2013 to study the use of Pariet ® as maintenance therapy in PPI-resistant reflux esophagitis.

*AD: Alzheimer’s disease

2001: Fine granule

0.5% launched

2004: D tablet

launched

2009: Jelly

launched

2007: 10 mg tablet with

additional indication for severe AD*

launched

June 2013: Dry syrup launched

Eisai Continues to Support the

Needs of Patients on Aricept ®

1999: Aricept® tablet

launched



09


Looking Back at the Two Years of the Mid-term Strategic Plan “HAYABUSA” Fundamental Strengthening of Domestic Marketing Capabilities to Support Further Growth in Japan Improvement of Access to Medicines in Emerging and Developing Countries


Yearly Progress of R&D Projects

(1) Oncology Domain

Product Name / Research Code (generic name)

Description Form Development Status Region Phase I Phase II Phase III Submission Approved

Halaven®/E7389(eribulin)

A synthetic analog of halichondrin B derived from the marine sponge, Halichondria okadai. Believed to exert an antitumor effect by arresting the cell cycle through inhibition of the growth of microtubules. Currently being investigated as a potential treatment for breast cancer and various other solid tumors. Approved in 48 countries including the U.S., Singapore, European Union (EU) member states, Japan, and Switzerland.

Injection [Additional Indication]

Second-line treatment for breast cancer U.S. April 2013

EU

[Additional Indication] Japan, U.S.,

Non-small cell lung cancer EU, Asia FY2013 (plan)

[Additional Indication]

Sarcoma U.S., EU, Asia FY2014 (plan)

Japan FY2014 (plan)

E7820 An angiogenesis inhibitor that suppresses the expression of alpha 2 integrin suppressant, a vascular endothelial cell adhesion molecule.

Oral Colorectal cancer U.S., EU

E7080 (lenvatinib) An anti-angiogenic agent that inhibits tyrosine kinase of the VEGF receptor, VEGFR2, and a number of other types of kinase involved in angiogenesis and tumor proliferation. Currently being investigated as a potential treatment for various solid tumors.

Oral Thyroid cancer Japan, U.S., Europe, Asia

FY2013 (plan)

Hepatocellular carcinoma Japan, U.S., Europe, China, Asia

Endometrial cancer U.S., Europe

Melanoma U.S., Europe

Glioma U.S.

Non-small cell lung cancer Japan, U.S., Europe, Asia

MORAb-003 (farletuzumab)

A humanized IgG1 monoclonal antibody that targets folate receptor alpha (FRA). Expected to exhibit an antitumor effect against carcinomas that over-express FRA.

Injection Platinum-sensitive ovarian cancer Japan, U.S., Europe, Asia

Non-small cell lung cancer U.S., Europe

MORAb-004 A humanized lgG1 monoclonal antibody that targets Tumor Endothelial Marker 1 (TEM-1)/endosialin. Expected to exhibit an antitumor effect against carcinomas that express endosialin.

Injection Melanoma U.S., Europe

Colorectal cancer U.S., Europe

Sarcoma U.S., Europe

MORAb-009(amatuximab)

A chimeric IgG1 monoclonal antibody that blocks the function of mesothelin. Expected to exhibit an antitumor effect against carcinomas that express mesothelin.

Injection Mesothelioma U.S., Europe

Dacogen®/E7373 (decitabine)

Induces cell differentiation by inhibiting DNA methylation. Currently approved in the U.S. for the treatment of myelodysplastic syndromes (MDS). Eisai decided to suspend development after receiving a Complete Response Letter from the FDA in March 2012 concerning the supplemental New Drug Application for Dacogen in acute myeloid leukemia.


Pediatric acute myeloid leukemia (AML) U.S.

ONTAK/E7272(denileukin diftitox)

A fusion protein that combines the interleukin-2 (IL-2) receptor binding domain with diphtheria toxins. Specifically binds to IL-2 receptors on the cell surface, causing diphtheria toxins that have entered cells to inhibit protein synthesis. Already approved in the U.S. as a treatment for CD25 (a component of the IL-2 receptor) positive cutaneous T-cell lymphoma.


Melanoma U.S.

DC Bead® (E7040) A hydrophilic microspherical particle produced from a cross-linked polyvinyl alcohol polymer, this embolic bead is injected through a catheter to selectively embolize targeted blood vessels. Microscopic and uniformly spherical in shape, it allows for sustained embolization of targeted vessels based on vascular diameter and tumor size. Approved in Japan as a device for transcatheter arterial embolization (TAE) therapy in patients with hepatocellular carcinoma (HCC).

Embolic agent

Transcatheter arterial embolization (TAE) of hepatocellular carcinoma

Japan April 2013


Transcatheter arterial embolization (TAE) of hypervascular tumors

Japan

* Approval application and development policy in the U.S. is pending, based on results of Phase III studies for expanding the indication of Halaven® to second-line chemotherapy of breast cancer.

Major R&D Pipeline (As of June 2013)




10




(2) Neurology Domain

Product Name / Research Code (generic name)


Fycompa®/E2007 (perampanel)

A selective antagonist against the AMPA receptor (a glutamate receptor subtype).Currently being investigated as a potential adjunctive therapy for partial-onset seizures as well as a treatment for generalized seizures in patients with epilepsy. Approved in 32 countries including in Europe (including Norway, Iceland and Switzerland), the U.S., and Canada.

Oral Partial-onset seizures Europe July 2012

U.S. October 2012

Japan, China, Asia

FY2014 (plan)


Generalized seizures Japan, U.S., Europe, Asia

FY2014 (plan)


Pediatric partial-onset seizures U.S., Europe

Aricept®/E2020 (donepezil)

Increases levels of the neurotransmitter acetylcholine in the brain by inhibiting its breakdown by the enzyme acetylcholinesterase, thereby slowing the overall progression of symptoms associated with Alzheimer’s disease (AD). Currently approved in more than 90 countries around the world for the treatment of mild to moderate AD. It is also approved as a treatment for patients with severe AD in numerous countries including the U.S., Japan, Canada, and several other Asian and Latin American countries.

Oral [Additional Formulation]

Dry syrup Japan February 2013


Lewy body dementia Japan FY2013 (plan)

[Additional Dosage, Administration, Formulation]

Severe Alzheimer’s disease China FY2014 (plan)

[Additional Dosage, Administration, Formulation]

Higher dose 23 mg tablet Japan


Regression-like symptoms in Down’s syndrome Japan

AS-3201 (ranirestat) An aldose reductase inhibitor that is believed to reduce intracellular accumulation of sorbitol. Currently being investigated as a potential treatment for diabetic neuropathy, one of the most common diabetic complications.

Oral Diabetic neuropathy U.S., Europe II/III*

Zonegran®/E2090 (zonisamide)

Believed to exhibit a broad anti-epileptic spectrum and is well-tolerated. Currently indicated as a monotherapy and adjunctive therapy in the treatment of patients with partial-onset seizures.

Oral [Additional Indication]

Monotherapy for partial-onset seizures Europe June 2012


Pediatric partial-onset seizures Europe May 2012

E0302 (mecobalamin) A mecobalamin (vitamin B12 coenzyme) formulation. Restores damaged peripheral nerves and is widely used for the treatment of peripheral neuropathy. Currently being investigated as a potential treatment for amyotrophic lateral sclerosis (ALS).

Injection Amyotrophic lateral sclerosis (ALS) Japan II/III* FY2014 (plan)

Inovelon/E2080 (rufi namide)

A triazole derivative that is structurally unrelated to currently marketed AEDs. It is believed to regulate the activity of sodium channels in the brain which carry excessive electrical charges. Now approved in Japan in addition to Europe and the U.S. as an adjunctive therapy to other antiepileptic drugs (AEDs) in the treatment of Lennox-Gastaut syndrome (LGS), one of the most severe and intractable forms of childhood-onset epilepsy. The product names are Inovelon® in Japan and Europe and Banzel ® in the U.S.

Oral Adjunctive therapy for LGS Japan March 2013


Pediatric Lennox-Gastaut syndrome U.S.

BAN2401 A humanized IgG1 monoclonal antibody that targets amyloid beta (Aß) protofi brils. Expected to be effective in the treatment of Alzheimer’s disease by halting disease progression through the elimination of Aß protofi brils reported to exhibit neurotoxicity.

Injection Alzheimer’s disease U.S., Europe

* Plans encompass both Phase II and Phase III studies.

Major R&D Pipeline (as of June 2013)




11




(3) Vascular and Immunology DomainProduct Name / Research Code (generic name)


HUMIRA®/D2E7 (adalimumab)

A fully human anti-TNF monoclonal antibody that neutralizes the activity of tumor necrosis factor (TNF), a type of cytokine that plays a central role in inflammatory reactions in patients with autoimmune diseases. Approved in Japan for the treatment of rheumatoid arthritis, psoriasis, Crohn’s disease, ankylosing spondylitis, juvenile idiopathic arthritis, and inhibition of structural damage of the joints.


Inhibition of structural damage of joints Japan August 2012


Intestinal Behcet’s disease Japan May 2013


Ulcerative colitis Japan June 2013

E5564 (eritoran) Exhibits endotoxin antagonist effects that inhibit isolation of inflammatory cytokines. Suppresses various clinical conditions caused by endotoxins.

Injection Severe sepsis Japan, U.S., Europe

E5501/AKR-501(avatrombopag)

A novel, oral thrombopoietin receptor agonist that stimulates platelet production. Expected to exhibit effects against conditions that are associated with thrombocytopenia.

Oral Idiopathic thrombocytopenic purpura (ITP) U.S., Europe, Asia

Thrombocytopenia in chronic liver disease requiring surgery

U.S.

Thrombocytopenia during interferon therapy (both initiation and maintenance) for hepatitis C

U.S.

E6201 A novel MEK-1/MEKK-1 kinase inhibitor. Expected to inhibit inflammatory cellular signaling as well as overgrowth of epidermal cells in patients with psoriasis.

Topical Psoriasis U.S., Europe

E6005 Inhibits the action of phosphodiesterase 4, a cyclic AMP-degrading enzyme that acts as an intracellular messenger. Expected to be effective as a treatment to suppress the various symptoms associated with atopic disease.

Topical Atopic dermatitis Japan

(4) Gastrointestinal DomainProduct Name / Research Code (generic name)


Pariet®/AcipHex® (E3810) (rabeprazole)

A proton pump inhibitor approved for the treatment of gastric and duodenal ulcers, reflux esophagitis and eradication of Helicobacter pylori infections, etc.

Oral [Additional Indication and Formulation]

Pediatric sprinkle capsule formulation U.S. March 2013


Triple formulation therapy for Helicobacter pylori eradication in Helicobacter pylori gastritis

Japan February 2013


Triple formulation pack for Helicobacter pylori eradication

Japan May 2013


Prevention of recurrence of gastric and duodenal ulcers during treatment with low-dosage aspirin

Japan II/III* FY2013 (plan)


Maintenance therapy of PPI resistant reflux esophagitis

Japan


Functional dyspepsia Japan

(Clevudine) An antiviral drug that exerts an anti-HBV effect by inhibiting DNA polymerase. Oral Chronic hepatitis B China

(cinitapride) By stimulating 5-HT2 and 5-HT4 receptors found in the gastrointestinal tract, the agent increases acetylcholine release and improves upper gastrointestinal motility. Its antidopaminergic effects also help stimulate the release of acetylcholine by blocking dopamine receptors, thereby improving upper gastrointestinal function.

Oral Functional dyspepsia China

* Plans encompass both Phase II and Phase III studies.

Major R&D Pipeline (as of June 2013)




12




Fundamental Strengthening of Domestic Marketing Capabilities to Support Further Growth in JapanFeature: Performing Better with Fewer Resources

Transformation to a Dual-unit Structure that Matches Patient BehaviorIn Japan, the environment surrounding patients has changed dramatically, including in the progress of healthcare/caregiving partnerships in local healthcare, and in the government and local commu-nities working as one to establish regional healthcare structures. In the context of such changes, Eisai believes that it is necessary to gain thorough understanding of the consultation behavior and needs of patients and strengthen its activities focused on fully satisfying patients, in order for the Group to grow steadily.

Beginning in the fiscal year ending March 2014, we conducted a fundamental review and revi-sion of our business model for pharmaceuticals in Japan, and implemented a transformation to a dual-unit structure. The new structure will consist of an “Integrated Community hhc Unit” that pro-motes marketing activities specializing in patients undergoing treatment for dementia, rheumatism, and other chronic disorders by local doctors where they live, and an “Oncology hhc Unit” that aims to satisfy the needs of patients receiving treatment for cancer and other acute-stage disorders by central hospitals serving a broader area.

In this way, the Group will provide guidance and product information that meet the characteris-tics and needs of patients, in order to address the plight of untreated dementia patients with Aricept ®, while expanding contribution to the wellbeing of patients with Halaven ® in the oncology area, as well as through Humira ®, Lyrica ®, Lunesta ® and other new product lines. The Group will thereby achieve steady growth in Japan as the leading country for the Plan “HAYABUSA.”

Coordination with the Newly Organized Hospital Marketing Department, Pharmacy Marketing Department and Wholesaler Marketing Department The environment for patients and pharmaceuticals has changed hand-in-hand on a daily basis. Against this backdrop, the Hospital Marketing Department, Pharmacy Marketing Department and Wholesaler Marketing Department were newly organized to deliver products more efficiently to patients. Based not only on information from Medical Representatives (MRs), but also on the strat-egies focused on hospitals, pharmacies and pharmaceutical logistics that these three new depart-ments are formulating, Eisai Japan is striving as one to enhance patient satisfaction.

The mission of each Medical District Department is to understand patient needs according to the regional characteristics of the district of which it is in charge, including the regional differences of the local medical district and its hospital-clinic cooperation and dementia care networks.

Oncology hhc Unit

4 Medical District Departments

Oncology Marketing Department

Oncology Medical Department

Integrated Community hhc Unit

Hospital Marketing Department

Pharmacy Marketing Department

Wholesaler Marketing Department

35 Medical District Departments

Aricept ® knowledge leader

Eisai Japan President

New Organization for Enhancing Patient Satisfaction

Two Units with an Eye on the Consultation Behavior of Patients

New structure➣ Establishment of two new units

• Integrated Community hhc Unit: 35 organizations nationwide

• Oncology hhc Unit: Four organizations nationwide

Old structure

➣ 13 marketing areas covering Japan

Compartmentalized into 133 organizations

➣ MRs cover all products for their organization’s territory



13


Looking Back at the Two Years of the Mid-term Strategic Plan “HAYABUSA” Improvement of Access to Medicines in Emerging and Developing CountriesYearly Progress of R&D Projects


Fundamental Strengthening of Domestic Marketing Capabilities to Support Further Growth in Japan

Japan

Asia Region

EMEA

The Americas

New Regional Structure for Utilizing Resources More Efficiently and Maximizing Product ValueFeature: Performing Better with Fewer Resources

•Further promote the three pan-European business units of 1) oncology and institutional care, 2) epilepsy, and 3) mature products, under a business model that views Europe as a single market

•Further enhance the franchises in oncology, mainly Halaven ®, and in epilepsy with the addition of Fycompa ®

EMEA (Europe, Russia, the Middle East, Africa and Oceania) •Improvement of access to medicines in Asian countries

•Pricing strategies that patients can afford medicines in accordance with their income levels

•Franchise enhancement in the domains of 1) oncology, 2) neurology, and 3) hepatic and gastrointestinal disorders

•Business expansion in the rapidly growing markets of Indochina and Indonesia

Asia Region (China, South Korea, Taiwan, India, ASEAN, etc.)

•Build a new organization comprising a Specialty Business Unit for handling BELVIQ® and anti-epilepsy agent BANZEL®, and an Oncology Business Unit for handling cancer treatments

•Develop a new market in the U.S. for treating obesity with BELVIQ® by leveraging proprietary knowledge and expertise

•Seek and develop business partners for launching new products under BELVIQ® sales rights in 20 Latin American countries

The Americas (North, Central and South America)U.S. Launch of Antiobesity Agent

BELVIQ® in June 2013First Prescription Weight-loss Treatment

Approved in the U.S. in 13 YearsObesity is linked with the onset of complica-tions such as diabetes, hyperlipidemia and hypertension, and has become a major social problem in the U.S. in particular. BELVIQ® contains a new chemical compound discov-ered and developed by Arena Pharmaceuticals, Inc. It is believed to promote weight loss by selectively stimulating the serotonin 2C recep-tors in the brain to suppress food intake.

BELVIQ® demonstrated sustained weight-loss results in clinical trials when taken in adjunct with a reduced-calorie diet and increased physical activity. Furthermore, obese clinical trial patients with type 2 diabetes were reported to achieve a statistically significant reduction in both HbA1c (hemoglobin A1c) and fasting glucose.

This is the first new prescription medication approved in the U.S. for treating obesity in 13 years. Upon launch, BELVIQ® will be manufactured by Arena Pharmaceuticals and marketed by the Group’s U.S. subsidiary Eisai Inc.

* Matured brand products: Aricept ®, Pariet ®, etc.

The Group plans to make the fiscal year ending March 2014, the third year of the Mid-term Strategic Plan “HAYABUSA,” a year of transfor-mation to the next growth phase, through further growth of Halaven ® globally, as well as by increasing the number of countries in Europe in which we launch Fycompa ®, and launching BELVIQ ® and Fycompa ® in the U.S. The Group will focus resources on these new product lines to maximize their sales at an early stage.

In particular, the market for treating obesity that the Group is enter-ing in the U.S. is similar to the market for treating dementia in the past, in that there is no well-established drug therapy as of yet. We will use the Company’s experience gained through Aricept ® to promote dis-ease awareness among medical professionals and patients, build patient support programs, and contribute to create the weight man-agement market.



14



Further Enhancement of Product Creation Capabilities to Generate Innovation Creating Corporate Value with Vigorous Investment for Growth and Financial StrategyMajor R&D Pipeline New Regional Structure for Utilizing Resources More Efficiently and Maximizing Product Value

Improvement of Access to Medicines in Emerging and Developing CountriesFeature: Performing Better with Fewer Resources

In the Mid-term Strategic Plan “HAYABUSA,” the Group seeks to make its products available in a total of 114 countries with the goal of serving over 500 million patients. Eisai plans to contribute to patients in emerging countries that are expected to provide significant opportunities for growth through the rapid expansion of middle-income populations. Accordingly, the Group will develop new business models that include such elements as affordable pricing paying consideration to local medical systems and patients’ income levels, etc., and building best partnerships in those regions and markets.

New 4P Mix Strategies in Emerging and Developing Countries

Price ZeroContribution to the elimination of neglected tropical diseases (NTDs) through supply of DEC (diethylcarbamazine) tablets at Price Zero Popularization of the corporate brand

Affordable pricingMaximization of access to medicines by achieving affordable prices for medicines to treat chronic disorders

Tiered pricingExpanded access to medicines through price settings that take into consideration the various back-grounds of patients and the healthcare systems of individual countries

Pricing Policies

Cost reduction through utilization of the Vizag PlantEstablishment of a high-quality production structure that fully utilizes the benefits of the location in India, and achievement of reduced unit cost through increased volume in emerging countries

Production

Pursuit of regional bestEfficient utilization of resources and maximization of product value through partnerships that match the regional strategy

Public-private partnerships (PPP)Increase of the opportunities for early detection and diagnosis of disorders, and for patients to access high-quality healthcare through public-private partnerships

Partnerships

Full-scale entry to markets in emerging countries through the Eisai brand, as well as through Elmed Eisai and Eisai Consumer Health ProductsExpansion in Asia that includes strategic partnerships, through high-quality products and the Japanese business model

Products

Meanwhile, in many emerging and developing countries, drug products do not reach the patients who need them due to poverty and inadequate healthcare systems. This is known as the access to medicines issue. Eisai believes that its contributions to the economic development and expansion of middle-income populations through the enhancement of health and welfare, as well as its efforts to improve access to medicines in these countries, is a form of long-term investment for future market growth. Accordingly, Eisai continues its proactive efforts on a foundation of the hhc philosophy.

Approach to NTDs as a Long-term InvestmentThe Group participates in the London Declaration, the largest public-private partnership in history, which aims to eliminate 10 NTDs by 2020. Under the Declaration, Eisai has committed to manufacturing 2.2 billion tablets of DEC (diethylcarbamazine), a drug for the treatment of lymphatic filariasis which is in short supply worldwide, at the plant in Vizag, India, and providing them to the World Health Organization (WHO) at Price Zero (free of charge) for a period of seven years beginning in 2013. Other efforts to eliminate lymphatic filariasis will include activities for raising patient disease awareness.

Further, through partnerships with the Drugs for Neglected Diseases initiative (DNDi), the Sabin Vaccine Institute, and other international nonprofit organizations, as well as Brazil’s national research institute the Oswaldo Cruz Foundation, the Group is developing new drugs for the treatment of Chagas’ disease, leishmaniasis and other NTDs, as well as malaria.

In April 2013, the Group also participated in the founding of the Global Health Innovative Technology Fund (GHIT Fund), Japan’s first public-private partnership to promote the development of new drugs in Japan with the aim of eliminating communicable diseases that are prevalent in developing countries, thereby contributing to the discovery of new drugs originating in Japan.

The press conference for the GHIT Fund founding in June 2013



15


Looking Back at the Two Years of the Mid-term Strategic Plan “HAYABUSA” Fundamental Strengthening of Domestic Marketing Capabilities to Support Further Growth in JapanYearly Progress of R&D Projects


Improvement of Access to Medicines in Emerging and Developing Countries

100

0

200

800

600

400

FY2013FY2012FY2011FY2010

Price halved

Improvement of Access to Medicines in Emerging and Developing CountriesFeature: Performing Better with Fewer Resources

The Group believes that it is important to establish prices that are affordable for local patients according to the economic conditions and insurance systems of the individual countries (affordable pricing), in order to provide Eisai’s innovative drugs to patients in emerging and developing coun-tries. The Group will conduct marketing activities in those countries strategically, selectively apply-ing the three pricing strategies of Price Zero (provision free of charge), affordable pricing, and tiered pricing (pricing tiered according to income demographics).

Eisai aims to realize a business model that differs from the one that has been applied in devel-oped countries up until now. The model uses a Low-Margin & High-Volume* pricing strategy to promptly deliver the Group’s medicines and contribute to the wellbeing of a substantially greater number of patients.* Low-Margin & High-Volume: A business model in which product prices are set at a low level and provided to a large number of patients, generating profit as a result.

1. Price ZeroUnder the London Declaration, Eisai will begin production of DEC in 2013, at its Vizag plant in India, to supply 2.2 billion of those tablets by 2020 to the WHO free of charge. The tablets will provide treatment for 250 million patients at risk of lymphatic filariasis in 24 countries around the world where the disease is prevalent.

Many issues must be resolved in order to produce this high-quality product at low cost, and to deliver it for administration to patients. Eisai will continue executing its comprehensive DEC initiative while solving those issues. Eisai can expect its corporate brand in developing countries to improve by having the Eisai logo mark on the tablets and the packages. Price Zero is an investment from a long-term perspective that will help give rise to productive middle-income populations in the future.

2. Affordable PricingAffordable pricing refers to setting pharmaceutical prices that make it easier for patients to buy the products, taking into consideration the economic conditions and insurance systems of the indi-vidual countries. One example is Aricept ®. The Group provides this treatment of Alzheimer’s dis-ease in Indonesia applying affordable pricing. Since affordable pricing took effect in 2009 to cut the price in half, the number of patients on Aricept ® has quadrupled in Indonesia (see Figure 1).

