Contents · The Chugai Group's mission is to dedicate itself to adding exceptional value through the creation of innovative medical products and services for the benefit of the medical

C o n t e n t s

■PART 1 Sharing Our Story

2 Message from the President

4 Corporate Overview

6 Highlight 1 Antibody DrugsResearch and Development of Antibody Drugs

8 Highlight 2 Appropriate Treatment of WastewaterAppropriate Treatment of Wastewater Containing Highly PotencySubstances

9 Mission StatementChugai Business Conduct GuidelinesBCG & Human Rights Training―Putting the Chugai BusinessConduct Guidelines into Practice

10 Firm Commitment to Corporate EthicsCorporate Ethics Take Priority over ProfitCommitted to Ethical Promotional ActivitiesCreating a Corporate Culture of Respect for Self and OthersChugai's View of Animal WelfareBioethics Initiatives in R&DConduct of Clinical Trials

12 System for Fulfilling Social ResponsibilityChugai's Basic View of Corporate GovernanceInternal Audit SystemRisk Management SystemCommitted to ComplianceInternal Control over Financial ReportingFramework for Promoting Social Responsibility

14 CSR InitiativesChugai's Unique Approach to Fulfilling Social Responsibilities

■PART 2 Responsible to People

16 Initiatives for Patients and Consumers1. Development and Provision of Pharmaceuticals

Supplying Innovative Pharmaceuticals―Avastin, Tarceva―andSafety MeasuresInnovative R&DEnsuring a Stable Supply of High-Quality PharmaceuticalsHelping People Suffering from Incurable Disease

2. Increasing Product ReliabilityPharmaceutical Reliability AssuranceAll-patient SurveysBuilding a System that can Proactively Detect and ReliablyRespond to Quality IssuesDrug Information Center Responds to Inquiries Using ThreeProduct Consultation GroupsTamiflu-related ActivitiesResponse to GCP Violation during Clinical Trial

3. Social Responsibility beyond Pharmaceutical DevelopmentContributing to Patient-centered Medical CareSupporting Developing CountriesHelping to Meet the Needs of an Aging Society

23 Working with Shareholders and InvestorsInformation Disclosure PolicyEnhancing Investor UnderstandingFTSE4Good Index SeriesBasic Policy on Profit Distribution

24 Working with Business PartnersInitiatives for Building Fair, Transparent RelationshipsPurchasing PolicyChugai Ethical Purchasing StandardsInitiatives in 2008

25 Working with CommunitiesChugai Group Sites Make Their Own Social ContributionsOffering Classes for the Local Community through ShizuokaSangyo UniversitySummer Biotech-Lab for KidsTraining Program for Educators at Private Companies

26 Working with EmployeesSupport for Career GrowthRespecting and Supporting Employee Diversity in Work StylesCreating Supportive Work EnvironmentsRaising Human-Rights Awareness: Encouraging People to Thinkabout Human RightsHelp LinesImproving Understanding of the Company's Personnel Systemsthrough Frequent DialogueFair and Impartial HiringLabor-Management RelationsMental Healthcare InitiativesDialogue between the President and EmployeesChugai Group Code of Conduct for Occupational Health and SafetyUkima Site Safety SeminarTraining Class for Drivers with Accident Records

■PART 3 Caring for the Earth

30 Basic Position on Environmental Protection and Safety

31 Environmental and Safety ManagementInternal Environmental and Safety AuditsInitiatives at Sites

32 Action Plans and PerformanceFiscal 2008 Action Plans and PerformanceRoche Safety, Health and Environmental Protection Goals

34 Material Flow / Environmental Accounting

35 CO2 Emissions and Measures for ReductionIntroduction of Photovoltaic Power Generation EquipmentKamakura Site's Energy Conservation ReportIntroduction of Low Emission Sales Vehicles

36 Chemical Substance ManagementAppropriate Management of Chemical SubstancesChemical Management Committee

37 Waste Reduction / Soil Contamination CountermeasuresWaste TreatmentSoil Contamination Countermeasures: Initiatives Completed at theKyushu Plant Site of Eiko Kasei Co., Ltd.

38 Environmental Education and CommunicationEnvironmental e-LearningEnvironmental Education at SubsidiariesTours of Chugai Pharma Manufacturing's Fujieda Plant

■PART 4 Our Performance

39 Social and Economic Areas

40 Environmental Area

Editorial Policy

Photo on the cover: Photovoltaic power generation equipment at the Ukima Site

Social Responsibility Initiatives

SharingOur Story

PART1

Dedicated to better medicine for human health worldwide

Members of the Executive Committee:

Nihonbashi Mitsui Tower (Head Office 15-20F)

Chugai BCG

Corporate Strategy

Mid-term Goal

Business plan

Action plan

Mission Statement

Mission

Core Values Envisioned Future

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Message from the President

The Chugai Group's mission is to dedicate itself to adding exceptional value through thecreation of innovative medical products and services for the benefit of the medical communityand human health around the world. We are committed to creating innovative pharmaceuticalsby pursuing innovation and strategically allocating our resources. In particular, we are focusingon unmet medical needs, where there is still great potential to improve treatment for peopleby discovering new drugs.

