Otsuka Holdings Co Ltd

The 2nd Medium-Term Management Plan FY 2014 - 2018

August 26, 2014

Tatsuo Higuchi President and Representative Director, CEO

Otsuka Holdings Co., Ltd.

Disclaimer

n This material contains forward-looking statements regarding the financial conditions, results of operations and business activities of Otsuka and its subsidiaries (collectively the “Otsuka Group"). All forward-looking statements, due to their inherent nature, will be influenced by future events and developments for which the occurrence is uncertain, and therefore involve risks and uncertainties. Otsuka cautions you in advance that actual financial conditions, results of operations and business activities could differ materially from those discussed in the forward-looking statements.

n Otsuka disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, further events, or otherwise.

n Further, this material contains statements and information regarding corporate entities other than those belonging to the Otsuka Group, which have been compiled from various publically-available sources. Otsuka has not verified any of such statements or information and does not provide any guarantees with regard to their accuracy and relevance.

n The IMS Health, Euromonitor and other reports described herein (the “Reports”) represent data, research opinions or viewpoints published as part of a syndicated subscription service and are not representations of fact. The Reports speak as of their original publication dates (and not as of the date of this material), and the opinions expressed in the Reports are subject to change without notice.

n This material contains information on pharmaceuticals (including compounds under development), but this information is not intended to make any representations or advertisements regarding the efficacy or effectiveness of these preparations nor provide medical advice of any kinds.

1

Agenda

n Management Policy & Plan Outline

n Performance Targets

n Pharmaceutical Business Strategy

n Nutraceutical Business Strategy

n Investment Policy and Shareholder Return

2

Management Policy &

Plan Outline

Corporate Philosophy

nDramatic expansion of business opportunities rooted in corporate philosophy

Developing a truly global

businesses

Building new

category markets

Creating our own

unique and innovative products

Developing a truly global

businesses

Building new

category markets

Creating our own

unique and innovative products

4

Transition of business opportunity expansion

OTC

NC

alliance

5

diagnostics chemical

Clinical nutrition

medical devices

cosmedics

consumer products

pharma

6

Otsuka’s identity and business model

Unmet medical needs

Pharmaceutical business

Yet-to-be-imagined needs

Nutraceutical* business

Total Healthcare from prevention to treatment

*Nutraceutical: Nutrition + Pharmaceutical

To become an indispensable contributor to people’s health worldwide

7

Otsuka’s Goal

1st mid-term plan

Globalization &

Investment

2nd mid-term plan

Sustained investment &

Structural reform

Nth

Mid-term plan

8

Outline of the 2nd mid-term plan

n Strengthen core therapeutic areas

n Nutraceutical business - structural reform, evolution and growth

n Active investment in new growth areas and shareholder return

5 year period to establish diversified business portfolio

Performance Targets

Performance Targets

¥ billion 2013A1)

Actual 2016E1) Target

2018E1) Target

Net sales 1,452.8 1,190 1,440 R&D expense 249 170 170 Operating income 198.7 100 200 vs. net sales（％） 13.7 8.4 13.9 Net income 151 70 140 ROE（%） 10.8 4-5 8-10

10

n Performance recovers in FY2018 to FY2013 level n R&D expenses maintained at high level for growth beyond

2020

Note: -Foreign currency exchange rate assumptions: US$ 1= ¥100, Euro 1=¥ 140 -Excluding external growth 1) FY 2013 is 12 months ended March 2014. FY 2016 and 2018 are calendar year due to change in business year from 2014.