3. Tiered PricingTiered pricing refers to a strategy in which different prices are charged depending on the country and patient income level. This is the pricing strategy we applied to our new anticancer agent Hala-ven ®, which we plan on rolling out for sale in stages among many emerging and developing coun-tries from fiscal 2013 onward. In India, for example, the pricing of this treatment will be carefully tiered according to the income level of patients. We project that this tiered pricing will result in a dramatic increase in patients with access to Halaven ® (see Figure 2).

Figure 2. Growth Image of Halaven® Contributing to Patients in India

1st year 2nd year 3rd year 4th year 5th year

New patients benefiting as a result of tiered pricing

Patients benefiting under the conventional business model

Unit COGS* (Image) Free of charge

Price Zero for cycles 1 to 3

Insurance coverage

Price patients bear

Figure 1. Growth of Aricept® tablets in Indonesia(Indexed growth with the first quarter of the year ended March 2010 as 100)

Eradicating Lymphatic Filariasis

WHO Southeast Asia Region• Indonesia• Bangladesh• Myanmar• Nepal• East Timor

WHO Region of the Americas • Brazil• Dominican Republic• Guyana• Haiti

WHO Western Pacific Region • Fiji• French Polynesia• Laos• Malaysia

• Papua New Guinea• Philippines• Samoa

Eisai’s DEC tablets

Eisai Vizag plant

WHO African Region • Gambia• Kenya• Comoros• Madagascar

• Sao Tomé and Príncipe• Zambia• Zimbabwe

* COGS: cost of good seld

WHO Eastern Mediterranean Region• Egypt



16


Looking Back at the Two Years of the Mid-term Strategic Plan “HAYABUSA” Fundamental Strengthening of Domestic Marketing Capabilities to Support Further Growth in JapanYearly Progress of R&D Projects


Improvement of Access to Medicines in Emerging and Developing Countries

Corporate Governance

Perspectives of shareholders and investors

Compensating cost of equity via cash dividendsMargin

Leverage

Turnover

Conversion to proactive growth investment

IR Strategy Shareholder ReturnsROE Management

Maximizing value for shareholders

Accountability

Achieving fair valuation

Allocating cash income accordingly

Striving to maintain and increase dividends

DOE of 8%+

Independent Board of Directors: representing the best interests

of shareholders

Creating Corporate Value with Vigorous Investment for Growth and Financial StrategyFeature: Performing Better with Fewer Resources

Three StrategiesThe Group will continue to create shareholder value through three measures: 1) strategic growth investment, 2) ROE*¹ management, and 3) dividend policy. Strategic growth investment will include enhancement of the product lines centered on the oncology and neurology domains, growth in China and other emerging countries, and the creation of new business models, among other

measures. In terms of ROE management, Eisai aims to attain a global top-tier level of ROE and Equity Spread*² by improving profit margins, financial leverage, and asset turnover. Furthermore, in its dividend policy, Eisai will ensure sustainable and stable dividends, thereby maintaining a DOE*3 that exceeds the cost of shareholders’ equity.*1 Return on Equity *2 ROE less cost of equity *3 Dividends on Equity

Financial Strategy for Maximizing Shareholder Value

Order of priority of strategic growth investment(1) Corporate M&A and in-licensing products focused on the oncology and neurology domains(2) Investment projects in China and other emerging countries(3) Investment projects in Asia in generic pharmaceuticals and consumer healthcare products business, etc.



17



Further Enhancement of Product Creation Capabilities to Generate Innovation New Regional Structure for Utilizing Resources More Efficiently and Maximizing Product ValueMajor R&D Pipeline Creating Corporate Value with Vigorous Investment for Growth and Financial Strategy

Creating Corporate Value with Vigorous Investment for Growth and Financial StrategyFeature: Performing Better with Fewer Resources

Investing for GrowthBelieving in the necessity of active investment for future growth to create shareholder value, Eisai plans to substantially increase its strategic growth investments from the year ending March 2014 onward as part of adopting a more proactive financial stance. These investments will target (1) corporate M&A and in-licensing products in specialized domains particularly in oncology and neurology, (2) emerging markets, notably China, and (3) busi-ness focused on generic drugs and consumer healthcare products in Asia, consistent with Eisai’s category mix model.

Adaptive Financial PolicyFlexibly allocate cash income to long-term growth investments, to

increase from fiscal 2013 onward, while maintaining stable dividends

Transformation of Financial Policy to More Proactive Approach

Significant increase in strategic investment from fiscal 2013

due to improved debt capacity

¥150 – 200 billion of strategic investment capacity secured

Priority areas for strategic growth investments1. Corporate M&A and in-licensing products focused on special-

ized domains particularly in oncology and neurology2. Continue searching/evaluating investment opportunities in

emerging countries, including China3. Investment opportunities in line with Category Mix Model

•Possibilityofgeneric/consumerproductbusinessinAsia

Aim to maximize shareholder value with NPV*-positive deal(s) to be adopted

2012/3 2013/3 2014/3 2015/3 2016/3

Financial Strategy for Creating ValueEisai conducts business utilizing earnings per share (EPS)—an indicator of efficiency—and ROE as key performance indicators to generate shareholder value. Along with aiming to achieve record levels of EPS on the back of double-digit income growth from the year ending March 2014 onward, the Company aims to raise ROE to a record level surpassing 15%. As for return to shareholders, the Company will strive to maintain a DOE of 8% or higher, exceeding the cost of shareholder equity, by paying out dividends in a stable and sustainable manner.

Investment for growth

Dividends

Financial integrity

Fiscal 2013–2015

Proactive CAPEX

Fiscal 2012–2015 stable dividends

DOE 8–10% level

Net DER

0.3 level achieved

Net DER 0.3 or below

Net Debt/EBITDA*1 1 or below

* Net Debt/EBITDA: Net Debt/Earnings Before Interest, Taxes, Depreciation and Amortization(Interest bearing debt – (cash and deposits + marketable securities))/Income before income taxes and depreciation

* Net Present Value (NPV)



18



Further Enhancement of Product Creation Capabilities to Generate Innovation New Regional Structure for Utilizing Resources More Efficiently and Maximizing Product ValueMajor R&D Pipeline Creating Corporate Value with Vigorous Investment for Growth and Financial Strategy

hhc Activities

Eisai’s corporate philosophy is to give first thought to patients and their families, and to increase the benefits that health care provides to them. Guided by this corporate philoso-phy, all corporate officers and employees are working as one to meet diversified health care needs worldwide. By doing so, Eisai aims to be a “human health care (hhc) company” capable of making a meaningful contribution under any health care system. Contributing to Breast Cancer Patients

and Their Families

In the U.S., a service called Magnolia Meals at

Home that provides meals for breast cancer

patients has been started since 2012. Because of

their illness, breast cancer patients suffer from

various difficulties in their day-to-day lives, which

include problems associated with preparing meals.

The thinking behind this U.S. service is to support

the vital daily lives of the patients and their families

by providing very nutritious meals, which are also a

foundation supporting their medical treatment.

Eisai employees have continually supported this

service by working as delivery volunteers. We have

found that not only medical professionals but we

also can support each breast cancer patient by

providing a comprehensive solution in the form of

this type of support program.

Corporate Social Responsibility

Corporate Philosophy1. The Company’s Corporate Philosophy is to give first thought to patients and their families, and

to increase the benefits that health care provides to them. Under this concept, the Company endeavors to become a human health care (hhc) company.

2. The Company’s mission is the enhancement of patient satisfaction. The Company believes that sales and earnings will be generated as a consequence of the fulfillment of this mis-sion. The Company places importance on this positive sequence of the mission and the ensuing results.

3. Positioning compliance (adherence to legal and ethical standards) as the core of all business activities, the Company strives to fulfill corporate social responsibilities.

4. The Company’s principal stakeholders are patients and their families, shareholders, and employees. The Company seeks to develop and maintain a good relationship with stakeholders and enhance the value they receive, through the following.(1) Satisfying unmet medical needs, ensuring a stable supply of high-quality products, and

providing useful information regarding safety and efficacy.(2) Timely disclosure of management information, improvement of corporate value, and proac-

tive return to shareholders.(3) Ensuring stable employment, offering fulfilling work, and providing a full range of opportuni-

ties for the development of capabilities.

Excerpt from the Articles of Incorporation, Chapter 1, Article 2

Raising Awareness of Epilepsy with the Picture Book “Epilept is a Great Friend”

In order to ensure that children with epilepsy can

lead fulfilling everyday lives with peace of mind, in

Spain, Eisai created a children’s picture book entitled

“Epilept is a Great Friend” that provides an easily

understandable explanation of epilepsy.

If the children surrounding children with epilepsy

know about the feelings and symptoms of children

with epilepsy, they will be able to deal with a seizure

when it occurs, and accept epilepsy without being

shocked or thinking it is strange. We are actively

working to raise awareness by distributing the

picture books to schools and introducing it on

National Epilepsy Day.

Our employees deliver meals to cancer patients and receive tokens of gratitude

Raising children’s awareness of epilepsy with a picture book

Cover of the picture book

Eisai employees think about what they can do to respond to patients’ feelings, then formulate and implement

concrete action plans. The Group calls this series of activities “hhc activities.” Through over 500 “hhc activi-

ties” each year, Eisai creates new value globally, bringing peace of mind, hope, and joy to patients and their

families. The following are specific examples of “hhc activities.”


Introduction To Our Stakeholders Consolidated Financial Highlights Feature: Performing Better with Fewer Resources

Financial Section Corporate Data

19

Management Foundation

Corporate Social Responsibility Corporate Governance

Shareholder Returns Outside Director Interview

Board of Directors and Executive Officers

Eisai Diversity Declaration*

Eisai is striving for the promotion of diversity as a company staking its survival

Eisai issues the internal magazine PLEDGE to promote diversity

For All Employees

Eisai has made provisions in its Articles of Incorporation stipulating that it will strive to secure stable employment, provide satisfying jobs, and augment opportunities for developing personal capabilities. We are proactively endeavoring to achieve this Corporate Philosophy through our daily business activities. In addition, Eisai refers to personnel as “talent” (capable human assets) based on the view that our employees are important assets, and positions them as important stakeholders.

* The utilization of various ways of thinking and systems of values of individual employees of different genders, citizenships, cultures, regions, ages, education, careers, and lifestyles, etc.

In October 2012, the Eisai Group released the

“Eisai Diversity Declaration” and worked to familiar-

ize all officers and employees with the Declaration.

We aim to achieve hhc objectives at a higher level

by evoking innovation through a diverse set of

values, and by outdoing the competition and suc-

ceeding in the midst of a torrent of environmental

changes. In addition to striving to strengthen our

organizational capabilities, we will strive to enrich a

company in which each employee can experience

the pride and joy of working at Eisai, increase his or

her personal growth and meaning, and be moti-

vated to take on challenges with peace of mind.

We have established three pillars of activities to

serve as the starting point of our efforts. We will

promote the provision of a workplace in which

women are able to flourish, the establishment of an

environment in which the human resources who

support global development can play an active role,

and the creation of a system under which middle-

aged individuals, senior citizens, and young people

can work together to create new value. On a foun-

dation of a spirit of respect for others and oneself,

we will build a system to expand personal growth

into organizational growth, and develop human

resources one after another who are able to

continue responding to the needs of a diverse

society in a prompt and flexible manner, leading to

innovation in human resources development.

Under the direction of the Chief Talent Officer who

supervises the Talent Innovation Headquarters that

was newly established in June 2011, we will imple-

ment talent strategy, human resources development,

and labor measures suited to our era of major glo-

balization, in an effort to maximize the employee

value of each individual and increase the overall

strength of the employees who support the growth

of the Group.

Support for the Development of Global Talent

The Eisai Group emphasizes talent development to

improve the capabilities of every employee and the

promotion of diverse talent including female employ-

ees and non-Japanese employees, in an effort

toward global achievement of the hhc philosophy.

Furthermore, the Group develops personal capabili-

ties through the talent assignment of the right per-

sonnel to the right locations based on the idea that

assigning complete jobs will lead to the development

of talent who have ownership and accountability for

their work.

In addition, by conducting leadership develop-

ment programs for top management candidates and

managers in each region, short-term internship

programs at overseas subsidiaries for young

employees, and other personnel exchange pro-

grams that go beyond national borders, we are

developing global talent that is able to support the

continuous future growth of the Eisai Group.

Creating Workplaces where Employees Can Work with Peace of Mind

Eisai makes efforts that are directed toward the

creation of a workplace in which each employee can

work actively. We introduced “mandatory retirement

at the age of 65” on April 1, 2012, and have flexible

work systems that respond to an employee’s job

type and include flexible working hours and discre-

tionary work, as well as leave of absence and short-

ened working hours for the purpose of providing

childcare or nursing care for family members.

Together with enhancing such systems, the Group

also offers systems that enable volunteer leave and

donor leave, thereby supporting employees’ contri-

bution to society, as well as mental health care, and

health guidance by industrial doctors.

In accordance with Eisai’s basic policy for disas-

ter prevention, which places the safety of employ-

ees as the top priority, Eisai commissioned outside

experts to carry out assessments of potential

earthquake, tsunami, and fire risks at each of its

operational facilities. As a result, Eisai is currently

implementing measures, as a large-scale invest-

ment, aimed at assuring the safety of our employ-

ees in the event of an emergency. These measures

include anti-seismic reinforcement and seismic

work on the Tsukuba Research Laboratories (Ibaraki

Prefecture), and anti-seismic reinforcement of

Kawashima Industrial Park (Gifu Prefecture), and

the Naito Museum of Pharmaceutical Science and

Industry (Gifu Prefecture), etc.

Eisai’s DiversityRealization of hhc by utilizing diversity to

generate innovationSystem of values

Work history

Education

Race

Lifestyle

Age

Culture/nationality

Gender

Global leadership development program




20





assessments, Eisai aims to stimulate the risk man-

agement cycle (identification, assessment, control,

and monitoring of risks), while at the same time

supporting the establishment of overall internal

controls. Furthermore, Eisai has established

regional management organizations to globally

promote internal control through support for risk

management.

Eisai’s Approach to Crisis ManagementThe Eisai Group has established a Crisis Manage-

ment Committee and summarized the basic

approach to crisis management and preparations

that should be made in the ENW Crisis Manage-

ment Policy. In addition, the ENW Business Conti-

nuity Plan (BCP) has been established and shared

globally to ensure contributions to patients are not

interrupted even in the event of an emergency.

Based on these, each function and region has

created a crisis management organization accord-

ing to the content of business and regional charac-

teristics, and are proceeding to initiate regulations

and manuals concerning initial responses that place

priority on ensuring the safety of employees in the

event of an emergency. Moreover, they also estab-

lish specific BCPs to ensure the continuation of key

operations such as the stable supply of pharma-

ceuticals and ongoing product creation. They are

continually verified and reviewed through the

Promotion of Compliance

Under the guidance of the Chief Compliance Officer,

the Corporate Compliance and Risk Management

Department works with compliance departments in

each region, and the compliance personnel in each

Eisai Network Companies (ENW)* company to pro-

mote compliance globally.

Spread of Compliance Awareness

Eisai believes that it is essential to promote compli-

ance awareness among all employees in order to

ensure that corporate activities are always con-

ducted in accordance with compliance by every

employee. To achieve this, the ENW Charter of

Business Conduct and the Compliance Handbook

summarizing the Code of Conduct have been

translated into 18 languages, and shared among all

Group employees along with a Take-along Compli-

ance Card.

Training opportunities on compliance continue to

be provided through media such as compliance

workshops, e-learning, and e-mail newsletters.

Promotion of Risk Management

The Corporate Compliance and Risk Management

Department implements Control Self-Assessments

(CSAs) for all ENW companies as a mechanism for

reducing everyday operational risks. Through these

Global Warming PreventionIn order to achieve a low-carbon society, the Com-

pany is working toward efficient use of energy and

energy conservation, in particular at its plants and

laboratories that use a large amount of energy. Efforts

such as the introduction of heat pump technology to

hot water heaters (for chilled and hot water supply)

and refrigeration equipment, full-scale introduction of

evaporative humidification in air-conditioning systems,

replacement of commercial vehicles with hybrid cars,

and green purchasing are continuing. In addition, the

entire Company is making an effort to increase the

motivation of employees to save energy through the

“visualization” of electricity use.

In February 2013, the Company’s Tsukuba

Research Laboratories received the top award at the

Kanto region’s awards for the rationalization of elec-

tricity usage. The Company’s plants and laboratories

are participating in the Low-carbon Society Action

Plan launched by the Japan Pharmaceutical Manu-

facturers’ Associations in fiscal 2013, in an effort to

reduce CO2 emissions further.

Compliance & Risk Management

Eisai is engaged globally in activities aimed at enhancing the Group’s awareness and capabilities for responding to compliance and risks, based on the recognition that compli-ance and risk management form the cornerstone to internal control.

Environmental Protection IN DETAIL Environmental and Social Report http://www.eisai.com/responsibility/esreport/index.html

At the Eisai Group, all officers and employees share the same basic principles for environmental protection under a management system that is based on the “ENW Environmental Protection Policy.” The Group carries out environmental protection activities on a global basis, including obtaining ISO 14001 certification at its major production facilities in Japan, the Suzhou Plant in China, and the Vizag Plant in India.

Waste Product Reduction and Recycling PromotionIn an effort to form a recycling-oriented society, the

Company is striving to reduce waste product

volume, the volume of waste products ultimately

disposed of in landfills, and expand the use of recy-

cling. Resale routes are being sought for products

such as testing equipment that can be reused as-is,

and items such as scrap iron and waste oil from

employee cafeterias are being sold or recycled. In

addition to changing the way meetings are run and

the method of making copies to reduce the amount

of paper waste, the Company strives to recycle

paper by conducting thorough separate garbage

collection.

In February 2013, these efforts received a com-

mendation by Bunkyo City Government, Tokyo, for

the Company’s “contribution to the promotion of

recycling and reducing garbage.” Further, Group

companies in Japan achieved “Zero Emissions” (a

volume of waste product ultimately disposed of in

landfills/waste product volume ratio of less than 1%)

for the fifth consecutive period.* ENW (Eisai Network Companies): A corporate group comprised of Eisai and its subsidiaries and affiliates

implementation of training. Based on the lesson

provided by the “Miracle of Kamaishi,” evacuation

drills and crisis management headquarters training

are conducted with all personnel participating. As a

rule, each type of training is conducted twice or

more a year to improve the ability of all personnel to

respond to crises.




21





for 237 projects, including science promotion prizes and science incentive grants.

IN DETAIL http://www.naito-f.or.jp/en/

The Health Care Science Institute

The Health Care Science Institute was established in 1990, funded by a donation marking the 50th anniversary of the foundation of Eisai Co., Ltd., with the aim of pro-moting the progress of medical therapy and human welfare in Japan by conducting economic surveys and research related to medical therapy and pharmaceuticals; conducting economic surveys and research focused on R&D, manufacturing, distribution, and other subjects related to pharmaceuticals; and promoting academic research and surveys related to pharmaceuticals and associated sciences. In addition to publishing the Health-care and Society periodical outlining research achieve-ments, the Institute organizes research conventions and symposia to provide venues for discussions among specialists.

IN DETAIL http://www.iken.org/english/misson.html

Health and Medical Care Contributions Awards

Since 1986, Eisai has co-sponsored the Health and Medical Care Contributions Awards*. The awards spot-light healthcare professionals with outstanding achieve-ments in providing medical services over many years amid challenging environments. In fiscal 2012, 15

Naito Museum of Pharmaceutical Science and Industry

The Naito Museum of Pharmaceutical Science and Industry, Japan’s first museum devoted to phar-maceuticals, was estab-lished in 1971 by Toyoji Naito, the founder of Eisai.

Admission to the museum is free of charge, and visi-tors can view approximately 2,000 items selected from the museum’s collection of more than 65,000 materials and 62,000 books.

In February 2009, it was recognized as a modern industrial heritage site by the Ministry of Economy, Trade and Industry. Over 1.4 million people have now visited the museum. Moreover the museum is working hard to create content for its website, so called “The Museum of Pharmaceuticals,” including making a digital archive of its items and books.

IN DETAIL http://www.eisai.co.jp/museum/english/index.html

The Naito Foundation

The Naito Foundation was established in 1969 by Eisai and its founder, Toyoji Naito, to contribute to the advancement of science and human welfare. Each year, the Foundation provides financial support for leading-edge researchers. In fiscal 2012, the Foundation provided financial support totaling approximately 5 million dollars

hhc Hotline (Call center for product-related inquiries)

In April 2013 as we greeted the 23rd year since its launch, we changed the name of the Customer Hotline to the “hhc Hotline” with the aim of providing a higher level of customer joy. Since the establishment of our toll-free hotline in accordance with the hhc philosophy in April 1990 for patients, consumers, and health care professionals, a total of approximately 1,570,000 inquiries have been received. We aim to please our customers by utilizing the variety of comments received to improve quality and modify products.

Eisai Receives the JIRA 17th Annual IR Grand Prix Awards “Best IR Award”

In November 2012, the Company received the 17th Annual IR Grand Prix Awards “Best IR Award” from the Japan Investor Relations Association (JIRA). The Annual IR Grand Prix Awards is an awards system through which JIRA aims to select and recognize companies that have achieved successful results and gained sup-port in the investment community for their strong under-standing of and proactive efforts to promote investor relations (IR). The Company received the IR Grand Prix Award in 2006, and the Best IR Award in 2004, 2005 and 2009. The receipt of the award in 2012 made it the 5th time for the Company to receive the Best IR Award.

Naito Museum of Pharmaceutical Science and Industry

Philanthropy

Eisai’s social contribution activities primarily promote progress in medical science. Eisai opened the Naito Museum of Pharmaceutical Science and Industry to the public free of charge; provides operational support for the Health Care Science Institute, which supports medical and pharmaceutical research; and has co-sponsored the Health and Medical Care Contributions Awards for healthcare professionals with outstanding medical achieve-ments over many years.

Other Topics

Eisai Receives the TSE Corporate Value Improvement Award

The Company received the “Excellence Award” of the Corporate Value Improve-ment Award that was newly created by the Tokyo Stock Exchange (TSE) in 2012. The Corporate Value Improve-ment Award is an awards system created to spread and promote management aimed at improving corpo-rate value deemed desirable by the TSE in its position as a market operator. Listed companies with high corporate value and management practices deemed to contribute to the appeal of the TSE market, such as by improving corporate value through initiatives which consider capital cost and other investor concerns, are eligible for these awards.

In addition to ROE management, the Company carries out management with a focus on DOE that exceeds the cost of shareholders’ equity. The Com-pany would like to take advantage of the receipt of this

award to further boost its efforts toward the enhancement of corpo-rate value.

L I S T E DCOMPANYA W A R DOF THE YEAR

平成24年度企業価値向上表彰

優秀賞

domestic recipients and 3 overseas recipients were presented with awards.

* Main sponsor: Yomiuri Shimbun; Co-sponsors: Ministry of Health,

Labour and Welfare, and Nippon Television Network Corporation.

IN DETAIL

http://www.eisai.com/responsibility/program.html

Receiving the Excellence Award at the TSE Corporate Value Improvement Award ceremony




22





Basic Policy on Profit Appropriation and Dividends

The Company is devoted to providing sustainable

and stable dividends to its shareholders based on

the comprehensive consideration of its consolidated

financial performance along with the consolidated

dividend on equity ratio*1 (DOE) as well as the alloca-

tion of cash income*2.

