02.07/藤沢薬品AR 2002 表紙C4-C1 Y M C B

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ANNUAL

REPORT

2002

Printed on recycled paper in Japan

02.07/藤沢薬品AR 2002 表紙C2-C3 DIC19 B

Corporate MissionFujisawa is a research-driven pharmaceutical company active in the world’s major markets —

Japan, North America, Europe and Asia — with sales outside Japan accounting for around

forty-five percent of net sales. True to its corporate mission “Fujisawa contributes to

healthier, more prosperous lives around the world by exploring the frontiers of human

health and disease,” Fujisawa is firmly committed to innovative research to satisfy unmet

medical needs and contribute to the progress of medical care.

Fujisawa Pharmaceutical Company Limited and Consolidated Subsidiaries

Financial HighlightsYears ended March 31

Contents1 Message from the President4 Principal Business Data6 Worldwide Operations

7 Highlights of the Year8 Japan

10 North America12 Europe14 Asia15 Top Ten Ethical Pharmaceuticals by Sales16 Other Businesses

18 R&D Activities22 Environmental Protection24 Board of Directors / Members of Management Committee25 Review of the Year

25 Selected Financial Data26 Financial Review28 Business Review

50 Management and Corporate Auditors51 Corporate Directory53 Stock Information

Statements made in this annual report with respect to Fujisawa’s current plans, estimates, strategies and beliefs and other statements that arenot historical facts are forward-looking statements about the future performance of Fujisawa. These statements are based on management’scurrent assumptions and beliefs in light of the information currently available to it and involve known and unknown risks and uncertainties.Consequently, undue reliance should not be placed on these statements. Fujisawa cautions the reader that a number of important factorscould cause actual results to differ materially from those discussed in the forward-looking statements. Such factors include, but are notlimited to: (i) changes in general economic conditions in, and the Pharmaceutical Affairs Law and other laws and regulations relating to,Fujisawa’s markets, (ii) currency exchange rate fluctuations, (iii) delays in new product launches, (iv) the inability of Fujisawa to marketexisting and new products effectively, (v) Fujisawa’s ability to continue to research and develop products accepted by customers in highlycompetitive markets and (vi) infringements of Fujisawa’s intellectual property rights.

Stock Information

Fujisawa Pharmaceutical Company Limited

Founded:January 1894

Date of Incorporation:December 20, 1930

Paid-in Capital:¥38,588 million

Number of Shareholders:11,985

Issued and Outstanding Number of Shares:330,183,034

Independent Certified Public Accountants:PricewaterhouseCoopersNihon Seimei Imabashi Bldg.,7th Floor 3-1-7, Imabashi,Chuo-ku, Osaka 541-8582,Japan

Stock Exchange Listing:Tokyo, Osaka, Nagoya

Transfer Agent:UFJ Trust Bank Limited6-3, Fushimi-machi 3-chome, Chuo-ku, Osaka 541-8502

Major Shareholders:Nippon Life Insurance Co.The Chase Manhattan Bank, NA, London (SL Omnibus Account)Japan Trustee Services Bank, Ltd. (Trust Account)The Mitsubishi Trust & Banking Corporation (Trust Account)UFJ Bank Limited NIPPONKOA Insurance Company, Limited UFJ Trust Bank Limited (Trust Account A)UFJ Trust Bank Limited (Daido Life Insurance Co. Account)The Bank of Tokyo-Mitsubishi, Ltd.State Street Bank & Trust Co.

(As of March 31, 2002)

For InformationCorporate CommunicationsFujisawa Pharmaceutical Co., Ltd.� Osaka Head Office� Tokyo Head Office

http://www.fujisawa.co.jp(Fujisawa Pharmaceutical Co., Ltd.)

http://www.fujisawa.com(Fujisawa Healthcare, Inc.)

http://www.fujisawaeurope.com/(Fujisawa GmbH)

http://www.pmpinc.com/(PMP Fermentation Products, Inc.)

http://www.fujisawa.com.tw/(Fujisawa Taiwan Co., Ltd.)

53

Millions of yen Thousands of U.S. dollars*

2002 2001 2002 Change (%)

Net sales ......................................... ¥341,356 ¥297,517 $2,566,586 114.7Income before income taxes ............... 47,007 36,190 353,436 129.9Net income ..................................... 26,151 20,529 196,624 127.4Shareholders’ equity ......................... 317,870 278,581 2,390,000 114.1

Amounts per share (in yen and dollars):Net income

Basic ...................................... ¥ 80.07 ¥ 63.62 $ 0.60 125.9Diluted ................................... 78.14 61.76 0.59 126.5

Cash dividends ............................. 16.00 12.00 0.12 133.3

Total assets ..................................... ¥474,546 ¥462,325 $3,568,015 102.6Research and development expenses ... 57,093 52,016 429,271 109.8

* The U.S. dollar amounts in this report represent, for convenience only, translations of Japanese yen at the rate of ¥133=US$1.

1

I am very pleased to report that Fujisawa

achieved record revenue and profits for the

year ended March 2002. Net sales rose to

¥341,356 million (US$2,567 million), up

14.7% over the year before, to set a histori-

cal high for the third consecutive year.

Operating income and net income jumped

39.4% to ¥46,852 million (US$352 million),

and 27.4% to ¥26,151 million (US$197 mil-

lion), respectively. Both operating income

and net income surpassed the record highs

reported for the year ended March 2000.

Message from the President

Business expansion was fueled by sales of

the immunosuppressant Prograf ®, which

achieved 43% growth with ¥72.4 billion

(US$544 million) over the year earlier.

Prograf ® has been the key growth driver over

the past few years, and is expected to con-

tinue this role over the coming years. Sales

of Protopic ® for atopic dermatitis, another

tacrolimus product and first in the class of

topical immunomodulators, or TIMs, also

increased.

