Financial Section

Consolidated Financial Summary
DAIICHI SANKYO COMPANY, LIMITED and Consolidated Subsidiaries Years ended March 31, 2011, 2010 and 2009 (Fiscal years 2010, 2009 and 2008) Thousands of U.S. dollars*

Millions of yen

2011

2010

2009

2011

Operating Results: Net sales Cost of sales Selling, general and administrative expenses (excluding R&D expenses) Research and development expenses Research and development expenses to net sales (%) Operating income Interest expense Income (loss) before income taxes and minority interests Net income (loss) ¥ 967,365 281,678 369,213 194,330 20.1 122,144 5,519 120,419 70,121 ¥ 952,106 278,031 381,763 196,803 20.7 95,509 5,720 97,372 41,852 ¥ 842,147 214,397 354,340 184,539 21.9 88,871 1,917 (308,263) (215,499) $11,655,000 3,393,711 4,448,350 2,341,325 20.1 1,471,614 66,494 1,450,831 844,831

Financial Position: Total current assets Net property, plant and equipment Total assets Total current liabilities Total long-term liabilities Total net assets 894,075 237,710 1,480,240 306,952 285,585 887,703 819,758 249,546 1,489,510 268,812 331,190 889,508 783,507 250,114 1,494,600 508,536 97,447 888,617 10,771,988 2,863,976 17,834,217 3,698,217 3,440,783 10,695,217

Financial Indicators: Pre-tax profit margin (Ratio of net income before income taxes and minority interests to net sales) (%) Net profit margin (Ratio of net income to net sales) (%) Net income (loss) per share of common stock (yen and U.S. dollars) Dividends paid per share (yen and U.S. dollars) Return on shareholders’ equity (%) Equity ratio (%) Dividends to net assets (%) Capital expenditures Number of employees 12.4 7.2 99.62 60.00 8.2 57.4 5.0 37,328 30,488 10.2 4.4 59.45 60.00 4.9 57.4 4.9 29,729 29,825 — — (304.22) 80.00 (20.5) 57.7 5.4 19,644 28,895 12.4 7.2 1.2 0.72 8.2 57.4 5.0 449,738 30,488

* The U.S. dollar amounts represent translations of Japanese yen, solely for convenience, at the rate of ¥83=US$1.00, the approximate exchange rate prevailing on March 31, 2011.

36

Annual Report 2011

Operating Results and Financial Analysis

The State of the Daiichi Sankyo Group
The Daiichi Sankyo Group (“the Group”) consists of 110 companies, including Daiichi Sankyo Co., Ltd. (“the Company”), and its 106 subsidiaries and three affiliates. The Group’s principal activity is the manufacture and sales of pharmaceuticals and related products. In addition to overall results, the Group reports results for two reporting segments: one called the “Daiichi Sankyo Group” segment and one called the “Ranbaxy Group” segment. Although the Group itself on a consolidated basis includes Ranbaxy Laboratories, Ltd. (“Ranbaxy”) and its group companies, reporting of the Daiichi Sankyo Group segment excludes results from the Ranbaxy Group segment.

Sales of Key Products
FY2008 FY2009

(¥ billion) FY2010

Global Olmesartan (antihypertensive) Levofloxacin (synthetic antibacterial agent) Pravastatin (antihyperlipidemic agent) Japan Loxonin (anti-inflammatory analgesic) Omnipaque (contrast agent) Artist (antihypertensive) U.S. Venofer (anemia treatment) Welchol (antihyperlipidemic agent/ treatment for type 2 diabetes) 32.0 24.5 32.2 27.5 30.7 28.5 38.7 28.3 21.9 47.0 27.3 23.3 54.2 25.0 23.7 211.1 97.7 60.8 238.3 87.2 55.0 241.5 69.1 44.9

Overview of Business Results
The Group recorded consolidated net sales of ¥967.4 billion in fiscal 2010, up 1.6% from fiscal 2009. While the yen was even stronger than in the previous year, the negative exchange rate impact was offset by the contribution of ¥171.9 billion in net sales from Ranbaxy, stronger sales of the antihypertensive olmesartan and Loxonin brand antiinflammatory analgesics, and the launch of new products. Regarding fiscal 2010 profitability, operating income rose a substantial 27.9% over fiscal 2009, to ¥122.1 billion, with SG&A expenses declining for overseas subsidiaries as a result of the strong yen. Net income was ¥70.1 billion, up an impressive 67.5% over the previous year, as foreign exchange losses decreased over the previous fiscal year and income taxes were higher in fiscal 2009 compared to fiscal 2010 as a result of prior-period income tax adjustments. The Group posted a ¥5.6 billion loss on disaster to account for the repair costs for facilities damaged in the Great East Japan Earthquake. In fiscal 2010, the Group launched the triple combination antihypertensive agents, Tribenzor in the U.S. and the Sevikar HCT in Europe. In Japan, the Group released the two-drug combination antihypertensive agent Rezaltas, the percutaneous anti-inflammatory analgesic agent Loxonin Gel, and the anti-influenza treatment Inavir, among others.

Sales by Reporting Segment
Sales by segment, which include only sales to external customers, are described below.

Daiichi Sankyo Group Segment
The Daiichi Sankyo Group segment reported net sales of ¥795.4 billion, down 1.3% year on year. Japan Fiscal 2010 net sales in Japan amounted to ¥517.1 billion, down ¥2.3 billion, or 0.5%, from fiscal 2009. Sales of prescription drugs totaled ¥429.1 billion, up 1.9%, due to the expanded sales of the antihypertensive agents Olmetec and Loxonin brand anti-inflammatory analgesics, as well as contributions from the launch of Rezaltas and Inavir in fiscal 2010. Sales associated with royalty income and exports to overseas licensees declined 20.7%, to ¥39.9 billion, reflecting the impact of decreased exports of the synthetic antibacterial agent levofloxacin and the stronger yen. In the healthcare (OTC) business, net sales increased 2.6%, to ¥44.8 billion, attributable to stronger sales of the LuLu series of general cold remedies and a sales contribution from the anti-inflammatory analgesic Loxonin S, which was moved from prescription to over the counter switch formulation in fiscal 2010. North America Net sales in North America fell ¥700 million, or 0.4%, from fiscal 2009 to ¥184.4 billion, reflecting the effect of the stronger yen. In local currency terms, sales grew again in fiscal 2010. Major contributors to growth included the antihypertensive agent AZOR, the antihyperlipidemic agent and treatment for type 2 diabetes Welchol, and the anemia treatment Venofer. Other products contributing to growth included the newly launched antihypertensive agent Tribenzor. PharmaForce, Inc., which was acquired by Luitpold Pharmaceuticals, Inc. in December 2009, also contributed to higher sales. Europe Net sales in Europe fell ¥8.7 billion, or 11.6% year on year, to ¥66.5 billion, despite local-currency growth in sales of the antihypertensive agents Olmetec, Olmetec Plus, and Sevikar. The decline mainly reflected the effect of the stronger yen.
Financial Section

Sales
Fiscal 2010 net sales reached ¥967.4 billion, up ¥15.3 billion, or 1.6%, from fiscal 2009. The negative impact of the appreciating yen and declining sales of the synthetic antibacterial agent levofloxacin were more than offset by growing sales driven by the antihypertensive agent olmesartan, Loxonin brand anti-inflammatory analgesics, and the launch of new products, along with the contribution of net sales from Ranbaxy.

Consolidated Net Sales and Overseas Sales
(¥ billion) 51 44 51 (%)

1,200
967.4

50

952.1

40

900

842.1

30 600
468.8 469.8 477.7

20 300

373.3

482.3

489.7

10

0

FY2008

FY2009 Overseas sales

FY2010

0

Domestic sales

Ratio of overseas sales to net sales

37

Financial Section

Other Regions In other regions, net sales rose ¥1.7 billion, or 6.4% year on year, to ¥27.4 billion, thanks mainly to growing sales in China, South Korea and Brazil.

Operating Income
Operating income increased ¥26.6 billion, or 27.9%, to ¥122.1 billion, and the operating income ratio was 12.6%. Selling, General and Administrative Expenses Selling, general and administrative (SG&A) expenses fell ¥15.0 billion, or 2.6%, to ¥563.5 billion. Despite the one-off cost of the introduction of esomeprazole, a proton pump inhibitor, in Japan, the strong yen reduced operating expenses overseas, while joint development costs decreased for the anti-RANKL antibody demosumab.
Ratio of Costs, Expenses, and Operating Income to Net Sales

Ranbaxy Group Segment
Net sales for the Ranbaxy Group segment rose ¥25.4 billion, or 17.3% year on year, to ¥171.9 billion. The antiviral drug valacyclovir helped drive growth in the U.S.
Net Sales by Reporting Segment
(¥ billion)

1,000
842.1

952.1
146.6 38.6

967.4
171.9

(%) 100 10.6 10.0 12.6

800 600

80

803.5

805.5

795.4
60 64.0 60.8 58.3

400 200 0
FY2008 FY2009 FY2010 Ranbaxy Group segment

40

20 25.4 0 29.2 29.1

Daiichi Sankyo Group segment

Daiichi Sankyo Group Segment Net Sales by Region
(¥ billion)

FY2008 Cost of sales

FY2009 SG&A expenses

FY2010 Operating income

1,000

Other Income (Expenses)
800
805.5
25.8 75.2 185.1

795.4
27.4 66.5 184.4

600

Other income (expenses) decreased by ¥3.6 billion. Derivative gain fell by ¥6.0 billion, but foreign exchange losses improved by ¥9.6 billion over fiscal 2009. Moreover, the Group posted a ¥5.6 billion loss on disaster to account for the repair costs for facilities damaged in the Great East Japan Earthquake.

400
519.4 517.1

Income Before Income Taxes and Minority Interests
Income before income taxes and minority interests amounted to ¥120.4 billion, a ¥23.0 billion increase over the previous year.

200

Net Income
0
FY2009 Japan FY2010 North America EU Others

Net income for fiscal 2010 amounted to ¥70.1 billion, a ¥28.3 billion increase over the previous year.

Note: Fiscal 2008 data is not available.

Net Income (Loss)
(¥ billion)

Gross Profit on Net Sales
Gross profit on net sales increased by ¥11.6 billion, or 1.7%, to ¥685.7 billion. The ratio of gross profit to sales improved by 0.1 percentage points to 70.9%. Cost of Sales Cost of sales rose ¥3.6 billion, or 1.3%, to ¥281.7 billion, owing primarily to the additional costs associated with Ranbaxy sales. The Group continued to implement measures to reduce cost of sales during fiscal 2010.

80 60 40 20 0 -300
-215.5 FY2008 FY2009 41.9

70.1

FY2010

38

Annual Report 2011

Consequently, earnings per share (EPS) was ¥99.62, compared with ¥59.45 in fiscal 2009. Return on equity (ROE) rose 3.3 percentage points, to 8.2%.
EPS and ROE
(¥)

100 80 60 40 20 0 -200 -400 -304.22 -20.5 59.45 4.9

99.62 8.2

(%)

10 8 6 4 2 0 -20 -40

FY2008

FY2009

FY2010

EPS

ROE

Income Taxes The net value of current and deferred income taxes amounted to ¥41.8 billion.

bone metastases. The segment is proactively moving ahead with Phase III clinical trials for denosumab for use in the treatment of osteoporosis and as an adjunct therapy for breast cancer, and is also proceeding with Phase II trials for its use with rheumatoid arthritis. In April 2011, the direct oral Factor Xa inhibitor edoxaban was approved for manufacture and sale in Japan under the product name Lixiana for use in preventing venous thromboembolism (VTE) in patients who have undergone orthopedic surgery on the lower extremities. The segment is moving forward with a global clinical development program for an indication of edoxaban for preventing strokes in atrial fibrillation (AF) patients and global phase III trials for its use in preventing VTE, such as deep vein thrombosis (DVT) and pulmonary embolisms (PE). Ranbaxy’s drug discovery and research capabilities have been integrated with the research functions of the Company, to create an efficient global R&D setup with fully integrated control structures and policy implementation capabilities. R&D costs for the Daiichi Sankyo Group segment in fiscal 2010 totaled ¥182.3 billion, down 2.2% from fiscal 2009. Ranbaxy Group Segment The Ranbaxy Group segment carries out R&D activities mainly in generic products. R&D costs for the segment in fiscal 2010 totaled ¥12.0 billion, up 16.7% from fiscal 2009.
R&D Expenses and Ratio of R&D Expenses to Net Sales
(¥ billion)

Dividends
The Company considers the distribution of profits generated by Group businesses to be a top management priority. Profit distribution decisions are made with an emphasis on keeping returns commensurate with performance and increasing capital efficiency, and are based on a comprehensive assessment of those factors together with other factors such as the need to retain earnings to fund strategic business development measures going forward. The Company has a basic policy objective of paying dividends from retained earnings twice each year in the form of interim and year-end dividends. Based on this policy, the Company paid a year-end dividend of ¥60 per share (including an interim dividend of ¥30 per share) for fiscal 2010. The interim dividend is decided by resolution of the board of directors with September 30 as the basic payment date, while the year-end dividend is decided at the General Shareholders’ Meeting.

Financial Section

200 150 100 50 0

184.5

196.8

194.3

(%)

26 24

21.9 20.7 20.1

22 20 18

FY2008

FY2009

FY2010

R&D expenses

Ratio of R&D expenses to net sales

Financial Position R&D Activities
R&D costs in fiscal 2010 totaled ¥194.3 billion, down 1.3% from fiscal 2009. The ratio of R&D expenses to net sales was 20.1%. The progress of R&D activities in the segments is described below. Daiichi Sankyo Group Segment The Daiichi Sankyo Group segment has designated oncology and cardiovascular metabolics as its key research areas, and is working to enhance the R&D pipeline in these areas. As part of the segment’s strategy to reinforce its oncology business, the acquisition of Plexxikon Inc., which boasts impressive research technology and promising products in development, was completed in April 2011. In addition, the segment began Phase III trials globally (excluding Japan, China, South Korea and Taiwan) of the c-Met inhibitor ARQ 197 being developed jointly with ArQule, Inc., for the treatment of non-squamous, non-small cell lung cancer. The segment acquired the rights to develop and market the antiRANKL antibody denosumab from U.S.-based Amgen, Inc., and in August 2010 the segment filed for approval in Japan to manufacture and market this drug for the treatment of bone lesions caused by As of March 31, 2011, total assets amounted to ¥1,480.2 billion, down ¥9.3 billion from the previous fiscal year-end. Within total assets, current assets were up ¥74.3 billion, or 9.1%, to ¥894.1 billion, while fixed assets were down ¥83.6 billion, or 12.5%, to ¥586.2 billion. Total assets declined slightly from the previous fiscal year-end as a result of a decline in net unrealized gains on investment securities due to the lagging financial markets. Current liabilities rose ¥38.1 billion, or 14.2%, to ¥307.0 billion, while long-term liabilities fell ¥45.6 billion, or 13.8%, to ¥285.6 billion. Net assets at March 31, 2011 amounted to ¥887.7 billion, down ¥1.8 billion, or 0.2%, from the previous fiscal year-end. Net assets per share were ¥1,206.1, down ¥9.5. While the Group did post net income in fiscal 2010, it was down slightly as a result of the payment of dividends per its policy of returning profits to shareholders and a decline in accumulated other comprehensive income. As a result, return on equity (ROE) was 8.2%.