Perhaps the most distinguishing feature of our R&D pipeline and current products is their focuson finding better treatments for challenging diseases such as cancer, diabetes, rheumatoidarthritis, and chronic hepatitis C. We are working hard to develop innovative new drugs utilizingthe latest bio- and antibody technologies and our library of small-molecular compounds. It isour conviction that antibody medications, which use antibodies to target specific cells andtissues, will contribute greatly to the establishment of new treatments, since they can beexpected to improve therapeutic action while reducing side effects.

Achievements in 2008

We recorded a number of excellent new achievements in these areas in 2008. In Japan,approval was received in February to expand the indications for Herceptin (anti-HER2

Contributing to society by creating innovativepharmaceuticals

At Chugai, we take a

groundbreaking, integrated

approach to creating

innovative drugs.

monoclonal antibody, antitumor agent) to include postoperative adjuvant chemotherapy forbreast cancer. In April, rheumatoid arthritis, juvenile idiopathic arthritis (which is active inmultiple joints), and systemic onset juvenile idiopathic arthritis (sJIA) were approved asindications for Actemra (a humanized antihuman IL-6 receptor monoclonal antibody).

Outside Japan, in November we submitted an application to the European Medicines Agencyfor symptom improvement of moderate to severe rheumatoid arthritis as an indication forActemra. The application was approved in January 2009. In Switzerland this indication wasapproved earlier, in December 2008. In the United States, we received a Complete ResponseLetter from the Food and Drug Administration (FDA) in September. We are working withRoche to comply with the instructions to obtain approval.

Actemra is Japan's first antibody medication and a product being met with extremely highexpectations around the world. I earnestly hope that we will be able to deliver this innovativemedical product to patients worldwide as soon as possible, improving their quality of life andeven enabling them to overcome their diseases.

In addition, in November we submitted an application in Japan for additional efficacy for smallcell lung cancer of Avastin (anti-vascular endothelial growth factor (VEGF) humanizedmonoclonal antibody). Avastin is a new type of drug called an angiogenesis inhibitor, which is adrug that inhibits the growth of new blood vessels that supply nutrients and oxygen to cancertissue. We expect indications for Avastin to be expanded to many other cancers besides thecurrent colon and rectal cancers. Going forward, we will continue to do our utmost tocontribute to better treatment for people everywhere.

Our ambitions

We aim to become a top Japanese pharmaceutical company by providing a continuous supplyof innovative new medicines domestically and internationally. I believe that the mission andresponsibility of a top pharmaceutical company is to contribute to society and maximizecorporate value by meeting the expectations of its diverse stakeholders, including physiciansand co-medical personnel as well as patients and their families. Only as we fulfill this mission,can we earn the trust of society.

As we implement our mid-term business plan, "Sunrise 2012," everyone at Chugai is fullyaware of our mission and responsibility, and we are determined to be as thorough as possiblein ensuring that all of our corporate activities are carried out in accordance with the very strictethical standards required of a life-science company. As part of our commitment to patient-centered treatment, we not only create innovative medical products, but also work to makesure that medical professionals provide appropriate information on their proper use. Last butnot least, we have pledged ourselves to do everything we can to contribute to localcommunities and to help protect the global environment, including reducing CO2 emissions.

In closing, let me request your continued understanding and support for our businessendeavors.

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SharingOur Story

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Message

fromthe

President

Osamu NagayamaRepresentative DirectorPresident, CEO, and COOChugai Pharmaceutical Co., Ltd.

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■Corporate Overview (As of December 31, 2008)

Company name:

Representative:

Founded:

Established:

Stated Capital:

Fiscal Year-End:

Number of Employees:

Business Category:

Head Office:

Branches:

Plants:

Research Laboratories:

■Consolidated Net Sales/Operating Income

0

100

200

300

400(Billions of Yen)

08/1207/1206/1205/1204/12

Net Sales for Fiscal 2008 ended December 31, 2008: 326.9 Billion Yen

Operating Income for Fiscal 2008 ended December 31, 2008: 51.6 Billion Yen

0

25

50

75

100

08/1207/1206/1205/1204/12

(Billions of Yen)

Chugai Corporate Overview

■Sunrise 2012

Chugai Pharmaceutical creates innovative new drugs byleveraging its own infrastructure for antibody pharmaceuticalsresearch and the infrastructure for small-molecule drugs ithas access to in its partnership with Roche.