2

Our global business is growing in line

with our expectations. In particular, North

Amer ican business, represented by

Fujisawa Healthcare, Inc., showed strong

growth in local currency terms, with sales

rising to US$703 million for the term from

US$509 million for the year before. Its sales

are now projected to reach US$1 billion a

few years from now. In Europe, we success-

fully completed the reorganization of our

European operations in January 2002. We

now have sales and marketing operations in

key European countr ies under Fujisawa

GmbH. The largest operational unit is the

newly created Fujisawa Deutschland GmbH,

which markets a var iety of products in

German-speaking countries.

Japan also reported increases in sales thanks to

products recently launched. These products

are expected to help us achieve our target

share of 3% in the Japanese ethical pharma-

ceutical market as of March 2003.

Strengthening sales and promotional activities

here is another item on the agenda. Toward

this end, we reshaped our field organization

in April 2002, increasing the number of our

area sales offices to 99 from 71.

2000 2001 2002 2005

Progress under the VISION 2005Return on EquityNet SalesOverseas SalesJapanese SalesNet Income

0

100

200

300

400

(¥bn)9.5%

7.8%

8.8%

10%

Years to March 31

400

40

3

Our commitment to innovative research

remains unchanged. Investment in research

for the year ended March 2002 came to

¥57,093 million (US$429 million), equiva-

lent to 16.7% of net sales, up 9.8% over the

previous year. We intend to continuously

invest in research and development, includ-

ing genomic research. Clinical development

of in-house generated compounds is also

progressing steadily. We filed an NDA for

micafungin, an injectable antifungal agent, in

Japan in June 2001. In the US, we submitted

an NDA for micafungin in April 2002 fol-

lowed by the Canadian submission of June

2002. We plan to soon file an NDA in

Europe. Furthermore, we are actively seeking

opportunities for in-licensing and product

acquisition. During the term, we acquired

various compounds either in clinical devel-

opment or already marketed.

Believing that our management system must

be able to coordinate our global business

development efforts, Fujisawa has revised its

headquarters organization effective June

2001 to strengthen global headquarters func-

tions. The Global Corporate Strategic

Planning group, a newly established unit, is

now responsible for global corporate

strategic planning in the fields of R&D,

manufacturing, and sales and marketing. The

development division has been reorganized

to promote global development of Fujisawa

products in an efficient and speedy manner.

I am confident that Fujisawa will be able to

achieve the goals set out in the long-term

management policy VISION 2005. We are

now looking beyond the year 2005 to secure

sustainable growth. To this end, we are

devising measures to improve profitability,

which is essential for us to become

competitive in the global market and

achieve our ultimate goal of becoming a

global megaplayer.

Last not but least, we successfully made

a global offering of the Fujisawa shares pre-

viously held by our main banks in 2001. I

believe this success is attributable in large

part to our long-standing commitment to

maintaining good communications with the

financial community. From here on, too, we

will remain dedicated to the realization of

a mutually beneficial dialog with our

stakeholders.

Hatsuo Aoki, Ph. D.President and Chief Executive Officer

Principal Business Data

4

1998 1999 2000 2001 2002

(¥ bn)Net Sales

350

280

210

140

70

0

281.6 277.3 289.1 297.5

341.4

1998 1999 2000 2001 2002

(¥ bn)Total Assets

500

400

300

200

100

0

1998 1999 2000 2001 2002

(¥ bn)

50

40

30

20

10

0

15

12

9

6

3

0

7.9

12.0 12.1

11.3

Operating Income and Ratio to Net Sales

Operating Income Ratio to Net Sales(%)

13.7

1998 1999 2000 2001 2002

189.9

261.9

303.8

260.9

Current Ratio (%)

169.5

350

280

210

140

70

0

1998 1999 2000 2001 2002

(¥ bn)

–10

(1.5)

7.9

6.9

(0.5)

Ratio to Net Sales(%)

40

30

20

10

0

08

6

4

2

0

–2

Net Income (Loss) and Ratio to Net Sales

Net Income (Loss)

3.2

7.7

1998 1999 2000 2001 2002

–5

–10

(%)

15

10

5

0

Return on Equity

491.4

436.2 421.7

462.3 474.5

22.2

33.4 34.8 33.6

8.9

22.920.5

26.2

46.9

(0.7)

3.9

9.5 7.8 8.8

(Years ended March 31)

5

Pharmaceuticals 91.1%

Ethical Pharmaceutical 87.2%

Other Business 8.9%

Sales by Business Segment

See page 28

OTC Drugs 3.9%

Digestive system drugs2.2%

Anti-allergy drugs 4.8%

Sales of Ethical Pharmaceuticals byTherapeutic Category

Cardiovascular and respiratory drugs

16.2%

Nervous system and sensory organ drugs

13.9%

Metabolic drugs24.5%

Others 11.0%Antibiot ics and biologica l

preparat ions 27.4%

1998 1999 2000 2001 2002

(¥ bn)

60

48

36

24

12

0

Ratio to Net Sales(%)

30

24

18

12

6

0

R&D Expenses and Ratio to Net Sales

R&D Expenses

16.7

41.5

57.1

41.845.6

52.0

1998 1999 2000 2001 2002

(¥ bn)

25

20

15

10

5

0

Acquisition of Property, Plant and Equipment

14.7

17.5

19.8 19.7

24.4

1998 1999 2000 2001 2002

(¥ bn)

25

20

15

10

5

0

Depreciation and Amortization

13.914.9 15.6 16.1

20.4

19991998 2000 2001 2002

(¥ bn)

80

60

40

20

0

100

Total Sales of Tacrolimus(Prograf & Protopic )

51.9

81.2

42.2

33.3

21.7

® ®

Prograf Protopic ® ®

14.7 15.1 15.817.5

See page 29

Worldwide OperationsFounded in 1894, Fujisawa has steadily evolved

as a research-driven pharmaceutical company

and is active in the world’s major pharmaceuti-

cal markets — Japan, North America, Europe

and Asia.

The Company’s overseas operations, account-

ing for 44.1% of net sales for the year ended

March 2002, are growing significantly as sales

of its flagship product Prograf ® keep rising.