DOE includes two indexes for shareholders. The

first is the dividend payout ratio (DPR), which shows

the proportion of profit distributed to shareholders.

The second is the return on equity (ROE), which

measures how effectively a company is able to

produce a profit with the money invested by

shareholders.

Cash income represents a company’s ability to

earn cash. Cash income is used to provide divi-

dends to shareholders, make investments for future

growth, and strengthen the financial standing of the

Company, including the repayment of borrowings.

The Company believes that it is important to make a

well-balanced allocation from a medium-term per-

spective of approximately 1/3 to each of these

purposes.

In light of this, the Company believes that the Top 10 Shareholders*

(As of March 31, 2013)

Principal shareholdersNumber of shares held

(thousands)**

Equity position

(%)Japan Trustee Services Bank, Ltd. (trust account) 20,859 7.31The Master Trust Bank of Japan, Ltd. (trust account) 17,200 6.03Nippon Life Insurance Company 15,344 5.38Saitama Resona Bank, Limited 8,300 2.91SSBT OD05 OMNIBUS ACCOUNT-TREATY CLIENTS 7,285 2.55Eisai Employee Shareholding Association 7,038 2.46JPMorgan Chase Bank 385147 6,188 2.17Mizuho Corporate Bank, Ltd. 4,680 1.64The Naito Foundation 4,207 1.47Tokio Marine & Nichido Fire Insurance Co., Ltd. 2,660 0.93

* Treasury stock (11,470 thousand shares, 3.86%) is excluded as it has no voting rights.** Numbers of shares less than one thousand have been omitted.

Change in Breakdown of Shares Held by Category

v Financial Institutionsv Financial Instruments and Exchange

Companies (Securities Companies)v Other Japanese Corporationsv Outside Japan, etc.v Treasury Stockv Individuals and Others

Stock Price(%)

* Stock price on April 1, 2008 = 100 for TOPIX index

’13/3’09/3 ’10/3 ’11/3 ’12/3

150

100

50

0

3.9%

8.0%

37.1%

3.9%

25.0%

22.3%

March 31, 2013

mEisai Stock PricemTOPIX

’13/3’11/3’10/3’09/3’08/3

150150140

1309.6

’12/3

15015010.4 10.410.1

9.1

7.4

0

50

100

150 12

8

4

0

DPS = Dividends per Share (left scale) DOE: Dividend on Equity = ROE x Dividend Payout Ratio (right scale)

Cash Dividends per Share (DPS) and Dividend on Equity (DOE)(Yen) (%)

19.0%

37.5%

3.2%

8.1%

28.4%

3.9%

March 31, 2012

comprehensive consideration of its DOE and alloca-

tion of cash income in addition to its consolidated

performance provides a good index for maintaining

well-balanced shareholder returns from a medium-

term perspective. In addition, acquisition of treasury

stock will be carried out on a timely basis.

*1 Dividend on equity (DOE) ratio = Dividend payout ratio (DPR) x Return on equity (ROE)

*2 Cash income is equivalent to the total amount of cash available for use for such purposes as growth investment/business, dividend payment, and the repayment of borrowings.

Cash income = Net income (loss) + Depreciation of PP&E and amortization of intangible assets + In-process R&D expenses + Amortization of goodwill + Loss on impairment of long-lived assets (including loss on devaluation of investment securities)

Dividends

Eisai has a Company with Committees System. The

Articles of Incorporation provide that the dividend

payment should be resolved at the Board of Direc-

tors meeting in order to facilitate flexible payment.

Based on the Company’s basic policy to provide

sustainable and stable dividends to its shareholders,

the Company intends to set the fiscal 2012 year-end

dividend at ¥80 per share. Combined with the

interim dividend of ¥70 per share, this results in an

annual dividend of ¥150 per share (same as the

previous year), and the dividend on equity (DOE) is

to be 9.6%.

Shareholder Returns




23



Outside Director Interview


Shareholder Returns

The Company continually pursues optimum corporate governance

and makes ongoing efforts for its enhancement. The Company

believes that the essence of corporate governance is to respect the

rights of shareholders, ensure the fairness and transparency of

Corporate Governance

Corporate Governance System

IN DETAIL Corporate Governance http://www.eisai.com/company/governance.html

management, and stimulate the vitality of corporate management.

The Company seeks to achieve the enhancement of its corporate

governance while keeping within the following basic framework.

Basic Framework of the Corporate Governance System

(1) Shareholder Relations1. Respect the rights of all shareholders.2. Ensure the equality of all shareholders.3. Structure favorable and smooth relations with the Com-

pany’s stakeholders, including shareholders.4. Disclose properly and ensure the transparency of Company

information.(2) Corporate Governance System

1. The Company has adopted a company with Committees System.

2. The Board of Directors shall broadly delegate to the Corpo-rate Officers the power of decision-making over business conduct to the extent permitted by the laws and regula-tions and shall exercise its management oversight function.

3. The majority of the Board of Directors shall consist of inde-pendent Outside Directors.

4. There shall only be one Representative Corporate Officer & President who shall be a Corporate Officer and a Director concurrently.

5. To clarify the management oversight function, the Chair of the Board of Directors and the Representative Corporate Officer & President shall be divided.

6. The Nominating Committee and the Compensation Com-mittee shall be entirely composed of Outside Directors, and the majority of the Audit Committee shall consist of Outside Directors.

7. Each of the Chairs of the Nominating Committee, the Audit Committee and the Compensation Committee shall be appointed from the Outside Directors.

8. The internal controls system shall operate properly to ensure the credibility of financial reports.

General Meeting of Shareholders

Board of Directors: 11 members (7 outside, 4 internal) Chair: Outside Director

Audit Committee5 members (3 outside, 2 internal)

Chair: Outside Director

Nomination Committee 3 members (all outside)

Collaboration

Management Audit Department

Board of Directors’ Secretariat

Accounting Auditor

Accounting Audits

Executing Division

President (Representative Corporate Officer) and CEO

Executive Board

Corporate Officers

Individual divisions/subsidiaries inside and outside Japan

Development and operation of the internal control system

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Compensation Committee 3 members (all outside)

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7 members (all outside)




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Ongoing Efforts to Enhance Corporate Governance1. Adoption of the Company with Committees System In June 2004, the Company carried out a change of its Articles of Incor-poration at the Ordinary General Meeting of Shareholders and adopted the Company with Committees System in order to further enhance corporate governance.

With the adoption of the Company with Committees System, the Company increased the number of outside directors to comprise more than half of the Board of Directors. The Company aimed to increase the transparency and fairness of management, strengthen the supervisory function of the Board of Directors over overall management, enhance the quality of management, and improve benefits to shareholders, customers, employees, and other stakeholders. Meanwhile, by broadly entrusting corporate officers the authority to make decisions related to management to the extent permitted by law, the Company aimed to promote flexible management, heighten competitiveness, create a structure that enables the achievement of human health care (hhc), which is the Company’s Corporate Philosophy, and stimulate the vitality of corporate management by securing autonomy through internal con-trol by corporate officers.

2. Inclusion of the Corporate Philosophy within the Articles of Incorporation

The Company’s Corporate Philosophy was included within the Articles of Incorporation with the assent of shareholders at the Ordinary General Meeting of Shareholders held in June 2005. This Corporate Philosophy is shared “knowledge” among Group companies, both in Japan and abroad, and it supports the autonomous operation of the Company’s global development. Various measures and policies must be executed globally and with a long-term perspective in order to achieve this Corpo-rate Philosophy. Furthermore, believing that the execution of such cor-porate measures and policies is only possible with the trust of shareholders, the Company decided to include the Corporate Philoso-phy within the Articles of Incorporation, and share the Corporate Phi-losophy with shareholders. The Company believes that its corporate value is enhanced by achieving its Corporate Philosophy and enables shareholders to possess the Company’s stocks securely over the long-term.

Specific Operations related to the Enhancement of Corporate Governance1. Mechanism for Considering the Continuous

Enhancement of Corporate Governance Article 26 of the Company’s Corporate Governance Guidelines stipu-lates that the Board of Directors shall conduct an annual self-review of the execution of duties by the Board of Directors. On this basis, the Board of Directors carries out a self-review every year in April regarding the execution of duties by the Board of Directors.

Furthermore, a meeting of only outside directors is held every year to serve as an opportunity for discussion on the state of the Company’s corporate governance as well as its ideal state. This leads into fruitful discussions at the Board of Directors’ meeting.

2. Clear Separation of the Functions between Supervision of Management and the Execution of Business

The central aspect of the Group’s corporate governance system is the clear separation of supervision of management and execution of business by fully utilizing the fact that it uses a Company with Committees System.

The Board of Directors with outside directors making up the majority is able to devote its attention to the supervision of management by entrusting a large portion of decision-making authority to corporate officers. In addition to checking the status of execution of operations, the Board of Directors also inspects the status of internal controls such as business execution and decision-making processes from the per-spective of shareholders and society.

This makes it possible for corporate officers to increase the speed and flexibility of business execution and to enhance the vitality of manage-ment, in addition to ensuring autonomy by establishing internal controls.

Furthermore, in order to achieve a clear separation between supervi-sion of management and the execution of business, the Company has established that the Chair of the Company’s Board of Directors be an outside director. The Chair of the Board of Directors ensures that the selection of agendas and the establishment of annual themes are scruti-nized in order to enable the Board of Directors to make fair and appro-priate judgments on behalf of shareholders and other stakeholders. Sufficient time is also spent to confirm the content of proposals pre-sented to the Board of Directors. The Board of Directors Secretariat is supervised to explain the content of the proposals to each director in advance of meetings. The proceedings of the meetings of the Board of

Directors are carried out in ways that enable directors, with their diverse backgrounds, to express their opinions on the basis of their varied knowledge. One President (Representative Corporate Officer) and CEO serves concurrently on the Board of Directors in order to sufficiently explain the state of the execution of business to the Board of Directors.

3. Ensuring the Independence and Neutrality of Outside Directors

The presence of independent and neutral outside directors, who account for the majority of the 11 members of the Board of Directors, supports the effective operation of the Company’s corporate gover-nance system. The Company’s Nomination Committee is composed of three outside directors. The Committee strictly applies the requirements for the independence and neutrality of outside directors, stipulated by the Committee, for the selection candidates for outside directors.

The requirements are reviewed by the Nomination Committee every year and revisions are made as required. In fiscal 2012, each of the items was reviewed in accordance with the “Criteria for Independence of Outside Directors” of securities exchanges, etc., and revisions such as the addition of an item prohibiting mutual appointment of directors were made.

These requirements for the independence and neutrality of outside directors must be fulfilled not only at the time of the outside director’s selection but also continuously during the period the outside director is in office. Inspections of all outside director candidates are carried out each year, with the Nomination Committee confirming the results of the inspection.

4. Administration of the Nomination Committee, Compensation Committee, and Audit Committee

i) Nomination CommitteeThe Nomination Committee determines the content of proposals to the General Meeting of Shareholders in relation to the selection of directors. For this purpose, the Nomination Committee considers and determines the composition of the Board of Directors for the next fiscal year, such as the ratio of internal directors to outside directors, and the number of members for each committee; creates a list of proposed director candi-dates; narrows down the list of candidates to be proposed after consid-ering the composition of the Board of Directors and each committee for the next fiscal year and the diversity of directors; and carries out




25





screenings of the independence and neutrality of director candidates for proposal. After the chair of the Nomination Committee asks the director candidate be appointed as a director, resolutions are made regarding the director candidates to be selected at the General Meeting of Share-holders and the composition of the Board of Directors.

ii) Compensation CommitteeThe Compensation Committee determines the basic policy related to compensations, etc., of directors and corporate officers as well as the content of compensations, etc., for individual directors and corporate officers. In addition to reviewing the performance targets and evaluation criteria for the determination of bonuses for corporate officers, the Compensation Committee also reviews Company-wide performance and the evaluation of each corporate officer, and determines individual bonuses. Furthermore, the Committee carries out reviews each year related to basic policies and the compensation level of the Company’s directors and corporate officers by researching the compensation sys-tems, levels, and related matters at other companies for comparison and consideration, as well as identifies and discussing relevant issues. Regarding the disclosure of the compensation of officers, the content of the disclosure is to be deliberated by the Compensation Committee and proposed to the operating divisions.

iii) Audit CommitteeThe basic policy of audits is to contribute to the Board of Directors exhibition of supervisory functions; to pursue optimum corporate gover-nance and the enhancement of corporate value; to maintain company assets; to keep appropriate accounting records; to comply with laws; to verify and maintain the soundness of overall activities, inclusive of the Corporate Philosophy; and to verify the effectiveness of the overall Group’s risk management and internal control. Based on this basic policy of audits, Audit Committee meetings are held; audit plans of the Audit Committee are formulated; audits as required by the Companies Act are conducted; supervision of the state of the enhancement and operation of internal control related to financial reporting as stipulated by the Financial Instruments and Exchange Act is made; and audits of accounting auditors are conducted. At the same time, activities that emphasize collaboration with the internal control division of the Group as well as accounting auditors are also carried out.

Unit Personnel Duties, etc.

Nomination Committee

3 persons3 outside directorsChair: Outside director

(1) Determine the content of the proposals related to the selection or retirement of directors made to the General Meeting of Shareholders.

(2) Establish the “Requirements for the Independence and Neutrality of Outside Directors” for the selection of independent outside directors.

(3) Establish basic policies, rules, and procedures necessary for the execution of duties by the Nomination Committee.


Compensation Committee

3 persons3 outside directorsChair: Outside director

(1) Determine policies related to the determination of the content of the compensations, etc., of directors and corporate officers, and determine the content of compensations, etc., for individual directors and corporate officers.

(2) Proactively incorporate data from external surveys, etc., in order to ensure the objectivity of the determination of the compensations, etc., of directors and corporate officers, as well as review and determine the validity of the decision-making process in relation to compensa-tions, etc.

(3) Establish basic policies, rules, and procedures necessary for the execution of the duties of the Compensation Committee.


Audit Committee 5 persons3 outside directors2 internal directorsChair: Outside director

(1) Audit the execution of duties by directors and corporate officers.(2) Determine proposals related to the election, dismissal, and non-reappointment of the

accounting auditors to be submitted to the General Meeting of Shareholders.(3) Execute accounting audits and other matters stipulated by applicable laws.(4) Strive to enhance the quality of audits and achievement of efficient audits through such

means as receiving reports from directors, corporate officers, employees and accounting auditors on a timely and proper basis in relation to those matters required for the auditing of the execution of duties by directors and corporate officers, as well as by collaborating with accounting auditors and the Corporate Internal Audit Department.

(5) Establish basic policies, rules, and procedures necessary for the execution of the Audit Committee’s duties.

(6) Ensure the objectivity of audits by guaranteeing the independence of the Management Audit Department, which executes duties under the resolution of the Audit Committee and the direction of members of the Committee, from corporate officers in relation to directions related to the execution of their duties, personnel evaluations, etc.




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Internal Audits

Internal audits differ from audits by the Audit Committee and account-ing audits in that they are carried out by the Corporate Internal Audit Department established in the operating division under the corporate officer responsible for internal controls. Internal audits independently and objectively evaluate whether business activities are being carried out properly and efficiently on the basis of the hhc philosophy and compliance set forth in the Articles of Incorporation. Furthermore, it continuously confirms the state of the improvement of issues identified through internal audits.

The Corporate Internal Audit Department formulates audit plans considering the degree of importance of risks and operations, and ensures the quality of audits by performing auditing activities using predetermined methods. Furthermore, it aims to execute high-quality audits that meet global standards, taking into consideration the con-tinuous improvement of internal audit activities and the results of assessments by external institutions.

Collaboration between the Audit Committee and the Accounting Auditor

The Audit Committee collaborates with the accounting auditor through the following activities, thereby endeavoring to improve the quality of audits.

• The Audit Committee confirms the yearly accounting audit plans of the accounting auditor in advance and obtains a copy of the plan.

• The Audit Committee obtains and reviews the auditing opinions and recommendations of the accounting auditor regarding quarterly and year-end financial statements (consolidated and non-consolidated).

• Of the individual accounting audits carried out by the accounting auditor, the Audit Committee obtains information regarding important audits.

• The Audit Committee obtains information concerning the internal control audits executed by the accounting auditor.• The Audit Committee continuously confirms the status of the internal control of the accounting auditor related to Article 131

of the Rules of Company Accounting.

Collaboration between the Audit Committee and the Corporate Internal Audit Division, etc.

The Audit Committee aims to achieve efficient audits through the following activities in collaboration with the corporate officer responsible for internal controls and the internal control division, etc.

• The Audit Committee shares information related to internal control promotion activities and overall auditing activities through Audit Council meetings.

• The Audit Committee confirms internal audit plans (annual plan and individual plans) in advance and obtains copies of the plans in order to achieve consistency between the Audit Committee’s auditing activities and internal audits.

• The Audit Committee obtains, from the Corporate Internal Audit Department, copies of the annual audit plans and the results of individual audits carried out by the internal audit department of ENW companies.

• The Audit Committee regularly obtains information concerning the status of internal control over financial reporting under the Financial Instruments and Exchange Act.

• The Audit Committee regularly obtains reports regarding the status of efforts in internal control related to risk management.• Outside the Audit Council Meetings, the Audit Committee also promptly shares information regarding matters of urgency

related to internal audits.




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What is your impression of corporate governance (system) at Eisai?A: The independent non-executive directors on Eisai’s board are effectively performing as a supervi-sory board, which is different to the U.K. where the board is normally more involved in management decisions. In some ways this is more a German system, although in Germany there are a large number of union representatives on the supervisory board.

Within Eisai, management is for the managers and the role of the board is this kind of supervisory role. I think it’s a useful way to organize the governance of the Company. And certainly it seems to me very natural to have a majority of non-executive directors on the board, but that’s still quite rare in Japan. And it seems very natural to have a chairman of the board who is non-executive because that’s the British system. There are obviously differences among other companies in Japan, but my impression is that Eisai’s system seems to work.

Another important aspect is that Eisai is always willing to try and think about a new way of doing things if that would be better for the Company.

From an independent outside director’s perspective, could you tell us what is required for Eisai to further enhance its corporate value and hence, augment stakeholders’ benefits?A: The fundamental thing for Eisai is developing innovative medicines. You have to go back to that as the basic role of the Company. The future of the Company fundamentally depends on the pipeline and whether it continues to develop innovative medicines for patients. We have a number of new medicines which are just being launched, or have been launched in the last year or so in the market.

The single most important thing for Eisai is to create new medicines to benefit patients.

You have been an independent outside director at Eisai for a year now. What are your views on Eisai?A: There are two things to draw attention to, and the first is that I am the only Eisai director who doesn’t live in Japan.

I’ve noticed that sometimes debates about the pharmaceutical industry are different in Europe and America from the discussion that goes on inside Japan. One example is the debate about the affordability of poor people in developing countries to have access to modern medicines. This debate has been going on for over 10 years overseas. Eisai was one of the first Japanese companies to understand this discussion and to take action on it. I think this is what lies behind Eisai’s Zero Price supply of diethylcarbamazine citrate (DEC) to developing countries and to WHO, and behind Eisai’s adoption of affordable pricing in developing markets.

This is very much in line with Eisai’s hhc philosophy, and I think it’s also an indication of Eisai’s ability to pick up what is happening at the global level in terms of trends and debates in the pharma-ceutical industry.

The second thing to note is the emphasis within Eisai on the benefits for shareholders in the way the Company is managed, which I’ve been able to see after a year as a director, both in the Board of Directors and in senior management. This emphasis is expressed through the focus on dividends and on measurements like ROE. It was a very clear element of the financial strategy which we endorsed in the board, and it really plays an important part in the way the Company is managed.

Graham FryOutside DirectorNomination Committee MemberCompensation Committee MemberMember of the Independent Committee of Outside Directors

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Shareholder Returns



Haruo NaitoPresident (Representative Corporate Officer) and CEOOct. 1975 Joined the CompanyApr. 1983 Senior Director, R&D Promotion

Department of the CompanyJun. 1983 Director of the CompanyApr. 1985 General Manager, R&D of the CompanyJun. 1985 Managing Director of the CompanyJun. 1986 Representative Director and Senior

Managing Director of the CompanyJun. 1987 Representative Director and Deputy

President of the CompanyApr. 1988 Representative Director and President of

the CompanyJun. 2003 Representative Director, President and

Chief Executive Officer (CEO) of the Company

Jun. 2004 Director, President (Representative Corporate Officer) and CEO of the Company (current)

Jan. 2006 Chair, The Naito Foundation (current)

Dear Shareholders,I believe the mission of the modern pharmaceutical industry is to understand the feelings of patients and their families, create products that enhance value for patients, ensure stable supplies, provide information, and improve overall access. In an era of great globalization, I do believe that Eisai can play these roles across the globe and respond to the needs of our shareholders.

Akira Fujiyoshi(Member of the Audit Committee)Apr. 1976 Joined the CompanyApr. 2002 General Manager, Research and

Development Division of the CompanyApr. 2004 General Manager, Corporate Communi-

cations Department, IR Group of the Company

Jun. 2006 Vice President of the CompanyJun. 2006 Vice President, Corporate Communica-

tions and IR of the CompanyOct. 2008 Vice President, Corporate Communica-

tions of the CompanyJun. 2009 Director of the Company (current),

Member of the Audit Committee of the Company (current)

Dear Shareholders,I believe that the unique characteristics of the Company’s corporate governance can be found inthe combination of the operating function, which advances the execution of corporate activities in accordance with the Corporate Philosophy—inherited among Eisai people like a corporate gene—as stipulated in the Articles of Incorporation and the supervisory function that pursues management transparency and fairness through the maximum utilization of advantages in the “Company with Committees System.” I will do my utmost to ensure that the Company’s corporate activities are properly executed based on this corporate governance system and that imple-mentation of the corporate philosophy contributes to an increase in corporate value and stakeholder value so that growth in shareholder value over the long-term meets the expectations of shareholders.

Tokuji Izumi(Chair of the Board of Directors, and Member of the Independent Committee of Outside Directors)Apr. 1963 Assistant Judge, Tokyo District CourtApr. 1973 Judge, Kanazawa District CourtJul. 1995 Chief Judge, Urawa District CourtNov. 1996 Secretary General, Supreme CourtMar. 2000 President, Tokyo High CourtNov. 2002 Justice, Supreme CourtFeb. 2009 Admitted to the Tokyo Bar AssociationMar. 2009 Advisor, TMI Associates (current)Apr. 2009 Member of the Compliance Committee

of the CompanyJun. 2010 Director of the Company (current),

Member of the Independent Committee of Outside Directors (current), Member of the Nomination Committee, and Chair of the Compensation Committee

Jun. 2011 Chair of the Board of Directors of the Company (current)

Dear Shareholders,Eisai’s foremost mission is to develop new drugs that help people suffering from different diseases and to deliver the necessary drugs to as many patients as possible around the world. In developing new drugs, Eisai needs to focus on allocating internal resources to R&D and forging relationships with outside research organizations. To manufacture and provide drugs to more patients at affordable prices, the Company has to join forces with all its subsidiaries including its overseas subsidiaries in improving manufacturing efficiency and expanding its marketing network. Eisai wants to embody an agile management approach by assigning the execution of business to corporate officers and making decisions as quickly as possible. In this context, directors need to adopt the shareholders’ perspective, ensure that the operating divisions are fulfilling their duties in accordance with the proper decision-making processes, guide the Company in performing its corporate activities in a fully legal, highly transparent manner, and work to improve corporate value.