11

Diversified sales structure

2013A 2018E

1,440 New Drugs &

others NC*

Consumer & others 1,452.8

Impact of Abilify

Net Sales （¥billion）

＜Net Sales＞

*NC: nutraceutical business

12

Diversified sales structure

n Each core area’s growth diversifies sales structure

Consumer & others CNS

（except Abilify）

Oncology

Cardio -vascular

Other pharma

NC Abilify

2013A 2018E

Net Sales ¥1,452.8 billion

Net Sales ¥1,440 billion

New Drugs - Key driver for growth platform n 3 global products, 3 next-generation products and new drugs in Japan

to contribute to sustainable growth n 80% of $4.3bn sales (FY2018E) from products already filed or launched n Investments to enrich pipeline, including in-licensing deals

13

2013A 2018E

2023E

$2.0bn

$1.8bn

*New drugs in Japan: products newly launched or to be launched in Japan between 2009 and 2018, excluding 3 global products and 3 next-generation products above.

Foreign currency exchange rate assumptions: US$ 1= ¥100, Euro 1=¥ 140

New drugs in Japan*

3 next-generation products • Lonsurf • Lu AE58054 • SGI-110 $0.5bn

Sales

Approx. $0.8bn

3 global products • Abilify Maintena • brexpiprazole • tolvaptan

14

Cross-organizational cost optimization

COGS

SG&A

R&D

Promotion

Adminis-tration

Pharmaceutical Consumer/others NC

n Energy cost reduction by investment in energy saving system n Enhance production efficiency through new capital expenditures

n Clearly focused spending and saving

n Accelerated investments by 2014 n Maintain at steady level from 2016 • Prioritize assets in the pipeline • Utilize & coordinate research functions in

the Group

n Continuous efforts for overhead costs efficiency n Utilize the Group assets

n Decrease in Abilify co-promotion expenses

n Review & optimization of cost mainly in the US

n Full use of the Group’s sales infrastructure

15

Profit Diversification

2013A Operating income

Effect of R&D

acceleration

2018E Operating income

198.7

0

100

200

2016E Operating income

Increase in gross profit

by new drugs’ contribution

Cost optimization

Investment for growth

Impact of US Abilify* and Contribution of new drugs

*Include decrease in co-promotion fee of Abilify

(¥ billion)

Pharmaceutical Business Strategy

Outline of pharmaceutical business strategy

n Maximize product values

n Aggressive R&D investments in core therapeutic areas

(CNS and oncology)

17

Strengthen core therapeutic areas

CNS business : Evolution through products fr

anch

ise

Solutions for patient needs 18

Lu AE58054 • Alzheimer’s disease

Lu AF20513 • Amyloid β vaccine

Abilify Maintena

Smart tablet

Value-added drug therapy

Abilify

brexpiprazole • Schizophrenia • MDD adjunctive therapy

New category creation

Anxiety disorder PTSD

Behavioral disorder Agitation associated with AD

AD: Alzheimer’s disease, PTSD: Posttraumatic stress disorder

Abilify Maintena

19

n LCM plan (additional indications & administration routes, improved formulations)

n Collaboration with Lundbeck in US and Europe n NDA filed in Japan for schizophrenia

2014 2015 2016 2017 2018

<Development plan>

P-3：Bipolar disorder

Dual chamber

New administration route (deltoid)

Schizophrenia

2013 2012

Acute schizophrenia：PDUFA 2014/12

EU

EU

EU

Filed Approved

Schizophrenia

Schizophrenia

Growth potential of Abilify Maintena

20

0

2,000

4,000

Target: 30% market

share

～

～

＊LAI: Long Acting Injection ** Total sales of three atypical antipsychotics LAI products (Source: annual reports, Datamonitor, company data)

（¥100 mil）

n Atypical antipsychotics LAI* market sees double-digit growth n Abilify Maintena targets 30% market share

1,735

4,337

6,315

7,858

10,771

0

5,000

10,000

No. of new prescription of Abilify Maintena

（numbers）

Global LAI sales**

Copyright 2014 IMS Health. All rights reserved. Source: Estimated based on IMS Data (NPA) 2013-2014 Reprinted with permission