Protopic®, the first TIM in the world and the

second global product following Prograf ®, is now

making successful inroads into world markets.

6

Highlights of the Year

� Fujisawa achieved record revenue and profits —

net sales of ¥341,356 million (US$2,567 million),

operating income of ¥46,852 million, and net

income of ¥26,151 million (US$197 million).

� Fujisawa Healthcare, Inc. posted over US$700

million in sales thanks to robust growth in sales of

Prograf ®, Adenoscan®, and AmBisome® together with

the newly launched Protopic®.

� The European business of Fujisawa is now

streamlined under Fujisawa GmbH after the reorga-

nization was completed by the creation of Fujisawa

Deutschland GmbH in January 2002.

� Prograf ® achieved 43% growth with ¥72.4 bil-

lion, and is now marketed in 57 countries follow-

ing the latest launch in Romania in March 2002.

� Protopic ® is now moving to the stage of global

marketing. It is now available in Japan, the US,

Canada and some European countries including

Germany and the UK. Protopic ® has also been

approved in South Korea and Taiwan.

� Micafungin, an injectable antifungal agent and

Fujisawa’s third global product following Prograf ®

and Protopic®, is at the final stage of development.

A New Drug Application was filed in Japan in June

2001, followed by NDAs in the US in April 2002

and in Canada in June 2002.

7

(For the year ended March 2002)

8

JapanEthical PharmaceuticalsThe Japanese pharmaceutical market reg-

istered growth of 3-4 percent for the year

ended March 2002 according to media

reports, mainly because there was no price

cut on the National Health Insurance Drug

Price List. However, an overall 6.3% price

cut implemented in April 2002 is expected

to hit the Japanese market hard in the year

ending March 2003.

In this climate, Fujisawa was able to expand

its domestic ethical pharmaceuticals business

in the term mainly thanks to the full-year

contribution of products launched in the pre-

vious fiscal year, in particular, the hypnotic

Myslee ® (zolpidem tartrate) in December

2000, and the atypical antipsychotic agent

Seroquel ® (quetiapine fumarate) launched in

February 2001. These products together with

the antidepressant Luvox ® (fluvoxamine

maleate) have pushed Fujisawa to the number

one place in the central nervous system

(CNS) drug market in Japan.

Further, the Company succeeded in acquiring

two products already on the market in its

anti-infective product line during the term,

the glycopeptide antibiotic Targocid ® Injection

(teicoplanin) from Aventis Pharma Ltd., and

the 4th-generation injectable cephem

antibiotic Keiten® (cefpirome sulfate) from

Chugai Pharmaceutical Co., Ltd. Fujisawa

started distr ibution of Targocid ® Injection,

which has a stronger antibacterial effect on

MRSA than existing products, in January

2002. The Company also started marketing

and promotional activities for Keiten® in

March 2002.

Currently, promotional activities for Fujisawa

products are carried out by about 1,100 med-

ical representatives (MRs) deployed nation-

wide. Of these, about 110 MRs are assigned

as a special sales force focusing on dermatolo-

gists, pediatricians, ophthalmologists and

otorhinolaryngologists, in the general practi-

tioner market. Further, the number of antipsy-

chotics managers has been nearly doubled

9

capsules to the North American market,

which had previously been served by Fujisawa

Ireland, was commenced in January 2002.

Further, production of Protopic ® (tacrolimus

ointment) for the Japanese market has been

switched to new facilities for formulation and

packaging at the Toyama plant from the

Grand Island, New York plant of Fujisawa

Healthcare, Inc. since the spring of 2002.

The production of micafungin is divided

among the three Japanese plants of the

Company — fermentation at the Nagoya

Plant, synthesis in Toyama, and formulation

and packaging at the Takaoka Plant. All the

facilities are now operational and await the

start of commercial production of micafungin

upon receipt of approval.

OTC DrugsFujisawa’s OTC drug business covers a wide

range of therapeutic categories from Precol ®

brand cold remedy, anti-allergic AG Nose and

AG Eyes, Neuvita® Gold vitamin preparations,

and Pyroace® brand remedy for athlete’s foot,

to Fujipap® anti-inflammatory and analgesic

plasters, and Eva Youth® women’s health prod-

ucts. On top of sales and marketing activities

fully utilizing information technology,

Fujisawa actively pursues business expansion

through introduction of new products,

including line extensions of existing products.

New products launched during the year

ended March 2002 include: Privie ®7 and

Privie®10 medicinal lotion for skin care, New

Fujisawa Urea Cream 20% medicinal cream for

skin care for topical use, Eurax® Cool Spray,

and Eurax® Cool Liquid.

Fujisawa Japan coversthe full range of thera-peutic areas. To suc-ceed in the fiercecompetition in thepharmaceutical market,a comprehensive mar-keting strategy cov-ering all our productsis crucial. It is myassignment to con-tribute to the achieve-ments of our sales forceby analyzing the mar-ket, creating productportfolios, and coordi-nating upcoming newproduct launches suchas micafungin andProtopic® for pediatricuse.

Takahide KitadaAssociate DirectorProduct Planning &Marketing

from the level of two years ago. An increase in

the number of sales offices from 71 to 99 on

reshaping the field organization effective April

2002 has now enabled the MRs to more

intensively cover their territories.

As for production, the Toyama Plant now

supplies Prograf ® (tacrolimus) capsules both to

Japan and North America. Supply of Prograf ®

10

North AmericaProtopic® is the latest product offered in the US

by Fujisawa Healthcare, Inc. located in

Deerfield, IL. Since its debut in early 2001,

Protopic® has been widely appreciated as a new

therapeutic alternative to conventional thera-

pies since the introduction of topical steroids

more than 40 years ago. This important addi-

tion to the product portfolio illustrates the

growing presence of Fujisawa Healthcare in

the US pharmaceutical market.