Koichi Masuda(Chair of the Audit Committee, and Member of the Independent Committee of Outside Directors)Apr. 1966 Joined Yoshiji Tanaka Certified Public

Accountant OfficeSep. 1978 Joined Shinwa Audit CorporationJul. 1992 Managing Partner, Asahi Shinwa Audit

Corporation (currently KPMG AZSA LLC)Jul. 2001 Deputy Chairman and President, The

Japanese Institute of Certified Public Accountants

Jul. 2007 Chairman and President, The Japanese Institute of Certified Public Accountants

Oct. 2009 Outside Corporate Auditor, Enterprise Turnaround Initiative Corporation of Japan (currently the Regional Economy Vitalization Corporation of Japan) (current)

Apr. 2010 Outside Corporate Auditor, NKSJ Holdings, Inc. (current)

Jun. 2010 Director of the Company (current), Chair of the Audit Committee (current), and Member of the Independent Committee of Outside Directors (current)

Jun. 2011 Outside Corporate Auditor, The Daishi Bank, Ltd. (current)

Jun. 2011 Outside Corporate Auditor, TDK Corporation (current)

Jun. 2012 Outside Corporate Auditor, Tokai Rubber Industries, Ltd. (current)

Dear Shareholders,Economic globalization, evolving information technology, widespread technological innovation, and countless other factors are changing our world. Companies today thus need to respond as quickly as possible to an environment that continues to transform in dramatics, complex ways. Corporate management, meanwhile, often finds itself greatly influenced by even the smallest shifts in global dynamics or changes in the political climate. Although Eisai, one of the few “Companies with Committees Systems” in Japan, has received substantial praise for its governance system, it is still necessary for the Company to continuously improve, revise, and reconstruct its corporate governance framework and internal controls if it wants to successfully navigate the considerable risks the current business environment brings with it. Even with these demanding conditions, Eisai is currently charging ahead with the Mid-term Strategic Plan “HAYABUSA.” Given my many years of experience as a certified public accountant, my personal network, and my specialized knowledge, I am determined to live up to the expectations of shareholders and all other stakeholders by enhancing Eisai’s corporate value.

Kiyochika Ota(Chair of the Nomination Committee, Member of the Compensation Committee, and Member of the Independent Commit-tee of Outside Directors)Apr. 1970 Joined Nomura Computing Center Co.,

Ltd. (currently Nomura Research Institute, Ltd.)

Dec. 1987 Director, Nomura Research Institute, Ltd.Jun. 1997 Representative Director and Deputy

President, Nomura Research Institute, Ltd.

Jun. 2002 Director and Deputy Chairman, Nomura Research Institute, Ltd.

Apr. 2005 Representative Director and President, ARGO 21 Corp. (currently Canon IT Solutions Inc.)

Apr. 2008 Advisor, Canon IT Solutions Inc.Jul. 2010 Director, Canon MJ IT Group Holdings

Inc.Jun. 2011 Director of the Company (current), Chair

of the Nomination Committee (current), Member of the Compensation Commit-tee (current), and Member of the Independent Committee of Outside Directors (current)

Mar. 2013 Advisor, Canon MJ IT Group Holdings Inc. (current)


Michikazu Aoi(Chair of the Compensation Committee, Member of the Nomination Committee, and Member of the Independent Committee of Outside Directors)Apr. 1980 Assistant Professor, Graduate School of

Business Administration, Keio UniversityApr. 1990 Professor, Graduate School of Business

Administration, Keio UniversityOct. 2001 Dean of Keio Business School, Graduate

School of Business Administration, Keio University

Mar. 2006 Outside Director, KFE JAPAN Co., Ltd.Oct. 2007 Outside Director, Adat Inc. (current)Jun. 2010 Outside Director, Tokyo Cathode

Laboratory Co., Ltd. (current)Apr. 2011 Professor, Meiji University Graduate

School of Global Business (current)Jun. 2011 Director of the Company (current),

Member of the Nomination Committee (current), Chair of the Compensation Committee (current), and Member of the Independent Committee of Outside Directors (current)

Jun. 2011 Outside Director, Anritsu Company (current)

Dear Shareholders,Eisai is taking on the reinforcement of its business and operating models as well as major transformation under the strong leadership of its president, Haruo Naito. These are managerial challenges for bringing the Company back, in the future, onto a growth path in a new form. I am acutely aware that there are two basic guidelines at Eisai for designing the direction of such growth strategies. They are, of course, the hhc Corporate Philosophy, which is for patients, and increasing corporate value, which is for our sharehold-ers. I believe that the role of Eisai’s Board of Directors is to provide the function of overseeing that the operating divisions of the Company are ensuring its robust, sustained growth in the globally harsh, competitive environment on the basis of these two basic guidelines, and it is my intent to work to the utmost to this end.

Dear Shareholders,As globalization presses on and technological innovation reaches new heights, our society is growing more complex and tumultuous than could ever have been anticipated. Humans, animals, plants, and the entire natural world are now increasingly faced with difficult crises, highlighting the common need for proper medical care. In order to help achieve the Company’s philosophy —“human health care (hhc)”—more fully and ensure compliance, I will work to fulfill Eisai’s role as a corporate member of society by deliberating carefully on Board of Directors matters and communicating with employees of the Company.

Directors (As of June 30, 2013)




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Graham Fry(Member of the Nomination Committee, Member of the Compensation Committee, Member of the Independent Committee of Outside Directors)Aug. 1972 Joined British Foreign and Common-

wealth Office (FCO)May 1993 Director, the Far East and Pacific

Department of FCODec. 1995 Director, the North Asian and Pacific

Bureau of FCOSep. 1998 FCO High Commissioner to MalaysiaOct. 2001 Director General for Economic Affairs of

FCOJul. 2004 FCO Ambassador of the United

Kingdom to JapanSep. 2008 Member of the Board of Governors,

School of Oriental and African Studies, University of London (current)

Jun. 2012 Director of the Company (current), Member of the Nomination Committee (current), Member of the Compensation Committee (current), and Member of the Independent Committee of Outside Directors (current)

Dear Shareholders,Eisai’s business is in a period of transition to new growth products after patents expire. Its Board needs to ensure that it has the right strategy for this period and that it is implemented effectively. It is important also that the Company continues to be managed on the basis of its hhc philosophy of putting patients first, and with a strong emphasis on the interests of shareholders. After one year as a Director of your company, I have deepened my understanding of Eisai’s operations. I should like to contribute further to the strategic oversight of Eisai’s management and to its corporate governance.

Osamu Suzuki(Member of the Audit Committee, and Chair of the Independent Committee of Outside Directors)Apr. 1977 Admitted to the Daini Tokyo Bar

AssociationApr. 1977 Joined Yuasa and HaraApr. 1987 Partner, Yuasa and Hara (current)Jun. 2010 Outside Director, Yamada Corporation Jun. 2012 Director of the Company (current),

Member of the Audit Committee (current), and Chair of the Independent Committee of Outside Directors (current)

Dear Shareholders,As a pharmaceutical company, Eisai has a major social mission on a global scale to provide a stable supply of effective and safe drugs to patients through healthcare professionals. In this sense, I believe that Eisai’s corporate governance structure in which outside directors comprise the majority of the Board of Directors—extremely progressive as a Japanese company—is of importance. My year as an outside director for the Company has only served to strengthen that conviction. As an outside director for Eisai, I will continue to do whatever I can to ensure that the governance function of the Board of Directors lives up to its full potential.

Patricia Robinson(Member of the Audit Committee, and Member of the Independent Committee of Outside Directors)Jul. 1995 Assistant Professor, New York UniversityMay 2000 Visiting Assistant Professor, University of

California, BerkeleyApr. 2002 Visiting Assistant Professor, Graduate

School of International Corporate Strategy, Hitotsubashi University

Apr. 2004 Associate Professor, Graduate School of International Corporate Strategy, Hitotsubashi University (current)

Jun. 2013 Director of the Company (current), Member of the Audit Committee of the Company (current)Member of the Independent Committee of Outside Directors (current)

Dear Shareholders,I observe Eisai upholding human health care (hhc) as a core philosophy that values patients, share-holders and employees in carrying out its business activities. This striving to satisfy stakeholders on these various fronts is important to Eisai’s growth in the global market. My area of academic research focuses on organizational change that takes into account the various stakeholders affected by change. I bring this broad perspective to my managerial oversight, with the goal of supporting Eisai to continually enhance its corporate value globally, particularly its value to patients, shareholders and employees.

Nobuo Deguchi

Mar. 1970 Joined the CompanyOct. 1999 Senior Director, Corporate Ethics

Compliance Department of the Company

Jun. 2001 Group Officer of the CompanyJun. 2004 Vice President of the CompanyJun. 2005 Senior Vice President of the CompanyJun. 2006 Assigned to Internal Control, Compli-

ance, Legal Affairs, Intellectual Property of the Company

Jun. 2007 Executive Vice President of the Company

Jun. 2008 Executive Vice President and Represen-tative Corporate Officer of the Company

Jun. 2009 Assigned to Chief Compliance Officer, Human Resources, General Affairs of the Company

Jun. 2010 Representative Corporate Officer and Deputy President, Aide to the President, Chief Compliance Officer, and Human Resources and Labor Management of the Company

Nov. 2010 Representative Director and President, Eisai R&D Management Co., Ltd.

Jun. 2011 Representative Corporate Officer and Deputy President, Aide to the President, Chief Compliance Officer

Jun. 2011 Chairman, Eisai Welfare Pension FundJun. 2012 Director of the Company (current)

Dear Shareholders,I will devote my efforts to further improving the viability of the corporate governance system that Eisai has developed as a “Company with Commit-tees System,” enhance corporate value, and fulfill the expectations of stakeholders. In performing my management supervisory duties as a director, I will base my decisions on whether the Company’s activities conform to the Corporate Philosophy of giving first though to patients and their families. I will also devote myself to further enhancing the Company’s corporate value from different perspec-tives: making sure that the Company’s daily activities reflect an even stronger commitment to being kind and helpful to society and Company employees; that all employees work diligently and with a sense of integrity; and that the Company’s inner workings are as efficient and effective as possible in pushing Eisai toward its goals.

Hideaki Matsui(Member of the Audit Committee)Mar. 1971 Joined the CompanyApr. 1995 Senior Director, Corporate Management

Planning Department of the CompanyJun. 1997 Director of the CompanyJul. 1997 Chairman, Eisai Welfare Pension Fund

(currently Eisai Corporate Pension Fund)Jun. 2000 Director and Group Officer of the

CompanyJun. 2001 Director and Senior Vice President of the

CompanyJun. 2002 Director and Executive Vice President of

the CompanyJun. 2002 Assigned to Management Affairs of the

CompanyJun. 2004 Executive Vice President and Represen-

tative Corporate Officer of the CompanyJan. 2008 Chief Financial Officer (CFO) of the

CompanyApr. 2009 Assigned to Customer JoyJun. 2010 Head of Finance & Accounting HQ of the

CompanyJun. 2011 Director of the Company (current)Jun. 2012 Member of the Audit Committee of the

Company (current)

Dear Shareholders,Amid the harsh global business climate, Eisai strives to effectively combine its noble Corporate Philosophy and superior corporate governance to achieve the continuous growth of its business activities and the minimization of managerial risks and contribute to the health of people worldwide as an hhc company with social value. Furthermore, through a corporate governance framework that separates the functions between the operation function that advances the execution of corporate activities and transparent and fair management oversight, we aim to maximize our achievements in raising corporate value for our wide and diverse range of shareholders, from individual to institutional investors. As a non-executive Director originally from the Company, I assume a role as an independent officer. I believe that it is my duty to help the Company achieve the Corporate Philosophy towards which it aims, ensure the transparency and fairness of management, enhance the Company’s existential value in serving the public, and respond to that entrusted to us by our wide-ranging shareholders.




30





President (Representative Corporate Officer) and CEO

Haruo Naito

Deputy President (Representative Corporate Officer)Chief Product Creation Officer,Eisai Product Creation Systems,Global BD, CEO’s special mission

Hideki Hayashi

Deputy President (Representative Corporate Officer)Marketing Authorization Supervisor General,Global Product Emergency Management,Healthcare Policy, CEO’s special mission

Yutaka Tsuchiya

Deputy President (Representative Corporate Officer)Chief Financial Officer, Japan Subsidiaries,CEO’s special mission

Hajime Shimizu

Executive Vice President (Representative Corporate Officer)President, Asia Region, CEO’s special mission

Hideshi Honda

Executive Vice PresidentPresident, Americas Region, President & CEO, Eisai Inc.

Lonnel Coats

Executive Vice PresidentPresident, Eisai Demand Chain Systems

Takafumi Asano

Executive Vice PresidentChief Talent Officer, General Manager,Talent Innovation Headquarters, Director,Talent Management Department

Yasushi Okada

Senior Vice PresidentGeneral Counsel, Intellectual Property,Director, Legal Department

Kenta Takahashi

Senior Vice PresidentChief Medical Officer, General Manager,Corporate Medical Affairs Headquarters,Global Safety Board Chair

Edward Stewart Geary

Corporate Officers (As of June 21, 2013)

Vice PresidentAlliance, Eisai Japan

Noboru Naoe

Vice PresidentChief Information Officer, General Affairs,Environmental and Safety Affairs

Kazuo Hirai

Vice PresidentChief Compliance Officer, Internal Control/Audit

Hideto Ueda

Vice PresidentDeputy President, Asia Region

Yuji Matsue

Vice PresidentPresident, EMEA Region, President & CEO, Eisai Europe Ltd.

Gary Hendler

Vice PresidentCorporate Strategy and Planning,Consumer Healthcare Business, Director,Corporate Integrative Management Department

Ivan Cheung

Vice PresidentChief Innovation Officer,Eisai Product Creation Systems

Takashi Owa

Vice PresidentPresident, Oncology hhc Unit, Eisai Japan,Director, Oncology Medical Department

Yasunobu Kai

Vice PresidentPresident, Japan/Asia Clinical Research PCU,Eisai Product Creation Systems,Director, Clinical Development Department

Terushige Iike

Vice PresidentPresident, Eisai Japan, President, Integrated Community hhc Unit, Eisai Japan

Kenji Matsumae

Vice PresidentChief Clinical Officer, Eisai Product Creation Systems,President, Neuroscience and General Medicine PCU,Eisai Product Creation Systems

Lynn Kramer

Vice PresidentDeputy Chief Financial Officer,Chief IR Officer, Director, IR Department

Ryohei Yanagi

Vice PresidentCorporate Affairs, Director, PR Department,Director, Global Access Strategies Section

Sayoko Sasaki




31





Net Sales

(Billions of yen)

Proportion of Sales of Major Products SG&A Expenses/ Ratio of SG&A Expenses to Net Sales(Billions of yen) (%)

SG&A Expenses Ratio of SG&A Expenses to Net Sales

R&D Expenses/ Ratio of R&D Expenses to Net Sales(Billions of yen) (%)

R&D Expenses Ratio of R&D Expenses to Net Sales

0’11/3 ’12/3 ’13/3’10/3’09/3

900.0

600.0

300.0

573.7

768.9

648.0

803.2781.7

0’11/3 ’12/3 ’13/3’10/3’09/3

400.0

300.0

200.0

100.0

0

80

60

40

20

381.4

48.8

376.9

46.9

343.0

44.6208.7

36.4

253.7

39.1

0’11/3 ’12/3 ’13/3’10/3’09/3

200.0

150.0

100.0

50.0

0

40

30

20

10

156.1

20.0

179.1

22.3

145.0

18.9

120.4

21.0

125.1

19.3

Pariet ®/ AcipHex ® 18.9%

Oncology-related Products 17.5%Aricept ® 16.4%

HUMIRA® 5.1%

Other 42.1%

Items regarding the future in this section are based on judgments and forecasts we have made as of

the date our Annual Report 2013 was compiled. There are consequently some risks that change in

various factors could lead to substantial disparities between our forecasts and actual results.

Please refer to page 53 for risks that could alter the consolidated performance of our Group or that

could materially impact investment decisions.

Performance ReviewIn the year ended March 31, 2013, Eisai Co., Ltd. and its subsidiaries (“the Group”) reported consolidated net

sales of ¥573.7 billion, a decrease of 11.5% compared with the previous fiscal year. Operating income fell

26.4% year on year, to ¥70.5 billion, and net income declined 17.5%, to ¥48.3 billion.

The ¥573.7 billion in consolidated net sales represented a ¥74.3 billion, or 11.5%, year-on-year decline.

This decrease reflected lower sales of Pariet ®/AcipHex ® and Aricept ®, affected by intensified market competi-

tion, NHI (National Health Insurance) drug price revisions in Japan and other factors. Sales of Pariet ® declined

14.2% year on year, to ¥108.4 billion, while sales of Aricept ® dropped 35.9%, to ¥94.3 billion. On the other

hand, sales of oncology-related products were up 7.8% year on year to ¥100.4 billion, due to the contribution

of steady growth of Halaven ®. Oncology-related products accounted for 17.5% of consolidated net sales, up

from 14.4% in the previous fiscal year.

In the fiscal year ending March 31, 2014, the Group forecasts higher consolidated net sales, with growth

in sales of six products—Halaven®, Fycompa®, BELVIQ®, HUMIRA®, LYRICA®, and Lunesta®—and a more

than 20% year-on-year increase in sales in China and other countries in Asia (South Korea, Taiwan, India,

and ASEAN countries, etc.) and in the generic business. Eisai expects these to outweigh the impact of

patent expiration in the U.S. for mainstays AcipHex ® (trade name in Japan: Pariet ®) and Dacogen®.

The cost of sales rose ¥0.7 billion, to ¥174.1 billion, leading to a 3.6 percentage point rise in the cost of sales

ratio from the previous fiscal year. The main reasons were changes in the product mix due to lower Aricept ®

sales and the impact of NHI drug price revisions in Japan.

As a result, gross profit declined ¥75.0 billion, or 15.8%, to ¥399.6 billion.

SG&A expenses, excluding R&D expenses, declined ¥45.0 billion, or 17.7%, to ¥208.7 billion. This was

caused by a decline in alliance fees associated with co-promotions, a decline in personnel expenses for

structural reforms and Group-wide efforts for cost optimization. R&D expenses declined ¥4.8 billion, or 3.8%,

from the previous fiscal year, to ¥120.4 billion.

Operating income dropped ¥25.3 billion, or 26.4%, to ¥70.5 billion, due to the decrease in net sales. For

the fiscal year ending March 31, 2014, the Group is projecting double-digit growth in operating income in an

11.4% rise year on year to ¥78.5 billion. This forecast is premised on proactive investment in R&D for creating

further innovations and investment in new products seen as future growth drivers. The Group also expects to

see a decrease in SG&A expenses due to a decline in alliance fees paid to marketing partners in Japan and

Group-wide efforts for cost optimization.

Financial SectionFinancial Review


Financial SectionIntroduction To Our Stakeholders Consolidated Financial Highlights Feature: Performing Better with Fewer Resources

Management Foundation Corporate Data

32

Financial Review Consolidated Statement of Income Consolidated Statement of Changes in Equity Notes to Consolidated Financial Statements

Consolidated Balance Sheet Consolidated Statement of Comprehensive Income Consolidated Statement of Cash Flows Independent Auditor’s Report

Operating Income/ Ratio of Operating Income to Net Sales(Billions of yen) (%)

Operating Income Ratio of Operating Income to Net Sales

Net Income/Ratio of Net Income to Net Sales

(Billions of yen) (%)

Cash Income/Cash Income Per Share

(Billions of yen) (Yen)

Net Income Ratio of Net Income to Net Sales

Cash Income Cash Income Per Share

0’11/3 ’12/3 ’13/3’10/3’09/3

120.0

90.0

60.0

30.0

0

30

20

10

91.8

11.7

86.4

10.8

113.1

14.7

70.5

12.3

95.7

14.8

0’11/3 ’12/3 ’13/3’10/3’09/3

80.0

60.0

40.0

20.0

0

16

12

8

4

47.7

6.1

40.3

5.0

67.4

8.8

48.3

8.4

58.5

9.0

0’11/3 ’12/3 ’13/3’10/3’09/3

0

150.0

100.0

50.0

750

500

250

119.0

417.8

126.4

443.7

120.0

421.3

100.7

353.5

107.7

377.8

Other income (expenses) were ¥1.0 billion in gain, a ¥2.1 billion improvement from the previous fiscal year.

This change was mainly due to lower foreign exchange losses and a gain on contribution of securities to

retirement benefit trust.

Net income declined ¥10.2 billion, or 17.5%, to ¥48.3 billion. Basic earnings per share (EPS) was ¥169.38,

down by ¥35.94 from the previous fiscal year. For the year ending March 31, 2014, the Group is forecasting a

double-digit increase in net income of 10.2%, to ¥53.2 billion.

Comprehensive income after adding/deducting minority interests in income and other comprehensive

income to/from net income came to ¥95.2 billion. This was up ¥39.5 billion, or 71.0%, year on year, with the

main reason being a change in foreign currency translation adjustments because of the yen’s depreciation.

Cash Income

The Group uses cash income*1 as an indicator of cash-generating ability. Cash income is the total amount of

cash that can be used for such applications as growth investments, shareholder returns, debt repayments,

and other necessary payments. The Group’s management considers it a tool to evaluate growth potential

and strategies.

For the fiscal year ended March 31, 2013, cash income amounted to ¥100.7 billion, down 6.4% from the

previous fiscal year, and cash income per share*2 amounted to ¥353.47, down ¥24.32 from the previous

fiscal year. These figures reflected net income of ¥48.3 billion, depreciation of property, plant and equipment

and amortization of intangible assets of ¥43.3 billion, amortization of goodwill of ¥7.8 billion, and loss on

impairment of ¥1.4 billion.

The Group plans to provide sustainable and stable dividends to shareholders, comprehensively taking into

account consolidated financial performance, the dividend on equity ratio (DOE) and cash income.

*1 Cash income is calculated as follows: Net income (loss) + depreciation of PP&E and amortization of intangible assets + in-process R&D expenses + amortization

of goodwill + loss on impairment (including loss on devaluation of investment securities)*2 Cash income per share is calculated as follows: Cash income ÷ average number of shares during the fiscal year (after deduction of treasury stock)

Performance by Segment(Net sales for each segment include only sales to external customers.)

The Group’s business areas comprise the Pharmaceuticals and Other businesses, with the Pharmaceuticals

business of each geographical region being identified as a reporting segment. In the Pharmaceuticals Busi-

ness, the Group mainly conducts manufacturing and sales of prescription drugs. Effective from the year

ended March 31, 2013, the Group has designated the following four new reporting segments: 1. East Asia

(Japan, China, South Korea, Taiwan, and Hong Kong); 2. Americas (North, Central, and South America); 3.

EMEA (Europe, Middle East, and Africa); and 4. Indo-Pacific (South Asia, ASEAN countries, and Oceania). In

line with this change, amounts from the fiscal year ended March 31, 2012 have been restated in this report

based on the new reporting segments.

For further reference, Other business in this report is a segment not included in reporting segments. Phar-

maceutical raw materials business is included in this segment.