39

Financial Section

Total Assets
(¥ billion)

1,500 1,480 1,460 1,440 1,420 1,400

1,494.6

1,489.5

1,480.2

debt as the result of loans taken out in fiscal 2010 for the redemption of Ranbaxy’s convertible bond-type bonds with subscription rights to shares. Consequently, cash and cash equivalents at March 31, 2011 amounted to ¥302.4 billion, up ¥43.2 billion from the previous fiscal year-end.
Cash Flow Highlight
FY2008 FY2009 (¥ billion) FY2010

Net cash provided by operating activities
FY2008 FY2009 FY2010
Total assets

78.4 98.1 (29.1) (266.5) 177.8

130.2 42.6 (89.1) (2.3) 81.4 259.2

141.1 (63.0) (26.0) (9.0) 43.2 302.4

Net cash provided by (used in) investing activities (413.9) Net cash provided by (used in) financing activities Effect of exchange rate changes on cash and cash equivalents

Net Assets and Equity Ratio
(¥ billion) (%)

Net increase (decrease) in cash and cash equivalents Cash and cash equivalents, at end of year

900 880 860 840 820 800

888.6 57.7

889.5 57.4

887.7 57.4

60 58 56 54 52

Outlook for Fiscal 2011*
The Group expects the market environment to remain challenging in fiscal 2011 due to steps being taken around the world to curb healthcare costs. In this environment, the Group will strive to increase revenue with the sustained growth of its flagship product olmesartan in Japan and Europe, despite harsher competition in the U.S., and the launch of new products in Japan, such as Memary, an NMDA receptor antagonist used to treat Alzheimer’s disease, and Nexium, a proton pump inhibitor. However, as a result of a decline in the export of levofloxacin with the expiration of the exclusive period to sell it in the U.S., the return of sales rights in Japan, and lower sales at Ranbaxy, the Group projects its net sales will rise only slightly to ¥970.0 billion, up 0.3% from fiscal 2010. This forecast is based on the assumption of average exchange rates of ¥83 against the U.S. dollar and ¥115 against the euro. The Group anticipates that fiscal 2011 profitability will be negatively affected by such factors as higher promotional expenses for the launch of new products, high R&D expenses, particularly for the direct oral Factor Xa inhibitor edoxaban, and higher costs resulting from the acquisition of Plexxikon Inc. Consequently, the Group forecasts operating income of ¥90.0 billion, down 26.3%. The Group projects a 35.8% decline in net income compared to fiscal 2010, to ¥45.0 billion. While fluctuations in the rupee’s exchange rate against the U.S. dollar led to a foreign exchange gain at Ranbaxy in fiscal 2010, the Group does not anticipate such income in fiscal 2011. In addition, although extraordinary losses resulting from the loss on disaster (estimated to drop to about ¥2.0 billion in fiscal 2011) will decline, tax expenses temporarily decreased in fiscal 2010 as a result of a business reorganization. * As of June 27, 2011

FY2008

FY2009 Net assets

FY2010

50

Equity ratio

Cash Flows
Cash Flows from Operating Activities Net cash provided by operating activities amounted to ¥141.1 billion, an increase of ¥10.9 billion compared with fiscal 2009. The ¥120.4 billion in income before income taxes and minority interests represented an increase of ¥23.0 billion compared with the previous year, while the payment of income taxes increased ¥4.3 billion from the previous year, to ¥34.7 billion. Cash Flows from Investing Activities Net cash used in investing activities amounted to ¥63.0 billion, compared with a net inflow of ¥42.6 billion in fiscal 2009. The outflow amounted to ¥40.1 billion, compared with a net inflow of ¥82.7 billion in fiscal 2009, due to net changes in time deposits and marketable securities resulting from the reorganization of short-term invested assets. Cash Flows from Financing Activities Net cash used in financing activities amounted to ¥26.0 billion, down by ¥63.1 billion compared to the previous fiscal year. In fiscal 2009, there was a ¥39.7 billion net decrease in short-term borrowings, longterm debt and bonds for the repayment and refinancing of short-term borrowings for the acquisition of Ranbaxy. However, the Group had a ¥16.2 billion net increase in short-term borrowings and long-term

40

Annual Report 2011

the Company has established a joint task force comprising management of Ranbaxy and outside experts to take all steps necessary to resolve these issues. In September 2008. raw materials.S. unauthorized disclosure of confidential information. can also adversely affect the outcome of R&D programs. In addition. Every effort is being made to take the appropriate corrective measures. 1) Risks to Business Activities as a Result of Disasters The Group’s business results and financial position could be negatively affected in the event of damage to its plants. The Group’s retirement benefit expenses could increase depending on trends in interest rates. Trends in the Drug Pricing Systems in Japan and Other Countries Japan. Ranbaxy is significantly exposed to exchange rate movements between the Indian rupee and the U. primarily in the U. In addition. In addition. In September 2008. and other related damage resulting from natural disasters such as earthquakes. Meanwhile. the FDA invoked an AIP against the Paonta Sahib facility. illegal or improper actions by officers and employees. market from these two facilities. The DOJ has also indicated some problems with Ranbaxy. In February 2009. there is a possibility that the situation could have an impact on the Group’s business plans and performance. lawsuits and other challenges to Group-owned intellectual property could become more prevalent. If the resolution of this issue becomes protracted or the FDA imposes any additional restrictions on Ranbaxy. 3. during which time there is an ever-present risk that R&D activities on a particular compound may be terminated due to failure to demonstrate the expected clinical efficacy. and there is a possibility that they may differ from actual results due to known or unknown risks. 8) Intellectual Property Risk Business activities of the Group could be subject to the risk of termination or dispute in the event of an infringement of the patents or other intellectual property rights of other parties. Corporate Alliance Risks Research and development of new drug candidates is a costly process that requires many years to complete successfully. its relations with drug approval regulatory authorities worldwide.S. In February 2009.S. if drug candidates do not demonstrate expected results in the course of clinical trials or if any doubts remain concerning the drug candidates’ safety. current good manufacturing practices and placed a ban on the importation of any products for the U. Under the direction of top management. the synergies the Company anticipates realizing from the acquisition of shares in Ranbaxy could fail to materialize if obstacles arise that prevent the full implementation of Ranbaxy’s original business plans due to changes in the operating environment or the competitive status of Ranbaxy. infringement of the intellectual property rights of the Group by third parties could lead to litigation and other legal action by the Group to protect such rights. In addition. 9) Environmental Risk Certain chemicals used in research and manufacturing include substances that have a potentially harmful impact on human health and natural ecosystems. Decisions by regulatory authorities concerning these products under development may have an impact on future business performance. Any judgment that Group operations pose a risk of serious environmental impact in terms of soil contamination.S. there is a potential adverse effect on the Group’s business plans. for the treatment of patients with acute coronary syndromes (ACS) undergoing percutaneous coronary intervention (PCI).S. fluctuations in foreign currency exchange rates could have an adverse financial impact on the Group. In April 2011. Financial Section 41 . Sales trends for this product are believed to have a major impact on the business performance of the Group. the EU and other countries and markets have in some cases established pricing standards or official prices for drug products. then the development periods may be extended or development itself may be interrupted or canceled. product liability. In turn. Under any of these circumstances. or its legal and regulatory compliance status in these countries. and other factors. suspension or termination of their manufacturing or supply activities for any reason could have a material impact on the Group’s business results and financial position. 1.Factors That Could Have a Major Impact on Business Performance Forward-looking statements express the Company’s judgement as of June 27. such as lawsuits related to drug side effects. The Group conducts business. sales of Effient/Efient have already begun in Europe and the U. accidents at a nuclear power plant. Department of Justice (DOJ) has also indicated some problems with Ranbaxy. damage to social infrastructure such as a prolonged power interruption. Ltd. issued a warning letter stating that Ranbaxy’s production facilities in India at Paonta Sahib and Dewas were in violation of U.S. the U. Manufacture of pharmaceuticals in Japan is subject to strict regulations as stipulated in the Pharmaceuticals Affairs Law and other relevant laws and regulations. Accordingly. current good manufacturing practices and placed a ban on the importation of any products for the U. the Group’s performance in these markets could be adversely affected by legal and regulatory trends. the Food and Drug Administration (FDA) in the U. requiring the facility where the relevant data was obtained to re-apply for approval or to withdraw the application. offices and other facilities. floods and torrential rains or from man-made calamities such as accidents. The U.S. sales. uncertainties. market from these two facilities. An AIP is invoked when questions arise concerning the integrity and reliability of data in drug applications. the launch of any new product may not generate sales and profits commensurate with the investment in its research and development. due to the ongoing growth in the use of generic products in developed country markets. or its legal and regulatory compliance status in these countries. issued a warning letter stating that Ranbaxy’s production facilities in India at Paonta Sahib and Dewas were in violation of U. changes in stock prices and interest rates. edoxaban was approved for manufacture and sale in Japan under the product name Lixiana for use in preventing venous thromboembolism (VTE) in patients who have undergone orthopedic surgery on the lower extremities. However. Any changes in the terms of sales or technology transfer agreements. it also depends on specific suppliers for some finished products. Even if clinical trials obtain good results. including production. on a global basis. and there is a possibility that such eventualities could have a major effect on business performance. In particular. 7) Legal and Regulatory Risks Such as Limits on Medical Expenditures Prescription drugs in Japan are subject to a variety of laws. due to the increasing use of generic products in developed countries. These products will also require the investment of considerable funds before they are marketed. the resulting outcome could have a material impact on the Group’s business results and financial position. Currently. Similarly. or the cancellation thereof.” Ranbaxy is expected to play an important role in the Group’s business strategy. Trends in R&D Activities and Licensing Activities The Group is moving forward with global R&D and licensing activities aimed at achieving a steady stream of successful new products and growing sales. interruption of the Group’s computer systems due to a network-transmitted virus or other causes. Any quality assurance problem that necessitated a product recall could have an adverse effect on the Group’s business results and financial position. Business Risks The following section provides an overview of the principal risks that could negatively affect the business results and financial position of the Group.S. this could have a negative impact on the Group’s business results and financial position. the FDA invoked its Application Integrity Policy (AIP) against the Paonta Sahib facility. requiring the facility where the relevant data was obtained to re-apply for approval or to withdraw the application. wars. 11) Other Risks In addition to the risks noted above. 2011. or labor disputes. 2) Manufacturing and Procurement Risk While the Group manufactures some of its products at its own production facilities using proprietary technologies. An AIP is invoked when questions arise concerning the integrity and reliability of data in drug applications. Under these circumstances. Delay. 10) Litigation-Related Risk Besides potential antitrust issues.S. regulations. most notably NHI price revisions. the Group could also face other forms of litigation concerning its business activities. 2. dollar. The Group is moving forward with a global clinical development program for an indication of edoxaban for preventing strokes in atrial fibrillation (AF) patients and global phase III trials for its use in preventing VTE. the entry of generic products into a sector following the expiration of a patent. import. cessation or interruption of business activities. In particular.S. and Europe. any changes in the terms of an agreement related to R&D-related alliances with third parties. which could exert a negative effect on the value of earnings derived from Ranbaxy’s business and fund management operations. funding procurement risk. and export activities. and ordinances. These regulatory actions could exert a significantly adverse impact on the Group. the FDA in the U. 5) Research and Development. and production intermediates. The goal is to increase global sales of olmesartan to ¥300 billion within the period covered by the Second Mid-Term Business Management Plan. results and financial position. However. Phase III clinical trials to obtain approval for the additional indication of ACS in patients not undergoing PCI have been underway since June 2008. 6) Product Sales-Related Risks Such as Side Effects and Competing Products The emergence of unanticipated side effects of a drug. and governments can regulate and protect these prices and standards. 3) Risks Related to Operations of Ranbaxy The entry of Ranbaxy into the Group represents a hybrid business model as part of ongoing efforts to become a “Global Pharma Innovator. it could have an impact on business performance. Of these. the task force is cooperating fully with the FDA and the DOJ to resolve these issues with the assistance of Company representatives. and the triple combination Tribenzor and Sevikar HCT. sales of prescription drugs in overseas markets are also subject to various legal and regulatory constraints.S.” The investment in Ranbaxy is expected to play an important role in the Group’s business strategy.. Trends in regulatory measures related to the medical treatment system and national health insurance. 4. there is a possibility that changes in these regulatory or protection systems could have an effect on the Group’s business performance. if the investment required exceeds projections. while also encouraging collaboration and synergies between Daiichi Sankyo and Ranbaxy. 2011. could have a negative impact on the Group’s business results and financial position. changes to the regulatory approval criteria during development may result in failure to gain drug approval. terrorism and fires. air pollution or water pollution could adversely affect the Group’s business results and financial position. its relations with drug approval regulatory authorities worldwide. with high expectations for products under global development such as the antiplatelet agent Effient/Efient and the direct oral Factor Xa inhibitor edoxaban. Any forward-looking statements or projections contained in this overview represent the best judgment of management of the Group (Daiichi Sankyo Co. 4) Financial Markets and Currency Fluctuation Risks Declining share prices could lead to write-downs or losses on sale of stock owned by the Group. Such developments could have an adverse effect on the Group’s business results and financial position. Nevertheless. or the expiration or cancellation thereof. such as deep vein thrombosis (DVT) and pulmonary embolisms (PE). Conversely. and various other factors of a similar nature. the synergies anticipated by the Company by the acquisition of shares in Ranbaxy could fail to be realized if obstacles arise preventing the full implementation of Ranbaxy’s original business plans due to changes in the operating environment or the competitive status of Ranbaxy. the Group is striving to efficiently invest in R&D with due consideration for revenue trends and other factors. In either case. or the introduction of competing products within the same therapeutic field could reduce sales and negatively affect the Group’s business results and financial position. Trends in Sales of Important Products The Group has positioned the antihypertensive olmesartan franchise as a global strategic product and is pursuing further expansion by quickly developing the sales of Rezaltas (a combination drug integrating the ARB olmesartan with the calcium channel blocker azelnidipine) in the Japanese market. this could have an adverse impact on the firm’s medium-to-long-term business prospects.. research facilities. could adversely affect the Group’s business results and financial position. and foreign exchange movements could therefore have a material impact on the Group’s business results and financial position. could also have a material impact on the Group’s business results and financial position. Trends in Ranbaxy’s Business Operations The inclusion of Ranbaxy in the Group represents a step forward in the Group’s effort to leverage its hybrid business model to become a “Global Pharma Innovator. and its consolidated subsidiaries) as of the end of the fiscal year ended March 31.

510 20.427.747 10.417 73.198.735 (5.599 732.081.320 million ($27.449.245 38.289 458.157.084 1.404 420.771.540 22.087.866 (512. Plant and Equipment (Notes 7 and 11): Land Buildings and structures Machinery.654 203.668 million in 2011 and 2010.270 142.899. LIMITED and Consolidated Subsidiaries March 31.320) 249.253 $17.940 882.480.370 (494.759) 2.193 248.660) 237. respectively Inventories (Note 6) Deferred tax assets (Note 10) Other current assets Total current assets 2011 2010 2011 ¥ 262.043 81. 2011 and 2010 Thousands of U.735 3.619 322.455 ¥1.792 348.407 304.510 1.997 236.834.Financial Section Consolidated Balance Sheets DAIICHI SANKYO COMPANY.546 462.823.206 ¥1.233.038 157. 102.863.226 86.710 42.712 1. net of allowance of ¥2.217 42 Annual Report 2011 .489.758 $ 3. plant and equipment 38. 4 and 5) Trade notes and accounts receivable.240 137. equipment and vehicles Other Construction in progress Accumulated depreciation Net property.295 761.446 2.181 8.221 143.518 18.036 1.802 819.541 210.831 4.720.952 thousand) and ¥1.700 372.386 1.484 1.370 367.792 90. dollars (Note 1) Millions of yen ASSETS Current Assets: Cash and deposits (Note 3) Marketable securities (Notes 3.482 2.959.988 Property.108 4.759 201.075 ¥ 100.971 41.976 Investments and Other Assets (Notes 7 and 15): Investment securities (Notes 4 and 5) Deferred tax assets (Note 10) Other Total investments and other assets Total assets See accompanying notes.246 172.076 894.667.S.

057.S.011.410 1.390 12.154 887.544 35.699 423.904 1.240 27.000.643 74.019 4.410 139.139.386 (1.048 1.614 (175.888 50.246 306.141 60.241 42.698.537 100.000 Financial Section 50.190 600.007.747 16.398 9.506 889.867 342.834.000 — 124.036.217 43 .800.783 7.566) 887.036 11.275 (14.314) 3.541 155 28.508 ¥1.000 49.518 14.560 1.489.295 30.217 100.022. dollars (Note 1) LIABILITIES AND NET ASSETS Current Liabilities: Short-term bank loans (Note 8) Long-term debt due within one year (Notes 4 and 8) Current portion of convertible bond-type bonds with subscription rights to shares (Note 4) Trade notes and accounts payable Income taxes payable (Note 10) Accrued expenses Other current liabilities (Notes 10) Total current liabilities Long-Term Liabilities: Bonds payable (Note 4) Convertible bond-type bonds with subscription rights to shares (Notes 4 and 9) Long-term debt (Notes 4 and 8) Accrued employees’ severance and retirement benefits (Note 12) Accrued directors’ severance and retirement benefits Deferred tax liabilities (Note 10) Other long-term liabilities Total long-term liabilities Total liabilities Commitments and Contingencies (Note 14) Net Assets (Note 13): Common stock: Authorized—2.779) (31.194 (83. 2011 2010 2011 ¥ 25.819 — 1.637) (65.000 shares in 2011 and 2010 Issued—709.343 shares in 2011 and 2010 Capital surplus Retained earnings Treasury stock.510 199.393 (14.711 90.217 $17.377 10.009 50.021 602.440.277 554.969 — 103.790 7.883) 3.545 86.204.000 105.194 774.267.020 87.328.581) 914.575 331.462 1.812 $ 311.463 21.928 257.458 1.373 3.771) 42.703 ¥1.585 592.480.003 (59.542 10.675) (793.675) 11.833 3.494.509 46.390 285.194 746.002 1.711 3.320 132 29.000 105.253 605. at cost Shareholders’ equity Accumulated other comprehensive income Net unrealized gain on investment securities Deferred gains or losses on hedges Foreign currency translation adjustment Total accumulated other comprehensive income Subscription rights to shares (Note 18) Minority interests Total net assets Total liabilities and net assets See accompanying notes.663 268.952 ¥ 15.Millions of yen Thousands of U.695.238 18.535 121.