21

brexpiprazole

n NDA filed in US for schizophrenia and MDD n P-3 studies ongoing for PTSD and for agitation associated

with dementia of the Alzheimer’s type

P-3：Agitation associated with dementia of the Alzheimer’s type

P-3：PTSD (Posttraumatic stress disorder)

2014 2015 2016 2017 2018 2013 2012

P-3：Schizophrenia

P-3：MDD

P-3：Schizophrenia

Schizophrenia MDD

EU

EU

EU

EU

<Development plan> Filed

22

Potential of tolvaptan

30s 40s 50s 60s

Average age of dialysis

introduction2) ESRD

Early subjective symptoms

No symptoms

ESRD Challenge of tolvaptan

1) reference: research team of progressive renal impairment, Ministry of Health, Labour and Welfare, 2) source: the Japanese society for dialysis therapy “Chronic Dialysis Therapy in Japan ‘as of Dec 31, 2006, 2007 the Japanese society for dialysis therapy, Tokyo, 3) abstracted from application document approved as orphan drug in 2006 (reference: article by Prof. Higashihara), 4) reference: document applied to EMA for orphan drug approvement, 5) source: applied for orphan drug based on prevalence report by Prof. Willy of University of Rhode Island and approved on April 6 2012.

n ADPKD (Autosomal Dominant Polycystic Kidney Disease) ‒ Genetic disease ‒ Subjective symptoms: hematuria, stomachache, lumbar back pain,

abdominal distension, hypertension ‒ Approx. 5-10% of end-stage renal disease (ESRD) patients have ADPKD1)

‒ No drug therapy is available

Patient population: 31,0003) 205,0004) 116,0005) EU

age

23

tolvaptan

n US: Additional Phase 3 study started n EU: MA filed for ADPKD in December 2013 n Japan: Penetration of ADPKD market n Asia: NDA filed for hepatic edema/cardiac edema

additional P-3：ADPKD

ADPKD

ADPKD

Hepatic edema

2012 2014 2015 2016 2017 2018 2013

Cardiac edema Asia

EU

<Development plan> Filed Approved

Evolution of anti-metabolite franchise

molecular targeted drug

Evolution of oncology business n Broad therapeutic coverage from hematological & solid cancers

to cancer supportive care n Lonsurf – a growth driver in the 2nd mid-term plan

Busulfex Conditioning regimen

prior to BMT*

SGI-110 AML・MDS

Dacogen AML・MDS

ASTX-727

Sprycel CML, pancreas

Aloxi Nausea, vomiting

TS-1 Gastric, others

Lonsurf Colorectal

cancer

UFT Colorectal, others

TAS-118 Prostate, others

OCV-501 AML

TAS-116 Solid tumor

TAS-115 Solid tumor

AT13387 Prostate, NSCLC

Abraxane Breast, others

E-fen Cancerous

breakthrough pain Samsca

Carcinomatous edema rebamipide

Oral Mucositis SATIVEX Cancerous pain

TAS-114 Solid cancer

Hematologic cancer

Solid tumor

Supportive care

Expansion of molecular target agents

AT7519 Multiple Myeloma

24 Note) AML:acute myelogenous leukemia, MDS: myelodysplastic syndromes, Oral mucositis: stomatitis associated with cancer chemoradiotherapy CML: chronic myelogenous leukemia, NSCLC: non-small-cell lung cancer

* BMT: bone marrow transplant

25

Lonsurf

n Japan: Penetration of Japanese market n US/EU: NDA/MA to be filed for colorectal caner n Establishment of sales infrastructure in US and Europe

2014(plan)

1Q 2015(plan)

Colorectal cancer

2014 2015 2016 2017 2018 2013 2012

EU

<Development plan> To be Filed Approved

Establishment of sales infrastructure in US and EU

26

New drugs in Japan

n Foster new drugs in the 2nd mid-term plan period n Contribute as growth drivers together with 1st mid-term new drugs

0

1,000

2,000

3,000 2013-2018 total sales of new drugs in Japan CAGR approx. 30%

2nd mid-term new drugs

• Aloxi • Abraxane • E Keppra • Samsca • Mucosta eye drop • Neupro patch • Elneopa

• Lonsurf • Abilify Maintena • TAK-438 • brexpiprazole • others

1st mid-term new drugs

＜Sales plan of new drugs in Japan*＞ （¥100 mil）

*New drugs in Japan: drugs launched or to be launched between 2009 and 2018, including 3 global products and 3 next-generation products. Definitions are different from those on page 13.