33



Proportion of Sales in Each Reporting Segment to Total Net Sales

Sales in Each Reporting Segment to Total Net Sales(%)

East Asia Americas EMEA Indo-Pacific Other

0’12/3 ’13/3

100

75

50

25

East Asia 63.3%

EMEA 4.5%

Indo-Pacific 1.3%

Americas 26.7%

Pharmaceuticals Business

95.7%

Other

4.3%

<East Asia Pharmaceuticals Business>

Sales amounted to ¥362.9 billion, down 9.4% year on year, with segment profit of ¥149.1 billion, down

11.0% year on year. Of this amount, sales in Japan decreased 11.7% to ¥328.8 billion, while those in China

recorded a substantial increase of 29.4%, to ¥21.8 billion.

Sales of Aricept ® decreased 30.8%, to ¥78.8 billion, while sales of Pariet ® declined 17.3%, to ¥52.6 billion.

Meanwhile, sales of HUMIRA® increased 21.0%, to ¥29.0 billion, and sales of Halaven® climbed 79.6%, to

¥5.5 billion.

The Japanese pharmaceutical business experienced a 33.1% decline in sales of Aricept ®, to ¥72.4 billion

and a 17.7% decline in sales of Pariet®, to ¥50.1 billion, due to the impact of NHI drug price revisions and

intensified market competition. Sales of Halaven® increased 78.3%, to ¥5.5 billion. LYRICA®, which is a pain

treatment (neuropathic pain and fibromyalgia) co-promoted with Pfizer Japan Inc., was ¥13.9 billion, up 22.9%

year on year in alliance revenue. Additionally, Aricept ® has been promoted solely by Eisai since January 2013,

after completing the co-promotion agreement with Pfizer.

Furthermore, Eisai launched the following new products: insomnia treatment Lunesta® in April 2012, anti-

rheumatic Careram® in September 2012, chemotherapeutic implant Gliadel ® in January 2013, osteoporosis

treatment Actonel ® 75 mg (a monthly dose) in February 2013, and NerBloc®, a botulinum toxin type B

agent, in March 2013. Furthermore, Eisai launched the antiepileptic Inovelon® Tablets 100 mg and 200 mg

in May 2013.

<Americas Pharmaceuticals Business>

Sales totaled ¥153.3 billion, down 2.6% year on year, with segment profit of ¥35.7 billion, up 7.0% year on year.

Sales of AcipHex ® came to ¥51.4 billion, down 8.0% year on year, and those of Aricept® were ¥11.0 bil-

lion, down 3.5% year on year, while sales of Halaven® increased 7.1%, to ¥11.6 billion.

In June 2013, the obesity treatment BELVIQ ® was launched in the United States.

<EMEA Pharmaceuticals Business>

Sales totaled ¥25.8 billion, down 39.7% year on year, with segment profit of ¥2.0 billion, down 70.6% year

on year.

Due to patent expiration, sales of Aricept ® and Pariet ® came to ¥2.7 billion, down 86.4% year on year, and

¥2.7 billion, down 48.8% year on year, respectively. On the other hand, sales of Halaven® increased to ¥5.4

billion, up 173.9% year on year.

Fycompa® was launched first in the UK in September 2012, followed by six other European countries,

resulting in contribution to the growth of the Group’s epilepsy franchise in Europe.

In Russia, the Group received approval to market epilepsy treatment Zonegran ® in June 2012, Halaven®

in July 2012, and epileptic seizure treatment Exalief ® (eslicarbazepine acetate, product name in the EU:

Zebinix ®) in October 2012, and market launch preparations are currently underway.

<Indo-Pacific Pharmaceuticals Business>

Sales totaled ¥7.3 billion, up 8.1% year on year, with segment profit of ¥1.9 billion, up 8.9% year on year.

Sales of Aricept ® were ¥1.8 billion, up 4.4% year on year, while those of Pariet ® were ¥1.7 billion, up 4.7%

year on year. Sales of Halaven® were ¥0.1 billion, up 31.8% year on year.

<Other Business>

Sales amounted to ¥24.4 billion, a 40.0% decrease from the previous fiscal year, and segment profit declined

40.7% to ¥11.7 billion.




34



Major Financial Indicators

(Yen) (%)

EPS ROE ROA

Cash Dividends per Share/DOE

(Yen) (%)

Cash Dividends per Share DOE

Net Interest-bearing Debt/Shareholders’ Equity/ Net DER (Billions of yen) (times)

Net Interest-bearing Debt*1 Shareholders’ Equity*2

Net DER*1 Net interest-bearing debt = interest-bearing debt – cash and cash

equivalents – short-term investments*2 Shareholders’ equity = (Equity) – (minority interests) – (stock options)

0’11/3 ’12/3 ’13/3’10/3’09/3

300

200

100

0

18

12

6

167.35

4.2

10.9

141.58

3.6

9.6

236.52

6.3

16.4

169.38

4.8

10.9205.33

5.7

14.3

0’11/3 ’12/3 ’13/3’10/3’09/3

160

120

80

40

0

12

9

6

3

140

9.1

150

10.1

150

10.4

150

9.6

150

10.4

0’11/3 ’12/3 ’13/3’10/3’09/3

500.0

400.0

300.0

200.0

100.0

0

1.0

0.6

0.8

0.4

0.2

428.0

269.6

0.63

415.9

256.4

0.62

404.2

198.2

0.49

469.4

126.60.27

416.8

157.10.38

Financial PositionTotal assets as of March 31, 2013 amounted to ¥990.2 billion, down ¥14.4 billion from the previous fiscal

year-end. This difference was mainly caused by decline in cash and cash equivalents due to the repayment of

long-term borrowings.

Total liabilities decreased ¥65.3 billion from the previous fiscal year-end, to ¥515.9 billion. This decrease

was attributable to the repayment of long-term borrowings, and a decrease in liability for retirement benefits.

Total equity amounted to ¥474.3 billion, an increase of ¥50.9 billion from the previous fiscal year-end, and

the shareholders’ equity ratio*3 was 47.4%, up 5.9 percentage points. The net debt equity ratio (Net DER)*4

was 0.27, down 0.11 from the end of the previous fiscal year.

The Group determines investment in assets taking the optimized allocation of management resources

within the entire Group into consideration. Accordingly, assets, liabilities and certain other items are not allo-

cated to segments.

As a result, return on equity (ROE) was 10.9% and return on assets (ROA) 4.8%. The Company’s basic

policy is to provide sustainable and stable dividends to its shareholders. Based on this basic policy, the

Company set the year-end dividend for the fiscal year ended March 31, 2013 at ¥80 per share. Combined

with the interim dividend of ¥70 per share, this resulted in an annual dividend of ¥150 per share (the same as

the previous year). DOE was 9.6%.

For the fiscal year ending March 31, 2014, Eisai forecasts an annual dividend of ¥150 per share (the same

as for the fiscal year ended March 31, 2013), comprising an interim dividend of ¥70 per share and a year-end

dividend of ¥80 per share.

*3 Shareholders’ equity = (Equity) – (minority interests) – (stock options)

*4 Net debt equity ratio (Net DER) = (Interest-bearing debt (borrowings + bonds and debentures) – cash and cash equivalents – short-term investments) / shareholders’ equity

Cash FlowsNet cash provided by operating activities in the year ended March 31, 2013 amounted to ¥73.2 billion, a

decrease of ¥17.4 billion from the previous fiscal year. Income before income taxes and minority interests

amounted to ¥71.4 billion, and depreciation and amortization was ¥43.3 billion, while cash used by income

taxes-paid and other items was ¥29.8 billion. The main reason for the difference from the previous fiscal year

was a decrease in income before income taxes and minority interests.

Investing activities provided net cash of ¥21.7 billion, compared with net cash used of ¥2.6 billion in the

previous fiscal year. The net decrease in time deposits (exceeding three months) was ¥32.0 billion, while cash

used for the purchase of property, plant and equipment, and purchases of intangible assets was ¥19.8 billion.

The main reason for the change from the previous fiscal year was the net decrease in time deposits (exceed-

ing three months).

Net cash used in financing activities amounted to ¥81.8 billion, up ¥3.8 billion. Cash was mainly used for

the repayment long-term borrowings of ¥40.0 billion, and dividends paid of ¥42.7 billion.

Consequently, cash and cash equivalents at the end of March 2013 were up ¥29.9 billion from the previ-

ous fiscal year-end, to ¥142.5 billion.




35



Consolidated Balance SheetAs of March 31, 2013

AssetsMillions of yen

Thousands of U.S. dollars (Note 1)

FY2012 FY2011 FY2012Current assets (Note 12)

Cash and cash equivalents . . . . . . . . . . . . . . . . . . . ¥ 142,456 ¥ 112,567 $ 1,515,489Short-term investments (Note 3) . . . . . . . . . . . . . . . 45,002 75,614 478,744Notes and accounts receivable-trade . . . . . . . . . . . . 185,486 197,166 1,973,255Inventories (Note 4) . . . . . . . . . . . . . . . . . . . . . . . . . 87,620 75,196 932,127Deferred tax assets (Note 9) . . . . . . . . . . . . . . . . . . . 47,094 42,479 501,000Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23,067 22,811 245,393

Total current assets . . . . . . . . . . . . . . . . . . . . . . 530,727 525,835 5,646,031

Property, plant and equipment (Note 5)Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,693 19,328 209,500Buildings and structures . . . . . . . . . . . . . . . . . . . . . 199,559 193,483 2,122,968Machinery, equipment and vehicles . . . . . . . . . . . . . 123,475 118,079 1,313,563Other property, plant and equipment . . . . . . . . . . . . 51,343 51,081 546,202Construction in progress . . . . . . . . . . . . . . . . . . . . . 4,107 3,868 43,691

Subtotal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 398,180 385,841 4,235,957Accumulated depreciation . . . . . . . . . . . . . . . . . . . . (255,931) (242,262) (2,722,670)

Total property, plant and equipment . . . . . . . . . 142,248 143,578 1,513,276

Investments and other assets (Note 12)Investment securities (Note 3) . . . . . . . . . . . . . . . . . 33,856 38,708 360,170Investments in associated companies . . . . . . . . . . . 437 371 4,648Intangible assets (Note 5) . . . . . . . . . . . . . . . . . . . . .

Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127,342 119,054 1,354,702Sales rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51,432 65,338 547,148Core technology . . . . . . . . . . . . . . . . . . . . . . . . . . 43,724 40,492 465,148Other intangible assets . . . . . . . . . . . . . . . . . . . . . 13,546 13,755 144,106

Deferred tax assets (Note 9) . . . . . . . . . . . . . . . . . . . 40,727 45,101 433,265Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,206 12,423 66,021

Total investments and other assets . . . . . . . . . . 317,273 335,245 3,375,244Total assets ¥ 990,249 ¥1,004,660 $10,534,563See notes to consolidated financial statements.

Liabilities and EquityMillions of yen

Thousands of U.S. dollars (Note 1)

FY2012 FY2011 FY2012Current liabilities (Note 12)

Notes and accounts payable-trade . . . . . . . . . . . . . ¥ 26,054 ¥ 26,205 $ 277,170 Short-term borrowings (Note 6) . . . . . . . . . . . . . . . . 7,597 6,000 80,819 Long-term borrowings (current portion) (Note 6) . . . 18,810 40,000 200,106 Bonds and debentures (current portion) (Note 7) . . . 49,999 531,904 Accounts payable-other . . . . . . . . . . . . . . . . . . . . . . 35,108 41,540 373,489 Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . 47,443 56,703 504,712 Income taxes payable . . . . . . . . . . . . . . . . . . . . . . . 7,419 11,289 78,925 Reserve for sales rebates . . . . . . . . . . . . . . . . . . . . . 15,665 16,473 166,648 Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,642 9,718 81,297

Total current liabilities . . . . . . . . . . . . . . . . . . . . 215,740 207,932 2,295,106

Noncurrent liabilities (Note 12)Bonds and debentures (Note 7) . . . . . . . . . . . . . . . . 29,998 79,994 319,127 Long-term borrowings (Note 6) . . . . . . . . . . . . . . . . 207,620 219,314 2,208,723 Deferred tax liabilities (Note 9) . . . . . . . . . . . . . . . . . 19,638 23,019 208,914 Liability for retirement benefits (Note 8) . . . . . . . . . . . 14,536 31,985 154,638 Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28,412 18,986 302,255

Total noncurrent liabilities . . . . . . . . . . . . . . . . . 300,205 373,300 3,193,670 Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . 515,945 581,232 5,488,776

Commitments and contingent liabilities (Notes 12 and 13)

Equity (Notes 10, 11 and 17)Capital : Common stock

Authorized—1,100,000,000 shares Issued—296,566,949 shares in 2013 and 2012 . . 44,985 44,985 478,563

Capital surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56,860 56,898 604,893 Stock options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,093 990 11,627 Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . 469,703 464,176 4,996,840 Treasury stock—at cost

11,470,897 shares in 2013 and 11,585,988 shares in 2012 . . . . . . . . . . . . . . . . . . (39,031) (39,422) (415,223)

Accumulated other comprehensive income (Note 14)Valuation difference on available-for-sale securities . . 4,344 1,241 46,212 Deferred loss on derivatives under hedge accounting . . (973) (1,054) (10,351)Foreign currency translation adjustments . . . . . . . (66,532) (110,032) (707,787)

Total shareholders’ equity and accumulated other comprehensive income . . . . . . . . . . . . . 470,449 417,784 5,004,776

Minority interests . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,853 5,643 40,989Total equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . 474,303 423,427 5,045,776

Total liabilities and equity . . . . . . . . . . . . . . . . . . . . ¥990,249 ¥1,004,660 $10,534,563




36

Financial Section


Consolidated Statement of Comprehensive Income Consolidated Statement of Cash Flows Independent Auditor’s ReportConsolidated Balance Sheet

Consolidated Statement of IncomeFor the year ended March 31, 2013

Millions of yenThousands of

U.S. dollars (Note 1)

FY2012 FY2011 FY2012Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥573,658 ¥647,976 $6,102,744Cost of sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 174,093 173,405 1,852,053

Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 399,565 474,570 4,250,691

Selling, general and administrative expenses . . . . 208,725 253,679 2,220,478Research and development expenses . . . . . . . . . . 120,377 125,142 1,280,606

Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . 70,462 95,748 749,595

Other income (expenses)Interest and dividend income . . . . . . . . . . . . . . . . . . 1,841 1,671 19,585Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . (6,688) (6,892) (71,148)Foreign exchange gain (loss) . . . . . . . . . . . . . . . . . . 100 (560) 1,063Gain on contribution of securities to retirement benefit trust (Note 8) . . . . . . . . . . . . . . . . . . . . . . . 4,273 1,881 45,457

Gain on negative goodwill (Note 16) . . . . . . . . . . . . . 1,960 20,851Gain on sales of investment securities (Note 3) . . . . 404 820 4,297Loss on impairment (Note 5) . . . . . . . . . . . . . . . . . . (1,373) (452) (14,606)Gain on sales of investment in subsidiaries . . . . . . . 3,547Loss on revision of retirement benefit plan (Note 8) . . (958)Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 448 (157) 4,765

Total other income (expenses) . . . . . . . . . . . . . . . 965 (1,100) 10,265

Income before income taxes and minority interests . . . . . . . . . . . . . . . . . . . . . . . . . . 71,428 94,648 759,872

Income taxes (Note 9)Current . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,576 28,618 325,276Deferred . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (7,696) 7,094 (81,872)

Total income taxes . . . . . . . . . . . . . . . . . . . . . . . . 22,879 35,713 243,393

Income before minority interests . . . . . . . . . . . . . . 48,548 58,934 516,468Minority interests in income . . . . . . . . . . . . . . . . . . 273 423 2,904Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 48,275 ¥ 58,511 $ 513,563

Yen U.S. dollars (Note 1)

Per share information (Note 15)Basic earnings per share . . . . . . . . . . . . . . . . . . . . . ¥169.38 ¥205.33 $1.80Diluted earnings per share . . . . . . . . . . . . . . . . . . . . 169.31 205.31 1.80Cash dividends per share . . . . . . . . . . . . . . . . . . . . 150.00 150.00 1.59

See notes to consolidated financial statements.



FY2012 FY2011 FY2012Income before minority interests . . . . . . . . . . . . . . ¥48,548 ¥58,934 $ 516,468Other comprehensive income (loss)

Valuation difference on available-for-sale securities . . 3,085 1,148 32,819Deferred gain (loss) on derivatives under hedge accounting . . . . . . . . . . . . . . . . . . . . . . . . . 80 (245) 851

Foreign currency translation adjustments . . . . . . . . . 43,447 (4,191) 462,202Total other comprehensive income (loss) . . . . . . . . . 46,613 (3,289) 495,882

Comprehensive income . . . . . . . . . . . . . . . . . . . . . . ¥95,161 ¥55,645 $1,012,351Comprehensive income attributable to shareholders of the parent company . . . . . . . . . . . . . . . . . . . . . . ¥94,957 ¥55,303 $1,010,180

Comprehensive income attributable to minority interests . . . . . . . . . . . . . . . . . . . . . . . . . . 203 342 2,159


Consolidated Statement of Comprehensive IncomeFor the year ended March 31, 2013 (Note 14)




37

Financial Section

Financial Review Consolidated Statement of Changes in Equity Notes to Consolidated Financial Statements

Consolidated Balance Sheet Consolidated Statement of Cash Flows Independent Auditor’s ReportConsolidated Statement of Comprehensive Income

Consolidated Statement of Income

Consolidated Statement of Changes in EquityFor the year ended March 31, 2013

Thousands Millions of yen

FY2012 FY2012Accumulated other

comprehensive income (Note 14)

Issued number of

shares

Number of treasury stock

Common stock

Capital surplus

Stock options

Retained earnings

Treasury stock

Valuation difference on available-for-

sale securities

Deferred loss on

derivatives under hedge accounting

Foreign currency

translation adjustments Subtotal

Minority interests

Total equity (Notes 10 and 11)

Balance at beginning of year . . . . . . . . . . . . . . . . . . . . . . . . 296,566 (11,585) ¥44,985 ¥56,898 ¥ 990 ¥464,176 ¥(39,422) ¥1,241 ¥(1,054) ¥(110,032) ¥417,784 ¥ 5,643 ¥423,427Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48,275 48,275 48,275Dividends: ¥150.00 per share . . . . . . . . . . . . . . . . . . . . . . . (42,748) (42,748) (42,748)Disposal of treasury stock . . . . . . . . . . . . . . . . . . . . . . . . . . 120 (37) 410 373 373Acquisition of treasury stock . . . . . . . . . . . . . . . . . . . . . . . . (5) (19) (19) (19)Changes in items other than shareholders’ equity—net . . . . 102 3,102 80 43,499 46,785 (1,790) 44,995Net changes in the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115 (37) 102 5,526 390 3,102 80 43,499 52,665 (1,790) 50,875Balance at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 296,566 (11,470) ¥44,985 ¥56,860 ¥1,093 ¥469,703 ¥(39,031) ¥4,344 ¥ (973) ¥ (66,532) ¥470,449 ¥ 3,853 ¥474,303

Thousands Millions of yen

FY2011 FY2011Accumulated other

comprehensive income (Note 14)

Issued number of

shares

Number of treasury stock

Common stock

Capital surplus

Stock options

Retained earnings

Treasury stock


sale securities

Deferred loss on


Foreign currency


Minority interests


Balance at beginning of year . . . . . . . . . . . . . . . . . . . . . . . . 296,566 (11,608) ¥44,985 ¥56,910 ¥870 ¥448,410 ¥(39,499) ¥ 69 ¥ (808) ¥(105,898) ¥405,041 ¥5,329 ¥410,370Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58,511 58,511 58,511Dividends: ¥150.00 per share . . . . . . . . . . . . . . . . . . . . . . . (42,744) (42,744) (42,744)Disposal of treasury stock . . . . . . . . . . . . . . . . . . . . . . . . . . 26 (12) 89 76 76Acquisition of treasury stock . . . . . . . . . . . . . . . . . . . . . . . . (4) (12) (12) (12)Changes in items other than shareholders’ equity—net . . . . 120 1,171 (245) (4,133) (3,087) 314 (2,773)Net changes in the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 (12) 120 15,766 76 1,171 (245) (4,133) 12,742 314 13,057Balance at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 296,566 (11,585) ¥44,985 ¥56,898 ¥990 ¥464,176 ¥(39,422) ¥1,241 ¥(1,054) ¥(110,032) ¥417,784 ¥5,643 ¥423,427

Thousands of U.S. dollars (Note 1)FY2012

Accumulated other comprehensive income (Note 14)

Common stock

Capital surplus

Stock options

Retained earnings

Treasury stock


sale securities

Deferred loss on


Foreign currency


Minority interests


Balance at beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $478,563 $605,297 $10,531 $4,938,042 $(419,382) $13,202 $(11,212) $(1,170,553) $4,444,510 $ 60,031 $4,504,542Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 513,563 513,563 513,563Dividends: $1.59 per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (454,765) (454,765) (454,765)Disposal of treasury stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (393) 4,361 3,968 3,968Acquisition of treasury stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (202) (202) (202)Changes in items other than shareholders’ equity—net . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,085 33,000 851 462,755 497,712 (19,042) 478,670Net changes in the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (393) 1,085 58,787 4,148 33,000 851 462,755 560,265 (19,042) 541,223Balance at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $478,563 $604,893 $11,627 $4,996,840 $(415,223) $46,212 $(10,351) $ (707,787) $5,004,776 $ 40,989 $5,045,776





38

Financial Section

Financial Review Consolidated Statement of Income Notes to Consolidated Financial Statements


Consolidated Statement of Changes in Equity

Consolidated Statement of Cash FlowsFor the year ended March 31, 2013



FY2012 FY2011 FY2012Operating activities

Income before income taxes and minority interests . . ¥ 71,428 ¥ 94,648 $ 759,872Adjustments for

Income taxes paid . . . . . . . . . . . . . . . . . . . . . . . . (29,772) (39,829) (316,723)Depreciation and amortization . . . . . . . . . . . . . . . 43,256 41,709 460,170Amortization of goodwill . . . . . . . . . . . . . . . . . . . . 7,837 6,985 83,372Loss on impairment (Note 5) . . . . . . . . . . . . . . . . . 1,373 452 14,606Gain on negative goodwill (Note 16) . . . . . . . . . . . (1,960) (20,851)Gain on contribution of securities to retirement benefit trust (Note 8) . . . . . . . . . . . . . . . . . . . . . . (4,273) (1,881) (45,457)

Gain on sales of investment in subsidiaries . . . . . . (3,547)(Increase) decrease in notes and accounts receivable - trade . . . . . . . . . . . . . . . . . . . . . . . . 17,670 (5,533) 187,978

Increase in inventories . . . . . . . . . . . . . . . . . . . . . (7,844) (6,469) (83,446)Increase (decrease) in notes and accounts payable - trade . . . . . . . . . . . . . . . . . . . . . . . . . . (841) 5,928 (8,946)

Decrease in other current liabilities . . . . . . . . . . . . (25,007) (4,570) (266,031)Decrease in reserve for sales rebates . . . . . . . . . . (2,816) (6,854) (29,957)Increase (decrease) in liability for retirement benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (4,592) 7,974 (48,851)

Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,724 1,610 92,808Net cash provided by operating activities . . . . . . 73,181 90,624 778,521

Investing activitiesPurchases of short-term investments . . . . . . . . . . . . (5,108) (4,960) (54,340)Proceeds from sales and redemption of short-term investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,134 6,613 54,617

Purchases of property, plant and equipment . . . . . . (8,659) (11,414) (92,117)Proceeds from sales of property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,195 231 12,712

Purchases of intangible assets . . . . . . . . . . . . . . . . . (11,168) (8,073) (118,808)Purchases of investment securities . . . . . . . . . . . . . (321) (120) (3,414)Proceeds from sales and redemptions of investment securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,706 14,437 18,148

Proceeds from sales of investment in subsidiaries in the previous fiscal year . . . . . . . . . . . . . . . . . . . . . . 6,121 65,117

Net decrease in time deposits (exceeding 3 months) . . 31,958 1,648 339,978Decrease of cash and cash equivalents based on sales of subsidiaries resulting in change in scope of consolidation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (716)



FY2012 FY2011 FY2012Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 881 ¥ (205) $ 9,372

Net cash provided by (used in) investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,740 (2,561) 231,276

Financing activitiesNet increase in short-term borrowings . . . . . . . . . . . 1,586 6,000 16,872Repayment of long-term borrowings . . . . . . . . . . . . (40,000) (425,531)Redemptions of bonds and debentures . . . . . . . . . . (40,000)Dividends paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (42,748) (42,744) (454,765)Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (642) (1,232) (6,829)

Net cash used in financing activities . . . . . . . . . (81,805) (77,977) (870,265)Foreign currency translation adjustments on cash and cash equivalents . . . . . . . . . . . . . . . . . . 16,772 (319) 178,425

Net increase in cash and cash equivalents . . . . . . 29,888 9,766 317,957Cash and cash equivalents at beginning of year . . 112,567 102,800 1,197,521Cash and cash equivalents at end of year . . . . . . . ¥142,456 ¥112,567 $1,515,489

(Additional information)For the year ended March 31, 2012, assets and liabilities of subsidiaries that were excluded from the scope of consolidation as a result of the sales of investment in subsidiaries and the relationship between the total considerations received from sales of investment in subsidiaries and the expenditures associated with the sales of investment in subsidiaries are shown below:

Millions of yen

Current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 4,822Noncurrent assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 984Current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,973)Noncurrent liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (148)Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (34)Gain on sales of investment in subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . 3,547Sales value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,197Accounts receivable-other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (6,197)Cash and cash equivalents of subsidiaries excluded from the scope of consolidation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (716)

Balance: expenditures associated with the sale of subsidiaries resulting in change in scope of consolidation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ (716)



Consolidated Statement of Cash Flows



39

Financial Section


Consolidated Balance Sheet Consolidated Statement of Comprehensive Income Independent Auditor’s ReportConsolidated Statement of Cash Flows

Note 1. Basis of presenting consolidated financial statementsThe accompanying consolidated financial statements of Eisai Co., Ltd. (“the Company”) and its subsidiaries have been prepared in accordance with the provisions set forth in the Japanese Financial Instruments and Exchange Act, its related accounting regulations and in accordance with accounting principles generally accepted in Japan (Japanese GAAP), which are different in certain respects as to application and disclosure requirements of the International Financial Reporting Standards.