With a workforce of over 700, Fujisawa

Healthcare, Inc. is instrumental in promoting

the global business development of Fujisawa.

The current product portfolio offers pharma-

ceuticals in the immunology, anti-infective

(systemic antifungal infections), cardiovascular

(pharmacologic stress imaging, etc.) and der-

matology therapeutic areas.

Prograf ® is the leading product for Fujisawa

Healthcare and showed a sales increase of more

than 20%. Prograf ® is now used for nearly 85%

of new patients receiving a liver transplant.

Currently, more than 50% of new kidney

transplant recipients take Prograf ®, and this

number continues to grow.

The pharmacologic stress imaging agent

Adenoscan® (adenosine injection), together

with Adenocard ® (adenosine injection) for

paroxymal supraventr icular tachycardia

(PSVT), is a key product in the cardiovascular

franchise. Adenoscan® leads a growing pharma-

cologic stress imaging agent market with over

50% market share. The systemic antifungal

agent AmBisome® (liposomal amphotericin B)

also increased its sales in a fiercely competitive

marketplace.

Fujisawa Healthcare is very active in clinical

development and is also seeking opportunities

for in-licensing and product acquisition.

Evidence of this can be seen in the

completion of the clinical development pro-

gram for micafungin and the submission of a

New Drug Application to the FDA at the end

of April 2002.

11

In dermatology, Fujisawa Healthcare

acquired the exclusive North American mar-

keting and distribution rights to Atrisone ®, a

dapsone topical gel from Atrix Laboratories,

Inc. in October 2001. Atrisone ® is currently

in Phase III clinical studies for the treatment

of acne and in pilot studies for additional

indications.

Further, clinical studies are ongoing both for

CVT-3146, a selective A2a agonist as a second

generation pharmacologic cardiac stress imaging

agent from CV therapeutics, and for the

injectable formulation of DTI-0009, a selec-

tive A1 agonist for the treatment of atrial fib-

rillation and flutter and PSVT from Aderis

Pharmaceuticals, Inc.

The Grand Island, New York plant of Fujisawa

Healthcare for the formulation and packaging

of Protopic®, manufactures the product for the

North American market and the European

market (for Europe, formulation only).

In Canada, Fujisawa Canada, Inc., a wholly

owned subsidiary of Fujisawa Healthcare, is

expanding its business thanks to Prograf ®.

Further, Fujisawa Canada launched Protopic® in

September 2001 and obtained approval for the

extension of the indication for AmBisome®.

The Canadian launch of Protopic®, the third in

the world, came just seven months after its US

launch.

Cefdinir is marketed as Omnicef ® by Abbott

Laboratories in the US. Omnicef ® doubled its

sales to $88 million in 2001. While Omnicef ®

is available in capsule and oral suspension for-

mulations, its better tasting oral suspension

formulations are widely accepted because taste

is especially important for children. Omnicef ®

has now become the fourth-best-selling

antibiotic suspension product in the US, and

is an integral part of Abbott’s anti-infective

portfolio.

Accepting responsibilityfor growth and develop-ment, Fujisawa Health-care, Inc. is committedto excellence. Throughtraining and develop-ment, we will continueto provide the necessarytools that will enable allFujisawa Healthcare,Inc. employees to developand operate at thehighest level of profes-sionalism and salessuccess.

Karen L. TurnerManager, Sales TrainingHospital ProductsFujisawa Healthcare, Inc.

12

EuropeFujisawa GmbH, the European Headquarters

of Fujisawa, celebrated its 10th anniversary in

February 2002. Since its inception in 1991,

Fujisawa GmbH has been steadily growing,

driven by sales of Prograf ®. 1,300 people of

more than 30 nationalities now work for

Fujisawa GmbH and its subsidiaries, located in

Germany, France, the UK, Italy, Spain,

Austr ia, and Sweden, where Fujisawa

Scandinavia AB was established in April 2001.

Fujisawa GmbH also carries out promotional

activities in the Benelux countries, Ireland,

Poland, the Czech Republic and Hungary.

In the network of Fujisawa GmbH, Fujisawa

Deutschland GmbH has strategic significance.

The reorganization of Fujisawa’s European

operations in order to improve operational

efficiency and profitability, announced in

January 2001, culminated in the creation of

Fujisawa Deutschland GmbH in January 2002.

Fujisawa Deutschland GmbH, located in

Munich, was formed through the merger of

the German operations of Fujisawa GmbH

into Klinge Pharma GmbH. Pr ior to the

merger, Fujisawa GmbH acquired the remain-

ing minority stake at Klinge and made it a

wholly owned subsidiary.

Fujisawa Deutschland GmbH focuses on sales

and marketing activities, covering both hospi-

tal and general practitioner markets in the

German-speaking countr ies — Germany,

Austr ia and Switzerland. Its product

portfolio includes Prograf ®, Protopic ®, the oral

cephalospor in antibiotic Suprax® (cefixime),

the lipid-lowering agent Cranoc ® (fluvastatin),

anti-asthmatics and oncology products.

Further, in order to reinforce the product

portfolios not only of Fujisawa Deutschland

GmbH, but also of the entire European

operations of Fujisawa, in-licensing and

product acquisition activities are also pursued.

I have been working forFujisawa GmbH forthree years focusing onthe submission andsuccessful registration ofProtopic® in Europe —an exciting and chal-lenging project. Workingin an internationalenvironment and beinginvolved in the devel-opment and registra-tion of innovativemedicinal products ishighly motivating andI look forward to thenext goal, i.e. the sub-mission of the marketingauthorisation applicationfor micafungin in Europe.

Rosa Maria KleinSenior Manager, Regulatory AffairsFujisawa GmbH

13

Prograf ® is now commercially available in 18

European countries, with the latest launch in

Romania in March 2002. Of those, 16 coun-

tries are covered by Fujisawa affiliates, while

Portugal and Greece are covered by local part-

ners. The European launch of Protopic ® started

in Switzerland in January 2002. On February

28, the European Commission issued a

Marketing Authorization for Protopic ® valid

throughout the European Union, and in

Norway and Iceland. Following the launch of

Protopic® in Germany and the UK, both in

April, Protopic® was launched in Ireland in

May, Sweden in June and Austria early July.