The company is working to realize the goals of its mid-termbusiness plan "Sunrise 2012," a five-year plan established in2008. Sunrise 2012 calls for strengthening portfoliomanagement and employing strategic marketing in order todiscover, develop and provide innovative new drugs. Throughthese measures and the maximization of company-wideproductivity, Sunrise 2012 is building the foundation for thenext stage of growth fueled by Chugai's mission of benefitingthe medical community and human health around the world.

Sunrise 2012 Targets

Consolidated net sales

460 billion yen

Consolidated operating income

80 billion yen

Chugai Pharmaceutical Co., Ltd.Osamu Nagayama, President, CEO, COO19251943¥72,966,825,723December 314,671 (Consolidated: 6,383)Manufacturing, marketing, and exporting,and importing of pharmaceuticals1-1, Nihonbashi-Muromachi 2-chome,Chuo-ku, Tokyo, 103-8324, JapanTel: +81-3-3281-6611 (Reception)URL: http://www.chugai-pharm.co.jp/hc/chugai_top_en.jspSapporo, Sendai, Tokyo 1, Tokyo 2,Yokohama, Nagoya, Osaka, Kyoto,Hiroshima, Takamatsu, FukuokaUkima (Tokyo), Fujieda (Shizuoka),Utsunomiya (Tochigi), Kamakura (Kanagawa)Fuji Gotemba (Shizuoka), Kamakura (Kanagawa), Ukima (Tokyo)

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Summary of BusinessLocationCompany Name

Research and development of pharmaceuticalsResearch and development of pharmaceuticals in KoreaResearch and development of pharmaceuticals in Singapore

Meguro-ku, TokyoHwaseong-si, KoreaBiopolis, Singapore

Forerunner Pharma Research Co., Ltd.C&C Research LaboratoriesPharmaLogicals Research Pte.Ltd

Summary of BusinessLocationCompany Name

Summary of BusinessLocationCompany Name●Domestic Subsidiaries

●Overseas Subsidiaries and Affiliates

●R&D Partners

SharingOur Story

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ChugaiC

orporateO

verview

Leading products

Cancer

Renal diseases

Bone and jointdiseases

Other

・Avastin (anti-vascular endothelial growthfactor (VEGF) humanized monoclonalantibody)

・Tarceva (epidermal growth factor receptor(EGFR) tyrosine kinase inhibitor)

・Herceptin (anti-HER2 monoclonal antibody,antitumor agent)

・Xeloda (antitumor agent)・Neutrogin (agent for neutropenia associated

with chemotherapy)

・Epogin (agent for anemia associated withend-stage renal disease)

・Oxarol (agent for secondaryhyperparathyroidism in hemodialysispatients)

・Renagel (agent for hyperphosphatemia)

・Actemra (rheumatoid arthritis)・Alfarol (agent for osteoporosis)・Evista (agent for postmenopausal

osteoporosis)・Suvenyl (agent for knee pain associated with

rheumatoid arthritis, osteoarthritis)

・Tamiflu (anti-influenza agent)・Sigmart (anti-anginal agent)・Pegasys (chronic hepatitis C)・Copegus (antiviral agent used in combination

with Pegasys)

■Profile of Chugai Pharmaceutical

Chugai Pharmaceutical is a company driven by research anddevelopment―a leader in the field of biopharmaceuticalsthat specializes in prescription drugs. Since forming a strategicalliance with Roche in October 2002, Chugai has pursued anaggressive R&D agenda in and outside Japan as a keymember of the Roche Group. The company is working todiscover innovative and internationally viablepharmaceuticals, concentrating on the treatment of cancer,renal disease, and bone and joint diseases.

Chugai Research Institute for Medical Science Inc.Chugai Business Support Co., Ltd.Medical Culture Inc.Chugai Distribution Co., Ltd.Chugai Pharma Manufacturing Co., Ltd.Chugai Clinical Research Center Co., Ltd.

Gotemba-City, Shizuoka PrefectureKita-ku, TokyoChuo-ku, TokyoKazo-City, Saitama PrefectureKita-ku, TokyoChuo-ku, Tokyo

Research and development of pharmaceuticals Administrative support serviceLiterature documentation Storage and transportationContracted manufacturing of pharmaceuticalsClinical development of pharmaceuticals

Chugai Pharma Europe Ltd.Chugai Pharma U.K. Ltd.Chugai Pharma Marketing Ltd.

Chugai Pharma Marketing Ltd. Germany BranchChugai Pharma France S. A. S.CHUGAI sanofi-aventis S.N.C.Chugai U.S.A.,Inc.

Chugai U.S.A. Inc. New York OfficeChugai Pharma U.S.A., LLCChugai Pharma (Shanghai) Consulting Co., Ltd.

Chugai Pharma (Shanghai) Consulting Co., Ltd. Beijing BranchChugai Pharma (Shanghai) Consulting Co., Ltd. Guangzhou Branch

Chugai Pharma Taiwan Ltd.