In preparing these consolidated financial statements, certain reclassifications and rearrangements have been made to the consolidated financial statements issued domestically in order to present them in a form which is more familiar to readers outside Japan. In addition, certain reclassifications have been made in the consoli-dated financial statements as of March 31, 2012 to conform to the classifications used in the consolidated financial statements as of March 31, 2013.

The consolidated financial statements and notes are stated in Japanese yen, the currency of the country in which the Company is incorporated and principally operates. Japanese yen amounts less than 1 million yen are rounded down to the nearest million yen and translated into U.S. dollar amounts. U.S. dollar amounts are presented solely for the convenience of readers outside Japan at the rate of ¥94 to $1, the approximate rate of exchange at March 31, 2013. U.S. dollar amounts less than one thousand dollars are rounded down to the nearest thousand dollars. Such translations should not be construed as representations that the Japanese yen amounts could be converted into U.S. dollars at that or any other rate. Numbers of shares less than a thousand shares are rounded down to the nearest thousand shares.

Note 2. Summary of significant accounting policies(a) ConsolidationThe consolidated financial statements as of March 31, 2013 include the Company and all its 48 (48 as of March 31, 2012) subsidiaries (collectively, “the Group”).

Under the control or influence concept, those companies in which the Company, directly or indirectly, is able to exercise control over operations are fully consolidated, and investments in 1 associated company (1 as of March 31, 2012) over which the Group has the ability to exercise significant influence are accounted for under the equity method.

Goodwill, which is the difference between the amounts of investment in subsidiaries and the fair value of their net assets on acquisition is amortized over a period of 20 years or less, varying according to the reasons it was recorded, by the straight-line method.

All significant intercompany balances, transactions and unrealized profits on assets have been eliminated in consolidation.

(b) Cash equivalentsCash equivalents are short-term investments that are readily convertible into cash and that are exposed to insignificant risk of changes in value. Cash equivalents include time deposits, Money Market Funds (“MMF”s) and others, all of which mature or become due within 3 months from the date of acquisition.

(c) Short-term investments and investment securitiesShort-term investments consist of time deposits with more than 3 months to maturity and available-for-sale securities.Investment securities consist of available-for-sale securities.

Available-for-sale securities are composed of marketable and nonmarketable securities. Marketable securities are stated at fair value, with unrealized gains/losses, net of applicable taxes reported in a separate compo-nent of equity. The cost of securities sold is determined by the moving-average method.Nonmarketable securities are stated at cost, determined by the moving-average method.For other than temporary declines in fair value, available-for-sale securities are reduced to fair value by a charge to income.

(d) InventoriesInventories are stated at the lower of cost, determined using the average method, or net selling value for the Company and domestic subsidiaries, and at the lower-of-cost-or-market method, cost being determined using the first-in, first-out method for overseas subsidiaries.

(e) Property, plant and equipment (excluding leased assets)Property, plant and equipment (excluding leased assets) are stated at cost before deducted accumu-lated depreciation. The assets are depreciated by the straight-line method and the estimated main useful lives of the assets are from 15 to 50 years for buildings and from 6 to 7 years for machinery and equipment.

(f) Intangible assets (excluding leased assets)Intangible assets (excluding leased assets) are stated at cost after deducting accumulated amortization. The assets are amortized by the straight-line method and the main amortization periods of the assets are from 5 to 10 years for sales rights, 19 to 20 years for core technology and 5 years for software for internal use.

(g) Leases (Finance lease transactions that do not transfer ownership)Leased assets are depreciated by the straight-line method, over the useful life (the lease period) with a resid-ual value of zero.

Notes to Consolidated Financial Statements




40

Financial Section



(h) Impairment of noncurrent assetsThe Company and its certain domestic subsidiaries review their noncurrent assets for impairment whenever events or changes in circumstance indicate a carrying amount of an asset or asset group may exceed its recoverable amount. A loss on impairment would be recognized if the carrying amount exceeds the sum of the undiscounted future cash flows expected to be derived from continuing use of the asset or asset group and from its ultimate disposal. Then the loss on impairment would be measured as the amount by which the carrying amount exceeds the recoverable amount, as the higher of its fair value less costs of disposal and its value in use.

Overseas subsidiaries perform impairment tests and recognize a loss on impairment in accordance with either the International Financial Reporting Standards or accounting principles generally accepted in the United States.

(i) Income taxesThe provision for income taxes is computed based on the income before income taxes and minority interests included in the consolidated statement of income. The asset and liability approach is primarily used to recog-nize deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities. In addition, the Company and its certain domestic subsidiaries have adopted the consolidated tax payment system since the year ended March 31, 2013.

(j) Reserve for sales rebatesTo account for possible sales rebates for merchandise and finished goods sold that are incurred after the year-end date, certain subsidiaries provide for the reserves by multiplying an amount of related sales by an estimated percentage of rebates.

(k) Liability for retirement benefitsFor employee retirement benefits, the Company and certain subsidiaries provide a liability for the retirement benefits at an amount to be determined at the end of the year, which is derived from the projected benefit obligations and estimated plan assets at the end of the year.

The prior service cost recognized by the Company and its certain domestic subsidiaries is amortized over 5 years by the straight-line method and recognized as operating expenses starting from the revision date.

The actuarial gains/losses recognized by the Company and its certain domestic subsidiaries are amortized over 5 years by the straight-line method and recognized as operating expenses starting from the year subse-quent to the year during which each gains/losses was incurred.

Certain overseas subsidiaries provide a reserve for retirement allowances for directors and executive officers in required amounts calculated based on internal policies.

(Additional information)Since April 1, 2012, the Company has reformed its defined benefit pension plan and lump-sum retirement benefit plan. In addition, the Company has transferred a portion of its lump-sum retirement benefit plan to its defined contribution pension plan.

(l) Appropriations of retained earningsAppropriations of retained earnings are reflected in the consolidated financial statements at the date of the Board of Directors’ resolution or shareholders’ approval.

(m) Foreign currency transactionsAll short-term and long-term monetary receivables and payables denominated in foreign currencies are trans-lated into Japanese yen at the exchange rates at the balance sheet date. Foreign exchange gains/losses from translation are recognized in the consolidated statement of income to the extent that they are not hedged by forward exchange contracts.

(n) Foreign currency financial statementsAssets and liabilities of overseas subsidiaries are translated into Japanese yen at the current exchange rates at the consolidated fiscal year-end date, while accounts in the consolidated statement of income thereof are translated into Japanese yen at the average exchange rate for the fiscal year, and differences arising from such translation are included in “Foreign currency translation adjustments” and “Minority interests” in equity.

(o) Derivatives and hedge accountingThe Group uses derivative financial instruments (forward exchange contracts and interest rate swaps) to manage exposures to fluctuations in foreign exchange rates and interest rates. The Group does not intend to enter into these transactions for speculative purposes. The counterparty to these derivatives is restricted to a major international financial institution to reduce its default risk.

The derivatives are classified and accounted for as follows:1) For derivatives which do not qualify for hedge accounting, they are recognized as either assets or liabilities

at their fair value, with gains/losses recognized in the consolidated statement of income.2) For derivatives which qualify for hedge accounting because of high correlation and effectiveness between

the hedging instruments and the hedged items, gains/losses on the hedging instruments are deferred until maturity of the hedged items.

In case of forward exchange contracts excluding committed transactions which qualify for hedge accounting, hedged items denominated in foreign currencies are translated into the contracted rates (the allocation method). Interest rate swaps which qualify for hedge accounting and meet specific matching criteria are not remeasured at fair value, and the differential paid or received under the swap agreements are recognized and included in interest expense or income.

(p) Stock optionsThe Company recognizes compensation expense for stock options based on the fair value at the date of grant and over the vesting period as a consideration for receiving services from directors, executive officers and employees. In the consolidated balance sheet, the stock options are presented as “stock options” as a separate component of equity until exercised.

(q) Research and development expensesResearch and development expenses are charged to income as incurred.




41

Financial Section



(r) Per share informationBasic earnings per share is computed by dividing net income available to common shareholders by the weighted-average number of common shares outstanding for the period.

Diluted earnings per share reflects the potential dilution that could occur if stock options were exercised into common stock. Diluted earnings per share of common stock assumes full exercise of outstanding stock options at the beginning of the year (or at the time of issuance).

Cash dividends per share presented in the accompanying consolidated statement of income are dividends applicable to the respective years, including dividends to be paid after the end of the year.

(s) New accounting pronouncements

“Accounting Standard for Retirement Benefits” (Accounting Standards Board of Japan (ASBJ) Statement No.26, issued on May 17, 2012) and “Guidance on Accounting Standard for Retirement Benefits” (ASBJ Guidance No.25, issued on May 17, 2012)(1) OutlineUnder the revised accounting standard, actuarial gains/losses and a prior service cost shall be recognized within equity (accumulated other comprehensive income), after adjusting for the tax effect, and the deficit or surplus shall be recognized as liabilities or assets. Furthermore, the plan’s benefit formula becomes available for attributing benefit to periods of service in addition to the straight-line basis, and the method of calculation of the discount rate is revised.(2) Schedule of applicationThe Company and its domestic subsidiaries presume to apply the revised method of calculation of projected benefit obligation and retirement benefit costs from the beginning of the year ending March 31, 2015. In addition, the revised accounting procedures of unrecognized actuarial gains/losses and an unrecognized prior service cost are presumed to be applied from the end of the year ending March 31, 2014.(3) Influence on application of the accounting standardsThe Company is in the process of measuring the effects of applying the revised accounting standards.

Note 3. Short-term investments and investment securitiesShort-term investments and investment securities as of March 31, 2013 and 2012, were as follows:

Millions of yenThousands of U.S. dollars

FY2012 FY2011 FY2012Short-term investments

Time deposits exceeding 3 months to maturity . . . . . . . . . . ¥42,008 ¥73,283 $446,893Available-for-sale securities

Marketable securitiesBonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 300 201 3,191Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,693 2,129 28,648

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥45,002 ¥75,614 $478,744Investment securities

Available-for-sale securitiesMarketable securities

Stocks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥30,168 ¥34,426 $320,936Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,713 2,308 18,223

Nonmarketable securitiesStocks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,974 1,974 21,000

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥33,856 ¥38,708 $360,170

The cost and fair value of marketable securities at March 31, 2013 and 2012, were as follows:

Millions of yen

FY2012 FY2011

CostUnrealized

gainUnrealized

loss Fair value CostUnrealized

gainUnrealized

loss Fair value

Securities classified as

Available-for- sale

Stocks . . . ¥22,948 ¥7,304 ¥(84) ¥30,168 ¥32,086 ¥4,036 ¥(1,697) ¥34,426Bonds . . . 1,849 167 (2) 2,013 2,397 152 (40) 2,509Other . . . . 2,657 37 (2) 2,693 2,045 85 (1) 2,129

Thousands of U.S. dollars

FY2012

CostUnrealized

gainUnrealized

loss Fair value

Securities classified as

Available-for- sale

Stocks . . . $244,127 $77,702 $(893) $320,936Bonds . . . 19,670 1,776 (21) 21,414Other . . . . 28,265 393 (21) 28,648




42

Financial Section



Proceeds from sales of held-to-maturity securities and cost and gain on these sales for the year ended March 31, 2012 were as follows:

Millions of yen

Cost on sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥12,000Proceeds from sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,350Gain on sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 350

The Company sold some held-to-maturity securities for the year ended March 31, 2012. As a result, all remaining held-to-maturity securities were reclassified to available-for-sale securities. The effect of this reclas-sification was to increase short-term investments by ¥1 million, decrease investment securities by ¥35 million, and decrease valuation difference on available-for-sale securities by ¥21 million as of March 31, 2012, as compared to corresponding amounts which would have been recorded under the previous categorization.

Proceeds from sales of available-for-sale securities and gain and loss on these sales, computed by the mov-ing-average method, for the years ended March 31, 2013 and 2012, were as follows:


FY2012 FY2011 FY2012Proceeds from sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥1,257 ¥1,833 $13,372Gain on sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 404 470 4,297Loss on sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Scheduled amounts (face value) of redemption of available-for-sale securities at contractual maturities as of March 31, 2013 and 2012, were as follows:


FY2012 FY2011 FY2012Due within 1 year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 300 ¥ 200 $ 3,191Due after 1 year through 5 years . . . . . . . . . . . . . . . . . . . . . . . 700 1,200 7,446Due after 5 years through 10 years . . . . . . . . . . . . . . . . . . . . .Due after 10 years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 956 1,111 10,170

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥1,956 ¥2,511 $20,808

Note 4. InventoriesInventories as of March 31, 2013 and 2012, were as follows:


FY2012 FY2011 FY2012Merchandise and finished goods . . . . . . . . . . . . . . . . . . . . . . . ¥54,860 ¥43,108 $583,617Work-in-process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,816 18,283 189,531Raw materials and supplies . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,944 13,804 158,978

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥87,620 ¥75,196 $932,127

Note 5. Impairment of noncurrent assetsThe main contents of loss on impairment of noncurrent assets for the years ended March 31, 2013 and 2012, were as follows:


FY2012 FY2011 FY2012Intangible assets (mainly sales rights) . . . . . . . . . . . . . . . . . . . . ¥1,304 ¥452 $13,872Property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . 68 723

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥1,373 ¥452 $14,606

Note 6. BorrowingsShort-term and long-term borrowings are unsecured loans from financial institutions.Scheduled amounts of repayment of borrowings as of March 31, 2013 and 2012, were as follows:


FY2012 FY2011 FY2012Short-term borrowings (Weighted-average interest rates: 0.43% in 2013, 0.28% in 2012) . . . . . . . . . . . . . . . . . . . . . . . ¥ 7,597 ¥ 6,000 $ 80,819Long-term borrowings (Weighted-average interest rates: 2.30% in 2013, 2.08% in 2012)

Maturity date: Within 1 year . . . . . . . . . . . . . . . . . . . . . . . . . 18,810 40,000 200,106Maturity date: Over 1 year and within 2 years . . . . . . . . . . . . 44,405 16,438 472,393Maturity date: Over 2 years and within 3 years . . . . . . . . . . . 9,405 43,219 100,053Maturity date: Over 3 years and within 4 years . . . . . . . . . . . 58,810 8,219 625,638Maturity date: Over 4 years and within 5 years . . . . . . . . . . . 50,000 56,438 531,914Maturity date: Over 5 years . . . . . . . . . . . . . . . . . . . . . . . . . 45,000 95,000 478,723

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥234,027 ¥265,314 $2,489,648




43

Financial Section



Note 7. Bonds and debenturesBonds and debentures are unsecured.

Scheduled amounts (face value) of redemption of bonds and debentures as of March 31, 2013 and 2012, were as follows:


FY2012 FY2011 FY2012Bonds and debentures (Weighted-average interest rates: 1.71% in 2013 and 2012)

Maturity date: Within 1 year . . . . . . . . . . . . . . . . . . . . . . . . . ¥50,000 $531,914Maturity date: Over 1 year and within 2 years . . . . . . . . . . . . ¥50,000Maturity date: Over 2 years and within 3 years . . . . . . . . . . . 30,000 319,148Maturity date: Over 3 years and within 4 years . . . . . . . . . . . 30,000

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥80,000 ¥80,000 $851,063

Note 8. Pension plansThe Company has adopted a defined benefit pension plan and retirement lump-sum payment plan as a defined benefit type of pension plan. A defined contribution pension plan has also been adopted as a defined contribution type of pension plan. Additional severance payment may be made to some employees.

Since April 1, 2012, the Company has reformed its defined benefit corporate pension plan and lump-sum retirement benefit plan. In addition, the Company has transferred a portion of its lump-sum retirement benefit plan to a defined contribution pension plan.

Certain domestic subsidiaries have adopted a joint pension plan, a defined benefit pension plan and a lump-sum payment retirement plan as a defined benefit type of pension plan. In addition, certain overseas subsid-iaries have adopted pension plans as a defined benefit type of pension plan as well as a defined contribution type of pension plan. Additional severance payment may be made to some employees.

Liabilities for retirement benefits as of March 31, 2013 and 2012, were as follows:


FY2012 FY2011 FY2012Projected benefit obligation*1 . . . . . . . . . . . . . . . . . . . . . . . . . . ¥(95,597) ¥(95,630) $(1,016,989)Fair value of plan assets*2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90,155 72,383 959,095Unrecognized actuarial loss*1 . . . . . . . . . . . . . . . . . . . . . . . . . . 7,288 14,116 77,531Unrecognized prior service cost (reduction of debt)*1, 3 . . . . . . . (15,647) (21,295) (166,457)Loss on revision of retirement benefit plan*1 . . . . . . . . . . . . . . . (958)

Liability for retirement benefits*1 . . . . . . . . . . . . . . . . . . . . . . ¥(13,801) ¥(31,385) $ (146,819)

*1 As a result of partial transfer of the retirement lump-sum payment plan to the defined contribution pension plan, “Liability for retirement benefits” of ¥8,494 million ($90,361 thousand) was transferred to “Accounts payable-other.”

Components included in the “Liability for retirement benefits” as of March 31, 2012, were as follows:


Projected benefit obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥(5,967) $(63,478)Unrecognized actuarial loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (93) (989)Unrecognized prior service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,475) (15,691)Loss on revision of retirement benefit plan . . . . . . . . . . . . . . . . . . . . . . . . . . (958) (10,191)

Liability for retirement benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥(8,494) $(90,361)

The asset transfer of ¥8,494 million ($90,361 thousand) to the defined-benefit pension plan will be made over five years. The remaining amount of ¥6,546 million ($69,638 thousand) as of March 31, 2013, was recorded in “Accounts payable-other” (current liabilities) and “Other” (noncurrent liabilities).

*2 The Company contributed ¥12,981 million ($138,095 thousand) (market price) in February 2013 for the year ended March 31, 2013, and ¥5,723 million (market price) in September 2011 for the year ended March 31, 2012, in securities to the retirement benefit trust that was established for the purpose of future payments of the lump-sum payment retirement plan and the corporate pension plan.

*3 In accordance with the reform of its pension plans in January 2012, prior service cost (reduction of debt) was recognized.

Components of net periodic retirement benefit costs for the years ended March 31, 2013 and 2012, were as follows:


FY2012 FY2011 FY2012Service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 2,751 ¥ 3,575 $ 29,265Interest cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,146 2,683 22,829Expected return on plan assets . . . . . . . . . . . . . . . . . . . . . . . . (1,520) (2,007) (16,170)Amortization of unrecognized actuarial gains/losses . . . . . . . . 7,963 8,254 84,712Amortization of prior service cost . . . . . . . . . . . . . . . . . . . . . . . (4,172) (1,043) (44,382)Contribution to the defined contribution plan and other plans . 2,487 1,492 26,457Loss on revision of retirement benefit plan . . . . . . . . . . . . . . . . 958

Net periodic retirement benefit costs . . . . . . . . . . . . . . . . . . ¥ 9,656 ¥13,913 $102,723

Assumptions used for the years ended March 31, 2013 and 2012, were as follows:

FY2012 FY2011Discount rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Mainly 2.0% Mainly 2.5%Expected rate of return on plan assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Mainly 3.0% Mainly 4.0%Amortization period of actuarial gains/losses . . . . . . . . . . . . . . . . . . . . . . . . . . 5 years 5 yearsAmortization period of prior service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 years 5 years

Retirement allowances for directors and executive officers as of March 31, 2013 and 2012, were ¥735 million ($7,819 thousand) and ¥600 million, respectively, which were included in the “Liability for retirement benefits.”




