kazumasa kobayashi president & ceo kobayashi

May 17, 2002May 17, 2002

Fiscal Year Ended March 31, 2002Fiscal Year Ended March 31, 2002

Information MeetingInformation Meeting

KazumasaKazumasa KobayashiKobayashiPresident & CEOPresident & CEOKobayashi Pharmaceutical Co., Ltd.Kobayashi Pharmaceutical Co., Ltd.

Kobayashi Pharmaceutical Co., Ltd.Kobayashi Pharmaceutical Co., Ltd. 2

Consolidated Financial Consolidated Financial Results for Fiscal 2002Results for Fiscal 2002

Kobayashi Pharmaceutical Co., Ltd. 3

OverviewOverviewll Acquisition of Acquisition of Kiribai Kiribai ChemicalChemicalll Acquisition of goodwill from Chugai PharmaceuticalAcquisition of goodwill from Chugai Pharmaceuticalll Liquidation of Aquarius Medical (scheduled for July) Liquidation of Aquarius Medical (scheduled for July) ll Sale of shares of Nisshin Sale of shares of Nisshin Insatsu Insatsu ShikiShikill Sale of shares of KobayashiSale of shares of Kobayashi Sofamor Danek Sofamor Danek ll Kensho Kensho became a subsidiary of Kobayashi; became a subsidiary of Kobayashi;

Partnership with OTC drug wholesalers in the Partnership with OTC drug wholesalers in the Shikoku region Shikoku region

ll Reduction of the effective tax rate (48% Reduction of the effective tax rate (48% ⇒⇒ 44%)44%)ll Competitive advantages achieved for deodorizing Competitive advantages achieved for deodorizing

air fresheners, air fresheners, NetsusamaNetsusama Sheet, Sheet, EyebonEyebon, , SarasartySarasarty, , and Breath Careand Breath Care

ll Strong sales of nutritional supplement food products Strong sales of nutritional supplement food products ((¥¥3.4 billion through direct marketing and 3.4 billion through direct marketing and ¥¥1.1 billion 1.1 billion through sales at drugstores) through sales at drugstores)


Financial highlightsFinancial highlights

ChangeChangeAmountAmountRatioRatioAmountAmountRatioRatioAmountAmount

9.69.620.320.3－－232.6232.6－－212.3212.3EPS (yen)EPS (yen)

9.69.65765763.23.26,5956,5953.33.36,0196,019Net incomeNet income

△△5.15.1△△6556555.95.912,10312,1036.96.912,75812,758Ordinary Ordinary incomeincome

△△1.31.3△△1771776.76.713,62913,6297.47.413,80713,807Operating Operating incomeincome

％％

10.610.6¥¥ millionmillion

19,64619,646％％

－－

¥¥ millionmillion

204,647204,647％％

－－

¥¥ millionmillion

185,001185,001Net salesNet sales

DifferenceDifference2002200220012001

ConsolidatedConsolidated


Net salesNet sales

156 ,062166 ,585

180 ,731 185 ,001

204 ,647

0

50 , 000

100 , 000

150 , 000

200 , 000

250 , 000

1998 1999 2000 2001 2002


¥¥ millionmillion

+6.7％+6.7+6.7％％+8.5％+8.5+8.5％％ +2.4％+2.4+2.4％％

+10.6％+10.6+10.6％％

6

1,695

2,904

4,822

6,0196,595

97.4

166.9 170.8

212.3232.6

0

2 , 000

4 , 000

6 , 000

8 , 000

10 , 000

1998 1999 2000 2001 2002

0

50

100

150

200

250

300Net income EPS

ConsolidatedConsolidatedNet income and EPSNet income and EPS

+71.3%+71.3%+71.3%

+66.0%+66.0%+66.0%+24.8%+24.8%+24.8%

+9.6%+9.6%+9.6%

+71.3%+71.3%+71.3% +2.3%+2.3%+2.3%

+24.3%+24.3%+24.3%+9.6%+9.6%+9.6%

1.5 million shares issued

¥¥ millionmillion

1:1.5stock split


Sales by operationSales by operation ConsolidatedConsolidated

12,65315,490

107,485

76,934

12,63119,931

84,005

117,218

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

ConsumerProducts

Wholesale MedicalDevices

Other

¥ million 2000 2001 2002

+9.2%+9.2%+9.2%

+9.1％+9.1+9.1％％

+28.7％+28.7+28.7％％ -¥22 million--¥¥22 22 millionmillion

KiribaiKiribai KenshoKensho


Operating income by operationOperating income by operationConsolidatedConsolidated