London, U.K.London, U.K. London, U.K. Frankfurt, GermanyParis, FranceAntony, FranceBedminster, U.S.A.New York, U.S.A.Bedminster, U.S.A.Shanghai, ChinaBeijing, ChinaGuangzhou, ChinaTaipei, Taiwan

Clinical development and submission of applications for new drugs in EuropeSales of pharmaceuticals in the UKSales administration / Sales of pharmaceuticals in EuropeSales and sales promotion of pharmaceuticals in GermanySales of pharmaceuticals in FranceImport and sales of pharmaceuticals, clinical development and submission of applications for new drugs in EuropeHolding company / Business administration in the USHolding company / Business administration in the USClinical development and submission of applications for new drugs in the USProvision of medical information on drugs in ChinaProvision of medical information on drugs in ChinaProvision of medical information on drugs in ChinaSales of pharmaceuticals in Taiwan

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Highlight 1 Antibody Drugs

medical treatment with few sideeffects. At present, monoclonalantibodies in particular are attractingattention.

Monoclonal antibodies

B cells, which are a type of immunecell, produce antibodies that bind tospecific markers in order to attackforeign bodies (antigens), such as virus-infected cells and cancer cells.Monoclonal antibodies are a copy― i.e.a clone―of antibodies produced by onetype of B cell. Large quantities of pureantibodies can be obtained by applyingmonoclonal antibody productiontechniques. Antibody drugs usingmonoclonal antibodies were createdbased on the idea that if it werepossible to mass produce antibodiesthat could attack cancer cells by bindingonly to those specific markers, suchantibodies would make promisingdrugs. For example, most cancer cellshave a specific marker that other normalcells do not possess.

Characteristics of antibody drugs

■Potential treatment for cancer andother intractable diseases for whichthere are currently few or no effectivetherapies.

For example, cancer, rheumatoidarthritis, etc.

■Promise of outstanding therapeuticaction with comparatively few sideeffects.

Can zero-in on a wide range ofspecific markers, including those oncancer cells.

■More suited to state-of-the-artbiotechnology than past drugs.

Research and Development of Antibody Drugs

Chugai Pharmaceutical is an R&D-drivenpharmaceutical company on the cuttingedge of biopharmaceuticaldevelopment. In the 1980s thecompany developed drugs fromproteins associated with themultiplication and differentiation ofblood cells (erythropoietin (EPO) andgranulocyte-colony stimulating factor (G-CSF)) and established a massproduction system based on geneticengineering techniques. Building on thistechnology, Chugai is now a leader inthe development of antibody drugs,which make use of antigen-antibodyreactions. These pages provide anintroduction to antibody drugs andsome of Chugai's unique contributionsin the field.

Antibody drugs

Antibody drugs are pharmaceuticals thatuse antibodies, which have an effectonly on specific cells and structures(molecules). Antibody drugs can beexpected to demonstrate outstandingtherapeutic action with reduced sideeffects, since they zero-in on markers(antigenic proteins) appearing on thesurface of cancer cells, inflammatorycells, and other diseased cells.Expectations are high that antibodydrugs will enable highly effective

Manufacturing technology usinggenetic engineering techniques hasbeen established.

■One challenge is the worldwide lackof production equipment.

Constructing facilities entailsenormous costs, since theproduction equipment is highlyspecialized and large-scale.

Examples of antibody drugs

The outer membranes of breast cancercells have a marker called humanepidermal growth factor receptor type 2(HER2). By binding to this marker,antibody drugs can block the signal sentto cancer cells that instructs them tomultiply, thus suppressing the increaseof cancer cells. Moreover, antibodydrugs can strengthen the action ofnatural killer cells and macrophages,which attack cancer cells directly. Theseantibody drugs are efficacious for typesof breast cancer that have many HER2markers.

Some antibody drugs bind to markercalled an interleukin receptor.Interleukin-6 (IL-6) is a cytokine thatcontrols antibody-mediated immunity.Rheumatoid arthritis is a progressiveautoimmune disease characterized byinflammation of joints and synovialmembranes throughout the body. Itstarts with an inflammatory response inthe joints, which are part of themachinery of bodily movement. Itcauses pain and swelling and eventuallyleads to deformation and thedestruction of articular bone withresultant loss of mobility. By binding tothe IL-6 receptors, these antibody drugssuppress the activity of IL-6, which is animportant factor in the process that

Figure 1: Molecular model of Actemra

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SharingOur Story

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Highlight

1A

ntibodyD

rugs

triggers inflammation, therebyameliorating joint inflammation andeasing the systemic symptoms ofrheumatoid arthritis.

Antibody drugs under

development around the world

At present, work is underway todevelop antibody drugs for viral andbacterial infections; antibody drugs torelieve allergy symptoms by binding toimmunoglobulin E (which is a cause ofallergies); and antibody drugs forconditions such as asthma, rheumatoidarthritis, and Crohn's disease. Researchis also being carried out to improve theeffects of antibody drugs. Additionally,research is being carried out onantibody drugs in which a radioisotopethat is highly effective at killing cells isbound to an antibody targeted at cancercells; and antibody drugs that easilypenetrate cancer cells.