44

Financial Section



Note 9. Income taxesA description of the main items included in deferred tax assets and liabilities as of March 31, 2013 and 2012, was as follows:


FY2012 FY2011 FY2012Deferred tax assets

Entrusted R&D expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 38,471 ¥ 35,047 $ 409,265Liability for retirement benefits . . . . . . . . . . . . . . . . . . . . . . . 16,243 17,511 172,797Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . 10,583 11,264 112,585Accrued bonuses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,743 5,608 61,095Deferred charges for tax purposes . . . . . . . . . . . . . . . . . . . . 5,120 5,969 54,468Unrealized profits on inventories . . . . . . . . . . . . . . . . . . . . . . 4,856 3,780 51,659Reserve for sales rebates . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,097 4,008 43,585Tax credit for R&D expenses . . . . . . . . . . . . . . . . . . . . . . . . 2,649 5,581 28,180Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,041 17,416 202,563Valuation allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,011) (2,243) (21,393)

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104,796 103,946 1,114,851Deferred tax liabilities

Core technology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (17,156) (15,890) (182,510)Sales rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (10,366) (16,657) (110,276)Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (9,091) (6,836) (96,712)

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (36,614) (39,384) (389,510)Net deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 68,182 ¥ 64,561 $ 725,340

Reconciliation between the statutory tax rate and the effective income tax rate reflected for the years ended March ended March 31, 2013 and 2012, was as follows:

FY2012 FY2011Statutory tax rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38.0% 41.0%

Expenses not permanently deductible for income tax purposes, such as entertainment expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.8 2.1Income not permanently taxable for income tax purposes, such as dividend income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (0.2) (0.2)Tax credit for R&D expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (9.3) (8.6)Difference in statutory tax rate of subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . (3.0) (1.6)Valuation allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (0.2) (5.1)Amortization of goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.8 2.7Uncertain tax position on income taxes for U.S. subsidiaries . . . . . . . . . . . . . . 2.4Downward revision of deferred tax assets due to a change of tax rate . . . . . . . 7.5Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1.3) (0.1)

Effective income tax rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32.0% 37.7%

Note 10. EquityThe Company is organized under a Company with Committees System. Under the Companies Act of Japan and the current Articles of Incorporation of the Company, if certain requirements, including the receipt of an unqualified opinion on the consolidated financial statements from the independent auditor, have been met, appropriations of retained earnings, such as acquisition of treasury stock and dividends in cash, can be approved by the Board of Directors of the Company.

Note 11. Stock optionsDirectors, executive officers and employees of the Company were granted options for common stock.

The stock options outstanding as of March 31, 2013, were as follows:

Date of decision . . . .

June 27,2002

June 24,2003

June 24,2004

June 24,2005

June 23,2006

June 22,2007

June 20,2008

June 19,2009

June 18,2010

June 21,2011

June 21,2012

Date of grant . . . . . . .

July 1,2002

July 1,2003

July 1,2004

July 1,2005

July 10,2006

July 9,2007

July 7,2008

July 6,2009

July 5,2010

July 7,2011

July 9,2012

Exercise period . . . . . .

From July 1,

2002 to June 27,

2012

From July 1,

2003 to June 24,

2013

From July 1,

2004 to June 24,

2014

From July 1,

2007 to June 24,

2015

From July 10, 2008 to June 23,

2016

From July 9,

2009 to June 22,

2017

From June 21, 2010 to June 20,

2018


2019


2020


2021


2022Exercise price . . . . . . .

¥3,165 ($33.67)

¥2,520 ($26.80)

¥3,170 ($33.72)

¥3,820 ($40.63)

¥5,300 ($56.38)

¥5,480 ($58.29)

¥3,760 ($40.00)

¥3,320 ($35.31)

¥2,981 ($31.71)

¥3,140 ($33.40)

¥3,510 ($37.34)

Number of options granted . . . . .

175,000 shares

210,000 shares

238,000 shares

262,000 shares

254,000 shares

264,000 shares

288,000 shares

291,000 shares

319,000 shares

311,000 shares

337,000 shares




45

Financial Section



The stock options activities for the year ended March 31, 2013 were as follows:

Shares

Date of decision June 27,

2002June 24,

2003June 24,

2004June 24,

2005June 23,

2006June 22,

2007June 20,

2008June 19,

2009June 18,

2010June 21,

2011June 21,

2012Before the right is vested: Balance at beginning of year . . . . . . . . . . . . 305,000 305,000 Granted . . . . . . . . . . . . 337,000 Forfeited . . . . . . . . . . . Vested . . . . . . . . . . . . . 305,000 8,000 Balance at end of year . . . . . . . . . . . . . . 297,000 337,000After the right is vested: Balance at beginning of year . . . . . . . . . . . . 91,100 46,300 187,100 234,400 254,000 264,000 283,000 291,000 11,000 3,000 Vested . . . . . . . . . . . . . 305,000 8,000 Excercised . . . . . . . . . . 28,300 42,400 3,000 47,000 Forfeited . . . . . . . . . . . 91,100 3,000 12,000 11,000 7,000 3,000 3,000 3,000 Balance at end of year . . . . . . . . . . . . . . 15,000 132,700 223,400 247,000 261,000 280,000 285,000 269,000 11,000

Yen (U.S. dollars)Average of exercise prices . . . . . . . . . . . . . . ¥3,886 ¥3,935 ¥4,350 ¥3,904

($41.34) ($41.86) ($46.27) ($41.53)Fair value of options at grant date . . . . . . . . . ¥1,161 ¥991 ¥530 ¥471 ¥348 ¥417 ¥459

($12.35) ($10.54) ($5.63) ($5.01) ($3.70) ($4.43) ($4.88)

The assumptions used to measure the fair value of stock options granted at July 9, 2012, were as follows:

Estimate method . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Black-Scholes option pricing modelExpected volatility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26.173%Expected life . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 yearsExpected dividend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥150 ($1.59) per shareRisk-free interest rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.279%

Note 12. Fair value of financial instrumentsThe carrying amount, fair value and unrealized gains/losses of the financial instruments as of March 31, 2013 and 2012, were as follows:

Millions of yen Thousands of U.S. dollars

FY2012 FY2012Carrying amount Fair value

Unrealized gains/losses

Carrying amount Fair value


Assets Cash and cash equivalents . . . . ¥142,456 ¥142,456 $1,515,489 $1,515,489 Notes and accounts receivable-trade Notes and accounts receivable-trade . . . . . . . . . . 185,486 1,973,255 Allowance for doubtful accounts*1 . . . . . . . . . . . . . . (117) (1,244) Notes and accounts receivable-trade—net . . . . . . 185,369 185,369 1,972,010 1,972,010 Short-term investments and investment securities Time deposits exceeding 3 months to maturity . . . . . . 42,008 42,008 446,893 446,893 Available-for-sale securities . . . 34,875 34,875 371,010 371,010 Total . . . . . . . . . . . . . . . . . . ¥404,709 ¥404,709 $4,305,414 $4,305,414Liabilities Notes and accounts payable-trade . . . . . . . . . . . . . . ¥ 26,054 ¥ 26,054 $ 277,170 $ 277,170 Short-term borrowings . . . . . . . 7,597 7,597 80,819 80,819 Long-term borrowings (current portion) . . . . . . . . . . . . 18,810 18,958 ¥ 148 200,106 201,680 $ 1,574 Bonds and debentures (current portion) . . . . . . . . . . . . 49,999 50,126 126 531,904 533,255 1,340 Accounts payable-other . . . . . . . 35,108 35,108 373,489 373,489 Income taxes payable . . . . . . . . 7,419 7,419 78,925 78,925 Bonds and debentures . . . . . . . . 29,998 31,037 1,039 319,127 330,180 11,053 Long-term borrowings . . . . . . . . 207,620 214,513 6,893 2,208,723 2,282,053 73,329 Total . . . . . . . . . . . . . . . . . . ¥382,607 ¥390,816 ¥ 8,208 $4,070,287 $4,157,617 $ 87,319Derivative transactions Nonhedge accounting . . . . . . . . ¥ (97) ¥ (97) $ (1,031) $ (1,031) Hedge accounting Principle method . . . . . . . . . . (1,509) (1,509) (16,053) (16,053) Exceptional method (interest rate swap) . . . . . . . . . . . . . . (1,270) ¥(1,270) (13,510) $(13,510) Total*2 . . . . . . . . . . . . . . . . . ¥ (1,607) ¥ (2,878) ¥(1,270) $ (17,095) $ (30,617) $(13,510)

Unlisted equity securities of ¥1,974 million ($21,000 thousand) and investments in associated companies of ¥437 million ($4,648 thou-sand), respectively, are not included in “Short-term investments and investment securities,” because they have no market price and their fair values are not feasible to be determined accurately.




46

Financial Section



Millions of yen

FY2011Carrying amount Fair value


Assets Cash and cash equivalents . . . . ¥112,567 ¥112,567 Notes and accounts receivable-trade Notes and accounts receivable-trade . . . . . . . . . . 197,166 Allowance for doubtful accounts*1 . . . . . . . . . . . . . . (163) Notes and accounts receivable-trade—net . . . . . . 197,002 197,002 Short-term investments and investment securities Time deposits exceeding 3 months to maturity . . . . . . 73,283 73,283 Available-for-sale securities . . . 39,065 39,065 Total . . . . . . . . . . . . . . . . . . ¥421,919 ¥421,919Liabilities Notes and accounts payable-trade . . . . . . . . . . . . . . ¥ 26,205 ¥ 26,205 Short-term borrowings . . . . . . . . 6,000 6,000 Long-term borrowings (current portion) . . . . . . . . . . . . 40,000 40,000 Accounts payable-other . . . . . . . 41,540 41,540 Income taxes payable . . . . . . . . 11,289 11,289 Bonds and debentures . . . . . . . . 79,994 82,208 ¥ 2,213 Long-term borrowings . . . . . . . . 219,314 226,355 7,041 Total . . . . . . . . . . . . . . . . . . ¥424,345 ¥433,600 ¥ 9,255Derivative transactions Nonhedge accounting . . . . . . . . ¥ (107) ¥ (107) Hedge accounting Principle method . . . . . . . . . . (1,634) (1,634) Exceptional method (interest rate swap) . . . . . . . . (2,023) ¥(2,023) Total*2 . . . . . . . . . . . . . . . . . ¥ (1,741) ¥ (3,764) ¥(2,023)

Unlisted equity securities of ¥1,974 million and investments in associated companies of ¥371 million, respectively, are not included in “Short-term investments and investment securities,” because they have no market price and their fair values are not feasible to be deter-mined accurately.*1 The allowance for doubtful accounts is related to notes and accounts receivable-trade.*2 Net receivables and payables derived from derivative transactions are shown. Values in parentheses indicate net liabilities.

(Note) Methods used to calculate fair value of financial instruments:Assets“Cash and cash equivalents,” “Notes and accounts receivable-trade” and “Time deposits exceeding 3 months to maturity” The carrying value is used as the fair value of these items because the fair value is nearly equal to such carrying value, which is

settled in a short period of time. The fair value of MMFs or the other short-term investments classified as “Cash and cash equiva-lents” is based on market values, and that of debt securities is offered by correspondent financial institutions.

“Available-for-sale securities” The fair value of equity securities traded on securities exchanges is based on market values, and that of debt securities is offered

by correspondent financial institutions.

Liabilities“Notes and accounts payable-trade,” “Short-term borrowings,” “Accounts payable-other” and “Income taxes payable” The carrying value is used as the fair value of these items because the fair value is nearly equal to such carrying value, which is

settled in a short period of time.“Long-term borrowings” and “Long-term borrowings (current portion)” With regard to variable interest rate borrowings, the carrying value is used as the fair value of these items because the fair value

is nearly equal to such carrying value, as the interest rate approximates the market rate. On the other hand, the fair value of items with a fixed interest borrowing rate is calculated by discounting the total amount of principal and interest by using the interest rates that would presumably apply if similar borrowings were newly made.

“Bonds and debentures” and “Bonds and debentures (current portion)” The market values offered by correspondent financial institutions are used as the fair value.

Derivative transactions The market value offered by correspondent financial institutions is used as the fair value. The amounts of the fair value of forward

exchange contracts, which are applied with the allocation method, are included in the fair value of receivables and payables because they are treated as one.

Note 13. LeasesThe Group leases certain equipment, computers, office space, and other assets.

The minimum lease payments under noncancelable operating leases as of March 31, 2013 and 2012, were as follows:


FY2012 FY2011 FY2012Due within 1 year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 2,582 ¥ 2,160 $ 27,468Due over 1 year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,584 14,122 155,148

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥17,166 ¥16,282 $182,617




47

Financial Section



Note 14. Other comprehensive income

Reclassification adjustments and tax effect relating to components of other comprehensive income for the years ended March 31, 2013 and 2012, were as follows:


FY2012 FY2011 FY2012Valuation difference on available-for-sale securities

Gains in the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 9,564 ¥ 4,409 $101,744Reclassification adjustments for amounts recognized in loss . . (4,677) (2,382) (49,755)

Subtotal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,886 2,026 51,978Tax effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,801) (878) (19,159)Valuation difference on available-for-sale securities . . . . . . 3,085 1,148 32,819

Deferred gain (loss) on derivatives under hedge accounting

Losses in the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (383) (767) (4,074)Reclassification adjustments for amounts recognized in income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 508 503 5,404

Subtotal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 124 (264) 1,319Tax effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (44) 18 (468)Deferred gain (loss) on derivatives under hedge accounting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80 (245) 851

Foreign currency translation adjustmentsGains (losses) in the year . . . . . . . . . . . . . . . . . . . . . . . . . . . 43,447 (4,193) 462,202Reclassification adjustments for amounts recognized in income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Subtotal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43,447 (4,191) 462,202Tax effectForeign currency translation adjustments . . . . . . . . . . . . . 43,447 (4,191) 462,202

Total amount of other comprehensive income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥46,613 ¥(3,289) $495,882

Note 15. Earnings per share

Reconciliations of the differences between basic earnings and diluted earnings per share (“EPS”) for the years ended March 31, 2013 and 2012, were as follows:

Millions of yen Thousands of shares Yen U.S. dollars

Net incomeWeighted

average shares EPS

For the year ended March 31, 2013Basic EPS

Net income available to common shareholders . . . . . . . . . . . . . . . . . . . ¥48,275 285,007 ¥169.38 $1.80

Effect of dilutive securitiesStock options . . . . . . . . . . . . . . . . . . . 125

Diluted EPSNet income for computation . . . . . . . . ¥48,275 285,133 ¥169.31 $1.80

For the year ended March 31, 2012Basic EPS

Net income available to common shareholders . . . . . . . . . . . . . . . . . . . ¥58,511 284,966 ¥205.33

Effect of dilutive securitiesStock options . . . . . . . . . . . . . . . . . . . 18

Diluted EPSNet income for computation . . . . . . . . ¥58,511 284,985 ¥205.31

Note 16. Segment information(a) Overview of reporting segmentsThe Group’s business areas comprise the Pharmaceuticals and Other businesses, with the Pharmaceuticals business of each geographical region being identified as a reporting segment. Reporting segments of the Group are units for which it can obtain independent financial information, and units for which top manage-ment undertakes a periodic review in order to determine the allocation of management resources and to evaluate performance.

Previously, the Group’s Pharmaceuticals business was divided into the following four regions – East Asia (Japan, China, South Korea, Taiwan and Hong Kong), the U.S., Europe, and New Markets & ASEAN (Brazil, Mexico, Russia, Canada, Australia, India, the Middle East, Southeast Asia, etc.) – however, effective from the year ended March 31, 2013, the Group has redesignated the countries overseen by each region with the aim of delegating management oversight responsibilities for new markets such as Canada, Mexico and Brazil directly to individual regions. The newly designated regions comprise East Asia (Japan, China, South Korea, Taiwan and Hong Kong), Americas (North, Central and South America), EMEA (Europe, the Middle East and Africa), and Indo-Pacific (South Asia, ASEAN countries and Oceania). In line with this regional restructuring, the Group has changed the designation of its reporting segments, with changes also being reflected in seg-ment information for the year ended March 31, 2012.




48

Financial Section



(b) Methods to determine sales, profit (loss), assets, liabilities and others by reporting segmentThe accounting treatment applied for reporting segments is the same as described in “Summary of significant accounting policies.”

Figures in reporting segments represent sales to external customers and operating income thereof.R&D expenses and certain selling, general and administrative expenses are not allocated to any particular reporting segment, as the Group does not manage such expenses on a regional basis.Investment in assets is determined by taking the optimized allocation of management resources within the entire Group into consideration.

The amounts of assets, liabilities and expenses which are depreciation, amortization and other items related to noncurrent assets of the reporting segments are not provided due to the inherent difficulties in determining such amounts by reporting segment.

(c) Information concerning net sales and profit by reporting segment

Millions of yen

FY2012Reporting segment

Other*1 TotalPharmaceuticals business

East Asia Americas EMEA Indo-Pacific Subtotal

Net sales to external customers . . . . . . . . . . . . ¥362,855 ¥153,334 ¥25,754 ¥7,273 ¥549,216 ¥24,441 ¥573,658Segment profit . . . . . . . . . . 149,075 35,663 2,030 1,906 188,675 11,726 200,402

Millions of yen




Net sales to external customers . . . . . . . . . . . . ¥400,360 ¥157,452 ¥42,694 ¥6,726 ¥607,234 ¥40,741 ¥647,976Segment profit . . . . . . . . . . 167,449 33,317 6,918 1,750 209,435 19,771 229,207





Net sales to external customers . . . . . . . . . . . . $3,860,159 $1,631,212 $273,978 $77,372 $5,842,723 $260,010 $6,102,744Segment profit . . . . . . . . . . 1,585,904 379,393 21,595 20,276 2,007,180 124,744 2,131,936

*1 “Other” is a business segment not included in reporting segments. Pharmaceutical raw materials and pharmaceutical machinery businesses are included in this segment.

(d) Amount and main components of differences between reporting segment total and consolidated financial statements (items concerning difference adjustment)


Net sales FY2012 FY2011 FY2012Reporting segment total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥549,216 ¥607,234 $5,842,723Net sales included in “Other” . . . . . . . . . . . . . . . . . . . . . . . . . . 24,441 40,741 260,010Net sales as reported in the consolidated financial statements . . ¥573,658 ¥647,976 $6,102,744


Profit FY2012 FY2011 FY2012Reporting segment total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 188,675 ¥ 209,435 $ 2,007,180Profit included in “Other” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,726 19,771 124,744R&D expenses*1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (120,377) (125,142) (1,280,606)Group headquarters management costs and other expenses*2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (9,562) (8,315) (101,723)Operating income as reported in the consolidated financial statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 70,462 ¥ 95,748 $ 749,595

*1 R&D expenses are not allocated to any particular segment as the Group manages such expense on a global basis.*2 Group headquarters management costs and other expenses are not allocated to any particular segment as these are the costs cover-

ing Group-wide operations.

(e) Related information1) Information by product and service

Millions of yen

FY2012

Pariet ®/AcipHex ® Aricept ®Oncology-related

products Other Total

Net sales to external customers . . . . . ¥108,442 ¥94,266 ¥100,386 ¥270,562 ¥573,658

Millions of yen

FY2011



Net sales to external customers . . . . . ¥126,384 ¥147,058 ¥93,134 ¥281,399 ¥647,976


FY2012



Net sales to external customers . . . . . $1,153,638 $1,002,829 $1,067,936 $2,878,319 $6,102,744




49

Financial Section



2) Information by regioni) Net sales

Millions of yen

FY2012Japan U.S. Europe Other Total

¥342,087 ¥157,353 ¥30,575 ¥43,642 ¥573,658

Millions of yen


¥389,648 ¥164,300 ¥56,641 ¥37,385 ¥647,976



$3,639,223 $1,673,968 $325,265 $464,276 $6,102,744

(Note) Sales are allocated into countries or regions based on customer locations.Major areas and countries included in this category other than Japan and U.S.:1) Europe: U.K., France and Germany2) Other: Asia and Latin America

ii) Property, plant and equipment

Millions of yen

FY2012Japan U.S. U.K. Other Total

¥80,405 ¥39,372 ¥15,344 ¥7,127 ¥142,248

Millions of yen


¥85,639 ¥36,286 ¥14,814 ¥6,837 ¥143,578



$855,372 $418,851 $163,234 $75,819 $1,513,276

(Note) Major countries included in “Other” are India and China.

3) Information by major customer


FY2012 FY2012Name of customer Net sales Related Segment Net sales

Alfresa Holdings Corporation . . . . . ¥78,627 East Asia Pharmaceuticals Business $836,457Suzuken CO., LTD. . . . . . . . . . . . . 68,601 East Asia Pharmaceuticals Business 729,797Medipal Holdings Corporation . . . . 63,886 East Asia Pharmaceuticals Business 679,638McKesson Corporation . . . . . . . . . 59,046 Americas Pharmaceuticals Business 628,148

Millions of yen

FY2011Name of customer Net sales Related Segment

Alfresa Holdings Corporation . . . . . ¥85,287 East Asia Pharmaceuticals BusinessSuzuken CO., LTD. . . . . . . . . . . . . 75,427 East Asia Pharmaceuticals BusinessMedipal Holdings Corporation . . . . 70,967 East Asia Pharmaceuticals Business

(f) Information concerning loss on impairment of noncurrent assets by reporting segment

Millions of yen

FY2012

East Asia Americas EMEA Indo-PacificPharmaceuticals Business total

Loss on impairment . . . . . . . . . . . . . . ¥1,304 ¥1,304

Millions of yen

FY2011


Loss on impairment . . . . . . . . . . . . . . ¥418 ¥16 ¥435


FY2012


Loss on impairment . . . . . . . . . . . . . . $13,872 $13,872

(Note) The amount of loss on impairment of noncurrent assets not allocated to reporting segments in the year ended March 31, 2013, was ¥68 million ($723 thousand), which was mainly comprised of property, plant and equipment included in “Other.” The amount in the year ended March 31, 2012, was ¥16 million, which was mainly comprised of intangible assets (other).




50

Financial Section



(g) Information concerning amortization of goodwill and unamortized balance by reporting segment

Millions of yen

FY2012


Amortization in the year . . . . . . . . . . . ¥ 7,724 ¥112 ¥ 7,837Balance at end of year . . . . . . . . . . . . 126,940 402 127,342

Millions of yen

FY2011


Amortization in the year . . . . . . . . . . . ¥(487) ¥ 7,358 ¥114 ¥ 6,985Balance at end of year . . . . . . . . . . . . 118,573 481 119,054


FY2012


Amortization in the year . . . . . . . . . . . $ 82,170 $1,191 $ 83,372Balance at end of year . . . . . . . . . . . . 1,350,425 4,276 1,354,702

(h) Information concerning gain on negative goodwill by reporting segmentFor the year ended March 31, 2013, the Indo-Pacific Pharmaceuticals Business recognized negative goodwill following the Company’s subsidiary Eisai Asia Regional Services Pte. Ltd. acquiring additional stock of the latter’s own subsidiary Eisai (Thailand) Marketing Co., Ltd. As a result, gain on negative goodwill due to this event amounted to ¥1,960 million ($20,851 thousand).

Note 17. Subsequent events(a) Appropriation of retained earningsThe following appropriation of retained earnings for the year ended March 31, 2013, was resolved by the Company’s Board of Directors on May 13, 2013:

Millions of yen


Year-end cash dividends (¥80.00 ($0.85) per share) . . . . . . . . . . . . . . . . . . . . . . . . . . ¥22,807 $242,627




51

Financial Section



Independent Auditor’s Report

To the Board of Directors of Eisai Co., Ltd.:

We have audited the accompanying consolidated balance sheet of Eisai Co., Ltd. and subsidiaries as of March 31, 2013, and the related consolidated statements of income, comprehensive income, changes in equity, and cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information, all expressed in Japanese yen.

Management’s Responsibility for the Consolidated Financial StatementsManagement is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with accounting principles generally accepted in Japan, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatements, whether due to fraud or error.

Auditor’s ResponsibilityOur responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in Japan. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

OpinionIn our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Eisai Co., Ltd. and subsidiaries as of March 31, 2013, and the consolidated results of their operations and their cash flows for the year then ended in accordance with accounting principles generally accepted in Japan.