Protopic® will soon be available in France, Italy

and other European countries.

At the 20th World Congress of Dermatology

in Paris, France early July 2002, Protopic ®

received high marks from the audience and is

being recognized as a new therapeutic option

for atopic dermatitis.

Fujisawa Ireland Limited, located in Killorglin,

serves as a base for the formulation and pack-

aging of Prograf ® ampoules and capsules to the

world market except for capsule formulations

to Japan and North America, as well as the

packaging of Protopic® to the European market.

In addition to coverage by the Fujisawa group

as Suprax ® in Germany and Aerocef ® in

Austr ia, cefixime is available in many

European countries through local partners,

under various names such as Oroken®, Suprax®

and Cefixoral ®. A dispersible tablet formulation

of cefixime has been added to the product line

in Italy since January 2002, and is now well

accepted.

14

Fujisawa has its own business operations inTaiwan and South Korea and has gained afoothold in China through its Hong Kongaffiliate. The Company also has local partnersin the region to distribute its products, mainlythe cephalosporin products.

Fujisawa Taiwan Co., Ltd., which celebratedthe 40th anniversary early 2002, is positionedamong the top-tier pharmaceutical companiesin Taiwan. The Company’s Taiwan operationscover the whole range of functions from clini-cal development and manufacturing to salesand marketing. They cover a wide range ofproduct categories comprised of in-housegenerated products of Fujisawa, such asPrograf ® and Cefspan® (cefixime), as well asproducts from partners, such as the anti-asthmatic and anti-allergic Intal ® (sodium cro-moglicate). Stilnox® (zolpidem tartrate) fromSanofi-Synthelabo of France has beenrobustly growing since its launch in June 1997and now holds the first place in the salesrankings of Fujisawa Taiwan. The antiglau-coma Rescula® (isopropyl unoprostone) fromR-Tech Ueno, Ltd. is another new productlaunched in December 2001. Fujisawa Taiwanreceived marketing approval for Protopic ® inDecember 2001 and plans to launch it in thesummer of 2002.

As for the huge Chinese market, Fujisawaoperates the Prograf ® business throughFujisawa Hong Kong Ltd., a wholly ownedsubsidiary of Fujisawa Taiwan. Sales ofPrograf ® have been expanding since its launchin 1997 thanks to promotional activities byFujisawa Hong Kong through its offices inHong Kong, Beijing, Shanghai andGuangzhou. Protopic ®, filed in China inSeptember 2001, is now under review by thegovernment authorities. Apart from Prograf ®

and Protopic®, the Company’s products are dis-tributed through local partners.

In South Korea, Fujisawa Korea Ltd. is responsi-ble for the Prograf ® business and has succeededin expanding sales of Prograf ®. Further, FujisawaKorea is now ready to launch Protopic®, whichreceived marketing approval in October 2001. Inthe oral cephalosporin market in South Korea,Suprax® by Dong A Pharmaceutical Co., Ltd.has kept the position of top brand product andOmnicef ® has become the fourth-best-sellingbrand product since its launch by JE ILPharmaceutical Co., Ltd. in 1999.

AsiaWorking smart – focus,flexibility and futureprospect (3F spirit) tocope with FujisawaTaiwan’s fast growth isalways my best guidelineas a frontline managerworking in Taichung,central Taiwan. Thanksto the strong supportfrom the Company andco-operation from ourcolleagues, the businessis running well. I aim toreach another recordhigh as my present toFujisawa Taiwan incelebration of its 40thanniversary this year.

Ming-Juu PengSupervisorTaichung OfficeFujisawa Taiwan Co., Ltd.

15

No.1 Prograf®

¥72.4 billion Immunosuppressants

No.2 Cefzon®

¥28.4 billionOral cephalosporin

No.3 Adenoscan®

¥19.2 billionPharmacologic stress imaging agent

No.4 Intal®¥14.1 billionAnti-asthmatic and anti-allergic

No.5 Nivadil®¥12.9 billionAntihypertensive

No.6 AmBisome®

¥11.8 billion Antifungal

No.7 Cefamezin®

¥11.5 billionInjectable cephalosporin

No.8 Cefspan®

¥9.3 billionOral cephalosporin

No.9 Protopic®

¥8.8 billionTopical immunomodulator

No.10 Dogmatyl®¥8.3 billionAnti-ulcer and neuroleptic

(Year ended March 31, 2002)

Top Ten Ethical Pharmaceuticals by Sales

16

Other Businesses

Non-invasive Intermittent Positive Pressure

Ventilation (NIPPV). Two home-care medical

devices provided by the US-based Respironics,

Inc., the BiPAP ® series for NIPPV, and the

CPAP system for SAS, are jointly promoted by

Fujisawa with Fuji RC, Ltd., the largest mar-

keter of home-care respiratory care devices in

Japan and the Japanese agency of Respironics,

Inc.

The Medical Supplies and Systems Business

of Fujisawa is an exclusive distr ibutor in

Japan of reagents of PharMingen and

Immunocytometry Systems of BD Biosciences,

a business unit of Becton Dickinson and

Company. We also exclusively distribute DNA

FISH (fluorescence in situ hybridization)

probes and instruments manufactured by Vysis,

Inc. of the US. Flow cytometory reagents, of

both PharMingen and Immunocytometry

Systems, are widely used in fields ranging from

basic research in immunology through disease

diagnosis. Genosensor ®, made by Vysis, which

includes genomic microarrays, reagents,

instrumentation and analysis software,

simultaneously detects gene copy number pages

from 287 target genes. In a move to expand the

Vysis line, Fujisawa launched the PathVysion®

HER-2 DNA Probe Kit (PathVysion) in Japan

in March 2002. PathVysion® is an in-vitro

diagnostic kit used to detect amplification of

HER-2 gene in human breast cancer tissues

and/or cells accurately by FISH. Fujisawa also

markets tests such as urine test sticks and stool

occult blood tests.