450.735) (40.120 172.466) 2.239 124 (3.509 6.090) 13.169) (67.419 27.831 $ U.483 14.863 97.892) (2.144 6.00 ¥ (304.811 2.597 95.191 (5.578) (2.690) 2.566 947.106 278.422 18.763 196.627 (66.Financial Section Consolidated Statements of Operations DAIICHI SANKYO COMPANY.031 381. 2011.678 369.594 47.501) (17.356 (5.471.821) (1.952) — (25.213 194.488) — (354.494) 134.803 856.00 ¥ 59.325 (33.233) — (393) (3.221 122.783) 1.20 0.452) (3. 2010 and 2009 Thousands of U.390) (3.305) (3.00 $ 1.711 4.241 (108.147 214.831 331.852 Yen ¥ 842.720) 17.334) (5. ¥ 99.725) 120.591 ¥(215.081) 8.448.397 354.000 3.121) (489) (203) (3. plant and equipment Loss on impairment of long-lived assets (Note 11) Loss on valuation of investment securities Loss on disaster (Note 11) Amortization of goodwill (one-time amortization) (Note 11) Non-recurring depreciation on non-current assets (Note 11) Restructuring loss (Note 11) Loss on penalty Other.263) 29.775 (5.414) (229.330 845.340 184.060) (77.024) 106.446) (46.42 60. dollars (Note 1) Millions of yen 2011 2010 2009 2011 Net Sales (Note 16) Costs and Expenses (Note 16): Cost of sales Selling.341.386 1.217) (397.948 1.72 44 Annual Report 2011 . plant and equipment Gain on sales of investment securities Loss on disposal of property.62 99.S.874 (1.183.103) (82) — — (261) (2.52 60.519) 11.871 9.614 81.22) — 80. net Income (Loss) before Income Taxes and Minority Interests Income Taxes (Note 10): Income taxes–current Income taxes–deferred Income (Loss) before Minority Interests Minority Interests in Net Loss (Income) of Consolidated Subsidiaries Net Income (Loss) ¥ 967.325 10. LIMITED and Consolidated Subsidiaries Years ended March 31.656) (2.744) (6.539 753. dollars (Note 1) Amounts per Share of Common Stock (Note 2): Net income (loss) Diluted net income Cash dividends applicable to the year See accompanying notes.365 281.161 (1.544) (671) 1.504) ¥ 41.475 (1. general and administrative expenses Research and development expenses Operating Income (Note 16) Other Income (Expenses): Interest and dividend income Interest expense Derivative gain (loss) Foreign exchange losses Gain on sale of property.S.062) (1.45 59.499) $11.155 (10.036) (20.350 2.145 (102.554) (5.393.917) (20.613 (8.372 31.276 88.314) 844.157 35.134) (308.121 ¥952.470 (13.640) — (2.323 78.932 (2.20 1.655.492) ¥ 70.

528 4.120) (466.422 428.000) (4.723) ¥ — — — ¥ — — — $ 480.347 ¥ — — — — — — ¥ — — — — — — $ 947.613 (11.048 52.738) ¥ 39.145 (139. 2010 and 2009 Thousands of U.141) (342) (38. ¥ 78. dollars (Note 1) Millions of yen 2011 2010 2009 2011 Income before Minority Interest Other Comprehensive income (Note 19) Valuation difference on available-for-sale securities Deferred gains or losses on hedges Foreign currency translation adjustment Share of other comprehensive income of associates accounted for using equity method Total other comprehensive income Comprehensive Income (Note 19) Comprehensive income attributable to: Comprehensive income attributable to owners of the parent Comprehensive income attributable to minority interests See accompanying notes.557) 302 (27.241) 3.Consolidated Statements of Comprehensive Income DAIICHI SANKYO COMPANY. LIMITED and Consolidated Subsidiaries Years ended March 31.S.638 (327.875 35. 2011.374 Financial Section 45 .

662) — — — — — (1.011 — — — — — — — — ¥ 16.275 — — — (15) — — ¥ (14.856) — — — — — $330.132 — ¥ 2.544 ¥ 35.267.302 $(720.229) — — — — — $39.779) — — — — — (23.011 See accompanying notes.508 — — (4) — — 70. 2011 735.393 ¥ (14.675) — (287.398 $8.121 — — (42.000 56.322) (1.852 (49.699 — — — — — $367.410 $1.902) — — 191 — — (8. 2010 709.154 ¥ 887.518 $12.104) — — — ¥ (51. 2008 Effect of changes in accounting policies applied to foreign subsidiaries Loss on sale of treasury stock Retirement of treasury stock Net loss Cash dividends (¥75.00 per share) Changes in net unrealized holding gain on securities Deferred gains or losses on hedges Change in translation adjustments of foreign currency financial statements Changes in treasury stock Issuance of subscription rights to shares Changes in minority interests Balance at March 31.104) — 28.411) — — — ¥ (59.S.000 — — — — — — — — — — ¥ 50.617 — (5) — — — — — — 41.637) ¥ 258 — — — — — — — — ¥ 378 ¥1.542 $10.657) — — — — — ¥ 19.275) 7.716.398 — — — — — — — — — $1.410 — — — — — — — — — $602.852 (49.648 ¥ 3.863 ¥1.614 $(175.00 per share) Changes in net unrealized holding gain on securities Deferred gains or losses on hedges Change in translation adjustments of foreign currency financial statements Changes in treasury stock Issuance of subscription rights to shares Changes in minority interests Balance at March 31.494) (48) — 844.194 (5) 41.499) (53.145 — (7) (74.856) — — (131. at cost Total net assets Balance at March 31.579 926 709.00 per share) Change in scope of equity method Changes in net unrealized holding gain on securities Deferred gains or losses on hedges Change in translation adjustments of foreign currency financial statements Changes in treasury stock Issuance of subscription rights to shares Changes in minority interests Balance at March 31.867 — — — (131.513 — — — — — — — — (1.831 — (508.542 $10.121 — (42.902) 191 709.648 4. 2011. investment losses on translation rights to Minority at cost securities hedges adjustment shares interests Total net assets Balance at March 31. 2010 Loss on sale of treasury stock Net income Cash dividends (¥60.322) (1.295 ¥ 30.264) — — — — — — — — (35.851 — — ¥ (14.858) — — (15) 249 — 249 — 4.025.176 ¥ 888.235) — — — — — — — ¥ 774.964 — (48) — 844.798 ¥ 23.566) (4) — 70.365) (7) (74.000 56. dollars (Note 1) Net unrealized Deferred Foreign Treasury gain on gains or currency Subscription stock.007. 2010 and 2009 Millions of yen Number of shares of common stock Common (Thousands) stock Net unrealized gain on investment securities Deferred Foreign gains or currency Subscription losses on translation rights to Minority hedges adjustment shares interests Capital surplus Retained earnings Treasury stock.235) — — — — (10.858) — — — ¥ (83.Financial Section Consolidated Statements of Changes in Net Assets DAIICHI SANKYO COMPANY.011 — — — (10) — — — — ¥ 746. LIMITED and Consolidated Subsidiaries Years ended March 31.000 — — — — — — — — — ¥ 50.011 — — — — — — — — ¥ 105.687 $(175.132 22.330 ¥ 3.328.390 — — — — — — — (35.368) — — — — — — (8.349) — — — — — $199.506 ¥ 889.000 ¥ 179.499) (53.992.446) — — — — — — 3.011 Loss on sale of treasury stock Net income Cash dividends ($0.540 — — — — — — (28.275) — — ¥ — — 2.011 ¥ 50.407) — — — — — — — — — 28.851 — 2.560 ¥ 1.217 46 Annual Report 2011 .411) — — (10) 905 — 905 — 7.386 $(1.556) — — — — — — ¥ 48.703 Number of shares of common stock Common (Thousands) stock Capital surplus Retained earnings Thousands of U.138) — — ¥ (43.365) — — (215.194 ¥ 753.831 — (508.675) $42.349) 2.003 — — — — — — (10.581) — — — — — — — — ¥ 27.000 — — — $14.446) — (181) — 3. 2011 709.72 per share) Changes in net unrealized holding gain on securities Deferred gains or losses on hedges Change in translation adjustments of foreign currency financial statements Changes in treasury stock Issuance of subscription rights to shares Changes in minority interests Balance at March 31.084 — — — — 2.462 ¥ 1.244. 2009 Loss on sale of treasury stock Transfer of loss on sale of treasury stock Net income Cash dividends (¥70.194 — — — — — — — — — ¥ 105.695.267.699 — (287.798 22.194 — — (23.579 — ¥ — — — — — — — — 77 — — — — 77 — — — — — 926 ¥ (16.883 — — — — 7.662) (215.138) (28.302 — — — (181) — — — — $9.657) 77 709.330 7.000 $423. $602.821 (5) — 5 — — — — — — — — ¥ 105.000 — — — — — — — — — — — — ¥ 50.

187 259.358) 36.032 7.831 43.129) (266.806) 6.642 1.139 (78.356) (2.257) (177) (89.474 (134.807) 2.791 (1.771 (35.707 (649) (58.301) (86.863 157.867) (418.871) 4.470) 10.084 (506) 1.965) 13.507 (16.103 261 8.410 Financial Section 47 . plant and equipment Proceeds from sales of property.326 3.304 173.Consolidated Statements of Cash Flows DAIICHI SANKYO COMPANY.883 (17.623.826 (28.975 (99) (428) 39 170 42.000) 1.456) 48.383 (25.060 (388.843 (34.760 20.268 (191) — (45.770 529.739) 141.155) 601 1.783) 107.446) 2.066 213 4.772) 111.084) (60. net Net cash provided by (used in) investing activities Cash Flows from Financing Activities: Net increase (decrease) in short–term bank loans Proceeds from long–term debt Repayments of long–term debt Proceeds from issuance of bonds Purchases of treasury stock Proceeds from sale of treasury stock Dividends paid Other.121) (2.775) 5.436 3.292) (152) 98.735 86.465 (2.742) 2.232 14.145) (5.181 (19.530) 1.045) 8.943 2.933 9.588 (32.241 1.519 (36) 3.796) (12.700.398 (337) 12 (22.607 (1.832 (4.494 (434) 42.012) (108.501 (208) 888 1.007) 43.894) (34.770 — ¥ 259.542) 444. Beginning of Year Decrease in Cash and Cash Equivalents due to Changes in Scope of Consolidation Cash and Cash Equivalents.458) 67.325) (9.859 (28) 1 (1.807 (57.932) (815) (6.980) (9.048 2.852) 196. LIMITED and Consolidated Subsidiaries Years ended March 31.437 6.190 (51.413) 130.550 (2.904) — (422) 24 (509.644) (30.000) 2. net Subtotal Interest and dividends received Interest paid Income taxes paid Net cash provided by operating activities Cash Flows from Investing Activities: Purchases of time deposits Proceeds from maturities in time deposits Purchases of marketable securities Proceeds from sales of marketable securities Acquisitions of property.883) (1. Millions of yen 2010 2009 ¥(308.554 110.252) 31 8.946 (24.255) 5.S.103 (9.179 (413.084 6.072) (308) 3.161) 837 558 2.608) 78.808 (124) 16 1.748 (313.735 25.061) (1.367) 127.720 (2.287) (6.723 27.518) 520.921 8.946 6.643.874) (1.007) 128.470 (945.121 9.216 — ¥ 302. plant and equipment Acquisitions of intangible assets Acquisitions of investment securities Proceeds from sales of investment securities Acquisitions of investments in subsidiaries Acquisition of investments in newly consolidated subsidiaries (Note 3) Proceeds from sales of investments in consolidated subsidiaries resulting in changes in scope of consolidation Net (increase) decrease in short-term loans receivable Payment for loans receivable Proceeds from collection of loans receivable Other.499) (14.687 (81.582 3.450. 2011.036 65.279 — (411.991 (120. net Net cash provided by (used in) financing activities Effect of Exchange Rate Changes on Cash and Cash Equivalents Net Increase (Decrease) in Cash and Cash Equivalents Cash and Cash Equivalents.263) ¥ 120.753) 124.411 1.056 (29.419 ¥ 97. dollars (Note 1) 2011 2011 Cash Flows from Operating Activities: Income (loss) before income taxes and minority interests Adjustments to reconcile income (loss) before income taxes and minority interests to net cash provided by operating activities: Depreciation Loss on impairment of long–lived assets Non–recurring depreciation on non–current assets Amortization of goodwill Derivative (gain) loss Increase (decrease) in allowance for doubtful accounts Increase in accrued retirement and severance benefits Decrease in prepaid pension costs Interest and dividend income Interest expense Foreign exchange (gains) losses Loss on valuation of investment securities Gain on sales of investment securities (Gain) loss on sales of investments in affiliates (Gain) loss on sales and disposal of property.447) 1.025) 8. at End of Year (Note 3) See accompanying notes.867 (17.436) (7.123.205 (4.098) (758.247) 145 (25.297) 81.403 45.637) 342 (1.554) 121.563 (2.672) 169.627) 66.922 10.916 (23.062 3.088.253) 584.084 — $ 3.783) (12.335 (23) ¥ 177.747) 6.349) 105.216 40.149 (11.688 (29) 6 (49.628 (246.834) (62.236 26.452 2.756 7.120) (99.372 $ 1.298 (6.919) (8.806) — (35) 2 (42.191) 5.229 (134.614) 165.650 (2.976 22.307 5.470 77.482 (46.482 100. 2010 and 2009 Thousands of U.501.067) 2.645 (1.031 (6.024 (1.233 371.236 (31.096) 31.250) 10.261 (3. plant and equipment Equity in net losses of affiliated companies (Increase) decrease in trade notes and accounts receivable Increase in inventories Increase (decrease) in trade notes and accounts payable Increase in accounts payable and accrued expenses Other.292) 176 (15.542) 1.446 177.847) 29 (53.412) 99.819) (73.083 (3.

net of applicable income taxes. in principle. currency swaps. (c) equity securities issued by subsidiaries and affiliated companies. and call options on specific stocks. and interest rates. stated at market value. but not required for fair presentation. could have been. interest-rate swaps. the accounts of overseas consolidated subsidiaries are prepared in accordance with either International Financial Reporting Standards or U. Derivative transactions Derivatives are. readily available bank deposits. Basis of Presenting Consolidated Financial Statements The accompanying consolidated financial statements of DAIICHI SANKYO COMPANY. are reported as a separate component of net assets. 2011. The translation of the Japanese yen amounts into U. These translations should not be construed as representations that the Japanese yen amounts have been. which was ¥83 to U. such as forward foreign exchange contracts. As discussed in Note 2. excluding insignificant subsidiaries (“the Companies”). Equity securities issued by subsidiaries and affiliated companies that are not consolidated or accounted for by the equity method are stated at the moving-average cost. to the 20 to 50% owned affiliated companies whereby the Company has the ability to exercise significant influence over the operational and financial policies of a company and to certain immaterial subsidiaries not consolidated. “held-to-maturity debt securities”). Available-for-sale securities with available fair market value are stated at fair market value. The Companies have no trading securities. which are different in certain respects as to application and disclosure requirements from International Financial Reporting Standards.S. in order to manage the risk arising from fluctuation in foreign currency exchange rates. “available-for-sale securities”). using the prevailing exchange rate at March 31. (b) debt securities intended to be held to maturity (hereafter. Held-to-maturity debt securities are stated at amortized cost. is amortized equally over the estimated effective period not exceeding 20 years. which is the difference between the investment and the net assets of the subsidiary. converted into U. is not presented in the accompanying consolidated financial statements. with minor exception. or could in the future be. and in conformity with accounting principles generally accepted in Japan (“Japanese GAAP”). LIMITED (“the Company”) and its consolidated subsidiaries have been prepared in accordance with the provisions set forth in Japan’s Financial Instruments and Exchange Act and its related accounting regulations. Unrealized gains and unrealized losses on these securities. 2. transactions and profits have been eliminated. generally accepted accounting principles. All significant intercompany balances. 2010 and 2009 1. the Companies classify cash on hand. Interest-rate swaps and currency swaps are utilized to manage interest-rate risk and risks arising from fluctuation in foreign currency exchange rates on debts. The Company and certain consolidated subsidiaries enter into derivative agreements. stock prices.Financial Section Notes to Consolidated Financial Statements DAIICHI SANKYO COMPANY. The accompanying consolidated financial statements have been restructured and translated into English from the consolidated financial statements of the Company prepared in accordance with Japanese GAAP and filed with the appropriate Local Finance Bureau of Japan’s Ministry of Finance as required by the Financial Instruments and Exchange Act. Marketable securities and investment securities The Companies examine the intent of holding each security and classify those securities as (a) securities held for trading purposes (hereafter. Call options on specific stocks are utilized to avoid the risk of fluctuation in stock prices related to stock appreciation rights. The equity method is applied. Cash and cash equivalents and statements of cash flows For the purpose of the consolidated statements of cash flows. dollars is included solely for the convenience of readers outside Japan. The goodwill. dollars at this or any other rate of exchange. Realized gains or losses on the sale of such securities are computed using the moving-average cost method. and short-term. $1. Forward foreign exchange contracts and currency options are utilized to hedge risks arising from changes in foreign currency exchange rates in relation to imports and exports.S. 2011. 48 Annual Report 2011 .S. and (d) all other securities that are not classified in any of the above categories (hereafter. Certain supplementary information included in the statutory Japanese-language consolidated financial statements. with adjustments for the specified six items as applicable. Summary of Significant Accounting Policies Consolidation and investments in affiliated companies The consolidated financial statements include the accounts of the Company and its subsidiaries. The Company and its consolidated subsidiaries do not enter into derivative transactions for speculative trading purposes. highly liquid investments that bear insignificant risk of changes in value and have maturities that are within three months from the date of acquisition as cash and cash equivalents.S. LIMITED and Consolidated Subsidiaries Years ended March 31. “trading securities”). currency options.