Convenience TranslationOur audit also comprehended the translation of Japanese yen amounts into U.S. dollar amounts and, in our opinion, such translation has been made in accordance with the basis stated in Note 1 to the consolidated financial statements. Such U.S. dollar amounts are presented solely for the convenience of readers outside Japan.

June 21, 2013

Deloitte Touche Tohmatsu LLCMS Shibaura Building4-13-23, ShibauraMinato-ku, Tokyo 108-8530Japan

Tel: +81 (3) 3457 7321Fax: +81 (3) 3457 1694www.deloitte.com/jp

Member of Deloitte Touche Tohmatsu Limited




52

Financial Section



Protection and Reinforcement of Intellectual PropertyThe legal protection and effective utilization of products and technologies developed by Eisai are essential for the sustained growth and advancement of the Company, and for Eisai to continue to provide a stable supply of pharmaceuticals to patients. Therefore, we pursue a number of strategic intellectual property activities and strategies related to the Company’s product portfolio and product creation operations.

1. Intellectual Property ActivitiesThe Intellectual Property Department has stationed persons responsible for intellectual property at Eisai’s Production Creation Units and conducts activities worldwide relating to patents, trademarks, designs, and copyrights while working closely with each group, such as Eisai Product Creation Systems (EPCS). In particular, in global activities related to intellectual property, including those at overseas product creation facilities, the persons responsible for intellectual property at each company unit periodically share information to strengthen cooperative ties, and decisions are reached from a global perspective. Furthermore, the filing of patent applications and prior art searches are carried out through close collabora-tion between business divisions and product cre-ation units. Companies within the Eisai network are given backing and support while respecting each company’s autonomy. In addition, when Eisai introduces new Technologies and promising new candidate compounds, it cooperates with relevant organizations and emphasizes the steadfast pro-tection of patent rights while ensuring compliance with relevant laws and regulations. In parallel with

these activities, we are taking steps to build a firm base for intellectual property management from various perspectives, including thorough systematic intellectual property training that began in fiscal 2009, in order to make our management more focused on intellectual property.

2. Product Creation Activities and Intellectual Property Strategies

Prescription pharmaceuticals account for most of Eisai’s total sales. Eisai files patent applications for the results of the initial phase of product creation activities such as genes, proteins, screening methods, and so forth. With respect to promising compounds discovered as a result of initial product creation activities, the Intellectual Property Depart-ment works closely with each Product Creation Unit and effectively files patent applications and focuses on obtaining the rights for them, so that launched drugs are adequately protected. With respect to development-stage and launched drugs, in order to maximize the potential efficacy and increase the benefit to patients, we also pursue new formula-tions, new medical uses, and new administration methods and file patent applications to secure patent rights for those achievements as well.

3. Contributions to Licensing-related Activities

Rather than simply looking to third-party licensing fees on patents as a revenue source, we strive to create a strong patent portfolio that will contribute to our business success. Rather than simply looking to third-party licensing fees on patents as a revenue source, we strive to create a strong patent portfolio that will contribute to our business success. Regarding the possible use of treat-ments for illness occurring specifically in areas

with inconvenient access to medicines, we plan to proactively out-license our patents.

4. Number of Registered PatentsTo protect the results of our product creation activi-ties, we diligently file patent applications in Japan and overseas. At the same time, to efficiently manage resources, we carefully evaluate the strate-gic importance of each inventive discovery and determine whether to file patents abroad and, if so, how many and in which country to file them.

5. TrademarksEisai develops product names for all pharmaceuti-cals that are protected by trademark rights, and the Intellectual Property Department implements brand strategies throughout the world in collaboration with the Marketing Division.

Risk FactorsRisks that could cause significant fluctuations in the consolidated results of the Eisai Group or have a material effect on investment decisions are described below. These risks, however, have been evaluated and forecasted as of the disclosure date of the Financial Report.

1. Risks Related to Overseas OperationsThe Group conducts production/sales activities with Aricept ® and AcipHex ®/Pariet ® and other major products in countries and regions including Japan, the U.S., Europe and Asia. However, there is no guarantee that the Group can entirely avoid such risks as legal restrictions and socio-political uncertainty in the development of global business activities. In the event the Group faces such risks, there is a possibility that original projected earnings may not be achieved.

2. Uncertainty of New Drug DevelopmentDevelopment of a drug candidate substance may be discontinued due to shortcomings in its effec-tiveness or safety profile. Even if clinical trials yield favorable results, approval may not be granted due to changes in pharmaceutical regulations imple-mented during the development of the product. As a result of the discontinuation of development of a new drug arising from the inherent uncertainties of drug development, future expected profits may not be achieved.

3. Risks Related to Dependence on Specific Products

Aricept ® and AcipHex ®/Pariet ®, the Group’s two major products, comprise a high level of total revenue, accounting for more than 50% of net sales on a consolidated basis. Risks such as a decline in sales as a result of the launch of new competing products or generic versions of these products after patent expiration, and specifically the expiration of the composition of matter patent for Aricept ® in the U.S. in November 2010, may significantly impact business performance.

4. Risks in Alliances with Other CompaniesThe Group has comprehensive business alliances with other companies for the sales promotion of some products, and obtains promotional assis-tance from business partners to cover the entire market and maximize product sales in the U.S. and major countries in Europe. If partner relationships are not sustained, sales may decrease and signifi-cantly impact business results. Furthermore, expected profits may not be achieved due to uncertainties associated with activities such as product acquisition/licensing.

Corporate DataIntellectual Property, Risk Factors



Management Foundation Financial Section

53

Corporate Data

Intellectual Property, Risk Factors Corporate Information

Japan and Overseas Operations

5. Impact of Medical Cost Containment Measures

In Japan, the government enacts price revisions for prescription drugs every two years as part of its efforts to contain medical costs. Efforts to reduce drug prices are intensifying year after year in the U.S. as well as in countries in both Europe and Asia. Such efforts to contain costs may lead to a drop in sales.

6. Competition and Lawsuits with Generic Products

Pharmaceutical patents have a limited term. Frequently, generic makers launch generic products upon the expiration of a patent for the original drug. Requiring less cost for development, such generic products are usually priced lower than the original products, and hence those generic products may have a significant impact on market share. Addi-tionally, in countries such as the U.S., an applica-tion for a generic product is accepted even during the patent term.

7. Risks Related to Intellectual PropertyIf a patent application is dismissed, a patent is found to be invalid after approval, or if there is a failure to properly protect a patent, competitors may enter the market earlier than expected, which could potentially lead to a decrease in sales. Addi-tionally, if the business activities of the Group infringe on the intellectual property of a third party, it may deteriorate the profitability as well as neces-sitate a change in business plan of the Group, as a result of the third party in question exercising the right, leading to a significant impact on business performance of the Group.

8. Risks of Occurrences of Side EffectsIf a product is found to have any serious side effects, the Group may take measures such as suspending product prescriptions or conducting a product recall. The investigation into and communi-cation of information on such side effects as well as the recall of the product in question may lead the Group to incur additional expenses.

9. Risks Regarding RegulationsBecause the Group’s pharmaceuticals business is subject to various controls including pharmaceuti-cal regulations and product liability, enactment of a law or changes in the regulations may have a significant impact on business results. In the event regulatory nonconformity is found in a product, the Group may issue a product recall, have the product’s marketing approval revoked, or receive liability claims.

10. Risks Relating to LawsuitsResults of pending or future lawsuits may have a significant impact on the Group’s business results. Currently, the Group is involved in litigation con-cerning the pricing and sales promotion of bulk synthetic vitamin E products.

11. Plant Closure/ShutdownThe Group may close or shut down its plants due to technical problems, raw material shortages, influenza and other pandemics, fire, or earthquakes and other natural disasters. In such cases, the provision of products may become difficult, which could significantly impact business results.

12. Risks Concerning the Safety and Quality of Raw Materials

If there is any concern over the safety and quality of raw materials, the Group may take action such as changing materials, conducting a recall, or sus-pending sales, which may have a significant impact on business results.

13. Risks Associated with OutsourcingThe Group outsources part of its operations, including research and production, to other com-panies. Business results may be significantly impacted when the provision of business commis-sioned to outside companies is disrupted due to the shutdown of operations of any of the subcon-tractors for whatever reason.

14. Environmental RisksIn case a serious environmental pollution event is reported at any of its business offices, the Group may be required to close the office in question or be subject to other proceedings required by law. Furthermore, the costs necessary to assume liabil-ity for payment of compensation to neighboring regions and improve the environment may signifi-cantly affect business results.

15. Risks Concerning IT Security and Information Management

Since the Group makes full use of various IT sys-tems for business, its operations may be disrupted due to external factors such as inefficient systems and computer viruses. In addition, the Group faces the risk of technical accidents that involve personal information leakage outside of the Group, which may considerably damage the Group’s social repu-tation and significantly impact business results.

16. Risks Related to Financial Market Conditions and Currency Movement

As the Group holds stocks and other marketable securities, a decline in the stock market could result in losses on stock sales or valuation losses. In addition, an increase in retirement benefits due to changes in the interest rate may have an impact on business results. Furthermore, foreign exchange fluctuations affect the yen conversion of sales of consolidated subsidiaries, which account for over half of consolidated net sales. The effects of foreign exchange fluctuations on export and import trans-actions also impact business results.

17. Risks Concerning Internal Control SystemsIn accordance with assessment and audit stan-dards as well as implementation standards for internal controls pertaining to financial reporting as mandated by the Financial Instruments and Exchange Law of Japan, the Group establishes effective internal control systems related to financial reporting and strives to appropriately manage those systems. However, major losses that arise due to the malfunction of internal control systems or occurrence of unexpected problems related to internal control systems may have a significant impact on business results.

18. Risks Concerning DisastersThe occurrence of disasters, including natural disasters, such as earthquakes and tsunamis, as well as accidents, such as fires, could result in large-scale damage to business facilities and impact the business activities of the Eisai Group. In addition, repairs to facilities damaged by these disasters may cause the Company to incur signifi-cant expenses and have a major impact on busi-ness results.




54

Corporate Data



u Head Office4-6-10, Koishikawa, Bunkyo-kuTokyo 112-8088, JapanTEL: 81-3-3817-3700

Major Overseas Business Offices

North America

1 Eisai Inc.100 Tice Boulevard Woodcliff Lake, New Jersey 07677, U.S.A.TEL: 1-201-692-1100FAX: 1-201-746-3201

A Eisai Inc. / Research Triangle Park (RTP)900 Davis Drive, P.O. Box 14505RTP, North Carolina 27709, U.S.A.TEL: 1-919-941-6920FAX: 1-919-941-6931

B Eisai Inc. / Andover Site (Research Laboratory)

4 Corporate Drive, Andover,Massachusetts 01810, U.S.A.TEL: 1-978-794-1117FAX: 1-978-794-4910

2 Morphotek, Inc.210 Welsh Pool Road, Exton, Pennsylvania 19341, U.S.A.TEL: 1-610-423-6100FAX: 1-610-423-6199

3 H3 Biomedicine Inc.300 Technology Square, Cambridge, Massachusetts 02139, U.S.A.TEL: 1-617-252-5000 FAX: 1-617-252-5098

4 Eisai Limited2630 Skymark Avenue, Suite 701, Mississauga, Ontario L4W 5A4, CANADATEL: 1-905-361-7130 FAX: 1-732-791-1212

5 Eisai Laboratórios Ltda.City of São Paulo, State of São Paulo, at Rua Doutor Cardoso de Melo, No 1628 and 1644, Vila Olímpia, 04548-005 Brazil

6 Eisai Laboratorios S. de R.L. de C.V.Paseo de los Tamarindos, 400-B piso 22 Col. Bosques de Las Lomas, Cuajimalpa de Morelos, Federal District, Mexico

Europe

7 Eisai Europe Ltd.European Knowledge Centre,Mosquito Way, Hatfield,Hertfordshire AL10 9SN, U.K.TEL: 44-845-676-1400FAX: 44-845-676-1300

C Limited Liability Company “Eisai”Business Center Lotte Plaza 8, Novinsky Blvd., Moscow 121099, RussiaTEL: 7-495-580-7026FAX: 7-495-580-7028

8 Eisai Ltd.European Knowledge Centre,Mosquito Way, Hatfield,Hertfordshire AL10 9SN, U.K.TEL: 44-845-676-1400FAX: 44-845-676-1401

9 Eisai Manufacturing Ltd.European Knowledge Centre,Mosquito Way, Hatfield,Hertfordshire AL10 9SN, U.K.TEL: 44-845-676-1400FAX: 44-845-676-5050

0 Eisai GmbHLyoner Strasse 36,D-60528 Frankfurt am Main, GermanyTEL: 49-69-6658511FAX: 49-69-6658525

- Eisai GesmbHSaturn Tower, Leonard-Bernstein-Strasse 10A-1220 Wien, AustriaTEL: 43-1-5351980-0FAX: 43-1-5351980-80

Eisai GmbH Organisational BranchHolusicka 2253/1148 00 Prague 4 - Chodov,Czech RepublicTEL: 420-2424-85839FAX: 420-2424-85840

= Eisai S.A.S.Tour Manhattan, 5-6 Place de I’Iris,92095 Paris La Défense 2 Cedex, FranceTEL: 33-1-47670005FAX: 33-1-47670015

q Eisai B.V.Strawinskylaan 1141, Toren C, 11e, 1077 XXAmsterdam, The NetherlandsTEL: 31-20-575-3340FAX: 31-20-575-3341

w Eisai Farmacéutica S.A.C/Arturo Soria 336, 3a Planta,28033 Madrid, SpainTEL: 34-91-455-9455FAX: 34-91-721-0506

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e Eisai S.r.l.Via dell’Unione Europea 6/BSan Donato Milanese (MI), 20097, ItalyTEL: 39-02-518-1401FAX: 39-02-518-14020

r Eisai Pharma AGSchaffhauserstrasse 611, 8052 Zurich, SwitzerlandTEL: 41-44-306-1212FAX: 41-44-306-1280

t Eisai ABSvardvagen 3A, Danderyd,P.O. Box 23060 104 35 Stockholm, SwedenTEL: 46-8-501-01-600FAX: 46-8-501-01-699

y Eisai Farmacêutica, Unipessoal Lda.Lagoas Park, Edifício 5A, Piso 6,2740-298 Porto Salvo, PortugalTEL: 351-21-487-55-40FAX: 351-21-487-55-48

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55

Corporate Data



Asia

u PT Eisai IndonesiaSentral Senayan II, 12 Floor, Jl. Asia Afrika No. 8,Senayan, Jakarta 10270, IndonesiaTEL: 62-21-5795-1994FAX: 62-21-5795-1995

D Bogor FactoryJI. Lanbau Desa Karang Asem Barat,Kecamatan Citeureup,Kabupaten Bogor, 16810, Jawa-Barat IndonesiaTEL: 62-21-875-3202FAX: 62-21-876-4886

i Eisai (Singapore) Pte. Ltd.152 Beach Road #15-05/08,Gateway East, Singapore 189721TEL: 65-6296-6977FAX: 65-6296-6577

o Eisai Clinical Research Singapore Pte. Ltd.152 Beach Road #15-05/08,Gateway East, Singapore 189721TEL: 65-6297-6624FAX: 65-6297-6328

p Eisai (Malaysia) Sdn. Bhd.Lot 6.1, 6th Floor, Menara Lien Hoe,No. 8, Persiaran Tropicana47410 Petaling Jaya, MalaysiaTEL: 60-3-7803-9096FAX: 60-3-7803-0060

[ Eisai (Thailand) Marketing Co., Ltd.6th Floor, GPF Witthayu Tower A,93/1 Wireless Road, Bangkok 10330, ThailandTEL: 66-2-256-6296FAX: 66-2-256-6299

] HI-Eisai Pharmaceutical Inc.20th Floor, Multinational Bancorporation Centre,6805 Ayala Avenue, 1226 Makati City, PhilippinesTEL: 63-2-887-1047FAX: 63-2-887-5172

\ Eisai Korea Inc.10F Revessant, 147-17Samseong-dong, Gangnam-gu,Seoul 135-878, KoreaTEL: 82-2-3451-5500FAX: 82-2-3451-5599

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E

d Eisai (Hong Kong) Co., Ltd.Room 2007, Fortress Tower,250 King’s Road, North Point,Hong Kong, ChinaTEL: 852-2516-6128FAX: 852-2561-5042

f Eisai Pharmaceuticals India, Pvt. Ltd.1st Floor, B-Wing, Marwah Centre,Krishanlal Marwah Marg, Andheri (East),Mumbai 400072, MH, IndiaTEL: 91-22-6131-1311FAX: 91-22-2857-9720

g Eisai Pharmatechnology & Manufacturing Pvt. Ltd.

Ramky Pharma City (SEZ), Plot Nos. 96, 97, 98, 124 & 126, Parawada -531 021, Visakhapatnam District, Andhra Pradesh, IndiaTEL: 91-892-428-2500FAX: 91-891-2711-203

a Eisai Taiwan Inc.9th Floor, No. 18, Chang An E. Road, Sec. 1,Taipei, TaiwanTEL: 886-2-2-531-4175FAX: 886-2-2-531-0063

s Eisai China Inc.39th-40th Floor, Park Place, No.1601,Nanjing Xi Road, Shanghai City, 200040 ChinaTEL: 86-21-2419-2888FAX: 86-21-2419-2881

E Suzhou FactoryBai Yu Road #32 Suzhou Industrial Park Suzhou,Jiangsu Province, 215021 ChinaTEL: 86-512-6761-3211FAX: 86-512-6761-8640




56

Corporate Data



Japan Business Sites

Communication Offices

1 Sapporo Communication Office4-3-1, Sakaedori, Shiroishi-ku,Sapporo-shi, Hokkaido 003-0021TEL: 81-11-851-6171FAX: 81-11-853-3523

2 Sendai Communication Office26-3, Aza-Tatsuzawa, Goroku, Aoba-ku,Sendai-shi, Miyagi 989-3121TEL: 81-22-226-2111FAX: 81-22-226-1107

3 Tokyo Communication Office23th Floor, Shinjuku Park Tower Building,3-7-1, Nishi-Shinjuku, Shinjuku-ku, Tokyo 163-1023TEL: 81-3-5325-0150FAX: 81-3-5325-0194

4 Nagoya Communication Office2-13-23, Izumi Higashi-ku,Nagoya-shi, Aichi 461-0001TEL: 81-52-931-1331FAX: 81-52-932-5547

Production Facilities, Research Laboratory

8 Misato Plant950, Oaza-Hiroki, Misato-machi,Kodama-gun, Saitama 367-0198TEL: 81-495-76-3111FAX: 81-495-76-1841

9 Kawashima Industrial Complex1, Kawashimatakehaya-machi,Kakamigahara-shi, Gifu 501-6195TEL: 81-586-89-3115FAX: 81-586-89-3848

0 Kashima Plant22, Sunayama, Kamisu-shi,Ibaraki 314-0255TEL: 81-479-46-1155FAX: 81-479-46-1095

- Tsukuba Research Laboratories5-1-3, Tokodai, Tsukuba-shi,Ibaraki 300-2635TEL: 81-29-847-5900FAX: 81-29-847-8489

Major Domestic Subsidiaries

EIDIA Co., Ltd.1-10-6, Iwamoto-cho, Chiyoda-ku,Tokyo 101-0032TEL: 81-3-3865-4311FAX: 81-3-3864-5644

Sannova Co., Ltd.3038-2, Serada-cho, Ota-shi,Gunma 370-0426TEL: 81-276-52-3611FAX: 81-276-52-1341

Elmed Eisai Co., Ltd.3-23-5, Higashi-Ikebukuro,Toshima-ku, Tokyo 170-0013TEL: 81-3-3980-6633FAX: 81-3-3980-6634

KAN Research Institute, Inc.3rd Floor, Kobe MI R&D Center,6-7-3, Minatojima-minamimachi, Chuo-ku,Kobe-shi, Hyogo 650-0047TEL: 81-78-306-5910FAX: 81-78-306-5920

Eisai Distribution Co., Ltd.3039-1, Aza-Daichido, Iiyama,Atsugi-shi, Kanagawa 243-0213TEL: 81-46-248-2655FAX: 81-46-248-5909

Sunplanet Co., Ltd.3-5-10, Otsuka, Bunkyo-ku,Tokyo 112-0012TEL: 81-3-5978-1941FAX: 81-3-5978-1970

Bracco-Eisai Co., Ltd.3-11-6, Otsuka, Bunkyo-ku,Tokyo 112-0012TEL: 81-3-5319-3381FAX: 81-3-5319-3387

Eisai Food & Chemical Co., Ltd.2-13-10, Nihonbashi, Chuo-ku,Tokyo 103-0027TEL: 81-3-3548-3560FAX: 81-3-3273-2084

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5 Osaka Communication Office10th Floor, Nakanoshima Mitsui Building,3-3-3, Nakanoshima, Kita-ku, Osaka-shi, Osaka 530-0005TEL: 81-6-6448-9001FAX: 81-6-6448-9011

6 Hiroshima Communication Office7-22, Naka-machi,Naka-ku, Hiroshima-shi, Hiroshima 730-0037TEL: 81-82-244-1212FAX: 81-82-246-6853

7 Fukuoka Communication Office6th Floor, BiVi Fukuoka, 4-1-36, Watanabe-dori, Chuo-ku,Fukuoka-shi, Fukuoka 810-0004TEL: 81-92-731-6709FAX: 81-92-731-6735

* In addition, Eisai has communication offices in 58 locations in Japan.




57

Corporate Data



Year Founded

1941

Corporate Name

Eisai Co., Ltd.

Corporate Address and Telephone Number

4-6-10, Koishikawa, Bunkyo-ku,

Tokyo 112-8088, Japan

TEL: 81-3-3817-3700

Annual Shareholders’ Meeting

The annual shareholders’ meeting of Eisai Co., Ltd.,

is held in June.

Stock Exchange Listings

Eisai common stock is listed on the Tokyo Stock

Exchange and the Osaka Securities Exchange.

Securities Code Number

4523

Independent Public Accountants

Deloitte Touche Tohmatsu LLC

MS Shibaura Bldg., 4-13-23, Shibaura,

Minato-ku, Tokyo 108-8530, Japan

Paid-in Capital

¥44,985 million

Number of Employees

4,050 (Non-consolidated basis)

10,495 (Consolidated basis)

Number of Shares Outstanding

296,566,949

Number of Shareholders

95,835

Transfer Agent

Mitsubishi UFJ Trust and Banking Corporation

Depositary for Eisai American Depositary

Receipts

JPMorgan Chase Bank, N.A.,

1 Chase Manhattan Plaza, Floor 58

New York, NY 10005, U.S.A.

ADR Ticker Symbol

ESALY

Public Notices

Available online at http://www.eisai.com

However, if circumstances so dictate, publication

will be made in the Nihon Keizai Shimbun.

For further information:

Investor RelationsEisai Co., Ltd.4-6-10, Koishikawa, Bunkyo-ku,

Tokyo 112-8088, Japan

TEL: 81-3-3817-5327 FAX: 81-3-3811-6032

http://www.eisai.com/

Corporate Data (As of March 31, 2013)




58

Corporate Data



4-6-10 Koishikawa, Bunkyo-ku, Tokyo 112-8088, Japanhttp://www.eisai.com/

annual report 2013 - eisai.com · materials and information provided in this annual report may ......

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