The Home Care Business, conducted solely

in Japan, has been growing since the start of

operations in 1995. Home Oxygen Therapy

(HOT) is so far the main area of service,

and Fujisawa now serves nearly 15% of the

Japanese HOT market. The service includes

Home Infusion Therapy (HIT), Continuous

Positive Airway Pressure (CPAP) for Sleep

Apnea Syndrome (SAS), and BiLevel for

17

leading position in their respective markets

worldwide. Among these, Sodium Gluconate and

sodium erythorbate have long been used in a

variety of areas including food processing, bottle

washing, metal surface treatment and so on.

The safe and useful properties of these old but

new products are expected to provide opportu-

nities for much wider use with the chemicals

business. The chemicals business, with the full

range of capabilities from product development

and manufacturing to marketing, is engaged in

by the parent company and PMP Fermentation

Products, Inc. headquartered in Peoria, Illinois.

The Nagoya Plant in Japan and PMP’s plant in

Illinois serve as production bases for industrial

chemicals and food additives.

Fujisawa divested its animal health business,

with annual sales of about two billion yen, in

June 2001. Further, the concrete admixture

business of the Company is now operated in

the form of a joint-venture company with

NIPPON PAPER INDUSTRIES CO., LTD.

This new venture, in which Fujisawa owns

34% equity, started operations in April 2001.

Fujisawa currently holds 50.1% of the shares of

Daisan Kogyo Co., Ltd., the largest manufac-

turer of industrial cleaning and hygiene prod-

ucts for the brewing and beverage industry in

Japan. These shares are scheduled to be

transferred to the minority shareholder in

November 2003.

I have been working forPMP Fermentation foralmost 15 years. I amworking hard to makeour products the highestquality and the mostcompetitive in theworld. These challengesinspire my motivations,and I have a brightoutlook on the future.

Dennis HuffDirector of CorporatePlanningPMP FermentationProducts, Inc.

The Chemicals Business now focuses on

industrial chemicals and food additives in order

to improve management efficiency and prof-

itability. The current product line is composed

of the chelating agent and food additive Sodium

Gluconate, the food antioxidant Eribate® (sodium

erythorbate), the food acidulant Fujiglucon®

(glucono delta lactone) and the calcium fortifier

Calcium Gluconate. These products enjoy a

18

R&D ActivitiesAs a research-driven pharmaceutical company, Fujisawa’s research and develop-

ment activities are the key to its success in the highly competitive global market.

To discover innovative products satisfying unmet medical needs, Fujisawa has

been investing heavily in research and development activities. The figure for the

year ended March 2002 was ¥57,093 million (US$429 million), giving a

ratio to net sales of 16.7%.

19

Under the banner of “speed, focus and flexibil-

ity,” Fujisawa is deeply committed to innova-

tive research to satisfy unmet medical needs. Its

research activities currently target the discovery

of compounds to be recognized as “best in the

class, first in the class” in the four therapeutic

categor ies on which Fujisawa focuses —

immunology/inflammation, cerebral diseases,

metabolic diseases and infectious diseases.

Organization and Network

Fujisawa’s research activities are conducted

mainly at the 10 domestic laboratories located

in Osaka, Tsukuba and Nagoya. The Company

also owns satellite research laboratories over-

seas: Fujisawa Research Institute of America,

Inc. in collaboration with Northwestern

University, and The Fujisawa Institute of

Neuroscience in Edinburgh, a collaborative

research venture between Fujisawa and the

University of Edinburgh.

In full recognition that methods of drug discovery

are changing dramatically along with the rapid

progress of molecular biology, Fujisawa is very

keen on strengthening its strategic collaboration

with outside institutions or emerging research

ventures that possess novel technologies or

ideas for drug discovery. Through Fujisawa

Investments for Entrepreneurship, L.P. I&II

(FITE I&II), the Company is continuously

seeking equity investments in start-up pharma-

ceutical research ventures. As of July 2002,

FITE I&II have made seven investments in

research ventures scattered across North

America, Europe and Asia. Among these

seven, an investment in a Taiwan venture was

the first one jointly made by FITE I&II.

In June 2001, Fujisawa reorganized its

Development Division in order to strengthen

its function as the global development head-

quarters. The division has been subdivided

into a global development group and a local

(Japanese) development group. The global

development group promotes the global

development of Fujisawa products speedily and

efficiently.

� Genomic Research

In addition to in-house activities, genomic

research of the Company is enhanced through

various joint projects. Fujisawa is currently

collaborating with Quark Biotech, Inc. to dis-

cover stroke-related genes and to develop

promising new medicines for the treatment of

strokes. The Reverse Proteomics Research

Institute, set up by other Japanese companies

along with Fujisawa, studies co-action

between small molecule compounds and pro-

teins expressed from full-length cDNA clones

gained through the research activities of Helix

and other institutions. The Pharmaceutical

Consortium for Protein Structure Analysis, in

which Fujisawa participates along with 21

Japanese pharmaceutical companies, is due to

start its research in October 2002.

20

� Microbial Product Research

Fujisawa has excellent records in microbial

product research based on its renowned fer-

mentation technology. Even though genomic

research offers new opportunities for drug dis-

covery, Fujisawa believes that microbial prod-

uct research of the Company, endorsed with

generation of such compounds as tacrolimus

and micafungin, is a viable method for drug

discovery. In this area, as the bio-diversity of

microorganisms depends on ecological and

environmental factors, Fujisawa has been col-

laborating with the Malaysian companies

SIRIM Berhad and TropBio Research Sdn.

Bhd. since 2000, and expects its microbial

product library to expand. In this bilateral col-

laboration, Fujisawa is committed to transfer

its technology to its Malaysian partners.