1998 by the Company and its domestic consolidated subsidiaries is computed by the straight-line method. Such benefits are calculated based on the established guidelines. starting in the year after the fiscal year in which accumulated depreciation based on the pre-revision method reached 95% of the acquisition costs. Assets and liabilities of overseas subsidiaries are translated into Japanese yen at the exchange rates at the balance sheet date of the overseas subsidiaries. as the conditions of these transactions are principally the same. The Company and those of its consolidated subsidiaries that have derivatives positions have also developed hedging policies to control various aspects of these transactions. However. Payment of such benefits is subject to approval at the shareholders’ meeting. net assets accounts at historical rates. plant and equipment Depreciation of property. Certain domestic consolidated subsidiaries have retirement benefits programs for directors and corporate statutory auditors. depreciation of property. Forward foreign exchange contracts that meet hedging criteria are accounted for by the allocation method. and from 4 to 8 years for machinery. The Company and its domestic consolidated subsidiaries depreciate the amounts of the differences between 5% of the acquisition costs and memorandum prices for all tangible fixed assets acquired on or before March 31. Inventories Inventories held for sales in the ordinary course of business are accounted for at the lower of weighted-average cost or net realizable value. Property. The resulting foreign currency translation adjustment is reported as a separate component of net assets. Prior service costs are principally amortized over 12 months. and actuarial gains and losses are principally amortized by a straight-line method over 10 years. equipment and vehicles. and expenses and income at average rates of exchange during the year. plant and equipment is computed principally by the straightline method. including establishing authorization levels and limits of transaction volumes. the effectiveness of the forward foreign exchange contracts of the Company as hedges has not been assessed. Replacement cost may be used in lieu of the net realizable value. 2007 in equal amounts over five years. The range of useful lives was from 15 to 50 years for buildings and structures. Depreciation of buildings (other than structures attached to the buildings) acquired on and after April 1.Deferred hedge accounting is basically adopted. if appropriate. plant and equipment (except for certain buildings) is computed principally by the declining-balance method based on the estimated useful lives of the respective assets as to the Company and its domestic consolidated subsidiaries. Directors’ and corporate auditors’ bonuses Directors’ and Corporate Auditors’ bonuses are expensed as incurred on an accrual basis. Financial Section 49 . Research and development Research and development expenses are charged to income when incurred. The allocation method requires that recognized foreign currency receivables or payables be translated at the underlying exchange rates in the corresponding forward foreign exchange contracts. Foreign currency translation Monetary assets and liabilities denominated in foreign currencies are translated into Japanese yen at the exchange rates prevailing at the balance sheet date with the resulting gain or loss included in the current statements of operations. The effectiveness of hedges is generally measured by comparing the cumulative change in the fair value of the hedge item with the cumulative change in the fair value of the hedged subject. Retirement benefits covering all employees of the Company and domestic consolidated subsidiaries are basically provided by the Group-wide retirement benefit arrangement comprised of a defined benefit pension plan and a defined contribution pension fund. Accrued severance and retirement benefits The accrued employees’ severance and retirement benefits at year-end is provided based on the estimated amounts of projected benefit obligation and the fair value of the plan assets at the balance sheet date. For overseas consolidated subsidiaries.

allows a parent company to prepare consolidated financial statements using foreign subsidiaries’ financial statements prepared in accordance with either International Financial Reporting Standards or U. 2009. 2007). 10. 1993 and later revised on March 30. 13: originally published by the First Subcommittee of the Business Accounting Council on June 17. be unified for the preparation of the consolidated financial statements. 18. the Company and its domestic consolidated subsidiaries have adopted the provisions of “Partial Amendments to Accounting Standard for Retirement Benefits (Part 3)” (ASBJ Statement No. 2008 continue to be accounted for as operating leases. Finance leases not transferring ownership are capitalized and depreciated over the estimated useful lives or lease terms. the Company has adopted PITF No. PITF No. Revised Accounting Standard for Financial Instruments and its implementation Guidance on Disclosures about Fair Value of Financial Instruments Effective from the fiscal year ended March 31. and revaluation of property. For diluted net income per share. 2008. Cash dividends per share are presented on an accrual basis and include dividends to be approved after the balance sheet date. the Company and its domestic consolidated subsidiaries have adopted the revised Accounting Standard “Accounting Standard for Financial Instruments” (ASBJ Statement No. the Company has adopted the “Accounting Standard for Lease Transactions” (ASBJ Statement No. 2010. 19. 2010 required pursuant to the revised accounting standards is described in Note 4.” published by the Accounting Standards Board of Japan (ASBJ) on May 17. The effect of this adoption on income before income taxes and minority interests was immaterial. Information on financial instruments for the year ended March 31. 2008). and intangible assets (e) Retrospective treatment of a change in accounting policies (f ) Accounting for net income attributable to minority interests Implementation Guidance on Determining a Subsidiary and an Affiliate Effective from the fiscal year ended March 31. such leases being effective prior to March 31. This adoption has no effect on operating income or income before income taxes and minority interests. as applicable. 2006. but applicable to the year then ended. 2010. 2008) and the “Guidance on Disclosures about Fair Value of Financial Instruments” (ASBJ Guidance No. plant and equipment. 18 “Practical Solution on Unification of Accounting Policies Applied to Foreign Subsidiaries for Consolidated Financial Statements.S. revised on March 10. 2007) and the “Guidance on Accounting Standard for Lease Transactions” (ASBJ Guidance No. (a) Goodwill not subject to amortization (b) Actuarial gains and losses of defined-benefit retirement plans recognized outside profit or loss (c) Capitalized expenditures for research and development activities (d) Fair value measurement of investment properties. Partial Amendments to Accounting Standard for Retirement Benefits (Part 3) Effective from the fiscal year ended March 31. PITF No. However. 2010. published by the ASBJ on July 31. as a tentative measure. 19). revised on March 10. 1994 and later revised on March 30. the Company has adopted the provisions of “Implementation Guidance on Determining a Subsidiary and an Affiliate” (Implementation Guidance No. published by the ASBJ on May 13. In this case. however. 2009. Amounts per share In computing net income (loss) per share of common stock. the average number of shares issued during each fiscal year is used. both net income and shares outstanding are adjusted to assume the exercise of stock warrants. 2008. 18 requires that accounting policies and procedures applied by a parent company and its subsidiaries to similar transactions and events under similar circumstances should. generally accepted accounting principles. This adoption has no effect on operating income or income before income taxes and minority interests. 50 Annual Report 2011 . adjustments for the following six items are required in the consolidation process so that their impact on net income is accounted for in accordance with Japanese GAAP unless the impact is not material. 16: published by the Accounting Systems Committee of the Japanese Institute of Certified Public Accountants on January 18.Financial Section Accounting for certain lease transactions Effective from the fiscal year ended March 31. Practical Solution on Unification of Accounting Policies Applied to Foreign Subsidiaries Effective from the fiscal year ended March 31. 22). in principle.

2008). These reclassifications have no impact on previously reported results of operations or retained earnings. the “Revised Accounting Standard for Business Divestitures” (ASBJ Statement No. 2009.910 515.770 $3. Accounting Standard for Presentation of Comprehensive Income Effective from the fiscal year ended March 31.638) 1. 7 (Revised 2008) on December 26. 22 on December 26. the Company and its domestic consolidated subsidiaries have adopted the “Accounting Standard for Asset Retirement Obligations” (ASBJ Statement No.438) 89. Information on comprehensive income for the fiscal year ended March 31.491 151. 2008) and the “Guidance on Accounting Standard for Asset Retirement Obligations” (ASBJ Guidance No. 21 on December 26. 2008). the Company has adopted the “Accounting Standard for Business Combinations” (ASBJ Statement No.081. 23 on December 26. the “Revised Accounting Standard for Equity Method of Accounting for Investments” (ASBJ Statement No.387) (46. 21 on March 31.809) 127.489) 6.964 $3. Accounting Standard for Business Combinations and related matters Effective from the fiscal year ended March 31. The effect of this adoption on operating income or income before income taxes and minority interests was immaterial. 2008). 2010).028 ¥177. 2010 and 2009 for the consolidated statements of cash flows consisted of the following: Millions of yen Thousands of U.038 (49.252 51 . Cash and Cash Equivalents Cash and cash equivalents at March 31.157.949 433. 2008) and the “Revised Guidance on Accounting Standard for Business Combinations and Accounting Standard for Business Divestitures (ASBJ Guidance No.410 In the year ended March 31. 2008). 2011. The relationship between the amounts of assets and liabilities of these companies at the beginning of the consolidation period used for consolidation purposes and the acquisition of investments in newly consolidated subsidiaries were as follows: Millions of yen Current assets Non-current assets Goodwill Current liabilities Long-term liabilities Subscription rights to shares Minority interests In-process research and development Purchase price of the subsidiaries Cash and cash equivalents owned by the subsidiaries Acquisition of investments in newly consolidated subsidiaries in 2009 ¥244.551 (25.050 ¥259. dollars 2011 2010 2009 2011 Cash and deposits Less time deposits with maturities extending over three months Add short-term investments with maturities within three months Cash and cash equivalents ¥262. 18 on March 31.997 (22.Accounting Standard for Asset Retirement Obligation Effective from the fiscal year ended March 31. 2008). the Company has adopted the “Accounting Standard for Presentation of Comprehensive Income” (ASBJ Statement No. 2008). 25 on June 30. 2011.216 ¥ 76.803 ¥302.882) (6.403 ¥100. As a result of the adoption of this standard. 2011.134 103. 16 (Revised 2008) on December 26. Financial Section 3.195) (98.831) 181. the Company has presented the consolidated statement of comprehensive income in the consolidated financial statements for fiscal year ended March 31. 2011.643. 10 (Revised 2008) on December 26. the “Accounting Standard for Consolidated Financial Statements” (ASBJ Statement No. 2011. 2010 is described in Note 19.882 ¥411.S. Reclassification Certain prior year amounts have been reclassified to conform to the current year’s presentation. the Company newly consolidated U3 Pharma AG (now U3 Pharma GmbH) and Ranbaxy Laboratories Limited (“Ranbaxy”). the provisions of “Partial amendments to Accounting Standard for Research and Development Costs” (ASBJ Statement No.084 (595.737 (170.

2011. Among them. A part of the payables includes foreign currency payable in relation to imports of raw materials. Financial Instruments (1) Qualitative information on financial instruments (a) Policies for using financial instruments The Companies have obtained short-term bank loans for financing short-term working capital. 52 Annual Report 2011 . the Company manages the mitigation of credit risk.) The Company and certain consolidated subsidiaries principally utilize forward foreign exchange contracts and currency options to hedge the currency rate fluctuation risks arising from changes in each foreign currency exchange rate in relation to foreign currency receivables and payables. and debts. and the maximum period of their maturities is within ten years. the Company deals with selected financial institutions with a high credit rating in order to mitigate the counterparty risk. In terms of marketable securities and investment securities. The Companies have a policy not to enter into derivative transactions for speculative trading purposes. interest-rate swaps. etc. currency options (zero cost option to offset option premium on sell option and on buy option). The Companies have been investing temporary surplus funds in highly-secure financial assets. They include foreign currency convertible bond-type bonds with subscription rights to shares issued and long-term bank loans in foreign currency obtained by the Company’s subsidiary. In principle. payables. (c) Policies and processes for risk management 1) Management of credit risk (risk associated with nonfulfillment of contracts by counterparties) In terms of receivables. the Companies enter into forward foreign exchange contracts to hedge the currency fluctuation risks in relation to foreign currency receivables and payables that are certainly scheduled to be incurred through import/export transactions within one year. The Company and certain consolidated subsidiaries enter into derivative agreements in order to manage the risks described in the following section (b).Financial Section 4. the Company manages credit risk according to its internal credit policy. currency swaps. mainly with bank loans and issuance of unsecured straight bonds. In terms of derivative transactions. Marketable securities and investment securities are principally held-to-maturity debt securities and shares issued by business partners. the Company continuously reviews its stock portfolio. and currency swaps are utilized to hedge risks arising from changes in foreign currency exchange rates applied to foreign currency receivables. Hedge accounting policy is described in Note 2. Such foreign currency debts are exposed to currency rate and interest-rate fluctuation risk and are hedged using currency swaps and interest-rate swaps. In terms of held-to-maturity securities. Long-term debt and unsecured straight bonds were utilized for financing acquisition of companies. The book values of financial assets exposed to credit-related losses represent the maximum amounts of credit risk exposure as of March 31. The consolidated subsidiaries also manage their credit risks through similar management systems according to their own policies on protection of receivables in line with the Company’s policy. Call options on specific stocks are utilized to avoid the risk of fluctuation in stock prices relating to stock appreciation rights. Therefore. In addition. Ranbaxy. the related credit risk is immaterial. In particular. currency options and call options on specific stocks include options whose maturities are more than one year and foreign exchange and share price fluctuations could have an impact on the results of operations. 2) Management of market risk (risks associated with changes in foreign currency exchange rate. the Companies regularly assess fair value and issuers’ financial conditions. Derivatives consist of forward foreign exchange contracts. Trade notes and accounts payable are due within one year. Its sales management department monitors business and financial conditions of major customers regularly and controls their payment dates and credit balances by customer so that the Company can recognize risks of incurrence of uncollectible accounts promptly. interest rates. Interest-rate swaps are utilized to manage interest-rate risk. and are exposed to market price fluctuation risk. Through these processes. the Company invests only in high-grade bonds according to its fund management policy. currency options. and have financed acquisition of companies. Forward foreign exchange contracts. and call options on specific stocks. forward foreign exchange contracts and currency options are utilized to hedge the currency rate fluctuation risk in relation to the net position of foreign currency receivables and payables. Foreign currency receivables incurred by the global business are exposed to currency rate fluctuation risk. (b) Details of financial instruments used and the related risks The Companies are exposed to customers’ credit risk on trade notes and accounts receivable.