12,764

499 259 82

13,397

440 -14

-2,000

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

ConsumerProducts

Wholesale Medica lDev ices

Other

¥ million 2000 2001 2002+5.0％+5.0+5.0％％

-¥557 million--¥¥557 557 millionmillion-¥96 million--¥¥96 96 millionmillion

KiribaiKiribai

-58

+69.9％+69.9+69.9％％


Consumer Products Consumer Products Operation Operation

for Fiscal 2002for Fiscal 2002


Contribution of new productsContribution of new products

2728

36 34

28

14.2 12.5 15.2 10.7 13.0

40.343.3

44.7

39.9 35.9

0

5

10

15

20

25

30

35

40

45

50

1998 1999 2000 2001 2002

Item

0

5

10

15

20

25

30

35

40

45

50

％No. of new products First year 4 years

NonNon--consolidatedconsolidated


Nutritional supplement food Nutritional supplement food products: Sales and No. of itemsproducts: Sales and No. of items

1,413

2,528 3,377

1,169

0

2,000

4,000

6,000

2000 2001 2002

¥million

Storefront salesDirect sales

0

2 0

4 0

6 0

8 0

2000 2001 2002

No. ofitems

+79.8%+79.8%+79.8%

+78.9%+78.9%+78.9%

4,5444,544

3838

5252

6464

2626

Storefront sales


Decline in prices stoppedDecline in prices stopped

278

268

282

260

265

270

275

280

285

290

00/4

00/5

00/6

00/7

00/8

00/9

00/10

00/11

00/12

01/1

01/2

01/3

01/4

01/5

01/6

01/7

01/8

01/9

01/10

01/11

01/12

02/1

02/2

02/3

YenToilet no Shoshugen

269

284


1 ,064

872

800

850

900

950

1,000

1,050

1,100

00/4

00/5

00/6

00/7

00/8

00/9

00/10

00/11

00/12

01/1

01/2

01/3

01/4

01/5

01/6

01/7

01/8

01/9

01/10

01/11

01/12

02/1

02/2

02/3

Yen

Decline in prices stoppedDecline in prices stoppedEyebon Eyebon large bottlelarge bottle

890

902

932

882


Decline in prices stoppedDecline in prices stopped

679

478

460

400

450

500

550

600

650

700

00/4

00/5

00/6

00/7

00/8

00/9

00/10

00/11

00/12

01/1

01/2

01/3

01/4

01/5

01/6

01/7

01/8

01/9

01/10

01/11

01/12

02/1

02/2

02/3

Yen

Netsusama Netsusama SheetSheet for adults for adults 12 + 4 sheets12 + 4 sheets

490

532

561


Sales by product categorySales by product category

0 5,000 10,000 15,000 20,000 25,000 30,000 35,000

Body warmers

Nutritional supplementfood products

Household sundries

Deodorizing airfresheners

Sanitary products

Oral hygiene products

Pharmaceuticals2002 2001


¥¥ millionmillion

+10.8％+10.8+10.8％％

+9.4％+9.4+9.4％％

-7.3％--7.37.3％％

-10.1％--10.110.1％％

+79.7％+79.7+79.7％％

+¥7.2 billion++¥¥7.2 7.2 billionbillion

-10.9％--10.910.9％％


Top 20 productsTop 20 productsBrands with sales of Brands with sales of ¥¥3 billion or more3 billion or more

0 3,000 6,000 9,000 12,000

Toilet noShoshugen

Eyebon

Netsusama Sheet

Breath Care

Sawaday

Sarasarty

Bluelet

2001

2002

¥¥ millionmillion


101.0％101.0101.0％％

132.9％132.9132.9％％

114.4％114.4114.4％％

109.2％109.2109.2％％

101.5％101.5101.5％％

* Shipment base

100.0％100.0100.0％％

81.7％81.781.7％％


0 2,000 4,000 6,000 8,000 10,000

Mukokukan

Tafudent

Nodonuuru

Anmerushin

Anmerutsu

OheyanoShoshugen

ToiletSonoatoni

2001

2002

¥¥ millionmillion


102.3％102.3102.3％％

* Shipment base

Top 20 productsTop 20 productsBrands with sales of Brands with sales of ¥¥1.5 billion to 1.5 billion to ¥¥3 billion3 billion

