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July 6, 2005

Taisho and Lilly Concluded a License Agreement for Taisho's Potential New Drug for Treatment of Type 2 Diabetes

Taisho Pharmaceutical Co., Ltd. [Headquarter: Toshima-ku, Tokyo, Japan, President: Akira Uehara] (hereinafter, Taisho) and Eli Lilly and Company [Headquarter: Indianapolis, Indiana, USA, President: Sidney Taurel] (hereinafter, Lilly) concluded a license agreement for potential new drug, TS-021, for the treatment of type 2 diabetes discovered and developed by Taisho (Phase I clinical trial in Japan).

TS-021 has a new mechanism of action facilitating insulin secretion and reducing blood glucose by inhibition of di-peptidyl peptidase-IV (DPP-IV), a catabolic enzyme of glucagon-like peptide-1 (GLP-1). Since the number of diabetes patients is increasing worldwide, sales potential of TS-021 could be significant.

In accordance with the license agreement, Taisho granted to Lilly exclusive rights for development and commercialization of TS-021 worldwide except for Japan and China. Taisho retains the rights in Japan and China and has the right of manufacturing bulk drug of TS-021, and will supply Lilly the bulk drug for their development and commercialization. Taisho, under certain circumstances, may be able to co-promote with Lilly in the US and other designated countries.

Taisho is the leading non-prescription pharmaceutical company in Japan and has also been strengthening its research and development efforts including development of its research infrastructure in the area of prescription drugs. As an outcome from such efforts, Taisho has succeeded in initiating clinical trials on several original new drugs. Taisho continues efforts to strengthen its prescription drug business through expansion of its novel original R&D and active collaboration with domestic and foreign pharmaceutical companies.