Tacrolimus Development

Clinical development of Protopic ® has almost

been completed. It is now moving to the mar-

ket launch stage, as illustrated in the world-

wide operations of this annual report. In the

area of auto-immune diseases, Phase III studies

for chronic rheumatoid arthritis are underway

in Japan and the US, while Phase II studies are

underway in Europe. Phase III for inflamma-

tory bowel disease, Phase II studies for lupus

nephritis, and Phase II for vernal conjunctivitis

and perennial allergic conjunctivitis with eye

drop formulation are ongoing in Japan. Phase

II studies for psoriasis by gel formulation in the

US, and Phase II for dry-eye with eye drop

formulation by Sucampo Pharmaceutical, Inc.

in Europe are also underway.

Micafungin Development

Micafungin is an injectable antifungal agent

and a member of the echinocandin group that

specifically inhibits fungal cell-wall synthesis.

Along with a high safety profile, micafungin

shows excellent efficacy against both candidia-

sis and aspergillosis, major invasive infections

caused by fungi. An NDA for micafungin was

filed in Japan in June 2001, and was submitted

in the US in April 2002 and in Canada in

June 2002. Fujisawa also plans to file an NDA

for micafungin in Europe soon.

Other Products under Clinical Development

� Cerebral Diseases

FK960 is expected to be effective in treating

memory impairment, which is a core symp-

tom of Alzheimer’s disease, and Phase II for

antidementia is underway both in Japan and

the US. FK960 for cognitive disorder in schiz-

ophrenia is also in Phase II in Europe.

Seroquel®, commercially available as an atypical

antipsychotic agent, is in Phase II for psy-

chogenic symptoms and behavior disorder in

dementia in Japan.

The extraordinary effortsof a worldwide develop-ment team for micafun-gin resulted in NDAfilings in Japan, theUSA, Canada and sched-uled filings in Europe.Ten clinical trials inpatients across fourcontinents, along withpreclinical and volunteerdata, have demonstratedthe efficacy and safety ofthis important newantifungal agent.

Donald Buell, Ph. D.Senior Medical Director,Research and DevelopmentFujisawa Healthcare, Inc.

21

◆ Metabolic Diseases

FK614 is an insulin sensitizer expected to have

potent hypoglycemic effects. FK614, a benz-

imidazole derivative, has a molecular structure

different from glitazones and is in Phase II for

non-insulin dependent diabetic mellitus in

both Japan and the US.

◆ Immunology and Inflammation

FK778, an immunosuppressant, has a novel

mechanism that inhibits bio-synthesis of

pyrimidine in both T-cell and B-cell. FK778 is

expected to have a synergistic effect with

Prograf ®, and Phase II clinical studies of FK778

for the prophylaxis of rejection in kidney

transplant patients in combination with

Prograf ® are currently progressing in Europe.

◆ Other Diseases

Abciximab is a chimeric monoclonal antibody

fragment targeted at GP IIb/IIIa receptors.

Fujisawa has licensed abciximab from

Centocor, Inc. and it is now in Phase II for use

in high-risk angioplasty in Japan. JTE-522, a

cyclooxygenase-2 (COX-2) inhibitor, is an

oral anti-inflammatory agent licensed from

Japan Tobacco Inc. (JT). Phase II study of

JTE-522 for chronic rheumatoid arthritis,

osteoarthr itis, etc. is ongoing by JT and

Fujisawa will participate in Phase III onwards.

FK352B, an adenosine A1 antagonist, is in

Phase II study for dialysis-induced hypotension

in Japan. Phase II clinical studies for FK228, a

histone deacetylase inhibitor anticancer, have

started in the US.

Products under Clinical Development

Japan

immunosuppressant (chronic rheumatoid arthritis)

immunosuppressant (chronic rheumatoid arthritis)

immunosuppressant (atopic dermatitis in pediatric population)

antifungal (deep-seated fungal infection)

antifungal (deep-seated fungal infection)

monoclonal antibody to GP IIb/IIIa receptors

Antidementia (Alzheimer’s disease)

Antidementia (Alzheimer’s disease)

insulin sensitizer (non-insulin dependent diabetes mellitus (NIDDM))

insulin sensitizer (non-insulin dependent diabetes mellitus (NIDDM))

anticancer

North America

Europe

immunosuppressant (lupus nephritis)

immunosuppressant (vernal conjunctivitis and perennial allergic conjunctivitis (eye drops))

immunosuppressant (inflammatory bowel disease)

Prograf ®

Prograf ®

Prograf ® tacrolimus (FK506)

tacrolimus (FK506)

tacrolimus (FK506)

tacrolimus (FK506)

tacrolimus

Prograf ® tacrolimus (FK506)

micafungin (FK463)

(FK506)

micafungin (FK463)

Protopic®

ReoPro® abciximab

FK960

FK960

FK614

FK614

FK228

Product Name Generic Name Product Category Phase II Phase III Filed

immunosuppressant (chronic rheumatoid arthritis)Prograf ® tacrolimus (FK506)

micafungin (FK463) antifungal (deep-seated fungal infection)

immunosuppressant (heart transplant)tacrolimus (FK506)Prograf ®

immunosuppressant (psoriasis (gel))tacrolimus (FK506)

immunosuppressant (dry-eye (eye drops))

immunosuppressant (prophylaxis of organ rejection in liver and kidney transplants)

tacrolimus (FK506)

FK778

(cognitive disorder in schizophrenia) FK960

adenosine Al antagonist (dialysis-induced hypotension)

(behavior psychological symptoms of dementia)

COX-2 inhibitor (chronic rheumatoid arthritis, osteoarthritis etc.)

Seroquel® quetiapine fumarate (FK949)

tilmacoxib (JTE-522)

FK352B

22

Environmental Measures

Fujisawa has set numerical targets for its main

environmental conservation activities. For

example, all energy consumption is calculated

in the form of CO2, as reductions in energy

use indirectly prevent global warming.

We have succeeded in substantially reducing

the emission of landfill waste through our ini-

tiatives for the reduction and recycling of dis-

posables.