Next, we would like to introduceActemra, the first antibody drugdeveloped in Japan.

Introduction

Actemra (generic name: tocilizumab), ahumanized antihuman IL-6 receptormonoclonal antibody, is the firstantibody drug developed in Japan andthe world's first IL-6 inhibitor. It waslaunched as a treatment forCastleman's disease in April 2005 andas a treatment for rheumatoid arthritisand systemic onset juvenile idiopathicarthritis (sJIA) in April 2008. This anti-rheumatic drug was the product of jointresearch by Chugai and Dr. Tadamitsu

Kishimoto and his colleagues at OsakaUniversity. It was realized by integratingmany years of basic research by Chugaiscientists and insights from Dr.Kishimoto's basic immunologyresearch. Figure 1 shows the molecularstructure of Actemra, which is anartificial antibody improved for ease ofuse, made using genetic engineeringtechniques to change antibodiesproduced by mice into human form. It isa genetically modified body producedusing Chinese hamster ovary (CHO)cells. Figure 2 shows the way in whichthe action of IL-6 is transmitted to a celland the way Actemra inhibits thiseffect.

Tireless basic research led to the

elucidation of autoimmune disease

and the mechanism of IL-6

Why do immune responses, which aresupposed to be defensive reactionsagainst foreign pathogens, sometimesturn on the body's own cells? Chugaiinvestigated the cause of thisphenomenon for many years usinganimal models of autoimmune diseaseand found results that support theexplanation that B cells are to blame.This explanation attributes autoimmunedisease to the appearance ofautoantibodies as a result of abnormalactivation of B cells, which are a kind oflymphocyte. In light of this, the idea thata B cell inhibitor could become a newmedication was born, and the companystarted screening compounds with thepotential to be developed into drugs.

Around the same time, basic researchon the mechanism of antibody

formation was developing and led to theunderstanding that B cells need helpfrom T cells, which are anotherlymphocyte, to transform into the cellsthat produce antibodies. Dr. Kishimotoand his colleagues at Osaka Universityfound that soluble protein factorssecreted by T cells play this helpingrole. In 1986, they isolated the gene forone of these factors, the cytokineknown as IL-6, which is thought to bewhat induces the symptoms ofautoimmune disease.

Based on this research developedindependently by Chugai and OsakaUniversity, the company formed thehypothesis that IL-6 triggers abnormalactivation of B cells, which causesautoimmunity, and then startedresearch to identify an IL-6 inhibitor.

Industrial-academic collaboration:

The driving force that led from

basic research to development

The company tried developing solublereceptors that could trap IL-6. It alsoscreened peptide fragments of IL-6 andIL-6 receptors as well as multiplesynthetic and natural compounds, butall ended in failure. Eventually, therewas no choice but to make monoclonalantibodies for IL-6 receptors as acandidate IL-6 inhibitor.

In modern parlance, the development ofActemra is a model of successfultranslational research in which basicresearch led to the development of apharmaceutical. It took 22 years fromthe beginning to product launch. It is anexample of success built on thefoundation of Chugai's continual anddedicated effort to elucidate thepathogenesis of autoimmune disease,and Osaka University's world-leadingbasic research on fundamentalimmunology relating to IL-6.

Mass producing an antibody drug was anew experience for Chugai, which hadto overcome numerous challenges anddifficulties along the way.

A. After binding to an IL-6 receptor (IL-6R) on the cell surface, IL-6 combines with a second receptor calledgp130. This complex unites into a hexamer, causing gp130 to form an intracytoplasmic homodimer. Thesignaling system starts, and IL-6's signal is transmitted to the nucleus. At the same time, bodily fluidscontain soluble IL-6 receptors which form complexes with IL-6. In this case, the complex combines withgp130 receptors on the cell surface, causing IL-6's signal to be transmitted into the cell.

B. Actemra competitively inhibits the binding of IL-6 to membrane-bound and soluble IL-6 receptors.(Quoted from the application materials.)

Figure 2: IL-6 signal transduction IL-6 and IL-6 signal transduction inhibition by Actemra

A: Cells expressing membrane-bound IL-6R and gp130B: Cells expressing only gp130

Tocilizumab Tocilizumab

Soluble IL-6RCell membrane

Signal transduction Signal transduction

Membrane-bound IL-6R gp130 gp130

IL-6 IL-6

8

Highlight 2 Appropriate Treatment of Wastewater

Appropriate Treatment of Wastewater

Containing High Potency Substances

The Chugai Group enjoys the advantages of unparalleled engineering of drugs for massproduction, cutting-edge facilities, and the leading position it earned by introducingJapan's first antibody drug, Actemra. Going forward, we will leverage this technology toprovide innovative drugs, and we expect to contribute to personalized healthcare tailor-made to disease characteristics and degree of progress. Moreover, in consideration ofbiodiversity, we ensure that medical agents that could have an effect even in traceamounts (e.g., anticancer drugs) are not emitted to the environment by collectingdischarged water generated during manufacturing and treating it as waste. Chugai isaiming to help realize a sustainable society by fulfilling its social responsibility.