000 124.988 101.988 100. fair values are estimated by using reasonable valuation methods.935) 88 ¥ (167) ¥ — 53 .408 45.Also.342 100.292 ¥719.920 ¥ 58.390 ¥357.478 ¥357.699 ¥ — — 1.046 ¥673. When quoted market prices are not available.680 (1.829] ¥ — — 2.799 ¥ [17. In terms of derivatives.233 ¥ 66.582] ¥262. (d) Supplemental information on fair values Fair value of financial instruments is measured through quoted market prices when available.997 211.595 ¥ 58.680 47. which are in line with the Company’s policy.806 ¥ [17.137 ¥359.038 205.453 ¥ [30.892 124. The notional amounts described in Note 17 should not be construed as representations that such amounts show the market risk exposure in relation to derivative transactions.540 19. the Company has established a Derivatives Management Policy.036 ¥357. The subsidiaries other than Ranbaxy control derivative transactions based on their own policies.600 121.590 252.889 361.342 102.889 358.932 ¥ 66. Derivative transactions are executed and controlled according to the policy.408 46.000) Millions of yen 2010 Carrying amount Fair value Differences Cash and deposits Trade notes and accounts receivable Marketable securities and Investment securities Assets total Trade notes and accounts payable Short-term bank loans Bonds payable Convertible bond-type bonds with subscription rights to shares Long-term debt Liabilities total Derivatives ¥100.286 ¥ [30. 2011 and 2010 are as follows.590 251.967 ¥ 719. which stipulates transaction rules such as trading limit and authority.699 ¥2.892 101 ¥1.993 ¥ — (1.000 49. Financial Section Millions of yen 2011 Carrying amount Fair value Differences Cash and deposits Trade notes and accounts receivable Marketable securities and Investment securities Assets total Trade notes and accounts payable Current portion of convertible bond-type bonds with subscription rights to shares Short-term bank loans Bonds payable Long-term debt Liabilities total Derivatives ¥262. 3) Management of liquidity risk associated with funding (risk of inability to make payments on due date) The Company manages liquidity risk through processes where its Finance & Accounting Department formulates and updates cash-flow plans based on the reports from operational departments on a timely basis and through a policy to maintain liquidity in hand at an equivalent amount of three months’ sales.020 29.829] ¥100. (2) Fair values of financial instruments Carrying values and fair values of financial assets and liabilities at March 31. The assumptions of such estimation include variable factors and.582] ¥ — — (325) ¥ (325) ¥ — — 2. accordingly.540 19. certain subsidiaries utilize currency swaps and interest-rate swaps to reduce the risk of change in currency exchange rate and interest rate in relation to loans.347 ¥671. if different assumptions are adopted. and reported to its board of directors.535 121.038 205.020 29. The Company continues to conduct the risk-exposure controls of Ranbaxy’s currency options and currency swaps. estimated fair values could be changed.997 211.

and 2) Trade notes receivables and accounts receivable Cash and deposits. Liabilities 1) Trade notes and accounts payable Trade notes and accounts payables are presented at the carrying value because they are settled in short-term and their fair value reasonably approximates the carrying amounts. and information on marketable securities and derivatives Assets 1) Cash and deposits. In terms of fair values of investments in partnership.669.S.012 $ — $ [211.048) — 34. 5) Long-term debt Fair value of long-term debt with variable interest rates is based on the carrying value because the applied interest rates have reflected short-term market interest rates and the fair value approximates the carrying amount.916) $ (3.735 $ 703.988 3.988 3.662 1.410 $ 4. Fair value information for securities.476. where its assets can be valued at fair value. dollars 2011 Carrying amount Fair value Differences Cash and deposits Trade notes and accounts receivable Marketable securities and Investment securities Assets total Trade notes and accounts payable Current portion of convertible bond-type bonds with subscription rights to shares Short-term bank loans Bonds payable Long-term debt Liabilities total Derivatives $ 3. Fair value of longterm debt with fixed interest rate is based on the discounted amount of future repayments of the interest and principal by using the current interest rate assumed for similar types of debts with similar terms.” (a) Valuation methodology of fair value of financial instruments. Certain foreign currency accounts receivables are subject to the allocation method.Financial Section Thousands of U.518 1.673.410 353. trade notes receivables and accounts receivable are presented at the carrying values because they are settled in short-term and their fair value reasonably approximates the carrying amounts.084 2.204. and net payables are presented in “[ ]. 2) Current portion of convertible bond-type bonds with subscription rights to shares Fair value of current portion of convertible bond-type bonds with subscription rights to shares is based on the quoted price in the over-the-counter market.831] Net receivables and payables incurred through derivative transactions are presented on a net basis.217 $ 24.518 1.458 353. classified by intent of holding. and fair values of bonds are based on the quoted market price or the price that the counterparty financial institutes estimated. 6) Derivative financial instruments Fair value of derivatives is estimated based on the market price offered by the counterpart financial institutions.035.928 $ — — (3.819 $ 703.831] $ [211.711 542.476.663 $ 8. is described in Note 5. 3) Marketable securities and Investment securities Fair values of listed stocks are based on the quoted market price.157.239.747 $ 8.310.039. 3) Short-term loans Short-term bank loans are presented at the carrying values because they are matured in short-term. Fair values of investment funds are based on published market price. and their fair value reasonably approximates the carrying amounts.334.084 2.627 $ 4.819 1. 54 Annual Report 2011 .494.495. their interest rates have reflected the short-term market interest rate. which requires that recognized foreign currency receivables or payables be translated at the underlying exchange rates in the corresponding forward foreign exchange contracts. 4) Bonds payable Fair value of bonds payable is based on the quoted market price.843 1.916) $ — (12.711 554.157.916 $ 3. the Company’s share of the entity’s net assets revaluated at fair value is regarded as fair value of such investments.

612 25.141 6.590 46. dollars 2011 2010 2011 Stocks of unlisted companies ¥7.889 56.032 Millions of yen 2010 Within one year Between one and five years Between five and ten years Over ten years Total Cash and deposits Trade notes and accounts receivable Held-to-maturity securities: Government bonds Corporate bonds Others Available-for-sale securities: Corporate bonds Others Total ¥100.201 19.461 ¥ — — — 3.141 3.038 205.830 105.493 Financial Section ¥3.009 97.013 97.862 — — ¥623.000 55 .185 0 — ¥483.(b) Financial instrument whose fair value estimation is extremely difficult Millions of yen Thousands of U.411 5.000 — — — ¥ — — — — — — — ¥ — ¥100.004 10 23 — ¥ — — — 1. 2011 and 2010 Millions of yen 2011 Within one year Between one and five years Between five and ten years Over ten years Total Cash and deposits Trade notes and accounts receivable Held-to-maturity securities: Government bonds Corporate bonds Others Available-for-sale securities: Corporate bonds Others Total ¥262.590 46.830 105.281 ¥ — — 2. since their market price is not available and it is not possible to estimate unlisted companies’ future cash flow. (c) Expected amount of cash-in at March 31.236 $93.S.000 10 22 — ¥ — — — — — — — ¥ — ¥ — — — — — — — ¥ — ¥262.889 54.997 211.729 ¥7.997 211.195 23 — ¥491.038 205.448 ¥1.779 ¥15.723 Stocks of unlisted companies are not included in the figures for Marketable securities and Investment securities in the above table because it is extremely difficult to estimate their fair value.872 22 — ¥626.

113 ¥26.039 ¥90.275.108 $ 36.289 1.145 120 265 — $ — — — — — — — $ — — — — — — — $ — $3.253 $724.988 555.476.048 $ 249.048 $ — — 249.181 $ 554.916 82.066 ¥20.892 $ — 361.880 — — 326.S.458 — $ — — 314.036 ¥ — ¥40.566 265 — $7.566 $ 722.275.084 2.578 $ — — — 36.066 ¥ — — 20.158 ¥53.916 46. dollars 2011 Within one year Between one and five years Between five and ten years Over ten years Total Cash and deposits Trade notes and accounts receivable Held-to-maturity securities: Government bonds Corporate bonds Others Available-for-sale securities: Corporate bonds Others Total $ 3.157.716 ¥20.S.020 — 27.806 ¥60.548.000 — 30.806 Thousands of U.205 ¥26.566 $1.716 ¥ — — 20.663 $481.671 ¥ — — 26.988 555.000 — 20.458 $ 314.107 ¥60.530 $ — (d) Expected amount of repayment and redemption at March 31.084 2.446 — — $ 7.000 — 30.039 ¥40.Financial Section Thousands of U.144 1.036 ¥90.714 Millions of yen 2010 Within one year Between one and two years Between two and three years Between three and four years Between four and five years Over five years Bonds payable Convertible bond-type bonds with subscription rights to shares Long-term debt Total ¥ — — — ¥ — ¥ — 49.157.534 3.113 ¥27. dollars 2011 Within one year Between one and two years Between two and three years Between three and four years Between four and five years Over five years Bonds payable Convertible bond-type bonds with subscription rights to shares Long-term debt Total $ — 554.928 — 242.158 ¥80.084.511.663 56 Annual Report 2011 .000 — 40.714 ¥60. 2011 and 2010 Millions of yen 2011 Within one year Between one and two years Between two and three years Between three and four years Between four and five years Over five years Bonds payable Convertible bond-type bonds with subscription rights to shares Long-term debt Total ¥ — ¥ — — 26.476.772 $ 326.107 46.020 — ¥46.

865 Millions of yen ¥36.277 22 7.700 ¥ (2.096 ¥85.841 35.484 22 7.950 (52) ¥114. carrying amounts.604 0 73.967 ¥21.338) — (488) ¥ (2.486 163 $ $ 431.942 0 73. dollars 2011 2010 2011 Securities with market values greater than their carrying amounts: Carrying amount Market value Difference Securities with fair value not exceeding book value: Carrying amount Market value Difference ¥ ¥123.5. 2011 and 2010.S.952 1.526 ¥12. the acquisition costs.323 64.497 114.353 — 565 ¥36.361 542 (b) Available-for-sale securities with determinable market value Millions of yen Financial Section 2011 Acquisition cost Carrying amount Difference Securities with carrying amounts greater than their acquisition costs: Stock Bonds Others Total Securities with carrying amounts at or less than their acquisition costs: Stock Bonds Others Total ¥13. and fair market values of securities with available market values were as follows: (a) Held-to-maturity securities with determinable market values Millions of yen Thousands of U.297 — 777 ¥73. Fair Value Information for Securities (1) At March 31.390 ¥ (107) $1.886 45 ¥ ¥ 64.401) 2010 Acquisition cost Carrying amount Difference Securities with carrying amounts greater than their acquisition costs: Stock Bonds Others Total Securities with carrying amounts at or less than their acquisition costs: Stock Bonds Others Total ¥14.593 57 .396 1 196 ¥53.359 ¥17.793) (0) (608) ¥ (3.944 — 212 ¥36.074 ¥35.041 23 760 ¥92.826) ¥38.918 ¥72.325 $ (627) ¥ ¥ 35.002 122.481.645 22 564 ¥39.824 ¥53.156 ¥ (2.819 432.481.584 ¥88.266 ¥10.231 ¥92.

874 ¥— $114.217 $ 126.Financial Section Thousands of U.361 $ 880.976) $ 437. and net book value at March 31. Inventories Inventories at March 31. (2) Available-for-sale securities sold during the years ended March 31.145 $1.313 265 88. respectively.504 ¥1.795 $ 871.792 ¥ 91. dollars 2011 Sales amount Total gain Total loss Sales amount 2010 Total gain Total loss Sales amount 2011 Total gain Total loss ¥9.535 ¥(1.074.709 16. The following is a summary of assumed amounts of acquisition cost.S. dollars 2011 2010 2011 Merchandise and finished goods Work in process Raw materials and supplies ¥ 89.143 21. Lease Information As discussed in Note 2.599 32.226 $1. 2011 and 2010 consisted of the following: Millions of yen Thousands of U.663 $ 215.614 The Companies recognized ¥3.964 265 95.386 7. equipment and vehicles. and other ¥1. dollars 2011 Acquisition cost Carrying amount Difference Securities with carrying amounts greater than their acquisition costs: Stock Bonds Others Total Securities with carrying amounts at or less than their acquisition costs: Stock Bonds Others Total $ 159. 2011 and 2010: Millions of yen 2011 Acquisition cost Accumulated depreciation Net book value Machinery.493 ¥3.S.325) $ (40. and other ¥1.590 6. 2011 and 2010 were as follows: Millions of yen Millions of yen Thousands of U.101 ¥(830) Millions of yen ¥271 2010 Acquisition cost Accumulated depreciation Net book value Machinery.783 34.313 ¥ 381 ¥2.050 ¥142.409 $433. finance leases commenced prior to April 1.334 million ($40.241 $ (33.651) — (7.373 $39.012 260. 2008 that do not transfer ownership of leased assets to lessees are accounted for as operating leases.169 thousand) and ¥82 million as impairment losses of available-for-sale securities with determinable market value in the years ended March 31.048 — 9.S.229 386.071) ¥464 58 Annual Report 2011 .734 ¥143.554 $435. equipment and vehicles. 2011 and 2010.916 $ 4.060 — 2.807 $ 444. accumulated depreciation.720.988 $ 256.988 — 6.

545 (3. 2011 and 2010.S.663 242. inclusive of interest under such leases. dollars 2013 2014 2015 2016 2017 and thereafter ¥ 26.58% for long-term debt other than debt due within one year.S.277) $1.988 $3.85% and 7.446 thousand). dollars 2011 2010 2009 2011 Total expenses Assumed depreciation charges ¥144 144 ¥290 290 ¥378 378 $1. Millions of yen Thousands of U.359 (4. unused lines of credit were ¥30.277 1. 59 .066 20. 2010 and 2009 were as follows: Millions of yen Thousands of U. dollars 2011 2010 2011 Secured loans principally from banks and insurance companies Less amount due within one year ¥127.S.880 326. were as follows: Millions of yen Thousands of U. dollars 2011 Acquisition cost Accumulated depreciation Net book value Machinery.000) $3.S.253 $1.113 20.036 $ 314.265 Future lease payments at March 31.91% at March 31.410 The annual maturities of long-term debt at March 31.714 30. Long-term debt at March 31.494. equipment and vehicles. 2011 and 2010 consisted of the following: Millions of yen Thousands of U. respectively.S. and other $13. 2011 were as follows: Year ending March 31.509) ¥124. dollars 2011 2010 2011 Due within one year Due in more than one year ¥106 165 ¥271 ¥188 276 ¥464 $1.390 $1. 2011. The weighted-average interest rates on long-term debt were 2.036 27. 2011 and 2010.969) ¥121.265 $ (10.Thousands of U.735 Financial Section 8.048 249.410 The Company entered into line-of-credit agreements with various banks in order to borrow operating funds efficiently.036 ¥126.000 million ($361. 2011 and 2010.265 Total expenses for finance leases that do not transfer ownership to lessees and assumed depreciation charges for the years ended March 31.107 ¥124.566 361.536. At March 31.687 (42.97% for debt due within one year and 0. Short-Term Bank Loans and Long-Term Debt The weighted-average interest rates on short-term bank loans outstanding were 1.735 1.494.

928 (2) Convertible bond-type bonds with subscription rights to shares A consolidated subsidiary has issued the bonds as follows: Millions of yen Issuance date Interest rate Security Maturity date Thousands of U. 2006 4. 2009 1.458 [$554.8 (0.7% 40.458] The amounts to be redeemed within one year are presented in “[ ]. dollars 2011 2010 2011 1st series unsecured straight bond 2nd series unsecured straight bond June 24. Income Taxes Taxes on income consist of corporation tax.6) 3.6) (7.3 (1.8% Unsecured Unsecured June 24. The following table summarizes the significant differences between the statutory tax rate and the Companies’ effective tax rate for financial statement purposes for the year ended March 31.6) 4.0 2. 2014 June 24.0) 3.1% 1. The aggregate statutory tax rate on income before income taxes and minority interests in net income of consolidated subsidiaries was approximately 40.000 $722. 2011 and 2010: 2011 2010 Statutory tax rate Expenses not deductible for income tax purposes Non-taxable income Decrease in valuation allowance Amortization of goodwill Unrealized deferred tax asset on intercompany profits Differences in effective overseas tax rates Other Effective tax rate 40. 2010 and 2009.020 2011 [¥46.5% for the years ended March 31.5 (4.534 $554.” 10.5% 4.S.000 ¥40. dollars 2011 2010 2011 Convertible bond-type bonds with subscription rights to shares March 17. 2011. ¥46. and enterprise taxes.S. 2019 ¥60.000 ¥60.4) 34.892 $481. The actual effective tax rates in the consolidated statements of operations differ from the aggregate statutory tax rate principally because of the effect of expenses not deductible for tax purposes. Income taxes of the foreign consolidated subsidiaries are based generally on the tax rates applicable in their countries of incorporation.0 51.020] ¥49. 2009 June 24.0) (7.2) (3.4% 60 Annual Report 2011 .7 8.Financial Section 9.8% Unsecured March 16.000 ¥40. inhabitants’ taxes.5% 7.2 (4. Bonds (1) Bonds payable The Company has issued bonds as follows: Millions of yen Issuance date Interest rate Security Maturity date Thousands of U.