Filed Approved

Global expansion of clinical nutrition business

27

0

500

1,000

1,500

2013A 2018E

（¥ 100mil）

Japan

Over seas

n Japan: Expand the stable profitability n Overseas：Target to be a leading company in Asia

CAGR 1％

Area Principal measures

India • Business expansion through Claris Otsuka

China • Aiming at higher I.V. market share

Indonesia • Expansion of clinical

nutrition business including high value-added products

Japan • New product introductions

to surgical operation area • Product development to

reflect clinical needs

For diversified therapeutic solutions n Offer therapeutic

solutions with medical devices to address unmet medical needs that remain unsolved by drugs

Drugs

Medical devices

Ortho- pedics

Urology GI

Cerebro vascular

Cardio vascular

28

Strengthening in-house drug discovery capability

n Combination of the Group’s fragmented assets

n Complementary use of each strength

29

Fragment-based drug discovery

CNS

CNS Oncology

Oncology

30

Active R&D investment

1,534 1,493

1,835 2,408

1,600 1,600

20% 19%

22% 23% 22%

17%

0

1,000

2,000

3,000

2010A 2011A 2012A 2013A 2014E 2015E 2016E 2017E 2018E

% of R&D expenses/Pharmaceutical net sales

nMaintain R&D expenses for sustainable growth

R&D expenses （¥ 100 mil）

＜R&D expenses in pharmaceutical business＞

Nutraceutical Business Strategy

Outline of nutraceutical business strategy

n Review of business assets that support value-chain

n Acceleration of global expansion

n Improved profitability

32

Structural reform and evolution to achieve growth

Review of business assets that support value-chain

33

Product strategy

R&D Production Distribution

n Product strategy, R&D - R&D acceleration focused on “healthy life expectancy”

n Production - Enhanced production efficiency by new capital

investments

n Marketing, Sales - Reintroduce creative pull-marketing approach based

on the philosophy of “total healthcare”

n Distribution - Establish distribution bases according to market needs

Marketing Sales

Human resources, management

Consumers

n Promote growth through brand-building in established markets

n Expansion to new markets capitalizing on regional network

Acceleration of global expansion

Areas where Otsuka group companies have operations

0

1,000

2,000

2013A 2018E

Core brand* international sales

＊Core brand：SOYJOY, Pocari Sweat, Nature Made, N&S products 34

（¥100 mil）

35

Sales plan by area

1,475

598

739

0

2,000

4,000

2013A 2018E

US

EU

Asia

Japan

n International sales drive NC business growth （¥ 100 mil）

2013-2018 CAGR

n 11%

n 6%

n 5%

n 1%

Area Measures

Asia ＜driver: Pocari Sweat＞ • Focused investments in

Indonesia and China

EU ＜driver: N&S products＞ • Focusing on growing areas

such as gluten-free and soy products

US ＜driver: Nature Made＞ • Fostering new category

Japan • Reviewing business asset

through fostering new products

36

Improve profitability and structural reform

Target operating income ratio of 10% or more

（¥100 mil）

0.9%

7.1%

8.7%

8.5%

8.8%

>10%

0

500 Operating income Operating income ratio

Review of business assets that support value-chain

Structural reform

NC Operating income Foster new products

Accelerate global

expansion

Investments Policy &

Shareholder Return

38

Flexibility based on strong balance sheet

(¥ billion)