100.4％100.4100.4％％

70.5％70.570.5％％

95.3％95.395.3％％

93.3％93.393.3％％

91.7％91.791.7％％

94.4％94.494.4％％


0 2,000 4,000 6,000 8,000 10,000

Itoyoji

Feminina

Partialden t

Kimco

Tafugrip

Bikokukan2001

2002

¥¥ millionmillion


105.8％105.8105.8％％

109.0％109.0109.0％％

110.2％110.2110.2％％

* Shipment base

Top 20 productsTop 20 productsBrands with sales of Brands with sales of ¥¥1 billion to 1 billion to ¥¥1.5 billion1.5 billion

83.7％83.783.7％％

94.3％94.394.3％％


Wholesale Operation Wholesale Operation for Fiscal 2002for Fiscal 2002


To become an OTC drug wholesaler To become an OTC drug wholesaler with sales of with sales of ¥¥300 billion300 billion

Expansion of geographical Expansion of geographical coverage through coverage through acquisition of regional acquisition of regional wholesalers (subsidiaries) wholesalers (subsidiaries) and partnerships and partnerships

Kensho Kensho became a became a subsidiary of subsidiary of KobayashiKobayashi25% 25% ⇒⇒ 51%51%

Partnerships with Partnerships with three OTC drug three OTC drug

wholesalers (wholesalers (AstisAstis, , Daiwa Daiwa YakuhinYakuhin, , Kowa YakuhinKowa Yakuhin))


Medical Devices Medical Devices Operation Operation

for Fiscal 2002for Fiscal 2002


ll Enrichment of the product lineEnrichment of the product line--upup　　Handling of products of 21 manufacturersHandling of products of 21 manufacturers　　Acquisition of goodwill from Chugai Acquisition of goodwill from Chugai

PharmaceuticalPharmaceutical　　 NGK Spark Plug, Gunze, NGK Spark Plug, Gunze, HomsHoms

ll International operationsInternational operationsRestructuring of operations in the U.S.Restructuring of operations in the U.S.

AquariusAquarius

ll Review of joint venturesReview of joint venturesSale of the equity in Kobayashi Sale of the equity in Kobayashi Sofamor DanekSofamor Danek, ,

a joint venturea joint venture

Expansion of the business baseExpansion of the business base


Medical Devices OperationMedical Devices Operation

Breakdown of salesBreakdown of salesConsolidatedConsolidated

9,873

4,706

911

11,781

7,132

1,017

0

2 , 0 0 0

4 , 0 0 0

6 , 0 0 0

8 , 0 0 0

1 0 , 0 0 0

1 2 , 0 0 0

KMD Shield Others

¥ m i l l i o n

2000 2001 2002

+19.3％+19.3+19.3％％

+51.6％+51.6+51.6％％

+11.6％+11.6+11.6％％KSD KSD relatedrelated


219256

-215

346

-253

347

-500

-400

-300

-200

-100

0

100

200

300

400

500

KMD Shield Others

¥ million 2000 2001 2002

Medical Devices OperationMedical Devices Operation

Breakdown of operating incomeBreakdown of operating incomeConsolidatedConsolidated

+58.4％+58.4+58.4％％ +35.2％+35.2+35.2％％

-¥38 million--¥¥38 38 millionmillion


Establishment of a foundationEstablishment of a foundation

Kobayashi International Kobayashi International Scholarship FoundationScholarship Foundation

　　To sTo support students from Asiaupport students from Asia

Endowment is not subject to taxation on reserves and the effective tax rate was reduced: 48% ⇒ 44%

Endowment: 2 million shares¥500 million cash


Forecast for Forecast for Fiscal 2003Fiscal 2003


Summary of forecastSummary of forecast

ChangeChangeAmountAmountRatioRatioAmountAmountRatioRatioAmountAmount

3.13.17.37.3－－239.9239.9－－232.6232.6EPS (yen)EPS (yen)

3.13.12052053.23.26,8006,8003.23.26,5956,595Net incomeNet income

3.33.33973975.95.912,50012,5005.95.912,10312,103Ordinary Ordinary incomeincome

10.810.81,4711,4717.27.215,10015,1006.76.713,62913,629Operating Operating incomeincome

％％

2.72.7¥¥ millionmillion

5,4535,453％％

－－

¥¥ millionmillion

210,100210,100％％

－－

¥¥ millionmillion

204,647204,647Net salesNet sales

DifferenceDifference2003200320022002



Forecast of sales by operationForecast of sales by operation

128,100

12,631

19,931

84,200

117,218

12,00015,600

86,900

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

ConsumerProducts


Other

¥ million 2001 2002 2003 (forecast)


+3.4％+3.4+3.4％％

+9.3％+9.3+9.3％％

-21.7％--21.721.7％％ -5.0％--5.05.0％％


Forecast of operating income Forecast of operating income by operationby operation