Drainage line and part of the Formulation & Packaging Pilot Plant 2

In September 2008, ChugaiPharmaceutical's Ukima Site completedconstruction of Formulation & PackingPilot Plant 2. Compounds with highpharmacological activity, that is, highpotency substances, are handled in thisbuilding, and so a system was adoptedwhereby treatment of wastewater isoutsourced to a specialized treatmentcompany. The three key reasons Chugaiadopted this system are:

1. To prevent release to theenvironment2. To ensure employee safety3. To prevent product contamination.

As a measure to prevent release to theenvironment, the building was designedso that discharged water from the areawhere high potency substances arehandled is segregated from ordinarydischarged water and stored in two 18-ton tanks. The tanks are located indoorsand maintained at an air pressure that islower than the ambient air to preventcontents from escaping.

Moreover, indoor ventilation passesthrough high-performance air filters.

In order to ensure employee safety,vents on the tanks have also been fittedwith high-performance air filters toprevent compounds from escapingindoors. Filters are moistened beforebeing changed to prevent collectedcompounds from becoming airborne.

As a measure to prevent productcontamination, special devices wereinstalled in the water pipes of the

manufacturing equipment to stop thepressure from rising inside the pipingand thereby prevent the contaminationof products with discharged water.

By combining a variety of technologiesfor treating discharged water in thisway, the Chugai Group has constructedmanufacturing facilities designed toprevent environmental pollution, ensuresafe working conditions for employees,and provide high-quality products thatcontribute to patients' health.

Message from the Deputy President

Motoo UenoRepresentative DirectorDeputy President, Corporate Social Responsibility

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Taking a principled approach to CSR initiatives

―fulfilling the Chugai Mission

Mission Statement, Chugai Business Conduct Guidelines and CSR Initiatives SharingOur Story

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Highlight2AppropriateTreatmentofWastewaterMissionStatement,ChugaiBusinessConductGuidelinesandCSRInitiatives

Mission Statement

The Chugai Group conducts all of its operationsbased on its Mission Statement ― which consistsof a Mission, Core Values, and an EnvisionedFuture ― in order to ensure that it will continue tofulfill its corporate social responsibility and meetthe diverse expectations of all its stakeholders.

■Chugai Business Conduct Guidelines

Responsibility to Patients and Consumers

We will always put the patient and the consumer first, andprovide high-quality products and services of superior safetyand efficacy.

Strict Adherence to the Law

In all our business activities, we will strictly adhere to all lawsand their underlying principles.

Respect for Humanity

We will respect human rights in every aspect of our businessactivities.

Fair Trade

We will engage in fair and transparent transactions withmedical institutions and organizations, suppliers andcustomers.

Management of Corporate Assets

We will achieve our management objectives through theoptimal and appropriate management and use of corporateassets.

Disclosure of Information

We will actively and fairly disclose corporate information inaccordance with both legal requirements and the principles ofsocial justice.

Social Contribution

We will remain aware of our responsibility as a goodcorporate citizen and actively continue with our social actionprogram.

Protection of the Global Environment

We will do our best to protect the environment by conductingall our business activities in accordance with the ChugaiEnvironmental Charter.

Relations with Governmental and Administrative Bodies

We will maintain fair and transparent relations withpolicymakers and administrative bodies.

Relations with External Bodies

We will maintain fair and transparent relations, within reason,with external bodies.

■BCG & Human Rights Training―Putting

the Chugai Business Conduct Guidelines

into Practice

In order to fulfill its responsibilities to stakeholdersand live up to their expectations, the Chugai Grouphas established the Chugai Business ConductGuidelines (Chugai BCG) to use as a code ofbehavior governing both the decisions of thecompany and the individual actions of employees.

To ensure the proper application ofthe Chugai BCG to daily operations, allemployees in the Chugai Group attendBCG & Human Rights Training twiceevery year. The training programutilizes case studies from Chugai andother companies as teaching material.Employees discuss these cases andconsider what action needs to betaken in their own workplaces.

Core Values●The primary focus of all our activities is patients

and consumers.● In all our activities we are committed to the

highest ethical and moral standards.●We value employees who develop profound

expertise and broad perspectives and pursueinnovation and challenges without fear offailure.

●Wherever we operate around the world weseek to understand and respect people andcultures and to behave as good corporatecitizens.

●We promote an open and active corporateculture that respects individuality, ability andteamwork.

●We care about the global environment.●We aim to achieve a fair return for our

shareholders and to disclose informationappropriately and in a timely manner.