2011 and 2010 were as follows: Millions of yen Thousands of U.361 342.489 (12.102) (8.458) $1.372) (12.730) (9.301) (145.245 73.246 ¥86.927) (59.051) 183.971 81. Significant components of the Companies’ deferred tax assets and liabilities as of March 31.672 6.238 5.720) ¥139.573) (49.664 6.940 (209.687 692.482 Intangible assets Net unrealized holding gain on investment securities Reserve for reduction in bases of property.532) (12. 2011 and 2010 were included in the following accounts of the consolidated balance sheets.819 6.717 23.214 86.614 286.S.404 3.289 882.482 61 .614 17.087. 2009 has been omitted.961) (10.945 6.036 502.388 1.S.621.463 2 29.583 ¥ 38.675 77.591 (17.976 83.930 49.039 1.085 1. Millions of yen Thousands of U.759 $1.157 40.264 (17.386) (590.807) (107.958 22.964) (127.193) 2.886) 199.Since the Company reported a loss before income taxes and minority interests.921 3. the disclosure for the year ended March 31.211.381 3. dollars 2011 2010 2011 Deferred tax assets: Prepaid consigned research and co-development expenses Net operating loss carry-forwards for income tax purposes Depreciation Accrued bonuses Unrealized profit on inventories and loss on valuation of inventories Loss on revaluation of securities Loss on impairment Accrued employees’ severance and retirement benefits Other Valuation allowance Total deferred tax assets Deferred tax liabilities: Financial Section ¥ 51.490 $ 619. dollars 2011 2010 2011 Deferred tax assets: Current Non-current Deferred tax liabilities: Other current liabilities Deferred tax liabilities (non-current) 445 28.210 (18. plant and equipment for income tax purposes Other Total deferred tax liabilities Net deferred tax assets Net deferred tax assets as of March 31.531) (18.639 (145.008) ¥134.380 41.735 36.468 57.928 ¥90.

equipment. Land Buildings. structures. dollars 2011 2010 2009 2011 Buildings and structures Machinery. the Companies recognized a loss on impairment in the following asset groups: Fiscal 2011 Location Function Asset Type Status Sunto. etc. taking into consideration the similarity in the type of products and business activities. etc.S.452 million ($ 77. Former sales office Commercial facility Former Tokyo Distribution Center facility Onahama Plant. etc. equipment and vehicles Land Investments and other assets .103 million and ¥3. Shizuoka. machinery. The amounts consisted of the following: Millions of yen Thousands of U. 2011. the consistency as a business group. etc. etc.735 thousand).S. Buildings.297 608 198 — ¥1. their book values have been written down to a recoverable amount. ¥2. Idle Idle Idle Because the above asset groups are idle and have uncertain prospects for future utilization. 2011. equipment. Bunkyo-ku. 2010 and 2009. Other Income (Expenses) (1) Loss on impairment of long-lived assets The Companies categorized their assets for business use into groups based on profit control unit for management purposes. Tokyo Fiscal 2009 Location Shizuoka Plant. Manufacturing facility Buildings. Shizuoka India Germany U. In the years ended March 31. or the original estimate of profit has become unrealizable. 62 Annual Report 2011 . equipment.other ¥152 727 368 5. Hokkaido Kasukabe. 2010 and 2009. machinery. etc. respectively. etc.711 The recoverable amount of an assets group represents an estimated net realizable value.205 ¥1. Investments and other assets . etc. Buildings. Buildings. etc. land. Saitama Iwaki.. after making reasonable adjustments.Financial Section 11. etc. Idle Rental Function Asset Type Status Sapporo.other Investments and other assets . and such reductions in the amount of ¥6. etc.726 511 825 — $1.831 8. etc.434 62. and the continuity of management in the future.other Idle Business use Business use Business use Function Asset Type Status Shimada. the planned sales price has become lower than the book value. structures. which was obtained based on thirdparty appraisal or the valuation amount for real estate tax purposes. Fiscal 2010 Location Higashi-Fuji Training Institute Paonta Sahib Manufacturing facility Trademarks and patents Marketing right. and individually categorized their assets for lease and unutilized assets that are not directly used for business. Fukushima.062 million were recorded as losses on impairment of long-lived assets for the years ended March 31.759 4. machinery. Manufacturing facility Office for rent Buildings.

the cost that insurance claims would cover is not determinable.554 — (4) Restructuring loss In the year ended March 31. In the year ended March 31. the Companies recognized a non-recurring loss.. The amounts consisted of the following: Millions of yen Thousands of U. Although some of the damaged assets were insured. 2011.072) were booked against loss on disaster. total provisions of ¥4.. integration and closure of operating locations Provision for losses of sale of shares Other ¥1. 2009 to reflect the fact that the market price at the fiscal year-end for the shares of consolidated subsidiary Ranbaxy had fallen below 50% of the purchase cost.024 2. equipment and vehicles ¥2. (3) Non-recurring depreciation on non-current assets In line with an accounting revision made to the useful lives of fixed assets following a decision to retire certain facilities of the Company and its domestic consolidated subsidiaries. Expenses associated with the removal. the Companies amortized goodwill at its consolidation in relation to this acquisition.024 9. Ltd.867 60 315 336 (5) Amortization of goodwill The Companies recognized a loss related to the write-down of shares in an affiliate in its financial statements in the year ended March 31. As a result. the Companies recognized a loss on disaster associated with the Great East Japan Earthquake on March 11. which mainly consisted of the expenses associated with the removal. Other ¥3.S.121 — ¥261 — ¥3. etc. Loss on retirement of inventories/provisions for returns Loss on disposal of buildings.S.285 1.571 million ($55. 2011. etc. The breakdown of this amount is the following: Millions of yen Thousands of U.220 13 $25. 2011. and others. etc.413 168 774 $39. associated with the reorganization of consolidated subsidiary Asubio Pharma Co. the Companies wrote off the difference in the book value of these assets before and after this revision. Ltd.(2) Loss on disaster In the year ended March 31. The amounts consisted of the following: Millions of yen 2010 Additional retirement benefits. dollars 2011 2011 Repair costs of buildings. 63 . dollars 2011 2010 2009 2011 Financial Section Buildings and structures Machinery. Ltd. 2010. the sale and transfer of the Shizuoka factory of Daiichi Sankyo Propharma Co.578 17..326 Of these costs.. the Companies recognized a non-recurring loss associated with the reorganization of consolidated subsidiary Asubio Pharma Co. integration and closure of operating locations.

193) 158.5% Principally 3.106 — — 3.072 (8.735) 11. respectively.757 198 1.422 The discount rates for calculating the projected benefit obligation and the rates of expected return on plan assets used by the Companies were as follows: % 2011 2010 2009 Discount rates for calculating projected benefit obligation Rates of expected return on plan assets Principally 2.627 2. if any.127) 85.939 ¥13.249 ¥17. in cases where dividend distribution of surplus is made.313 $ (139.430) 3. and 2009 consisted of the following: Millions of yen Thousands of U.313 — 1.883 7. which are potentially available for dividends.645 $ 53.408) 79.5% Principally 3.843 (30.564 ¥ 4.479) 2.599 — 158 5. 2011.783) 1.199 2.0% 13.590 (286.314.890 ¥ (12. which is included in capital surplus.906 (22. Under the Act. dollars 2011 2010 2009 2011 Service costs for benefits earned Interest costs Expected return on plan assets Amortization of actuarial loss Amortization of prior service costs Additional retirement benefits and other Other Total ¥ 4.028.048) Additional retirement benefits. the smaller of an amount equal to 10% of the dividend and the excess.602) 939 ¥ (11.730 ¥10. the legal earnings reserve and additional paid-in capital generally could be used to eliminate or reduce a deficit by a resolution of the shareholders’ meeting.735) 31.502) 14.5% Principally 3.444 2. Under the Act.754) 13.920 (2. a company may.S.904 71.975 (2. designate an amount not exceeding one-half of the price of the new shares as additional paid-in capital.320) $ (1. Retirement and Termination Benefit Plans Retirement benefits included in the liability section of the consolidated balance sheets as of March 31.555 $163.333) 3.0% Principally 2. Net Assets Under Japanese laws and regulations.S. 2010.373 (23. dollars 2011 2010 2011 Projected benefit obligation Plan assets at fair value Under-funded projected benefit obligations in excess of plan assets Unrecognized actuarial losses Net pension liabilities recognized in the consolidated balance sheet Prepaid pension assets Accrued employees’ severance and retirement benefits ¥(109. 2011 and 2010 consisted of the following: Millions of yen Thousands of U. Under Japan’s Companies Act (“the Act”). the entire amount paid for new shares is required to be designated as common stock.458 (127.661 (2. The legal earnings reserve is included in retained earnings in the accompanying consolidated balance sheets. all additional paid-in capital and all legal earnings reserves may be transferred to other capital surplus and retained earnings.0% Principally 2. Periodic employees’ severance and retirement benefit expenses for the years ended March 31. by a resolution of its board of directors. may be paid to employees upon retirement.873 ¥ 4. 64 Annual Report 2011 .541) ¥(102.551) 2.542 35.Financial Section 12. However.152 (10. of 25% of common stock over the total of additional paid-in capital and the legal earnings reserve must be set aside as additional paid-in-capital or a legal earnings reserve. which are not subject to the actuarial valuation in accordance with the accounting standards for the severance and retirement benefits.

859 million ($34. the Company was contingently liable as a guarantor for loans of employees in the amount of ¥2. and the company has submitted a counterproposal to the resolution proposed by the DOJ.92% (b) Period of results of acquired company included in the consolidated financial statements From October 1. 14. Ranbaxy is holding discussions with the DOJ to settle all outstanding matters. the U.S. there is still uncertainty about the outcome of settlements and negotiations with the DOJ and FDA. 2011.S. (2) Contingent liabilities relating to litigation on certain products’ price control by the Indian government were estimated as ¥3. and research and development of generic drugs in the therapeutic areas of hyperlipidemia and infection 2) Purpose of acquisition The Group believes that realizing sustained business growth must involve the expansion of its prescription drug business in advanced country markets while at the same time seizing new growth opportunities in developing countries. In addition to the traditional high-risk/high-return business model employed in developed-country markets. sale. 2008 to December 31. Commitments and Contingencies (1) At March 31. 2008 4) Legal form of acquisition Share purchase by cash 5) Name of the company after acquisition Ranbaxy Laboratories Limited 6) Percentage of voting rights acquired 63. the shareholders resolved cash dividends amounting to ¥21. This counter-proposal is conditional on the success of negotiations with the FDA. Financial Section 15. Business Combination (1) Acquisition of Ranbaxy (a) Description of the acquired company 1) Name and nature of business of the acquired company Name of the acquired company: Ranbaxy Laboratories Limited Nature of the acquired business: Manufacture. Food and Drug Administration (FDA) for import alert and warning letters issued primarily relating to Good Manufacturing Practice for some of the products manufactured at certain manufacturing facilities in India and Application Integrity Policy. In addition. (3) The Company’s consolidated subsidiary Ranbaxy is endeavoring to resolve the issues with the U. At present. At the annual shareholders’ meeting held on June 27. Such appropriations have not been accrued in the consolidated financial statements as of March 31.554 million ($42. 2011. The entry of Ranbaxy is thus an extremely significant step in terms of promoting the sustained long-term growth of the Group.” This approach seeks to expand the Group’s global reach by growing in emerging markets while also further expanding the Group’s drug portfolio in developed markets using generic drugs. 2008 for the year ended March 31. and Ranbaxy is endeavoring to resolve this issue. 2011 and are recognized in the period in which they are resolved.819 thousand). Department of Justice (DOJ) has indicated problems regarding certain possible issues with data submitted by the company in support of product filings. 2009 65 . the Group believes it is necessary to anticipate and respond to rapidly changing market needs by adopting a “hybrid business model. and thus it is difficult to make a reasonable estimate of the amount involved.117 million ($254.422 thousand). 3) Date of acquisition November 7.446 thousand).The maximum amount that the Company can distribute as dividends is calculated based on the non-consolidated financial statements of the Company in accordance with the Act.

103) (98.882) (6.918 10 years — (2) Acquisition of U3 Pharma (a) Description of the business of acquired company 1) Name and nature of business of acquired company Name of acquired company: U3 Pharma AG Nature of business: R&D. 3) Goodwill amortization method and period Amortized in equal amounts over 20 years The Company amortized the goodwill (one-time amortization) of Ranbaxy of ¥351. net Current liabilities Long-term liabilities Subscription rights to shares Minority interests In-process research and development Total (f) Amounts of acquisition cost allocated to research and development expenses charged to earnings In-process research and development expenses: ¥6.767 151.354 (g) Amounts of acquisition cost allocated to intangible assets other than goodwill and amortization period Millions of yen Amortization period Trademarks related Leasehold right ¥40.863 408.354 (d) Description of goodwill 1) Amount of goodwill ¥408.910 million ¥241. mainly in area of therapeutic antibodies for cancer 2) Purpose of acquisition To develop a continuous stream of promising drug candidates by reinforcing the drug discovery platform in the fields of cancer and therapeutic antibodies 66 Annual Report 2011 .407 230.310 million for the fiscal year ended March 31.675 (169.489) 6.387) (46. (e) Amounts and breakdown of main components of assets acquired and liabilities assumed as of the date of acquisition Millions of yen Current assets Non-current assets Goodwill.974 ¥488.984 5.971 85.910 ¥488.Financial Section (c) Acquisition cost of acquired company and related breakdown Acquisition considerations: Millions of yen Share purchases by an open offer Share purchases from founding family Capital increase subscribed by third party Direct acquisition-related costs Total acquisition cost ¥169. 2009.002 2.675 million 2) Reason for recognizing goodwill Goodwill was recognized as the excess of the acquisition cost over the net of acquired assets and assumed liabilities at fair value.

092) ¥26. 2009 for the year ended March 31. 2009 (c) Purchase cost of the acquired company and related breakdown Acquisition considerations: Millions of yen Cash Direct acquisition-related expenditures Total purchase cost ¥26. Daiichi Sankyo Europe GmbH. and is engaged in prescription and OTC pharmaceutical business activities. In this business. and other subsidiaries engaged in prescription and OTC pharmaceutical business activities. the Company uses two reporting segments for the Daiichi Sankyo Group Segment (“Daiichi Sankyo Group”) and the Ranbaxy Group Segment (“Ranbaxy Group”).724 86 25. Daiichi Sankyo Inc. The Group’s operations consist of the production and sale of prescription and OTC pharmaceuticals and related R&D activities. The Daiichi Sankyo Group consists of the Company.695 85 ¥26. Segment Information (1) Outline of reporting segments The reporting segments used by the Daiichi Sankyo Group (“the Group”) are based on the financial data available for discrete operating units.062 million 2) Reason for recognizing goodwill Goodwill was recognized as the excess value of the purchase cost over the net of acquired assets and assumed liabilities at fair value. The Ranbaxy Group consists principally of Ranbaxy Laboratories Ltd. 67 .780 16.3) Date of acquisition June 19..780 Financial Section (d) Description of goodwill 1) Amounts of goodwill ¥25. 2008 4) Legal form of acquisition Share purchase by cash 5) Name of the company after acquisition U3 Pharma AG (now U3 Pharma GmbH) 6) Percentage of voting rights acquired 100% (b) Period of results of the acquired company included in consolidated financial statements From July 1. 2008 to March 31. and are subject to periodic review by the Board of Directors to facilitate decisions related to the allocation of resources and the evaluation of business performance. 3) Goodwill amortization method and period Amortized in equal amounts over 5 years (e) Amounts and breakdown of main components of assets acquired and liabilities assumed as of the date of acquisition Millions of yen Current assets Non-current assets Goodwill Current liabilities Total ¥ 2.062 (1.