Environmental Protection

It is Fujisawa’s policy to ensure that all aspects

of its activities are in harmony with the envi-

ronment. Fujisawa’s global environmental

conservation activities are based on the

“Fujisawa Environmental Principles,” which

are supplemented by the “Fujisawa

Environmental Guidelines” as a practical

guide enabling all group companies to effec-

tively implement the Principles. While the

Principles were renamed to the current name

in 2000, the Guidelines were newly elabo-

rated in 2001.

During the year ended March 2002, in-house

environmental auditors of Fujisawa carried

out on-site audits at fifteen facilities in Japan

to check that environmental management

activities based on the Principles were being

carried out. As a result of the acquisition dur-

ing the term of ISO 14001 certification by

the Irish plant of Klinge Pharma GmbH (now

Fujisawa Deutschland GmbH), the number of

facilities that have obtained ISO 14001 certi-

fication increased to 6 out of the 14 facilities

engaged in manufacturing. The Irish plant of

Fujisawa Deutschland GmbH was also

selected as the winner of the “Environmental

Management Award for Sustainable

Development” for 2001 of Ireland. As the

best facilities in Ireland, the Plant will repre-

sent Ireland at this Award at the European

level in October 2002.

1996 19981997 1999 2000 2001 2002(Target)

300

250

200

150

50

100

0

(tons) (%)120

100

80

60

40

20

0

Landfill Waste (Klinge Pharma GmbH)Volume Ratio (1996 = 100)

Years to December 31

1991 1992 1993 1994 19961995 1997 1998 1999 2000 2001 2002 2006(Target)

14,000

12,000

10,000

8,000

6,000

2,000

4,000

0

(tons) (%)140

120

100

80

60

40

20

0

Landfill Waste (Japan)

Years to March 31

Volume Ratio (1991 = 100)

1991 1994 1995 1996 19981997 1999 2000 2001 2002 2011(Target)

140,000

120,000

100,000

80,000

60,000

20,000

40,000

0

(tons) (%)130

120

110

100

90

80

70

60

Emmision of CO2 (Japan)

Years to March 31

Volume Ratio (1991 = 100)

23

We have finishedexpanding the facilitiesat the Toyama Plant forthe manufacture ofPrograf ®, Protopic® andtacrolimus drug sub-stance as well as mica-fungin drug substance.Environmental protec-tion is one of the toppriorities of the plantmanagement. We havefurther enhanced thetraining of our staff toimplement the FujisawaEnvironmentalPrinciples, and haveachieved a constantimprovement in envi-ronmental performance.

Yasutada ShirakuraDirector, TechnicalToyama PlantManufacturing

Further, the staff responsible for our manufac-

turing facilities that use large volumes of

organic solvents are now tackling the task

of recycling more than ten different kinds

of solvents and re-using more than forty-

thousand tons of organic solvents per annum.

The proper management of chemical sub-

stances is an issue of the highest significance

for Fujisawa, and the Company is taking steps

to reduce the volume of pollutants, find

substitutes for such substances, and curtail

emissions.

Environmental Accounting

In the year ended March 2002, Fujisawa

introduced environmental accounting in the

parent company as a tool to improve the cost

performance of environmental conservation.

“Deemed effects” resulting from the imple-

mentation of measures to reduce environ-

mental r isks were not calculated, but

described only in a qualitative manner for the

first year’s environmental accounting. We

intend to measure these “deemed effects” on

a monetary basis.

1996 19991998 2000 2001 2002 2011(Target)

2006(Target)

600

500

400

300

100

200

0

(tons) (%)120

100

80

60

40

20

0

Air Emission of Dichloromethane (Japan) Volume Ratio (1996 = 100)

Years to March 31

Environmental Costs

Category Details Value (¥ Million)

Environmental Benefits

Category Details Value (¥ Million)

1) Costs within business area

1. Pollution control cost

2. Environmental protection cost

3. Resource conservation cost

Water quality, prevention of air pollution

Energy conservation, protection of ozone layer

Reduction of waste, recycling of solvents and used paper

2) Upstream / downstream cost Bottle recycling

3) Management cost ISO 14001 certification, environmental education and training

4) Technology cost Development of new environmental technology

5) Social activity cost Social contribution efforts, donations

6) Environmental damage cost Accidents or lawsuits relating to the environment

Total

817

1,061

708

961

1,021

2,946

60

48

25

18

0

0

158

164

a. Resource conservation Cost saving by in-house refining of solvents

b. Sale of disposables

c. Sale of valuable waste

d. Energy conservation

e. Reduction of waste handling expenses

Total

Revenue from sale of solvents, activated sludge, etc.

n.a.

Reduction of energy expenses resulting from energy conservation measures

Reduction, reuse and recycling of waste

Note: Approximately ¥1.2 billion was invested in environmental protection.

2,095

24

Board of Directors

Akira FujiyamaChairman of the Board

Michio IidaVice Chairman and Chief Financial Officer

Hatsuo Aoki, Ph. D. President and Chief Executive Officer

Koichi SejimaCorporate Executive Vice President andChief Administrative Officer

Tomokichiro Fujisawa, Ph. D.Chairman Emeritus

Akiro KojimaMember of the Board (Senior Counselor, Daicel Chemical Industries, Ltd.)

Kanji KobayashiMember of the Board (Senior Advisor, Nippon Life Insurance Company)

Members of Management Committee(Front row, from left)

Takeshi Shimomura Corporate Executive Vice President, Sales & Marketing

Hatsuo Aoki, Ph. D. President and Chief Executive Officer

Hideo TanakaCorporate Senior Vice President, External Relations

(Back row, from left)

Masafumi NogimoriCorporate Senior Vice President, Global Strategy

Michio Iida Vice Chairman and Chief Financial Officer

Koichi SejimaCorporate Executive Vice President and Chief Administrative Officer

Shuji InoueCorporate Senior Vice President, Overseas Operations