Envisioned FutureAs a most important member of the Rochegroup, we aim to become a top Japanesepharmaceutical company by providing acontinuous flow of innovative new medicinesdomestically and internationally.

Chugai's mission is to dedicate itself to addingexceptional value through the creation ofinnovative medical products and services forthe benefit of the medical community andhuman health around the world.

Mission

10

As a company associated with human life, Chugai

is committed to the highest ethical and moral

standards in all its activities.

Firm Commitment to Corporate Ethics

Corporate Ethics Take Priority overProfit

Chugai places paramount importance on respectfor life, and pursues fair and transparent corporateactivities based on high ethical standards, alongwith sincere scientific initiatives.

This approach is essential for the creation of strongrelationships of trust with stakeholders, and inorder to contribute to the sustainable developmentof society.

When the new Chugai Pharmaceutical was created in October 2002 through a merger withNippon Roche K.K. based on a strategic alliancewith F. Hoffmann-La Roche Limited the presidentissued a message to all employees concerning theneed to prioritize corporate ethics over profits. The company published a Mission Statement (seepage 9) declaring its path to becoming a companythat better meets stakeholder expectations andfulfills its responsibilities, and also established theChugai Business Conduct Guidelines (Chugai BCG)to accompany the statement.

Working toward these goals, all employees of theChugai Group are placing top priority on sharingthese values, as well as understanding andpracticing the ethical standards necessary toexecute their jobs.

The promise of Chugai employees is to evaluateevery action ethically before taking it.

Committed to Ethical PromotionalActivities

Pharmaceutical companies have a responsibility topursue quality, effectiveness, and safety in all theiroperations― from product R&D to sales. Theymust also rapidly collect and disseminate accurateinformation on pharmaceuticals in an appropriatemanner.

Japan's pharmaceutical industry has voluntarilyestablished a promotion code for the independentmarketing of pharmaceuticals. There is also a faircompetition agreement that covers themanufacture and sale of pharmaceuticals, whichserves to regulate the provision of free drugsamples to medical institutions.

The Chugai Group actively supports the efforts ofthe Fair Trade Council of the Ethical PharmaceuticalDrugs Marketing Industry and the JapanPharmaceutical Manufacturers Association'sPromotion Code Committee― the institutionsadministering the above-mentioned industry rules―

and has also gone one step further by establishingand implementing its own code of conduct onpharmaceutical promotion. The Chugai PromotionCode Committee serves as the decision-makingbody for Chugai's code, and a system of full-timemonitors at the Head Office and branches ensuresproper adherence to the fair competitionagreement and the Chugai code. The company istaking strong steps to ensure that all of itsmarketing activities are highly ethical.

Creating a Corporate Culture ofRespect for Self and Others

A culture of respect for human rights is essentialfor building a dynamic, outstanding company thatearns the trust of society. Promoting diversity andrespect for human rights is one of the mostimportant parts of the Chugai Business ConductGuidelines, which outline a code of conduct basedon Core Values shared by Chugai employees.

Chugai is committed to fostering a corporateculture where people respect themselves andothers, where they can do rewarding work withcreativity and enthusiasm. The key to this isbuilding workplaces that encourage diversity sothat all employees can have strong self-esteem andlive up to their full potential― that is, creating aculture where people respect each other'sperspectives and can work in an environment freefrom discrimination and infringement of humanrights.

A corporate culture that respects human rightshelps to foster employees' aspirations, which inturn results in higher productivity for the company.

Chugai believes that, as all our employees developa strong awareness of human rights and act inways that respect each other's individuality, theywill carry their commitment to respecting self andothers with them everywhere they go. This, in turn,will help to eliminate discrimination andinfringement of human rights in the broadersociety.

The keyword can be translated into English as, "You cannotrespect others if you cannot respect yourself"

Chugai's View of Animal Welfare

Research using laboratory animals to confirm thesafety and efficacy of drugs is essential to thedevelopment of the pharmaceuticals that contributedramatic improvements to human health. At the sametime, this research must thoroughly comply with the3R＊ principles. In 1988, the Chugai Group establishedguidelines on how to treat laboratory animals inresearch, and has adhered to these ever since,conducting all animal testing in an ethical, scientificallysound manner. Although these guidelines have beenpartially revised from time to time, Chugai hasconsistently sought to apply practical ethicalconsideration to all animal testing in line with thisbasic philosophy: "We must consider both ethical andscientific issues when undertaking animalexperiments, while taking into account ethical issuesincluding aspects of animal physiology, ecology, andbehavior as they affect animal welfare, as well asrearing animals with affection, respect for animal life,and measures to minimize pain."