489 ¥ 41.141 8. and other items for each reporting segment The accounting treatment of each reporting segment is in line with the “Summary of significant accounting policies.327 ¥1.211 ¥ ¥ 795. profits or losses.874 5.120 ¥ 173.Financial Section (2) Calculation methodology for net sales.982 5.661.468 41. profits or losses.954 ¥ 424.519 172 222 15.674 921 2.255 6.181 ¥ 968.082 172 — 10.437 — 222 5.059 36.011 2.064 — 3.” “Segment profit” as reported in this section is based on income before income taxes and minority interests. assets and liabilities.625 ¥ ¥ 171.516 ¥ 580. plant and equipment and intangible assets ¥ 29.151 ¥1.166 617 31.279 4.230 20. assets and liabilities.487 89.330 ¥ 967.674 3.371 29.546 ¥ 126. and other items.153 10.939 1.845 1.562 ¥ 156.722 ¥ 12.824 ¥ 251.913. by reporting segment Millions of yen 2011 Daiichi Sankyo Group Ranbaxy Group Total Net sales Outside customers Inter-segment sales and transfers Total Segment profit Segment assets Segment liabilities Other items Depreciation Amortization of goodwill Interest income Interest expenses Equity in earnings of affiliated companies Equity in losses of affiliated companies Other income Other expense (Loss on impairment of long-lived assets) Capital investment in equity-method affiliates Increase in property.191 6.851 9.955 68 Annual Report 2011 . “Inter-segment sales and transfers” are calculated at prevailing market prices. (3) Net sales.061 3.365 1.426 61 ¥ 795.

S.675 61.181 $ 1.625 2.976 66.048 80.410 11.892 $23.072 — 123.127 ¥1.193 $ 145.071.229 31.675 185.655 ¥ 14. plant and equipment and intangible assets ¥ 34.237 ¥ 242.366 ¥ 426.106 110 ¥ 952.579 2.880 41.241 120.364 ¥1.458 69 .023.434 382.494 2.940 99.747 58.527 34 ¥ 805.470 ¥ 8.494 $11.776 5.421 1.583.229 $ 1.584.410 — 2.699 80.916.674.103 487 21.868 $1.669.292 — 2.579 76 ¥ 146.554 13.349 — 36.000 14.085.519.729 Financial Section 2011 Daiichi Sankyo Group Ranbaxy Group Total Net sales Outside customers Inter-segment sales and transfers Total Segment profit Segment assets Segment liabilities Other items Depreciation Amortization of goodwill Interest income Interest expenses Equity in earnings of affiliated companies Equity in losses of affiliated companies Other income Other expense (Loss on impairment of long-lived assets) Capital investment in equity-method affiliates Increase in property.096 25.048 $ 443.756 ¥ 584.446 735 $ 9.103 6.325 $ 497.301 114.562 11.054.099 6.421 3.561 ¥ 89.735 496.964 $2.115.518 $ 9.882 11.437 ¥ 146.110 ¥ 952. dollars ¥ 805.391 6.547 ¥ 42.494 $2.320 67 — 5. plant and equipment and intangible assets $ 351.494 62.410 47.072 2.720 83 259 5.410 $ 6.193 351.614 29.151 3.216 ¥ 103.373 22.259 Thousands of U.241 7.999.030.390 ¥ 158.646 2.051 — 259 4.742 10.229 $11.084 2.253 251.229 $20.655.542 $ 5.883.663 $3.669 83 — 1.Millions of yen 2010 Daiichi Sankyo Group Ranbaxy Group Total Net sales Outside customers Inter-segment sales and transfers Total Segment profit Segment assets Segment liabilities Other items Depreciation Amortization of goodwill Interest income Interest expenses Equity in earnings of affiliated companies Equity in losses of affiliated companies Other income Other expense (Loss on impairment of long-lived assets) Capital investment in equity-method affiliates Increase in property.076.

480.410 (5.468 41.547 15.450.416) (2.519 — 2.349) 42.510 $ 23.325) (14.175 6.371 29.418) — — — (22) 97.157) (2.304) (22) — ¥1.477 (22) ¥ 600.423 (2.519.515) 3.313 283.108) (25.229) $ 11.916.211 ¥2.880 (29.240 ¥1.011 2.489.955 12.421) (1.102) (1.422) 1.999.855) (17.516 (488.537 584.364 (3.539) (4.452 3.546 (1.946 9.217 ¥ 126.783) 464.139.229 (14.674 3.892 (42.559 (2.354) 38.552) — (2.982 5.304) (1.669.434 (51.220) ¥ 592.982 5.532 19.181) $ 17.106 $ 11.149 3.420 $ 1.121) (15.802 (1.525 (4.Financial Section (4) Reporting segment totals and differences with amounts in Consolidated Financial Statements (CFS reconciliations) Millions of yen Thousands of U.153 10.458 154.883.126 41.831 ¥ 968.216 (110) ¥ 952.913.538 23.519 172 222 15.834.832 24.419 ¥ ¥ 103.151 (3.354) 45.054.902 (4.978) (3.211 70 Annual Report 2011 .260) ¥1.000 ¥1.691 2.S.645 12.365 ¥ 952.000 Millions of yen 2011 Reporting segment total Adjustment Amount on the CFS Other items Depreciation Amortization of goodwill Interest income Interest expenses Equity in earnings of affiliated companies Equity in losses of affiliated companies Other income Other expense (Loss on impairment of long-lived assets) Capital invested in equity-method affiliates Increase in property.255 6.756 (488.655.475 — — (172) 2. dollars 2011 2010 2011 Net sales Reporting segment total Elimination of inter-segment transactions CFS-stated consolidated net sales Segment profit Reporting segment total Amortization of allocated acquisition cost Adjustments to allocated acquisition cost Amortization of goodwill Adjustment for sales of investment securities Losses on equity interests in affiliated companies Elimination of inter-segment transactions Other consolidated adjustments CFS-stated consolidated income before income taxes Segment assets Reporting segment total Elimination of investments and capital Allocated acquisition cost Adjustment to goodwill Elimination of stock subscription rights on consolidation Elimination of inter-segment transactions Losses on equity interests in affiliated companies CFS-stated total assets Segment liabilities Reporting segment total Adjustment to deferred tax liabilities Elimination of inter-segment transactions CFS-stated total liabilities 580.559) 658 — ¥43.241 (14. plant and equipment and intangible assets ¥41.372 $ 1.181) ¥ 967.699) $ 7.002 6.175) (201) 118 ¥ 120.

614 29.470 110.776 5.369 ¥725.940 $11.729 ¥3.048 80.729 Thousands of U.904 11.365 2011 Olmesartan (antihypertensive) Other Total Net sales for outside customers $ 2.720 – 176 5.229 31.602 291. plant and equipment and intangible assets ¥42.646 2.883 3.S.S. plant and equipment and intangible assets $ 497.000 71 .943 8.193 351.996 Thousands of U.072 2.229 31.882 11.867 154.720 83 259 5.103 6.976 66.776 5.060 $ 8.518 $ 32.655.928 — $529.462 — — (83) (83) 22 — — — — ¥45.646 2.735 37.265 77.494 — 31.229 47.391 6. dollars ¥967.494 2.422 29.976) (42.192 (30.Millions of yen 2010 Reporting segment total Adjustment Amount on the CFS Other items Depreciation Amortization of goodwill Interest income Interest expenses Equity in earnings of affiliated companies Equity in losses of affiliated companies Other income Other expense (Loss on impairment of long-lived assets) Capital invested in equity-method affiliates Increase in property.908.410 47. dollars 2011 Financial Section Reporting segment total Adjustment Amount on the CFS Other items Depreciation Amortization of goodwill Interest income Interest expenses Equity in earnings of affiliated companies Equity in losses of affiliated companies Other income Other expense (Loss on impairment of long-lived assets) Capital invested in equity-method affiliates Increase in property.976 66.675 185.819 — — (2.552 2.421 3.241 120.746.735 496.663 496.518 (5) Information about products and services Millions of yen 2011 Olmesartan (antihypertensive) Other Total Net sales for outside customers ¥241.103 6.591) (59.879) 7.072) 29.

17 on March 27.832 $11.952 $ 427. dollars ¥123.000 $ 485.455 Thousands of U.490 ¥967. 2008).S.445 $ 811. 2009) and “Guidance on Accounting Standard for Disclosures about Segments of an Enterprise and Related Information” (ASBJ Guidance No.940 $ 283.655. dollars Daiichi Sankyo Group 2011 Name of customers Net sales Segment Alfresa Corporation $1.663 $ 237. the Company has adopted “Accounting Standard for Disclosures about Segments of an Enterprise and Related Information” (Accounting Standards Board of Japan (“ASBJ”) Statement No.710 Thousands of U.042 ¥19. issued on March 21.441 ¥40. Segment information for the years ended March 31.631 ¥261.258.S.807 Daiichi Sankyo Group (8) Information on outstanding goodwill by reporting segment Millions of yen 2011 Daiichi Sankyo Group Ranbaxy Group Adjustment Amount on the balance sheet Ending balance ¥24.749 ¥23. dollars 2011 Daiichi Sankyo Group Ranbaxy Group Adjustment Amount on the balance sheet Ending balance $ 289.499.S. 20.863.494 $1.000 (b) Tangible fixed assets Millions of yen 2011 Japan India Other Total ¥162.526 ¥67.754.154.951.789 ¥104.024 $ 2.590 $ 3. dollars 2011 Japan India Other Total $1.048 Additional information Effective from the fiscal year ended March 31.487.365 2011 Japan North America Europe Other Total $5.S. 2010 and 2009 were as follows: 72 Annual Report 2011 .257 ¥237.484 Thousands of U.012 ¥35.317 Thousands of U.976 (7) Information about major customers Millions of yen 2011 Name of customers Net sales Segment Alfresa Corporation ¥124.084 $1. 2011.Financial Section (6) Information about geographic areas (a) Revenues Millions of yen 2011 Japan North America Europe Other Total ¥477.

“Other” includes mainly Asia.891 783 29.(1) Business Segments The Companies’ primary business activities consist mainly of pharmaceuticals. Brazil and others. India and Other.226 26.338 952.554) (176.3% ¥117.458 ¥ 3.106 (185. Overseas net sales by the Companies for the years ended March 31. 2010 and 2009 are summarized as follows: Millions of yen 2010 North America Europe Other Total Overseas net sales Consolidated net sales Ratio of overseas net sales on a consolidated basis ¥247.392 584.331 ¥ ¥ — ¥ 952.366) ¥1.0% ¥117.030 ¥ 47.474 ¥913. Since net sales.685 ¥ ¥ 77.763 101.521 12.518 48.587 271.434 ¥ 59.978 1.791 ¥226.444 65.106 50.199 95.141 ¥212.028) ¥ — Financial Section 952.106 856. and total assets in the “Pharmaceutical” segment constituted more than 90% of the consolidated totals.7% 73 .263) (134. “Other” includes China.526) (9.299 ¥242. (2) Geographic Segments Geographic segments are classified as Japan.439 ¥920.907) ¥280. 2010 and 2009 were as follows: Millions of yen 2010 Japan North America Europe India Other Elimination Consolidated and/or corporate Sales and operating income Net sales: Outside customers Inter-segment Total sales Operating expenses Operating income Assets ¥519.673 239.103 ¥190. Europe.4% ¥482.288 386 ¥ ¥43.316 ¥50.489.871 (126. operating income.085 96.147 — 842.600 (3) Overseas Sales Overseas net sales are the Companies’ sales that were consummated in countries or regions outside of Japan.105 224.674 29.796 52.944 123.362 ¥ 40.836 544.531 ¥298.103 579.436 23. North America.710 ¥ ¥28. and operating income by geographic segment for the years ended March 31. Net sales.255 2.863 ¥ ¥(218.075 ¥242. The Companies’ overseas business activities consist mainly of those in North America and Europe.001 91.196 37.774 49.263) (126.597 95.470 ¥4. Taiwan. the disclosure of business segment information for the years ended March 31.185 ¥ 50. 2010 and 2009 has been omitted.050 ¥222.591 12.805 ¥50.694 132.554) (185.811 48.147 753.256 ¥ ¥ 99.276 88.803 9.509 ¥(227.103 ¥ (18. according to the location of the Companies.494.418 ¥ 43.956 ¥ 15.941 18.897) ¥1.250 33.510 Millions of yen 2009 Japan North America Europe India Other Elimination Consolidated and/or corporate Sales and operating income (loss) Net sales: Outside customers Inter-segment Total sales Operating expenses Operating income (loss) Assets ¥529. operating expenses.408 5.043 ¥ — ¥ 842.754 50.857 536.916 36.484 189.126) 7.

835 ¥(18.109 (21.S.606) 170.434) 22.S.150 ¥248. dollars 2011 Notional amount Fair value Unrealized gain (loss) Forward foreign exchange contracts Buy U.3% ¥98.990.892) 1.4% ¥373.254 842. dollar Currency swaps Total 68. dollar Buy U.354 (30.S. dollar Currency option Sell U.6% ¥53.109 2.147 44. 2011 and 2010 are summarized as follows: (1) Currency-related Millions of yen 2011 Notional amount Fair value Unrealized gain (loss) Notional amount 2010 Fair value Unrealized gain (loss) Forward foreign exchange contracts Buy U.451 (2.325 26.S.000) $ (223.S.434) 22.779) 1. dollar Currency option Sell U.363 ¥(31. Derivatives The notional amounts and the estimated fair value of derivatives outstanding as of March 31.586) 235.928) (223.S.615 10.301 $ (223.3% 17.193 (21.779) 1.078) (30.S.039 ¥ 21 ¥ 21 ¥ 132 ¥ 1 ¥ 1 Thousands of U. dollar Currency swaps Total 830.000) (2) Interest rate-related Millions of yen 2011 Notional amount Fair value Unrealized gain (loss) Notional amount 2010 Fair value Unrealized gain (loss) Interest-rate swaps Floating to fixed rate ¥7.509) 95.350 ¥341.928) $ 12.939 8.Financial Section Millions of yen 2009 North America Europe Other Total Overseas net sales Consolidated net sales Ratio of overseas net sales on a consolidated basis ¥221.067 (18.518 $ 253 $ 253 $ 2.170 11.049. dollar Buy U.400 ¥(50) ¥(50) ¥11.892) 1.586) (18.835 ¥(18.590 98.606) (2.509) (1.800 ¥(111) ¥(111) 74 Annual Report 2011 .000 (223.759 6.363 ¥(31.195 (1.078) ¥ 1.

806] ¥974 ¥(4.825] ¥529 ¥(4.S.582 ¥21.133] The amounts in “[ ]” represent option premium. (4) Currency-related Millions of yen $ 6.157 $ (602) $ (602) (3) Stock-related Millions of yen 2011 Notional amount Fair value Unrealized gain (loss) Notional amount 2010 Fair value Unrealized gain (loss) Call options on specific stocks Buy / Call ¥12.860 81 ¥447 — ¥2.832) Thousands of U.Thousands of U.842 1.374 $ (51.916 $ [58.802 ¥ [5. dollar Account payable-nontrade Allocation method for forward foreign exchange contract Total ¥20.759) 2011 Notional amount Fair value Notional amount 2010 Fair value Forward foreign exchange contracts Sell U. dollars 2011 Notional amount Fair value Unrealized gain (loss) Interest-rate swaps Floating to fixed rate $ 89. dollars 2011 Notional amount Fair value Unrealized gain (loss) Financial Section Call options on specific stocks Buy / Call $152.296) ¥14.S.692 ¥ [4.S.S. dollar Account receivable-trade Principle method Allocation method for forward foreign exchange contract Buy U.089 ¥ (86) (27) 1.278 — ¥366 — ¥1.931 — ¥(113) 75 .

dollars 2011 Notional amount Fair value Forward foreign exchange contracts Sell U.Financial Section Thousands of U. Stock option expense included in selling. respectively. 2039 237. The outline of stock options provided by the Company as of March 31. 2009 — August 18. Stock Option Plans The Company and certain of its subsidiaries have implemented stock option plans.S.373 976 $ 5. 2008 — February 16.200 November 17.386 18. 2010 — August 20. 2038 230.S. dollar Account payable-nontrade Allocation method for forward foreign exchange contract Total $ 244. 2011 was as follows: 2007 Stock option 2008 Stock option 2009 Stock option 2010 Stock option Individuals covered by the plan: Directors Corporate officers Total Class and number of stocks (shares): Common stock Date of the grant Required service period Exercise period 101.800 August 17.S. dollar Account receivable-trade Principle method Allocation method for forward foreign exchange contract Buy U. 2008 to February 15. general and administrative expenses for the years ended March 31. 2010 to August 19. 2009 to August 17. subscription rights to shares were granted to directors and corporate officers of the Company. 2008 — November 18.060 $ 263. 2038 172.900 February 15. 2011 and 2010 amounted to ¥650 million ($7.831 thousand) and ¥836 million.100 August 19. (1) Stock options by the Company Under the Company’s stock option plan.410 — 19. 2040 6 20 26 6 20 26 6 18 24 6 18 24 76 Annual Report 2011 . 2008 to November 17.313 — $ 4.