700100-14

440

13,397

-58 200

14,000

-2,000

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

ConsumerProducts


Other

¥ million

2001 2002 2003 (forecast)


+4.5％+4.5+4.5％％

+¥250 million++¥¥250 250 millionmillion +59.1％+59.1+59.1％％ +¥100 million++¥¥100 100 millionmillion


Consumer Products OperationConsumer Products Operation’’s s policiespoliciesll New product development New product development aiming at a big fish in aiming at a big fish in

small pondssmall pondsReduction in number of new itemsReduction in number of new items

3030--35 35 ⇒⇒ 20 items a year20 items a yearUtilization of development project teamsUtilization of development project teams

ll Beat competitors and achieve larger market shareBeat competitors and achieve larger market shareDeodorizing air freshenersDeodorizing air fresheners 46% 46% ⇒⇒ 49%49%EyebonEyebon 53% 53% ⇒⇒ 5555％％NetsusamaNetsusama SheetSheet 53% 53% ⇒⇒ 55%55%

ll Thorough reduction of manufacturing costs Thorough reduction of manufacturing costs ¥¥1.2 1.2 billionbillion

ll Redeployment of brandsRedeployment of brands


A new approach to product A new approach to product developmentdevelopment

MarketingMarketing

Technology Technology developmentdevelopment

ResearchResearch

Ad agencyAd agency

Aroma companyAroma company

Alliances with other companiesAlliances with other companies

Design companyDesign company

Launch of Wafuka

etc.etc.Packaging Packaging companycompany

((Development project teams)Development project teams)


Launch of a creative Launch of a creative development organizationdevelopment organization

Marketing Dept.Marketing Dept.

Ph

armaceu

ticalsP

harm

aceuticals

Oral h

ygien

e O

ral hyg

iene

and

foo

dan

d fo

od

San

itary and

S

anitary an

d

skin care

skin care

Deo

do

rizing

air D

eod

orizin

g air

freshen

ersfresh

eners

Ho

useh

old

H

ou

seho

ld

sun

dries

sun

dries

Creative

Creative

develo

pm

ent

develo

pm

ent


Strengthen and expand Strengthen and expand international businessinternational business

ll Competition strategy and expansion strategyCompetition strategy and expansion strategy

　　 ChinaChina Launch a new deodorizing air freshener productLaunch a new deodorizing air freshener product

　　 UKUK Launch an additional Launch an additional NetsusamaNetsusama Sheet productSheet product

　　 USUS Media mix, advertising in focused 13 areasMedia mix, advertising in focused 13 areas　　

ll Creation of new marketsCreation of new markets

　　 Start sales of body warmersStart sales of body warmers


Forecasts of sales and operating income in Forecasts of sales and operating income in the US for the year ending December 2002 the US for the year ending December 2002

-700

-600

-500

-400

-300

-200

-100

0

100

200

300

400

1999 2000 2001 2002(forecast)

Sales Operating loss

¥¥ millionmillion


-250

-200

-150

-100

-50

0

50

100

150

200

2001 2002 (forecast)

Sales

Operating loss

Forecasts of sales and operating income in Forecasts of sales and operating income in the UK for the year ending December 2002the UK for the year ending December 2002

¥¥ millionmillion


-200

-100

0

100

200

300

400

500

1999 2000 2001 2002(forecast)

Sales

Operating loss

Forecasts of sales and operating income in Forecasts of sales and operating income in China for the year ending December 2002China for the year ending December 2002

¥¥ millionmillion


Medical Devices OperationMedical Devices Operation’’s s policiespolicies

ll Strengthen manufacturing and developmentStrengthen manufacturing and development　　　　Product development in house: Product development in house:

Launch of 2 productsLaunch of 2 products　　　　Acquisition of Japanese/overseas manufacturersAcquisition of Japanese/overseas manufacturersll Find new partner manufacturersFind new partner manufacturers　　ll Strengthen sales of products procured from Strengthen sales of products procured from

partner manufacturerspartner manufacturers　　　　Sharpest focus on orthopedicsSharpest focus on orthopedics


0

1 , 0 00

2 , 0 00

3 , 0 00

4 , 0 00

5 , 0 00

6 , 0 00

7 , 0 00

1998 1999 2000 2001 2002 2003(forecast)

Surgery Otolaryngology Orthopedics Neurosurgery

Medical Devices OperationMedical Devices Operation’’s s salessales NonNon--consolidatedconsolidated

+70.8％+70.8+70.8％％+49.6％+49.6+49.6％％

kazumasa kobayashi president & ceo kobayashi

Documents