Approx. 1,700

Approx. 1,150

Approx. 500

Approx. 1,050 Working

capital

Shareholder return

Strategic investments

Net cash at the end of FY2013 1)

Net income + R&D expense + depreciation/ amortization2)

R&D expense and CapEx

1) Cash and deposits + marketable securities - short & long term debt 2) Total of net income, depreciation and R&D expense from FY2014 to FY2018

Cash flow accumulated in

5 years ＋

Net cash

The 2nd medium-term management plan period

n Cash Flow & Net Cash accumulated for 5 years : ¥1 tril

39

Investment policy

Management philosophy

n Share management philosophy, human resources, products and technologies to enhance corporate value

n Investments with long-term perspective

Focusing area

Phar

ma • Product-based acquisitions and

alliances mainly in CNS and oncology

• Strengthen oncology sales infrastructure in the US

• Investment in medial device business

NC

• Brand-based acquisitions and alliances

• Acquisitions of overseas distribution network

• Aggressive global expansion of our own brands

Products Technologies

Human resources

Shareholder return policy

0

500

2009A 2010A 2011A 2012A 2013A 2014E 2015E 2016E 2017E 2018E

Total dividend （¥100 million）

40

n Raise dividend to ¥100 per share in 2015

n Shareholder return balancing with strategic investment

n Flexible share buyback

appendix

42

Plan by business segment - net sales and operating income*

10,351

7,200

9,150

2,128 1,000

1,900

0

5,000

10,000

2013A 2016E 2018E

Net sales Operating income

2,871 3,200

3,500

254 310 390 0

5,000

2013A 2016E 2018E

1,743 2,000 2,250

50 85 110 0

5,000

2013A 2016E 2018E

Pharmaceutical

Nutraceutical Consumer/others

（¥ 100mil）

* Net sales before elimination of inter-segment transaction. Operation income before elimination of unallocated corporate expense.

（¥ 100mil） （¥ 100mil）

Consumer product business

Early return to profitability

Match

Natural water Tea

Crystal Geyser sparkling water

43

Mannan Hikari

Increase new customers Develop new markets

Stable profit by balanced investment and spending

Enhance production efficiency

Pouch-packed food business

Other businesses (Chemical)

Accelerate new market development in Japan as well as overseas

0

500

2013 2018

（¥100 mil） Area measures

EU Asia

• Business expansion from raw material to upstream business

US • Raw material business

Japan • New highly functional polymer business

＜Sales plan of chemical business＞

44

Major products to be filed in the 2nd mid-term plan

CNS Products1) Indication Area

Abilify Maintena Bipolar I disorder

brexpiprazole Schizophrenia Adjunctive therapy for major depressive disorder Agitation associated with dementia of the Alzheimer’s type

PTSD

ABILIFY Autism Agitation associated with dementia of the Alzheimer’s type

ASC-01 Major depressive disorder

Lu AE58054 Alzheimer’s disease

E Keppra Epilepsy (generalized onset seizures)

Oncology Products1) Indication Area

TS-1 Cervical cancer

TAS-118 Pancreatic cancer

trabectedin Malignant soft tissue sarcoma

SGI-110 AML / MDS

Lonsurf Colorectal cancer

SATIVEX Cancer pain

rebamipide Stomatitis associated with cancer chemoradiotherapy

Other area tolvaptan ADPKD

Deltyba Multidrug-resistant tuberculosis

bilastine Allergic rhinitis

Chronic urticaria, pruritus associated with skin disease

OPF-105 Peripheral parenteral nutrition

OPC-1085EL Glaucoma

OPA-15406 Atopic dermatitis

45

Products filed from April to July 2014 - brexpiprazole (US: adjunctive therapy for major depressive disorder, schizophrenia) - Abraxane (Japan: pancreatic cancer) - olanexidine (Japan: disinfectant) - Zosyn (Japan: febrile neutropenia)

EU

EU

EU

EU

EU

EU

EU

1) Brand name, generic name or development code