2011 Subscription rights to shares that have been vested (shares): Outstanding as of March 31.500 172.595 ¥1.400 — 93.800 — — — 230. 2010 Granted Forfeited/expired Vested Outstanding as of March 31.100 — 98.197 The fair value of options granted was estimated using the Black-Scholes model with the following assumptions: 2010 Stock option Expected volatility Expected holding period Expected dividend Risk-free rate 35.634 ¥2.338 — ¥1. 2011 Price information of stock options was as follows: — — — — — — — — — — — — — — — — 237.800 — 237.9% 77 . 2010 Vested Exercised Forfeited/expired Outstanding as of March 31.200 230.100 — 237.342 — ¥1.528 ¥1.2% 10 years ¥60 0.The movement of stock options was as follows: 2007 Stock option 2008 Stock option 2009 Stock option 2010 Stock option Subscription rights to shares that have not been vested (shares): Outstanding as of March 31.200 — 200 — 172.900 — 5.100 — — 237.100 2007 Stock option 2008 Stock option 2009 Stock option 2010 Stock option Financial Section Exercise price (yen) Average market price of the stock at the time of exercise (yen) Fair value (date of the grant) (yen) ¥ 1 ¥ 1 ¥ 1 ¥ 1 ¥1.

10 years from the date of the grant 3. subscription rights to shares were granted to directors and employees of the subsidiaries. 10 years from the date of the grant 3 494 497 3 679 682 3 862 865 Exercise period 2003 Stock option 2004 Stock option 2005 Stock option Individuals covered by the plan: Directors Employees Total Class and number of stocks (shares) Common stock Date of the grant Vesting 1. 2001 The options are vested evenly over a period of 5 years from the date of the grant. 2003 The options are vested evenly over a period of 5 years from the date of the grant.Financial Section (2) Stock options by certain subsidiaries Under the subsidiaries’ stock option plan.013. 2005 The options are vested evenly over a period of 5 years from the date of the grant.540 January 12.500 January 22. 10 years from the date of the grant 664. 2002 The options are vested evenly over a period of 5 years from the date of the grant.607 Exercise period 78 Annual Report 2011 . 2004 The options are vested evenly over a period of 5 years from the date of the grant.900 February 7. 10 years from the date of the grant 3 931 934 2 1. 10 years from the date of the grant 940.350 January 17.208 1.565. The outline of stock options provided by the subsidiaries as of March 31.900 April 1.605 1.500 December 3. 2001 The options are vested evenly over a period of 5 years from the date of the grant.861.210 2 1. 10 years from the date of the grant 2. 2011 was as follows: 2001 Stock option (1) 2001 Stock option (2) 2002 Stock option Individuals covered by the plan: Directors Employees Total Class and number of stocks (shares) Common stock Date of the grant Vesting 434.

094 736 40. 2010 Granted Forfeited/expired Vested Outstanding as of March 31.815 1.669 February 24. 10 years from the date of the grant Exercise period The movement of stock options was as follows: 2001 Stock option (1) 2001 Stock option (2) 2002 Stock option Subscription rights to shares that have not been vested (shares): Outstanding as of March 31. 10 years from the date of the grant 1 2.179 1. 2007 The options are vested evenly over a period of 5 years from the date of the grant. 10 years from the date of the grant 2 1. 2009 The options are vested evenly over a period of 5 years from the date of the grant.178 2.559.147 Exercise period 2008 Stock option (2) 2009 Stock option 2010 Stock option Individuals covered by the plan: Financial Section Directors Employees Total Class and number of stocks (shares) Common stock Date of the grant Vesting — 1 1 15. 2008 The options are vested evenly over a period of 5 years from the date of the grant.2006 Stock option 2007 Stock option 2008 Stock option (1) Individuals covered by the plan: Directors Employees Total Class and number of stocks (shares) Common stock Date of the grant Vesting 1.259 1. 2011 Subscription rights to shares that have been vested (shares): Outstanding as of March 31.818 2 2.640 126. 2011 27.676 1. 2010 The options are vested evenly over a period of 5 years from the date of the grant.470 — 11.952 88.860 16.300 January 17.145 2. 2008 The options are vested evenly over a period of 5 years from the date of the grant.725 January 21.258 2. 2006 The options are vested evenly over a period of 5 years from the date of the grant.575 January 17. 10 years from the date of the grant 1.968 — 35.678 3 1.134 1.221. 10 years from the date of the grant 1 2.472.000 June 11.746 — 9.752 52.825 January 16. 10 years from the date of the grant 1.573.550 — — — — — — — — — — — — — — — 79 .331.466 2. 2010 Vested Exercised Forfeited/expired Outstanding as of March 31.

220 402.000 1.795 42.670 10.900 — 183.300 192.120 — 116.730 110.635 192.730 894.225 1.573.800 146.067 1.900 552.000 3.649 80 Annual Report 2011 .630 — 19.291.930 119.225 12.700 — 1. 2010 Vested Exercised Forfeited/expired Outstanding as of March 31.765 — 56.175 35.104.790 1.500 64.730 — — — — — — — — — — 293. 2011 402. 2011 380.950 277. 2011 Subscription rights to shares that have been vested (shares): Outstanding as of March 31.200 115.705 264. 2010 Granted Forfeited/expired Vested Outstanding as of March 31.000 9.898 1. 2011 3. 2010 Vested Exercised Forfeited/expired Outstanding as of March 31.669 192.783 146.052 — 118.000 3.850 264.630 980.930 90.015 432.230 — 42. 2010 Granted Forfeited/expired Vested Outstanding as of March 31.Financial Section 2003 Stock option 2004 Stock option 2005 Stock option Subscription rights to shares that have not been vested (shares): Outstanding as of March 31.065 379.060 11.381.225 — — 42.551 263.887 — 23.318 349.150 303. 2011 Subscription rights to shares that have been vested (shares): Outstanding as of March 31.192. 2010 Vested Exercised Forfeited/expired Outstanding as of March 31.240 5.338.570 181.510 — 450 293.500 303.030 293.607 33.000 — — 6.035 973.000 — — 3.234 45.470 303.200 599.060 — 2006 Stock option 2007 Stock option 2008 Stock option (1) Subscription rights to shares that have not been vested (shares): Outstanding as of March 31.785 108.233 286.980 185.070 2008 Stock option (2) 2009 Stock option 2010 Stock option Subscription rights to shares that have not been vested (shares): Outstanding as of March 31. 2011 Subscription rights to shares that have been vested (shares): Outstanding as of March 31. 2010 Granted Forfeited/expired Vested Outstanding as of March 31.

373 93.578 17.50 2007 Stock option 538.57 662.72% 19.62 708.Price information of stock options was as follows: 2001 Stock option (1) 2001 Stock option (2) 2002 Stock option Exercise price (INR) Average market price of the stock at the time of exercise (INR) Fair value (date of the grant) (INR) 336.06 Financial Section 2010 Stock option Exercise price (INR) Average market price of the stock at the time of exercise (INR) Fair value (date of the grant) (INR) 561.5 years 3.3% 6.93 INR 7.15 754.000 81 . dollars Comprehensive income attributable to owners of the parent Comprehensive income attributable to minority interests Total comprehensive income ¥41.324 $107.00 582.08 308.00 — 668.50 586.929 1.169 $598.80 481.733 ¥49. 2010 was as follow: Millions of yen Thousands of U. Consolidated Statements of Comprehensive Income (1) Comprehensive income for the fiscal year ended March 31.892) 2.291) 237 ¥2.64 The fair value of options granted was estimated using the Black-Scholes model with the following assumptions: 2010 Stock option Expected volatility Expected holding period Expected dividend Risk-free rate 40.19 498.946 7.679 $505.89 216.50 506.89 586.00 2004 Stock option 372.07 2008 Stock option (2) 430.542 (2) Other comprehensive income for the fiscal year ended March 31.50 2005 Stock option Exercise price (INR) Average market price of the stock at the time of exercise (INR) Fair value (date of the grant) (INR) 283.00 548.856 $ 28. 2010 was as follow: Millions of yen Thousands of U.00 543.04 486.97 450.57 2009 Stock option 391.S.00 — 733.449 (8.18 2008 Stock option (1) Exercise price (INR) Average market price of the stock at the time of exercise (INR) Fair value (date of the grant) (INR) 392.50 2003 Stock option 297.50 507.29 416. dollars Valuation difference on available-for-sale securities Deferred gains or losses on hedges Foreign currency translation adjustment Share of other comprehensive income of associates accounted for using equity method Total other comprehensive income ¥8.00 2006 Stock option 496.00 536.458 (99.00 504.S.50 512.25 598.50 525.

dollars Year-end cash dividends of ¥30.. Millions of yen Thousands of U.00 ($0. 2010 to December 31.117 $254. Going forward. employees. Inc.S.422 (2) Acquisition of shares in Plexxikon Inc. Percentage of voting rights acquired: 100% ( f ) Acquisition funding method Internally funded 82 Annual Report 2011 . also helps to bolster the Group’s in-house drug discovery research capabilities across Japan. 2011.469 thousand Sales: US$39. Additional milestone payments of up to US$130 million are payable on the launch of the most advanced program. PLX4032.S.36) per share ¥21. cardio-renal disease and central nervous system Paid-in capital: US$4. 2011 were resolved at the annual general meeting of shareholders of the Company held on June 27. completed the acquisition of all shares of Plexxikon Inc. On April 1.324 thousand (for the period from January 1. Subsequent Events (1) Proposal for appropriations of retained earnings The following appropriations of retained earnings at March 31. (USA) Nature of the acquired business: Research and development. mainly in areas of oncology. The acquisition of Plexxikon Inc. (a) Purpose of acquisition The Group has designated creation of innovative pharmaceuticals as a key management issue and aims to develop the drug pipeline in priority therapeutic areas. Holdings. 2011 (e) Acquisition price and percentage of voting rights acquired Acquisition price: Total cost on completion of acquisition was US$823 million. investment funds and other shareholders (c) Name. the U. the Company’s consolidated subsidiary Daiichi Sankyo U.S. whilst reinforcing functional capabilities to promote the discovery of first-in-class molecules. nature of business and size of acquired company Name of the acquired company: Plexxikon Inc. 2011. inflammation. (b) Shares acquired from: Founder(s). Europe and India.Financial Section 20. Providing truly innovative oncology therapies is one of its main goals over the medium and long-term. 2010) (d) Date of acquisition April 1. the Group aims to leverage the distinctive features of these research facilities in its global research programs.

Financial Section 83 .

497 201.011. LIMITED September 28. Nihonbashi-honcho. (trust account) Nippon Life Insurance Company SSBT OD05 OMNIBUS ACCOUNT .20 28.251 8.000. import.948 13.659 14.com Research and development.000 Number of shares issued Number of shareholders 709. Ltd.31 2.473 37. (trust account) 44.791 8.TREATY CLIENTS 18% 43% 29% State Street Bank and Trust Company Sumitomo Mitsui Banking Corporation JP Morgan Chase Bank 385147 Tokio Marine & Nichido Fire Insurance Co. Japan http://www.000 million 30. 2011) Company Name Established Headquarters URL Business Paid-in Capital Employees ■ Stock Information Common Stock Number of shares authorized 2.591 8.57 5. Ltd. manufacturing. Mizuho Corporate Bank account) Total 84 Annual Report 2011 . Tokyo 103-8426.343 114.824 DAIICHI SANKYO COMPANY.89 1.488 (consolidated) ■ Distribution of shareholders Financial institutions Individuals and others Financial instrument firms Foreign investors Other companies Treasury stock ■ Major Shareholders Name Number of Shares Held (Thousands of Shares) Ratio (%) The Master Trust Bank of Japan.49 3% 6% 1% Japan Trustee Services Bank..92 1.11 1.24 1.31 5. Ltd.645 13. sales and marketing of pharmaceutical products ¥50.73 1. Chuo-ku. (retirement benefit trust.413 12.800.21 1. Mizuho Corporate Bank. 2005 3-5-1.703 39.daiichisankyo. Mizuho Trust & Banking Co. Ltd..975 6. Ltd.Corporate Information Corporate Data ■ Corporate Profile (As of March 31.

on October 1. LTD. DAIICHI SANKYO MEXICO S.A. DAIICHI SANKYO ALTKIRCH SARL U3 Pharma GmbH DAIICHI SANKYO DEVELOPMENT LTD. LTD. etc. LTD. Şti DAIICHI SANKYO IRELAND LTD.. and beverages.. DAIICHI SANKYO. LTD. DAIICHI SANKYO KOREA CO. development. Country Japan Japan Japan Japan Japan Japan Japan Japan Japan Japan U. Ltd.. DAIICHI SANKYO TAIWAN LTD.A. Switzerland Portugal Austria Belgium Netherlands Turkey Ireland France Germany U. and agency services of pharmaceuticals Marketing of pharmaceuticals Manufacturing and sales of pharmaceuticals Manufacturing and sales of pharmaceuticals Sales of pharmaceuticals Research and development of pharmaceuticals Research. among others Manufacturing of pharmaceuticals Manufacturing of active pharmaceutical ingredients and intermediates Distribution and related affairs Research and development of pharmaceuticals Support of research and development of the Group Business support of the Group Business support of the Group Research and development.V. DAIICHI SANKYO DEUTSCHLAND GmbH DAIICHI SANKYO ITALIA S. and sales of pharmaceuticals Research. DAIICHI SANKYO CHEMICAL PHARMA CO. manufacturing. LTD. and sales of pharmaceuticals Corporate Information Kitasato Daiichi Sankyo Vaccine Co. and sales of pharmaceuticals Research and development of pharmaceuticals Manufacturing and sales of pharmaceuticals and veterinary medicine Development and manufacturing of pharmaceuticals Sales of pharmaceuticals Sales of pharmaceuticals Sales of pharmaceuticals Sales of pharmaceuticals Sales of pharmaceuticals Sales of pharmaceuticals Sales of pharmaceuticals Sales of pharmaceuticals Sales of pharmaceuticals Sales of pharmaceuticals Sales of pharmaceuticals Sales of pharmaceuticals Manufacturing of materials. DAIICHI SANKYO LOGISTICS CO. DAIICHI SANKYO RD ASSOCIE CO. and sales of vaccine Research. LTD.V. Luitpold Pharmaceuticals.. and sales of pharmaceuticals Sales of pharmaceuticals Sales of pharmaceuticals Import.K. LTD. ASUBIO PHARMA CO.V.-S. DAIICHI SANKYO AUSTRIA GmbH DAIICHI SANKYO BELGIUM N.S. for pharmaceuticals Ethical pharmaceutical research Ethical pharmaceutical development Development.K.A.. U. DAIICHI SANKYO PHARMACEUTICAL (SHANGHAI) CO.p. LTD. medical equipment. LTD.S.. cosmetics. DAIICHI SANKYO PROPHARMA CO. LDA. LTD. DAIICHI SANKYO UK LIMITED DAIICHI SANKYO (SCHWEIZ) AG DAIICHI SANKYO PORTUGAL.. DE C.A. DAIICHI SANKYO HONG KONG LIMITED DAIICHI SANKYO BRASIL FARMACÊUTICA LTDA. sales.Global Network Major Group Companies (Consolidated Subsidiaries) (As of July 2011) Company DAIICHI SANKYO ESPHA CO. DAIICHI SANKYO İLAÇ TİCARET Ltd.A. DAIICHI SANKYO ESPAÑA. DAIICHI SANKYO (THAILAND) LTD. DAIICHI SANKYO VENEZUELA S. 2011. 85 . development. LTD..A.S.* DAIICHI SANKYO BUSINESS ASSOCIE CO.A.. DAIICHI SANKYO HEALTHCARE CO. manufacturing.. DAIICHI SANKYO INDIA PHARMA PRIVATE LIMITED Ranbaxy Laboratories Limited * DAIICHI SANKYO RD ASSOCIE CO. U.S. Plexxikon Inc... development. DAIICHI SANKYO HAPPINESS CO.A. DAIICHI SANKYO NEDERLAND B. DAIICHI SANKYO PHARMACEUTICAL (BEIJING) CO.. manufacturing.A.. manufacturing. China China Taiwan Korea Thailand China Brazil Venezuela Mexico India India Principal Activities Manufacturing and sales of pharmaceuticals Manufacturing and sales of OTC drugs. DAIICHI SANKYO EUROPE GmbH DAIICHI SANKYO FRANCE S. Germany France Germany Italy Spain U. food.. will be renamed DAIICHI SANKYO RD NOVARE CO. LTD. LTD. Inc. INC. LTD. S.

Japan http://www.3-5-1. Chuo-ku. Nihonbashi-honcho.com .daiichisankyo. Tokyo 103-8426.

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