In 2005, Chugai reformed its Ethics Committee for theTreatment of Laboratory Animals, which was originallyestablished with the advent of the guidelines, andrenamed it the "Institutional Animal Care and UseCommittee." In addition to further clarifying the linesof responsibility within the company, nonaffiliatedvoting committee members were added to ensure theobjectivity of research monitoring in animal testingfrom the perspective of the citizenry. At the sametime an institutional qualification program wasadopted for researchers and animal handlers involvedin animal testing. The company also providesappropriate education and training designed tocultivate deep ethical consideration regarding animaltesting. (In 2008, 97 participants took part inoccasional training courses held 27 times, and 484participants took part in annual training courses held10 times.)

These Chugai initiatives have been evaluated byAAALAC International,＊＊ a global independentevaluation organization, and in 2007 the companyobtained Full Accreditation as a result. Inspection byAAALAC International is repeated every three years,and Chugai will continue its tireless effort to ensureanimal welfare.

Bioethics Initiatives in R&D

Chugai has established Ethical Guidelines for Researchthat Uses Human-derived Test Material. Chugai hasalso formed a Research Ethics Committee to ensurethat research is being carried out appropriately.

The Research Ethics Committee is composed of eightmen and women, half of whom are from outsideChugai. The outside members consist of experts fromthe humanities and social sciences, including ethics

and law, as well as experts from the natural sciencesand people with a more general background. Thechairperson is selected from among the outsidemembers, which helps to ensure that the committeecarries out fair, objective evaluations from aninterdisciplinary and pluralistic frame of reference.

Conduct of Clinical Trials

Clinical trials are essential for verifying the safety andefficacy of investigational products. Naturally, clinicaltrials must be performed with respect for the rights oftrial subjects. Clinical trials are closely monitored forpatient safety, following stringent scientificmethodology based on the highest ethical standards.The Chugai Group is committed to evaluating the realmerit of investigational products using well-established,reputable testing procedures that comply with Japan'sPharmaceutical Affairs Law and other related legislation.

●Protocol Review Committee

Before the start of a proposed clinical trial, theProtocol Review Committee checks the protocol toensure that it is ethically and scientifically sound. The protocol is then checked by a governmentalregulatory agency, before being carefully examined byan Institutional Review Board, which is composed ofmedical professionals and non-medical members atmedical institutions. This board makes a decision onwhether or not Chugai may proceed with a given trial.

●Standard Operating Procedures

Clinical trials are undertaken in compliance withspecific Standard Operating Procedures (SOPs)prepared and updated by Chugai. Chugai's SOPscomply with all applicable pharmaceutical laws andregulations.

●Safety Evaluation Committee

Whenever obtaining important information on safetyof investigational products from clinical trials, Chugaipromptly gathers the needed information, and thenanalyzes and deliberates on it in a Safety EvaluationCommittee composed of medical and scientificexperts including physicians. This ensures that patientwelfare always remains the highest priority throughthe meticulous process of sharing information withregulating authorities and the medical institutionsinvolved.

11

SharingOur Story

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＊3Rs: The principles of replacement, reduction, and refinement are applied in order to ensure animal welfare during research.＊＊Association for Assessment and Accreditation of Laboratory Animal Care International: This private non-profit organization promotes the humane treatment of animals

in scientific research, through its own inspection and certification programs. More than 770 facilities in 29 countries have been accredited.

Head of Chugai(President)

Directors of research institutes within the Chugai Group

(Heads of research and development divisions:general managers at Chugai Pharmaceutical and

presidents of affiliates)

Research Ethics Committee

Reporting review results Requesting approval

12

the IAC to ensure that the company will continue torespond effectively to the rapidly changing globalbusiness environment.(Figures are as of the end of December 2008.)

Internal Audit System

In order to maintain the independence and objectivityof the internal audit department, the AuditDepartment was set up with corporate staff in anindependent organizational structure. The auditresults, along with suggestions, are all reported to theExecutive Committee.

Follow-up audits are carried out on the mainrecommendations six months later to verify the statusof improvement, and the results are reported to theexecutive vice president responsible. In addition, theAudit Department reports internal audit results to thefull-time corporate auditors.

The Audit Department also works with alldepartments, once a year, to conduct an internalcontrol self-assessment process. This contributes toenhance awareness of internal controls amongdepartment heads, and the feedback they receive ontheir assessment results helps them to improve theirinternal controls.

Risk Management System

The Chugai Group has established risk managementrules, and has a Risk Management Committee and aRisk Management & Compliance Department whichimplement Group-wide risk management. Specifically,every year Chugai takes proactive steps to avoid ormitigate risks that may significantly affect corporateactivities by having these organizations identify potentialrisk factors and establish management policies for eachrisk to ensure that risks will be prevented early onbefore they materialize. Risk management progressreports are reviewed by top management every quarter.To deal with potential emergencies, the company has adisaster response mechanism in place. In the event of a

Board of DirectorsMembers of the Board

President/ CEO

Executive Officers

Operating Organization

IAC

Accounting Auditor

Audit Department

General Meeting of Shareholders

Board of AuditorsCorporate Auditors

Executive Committee

IR CommitteeRisk Management Committee

Corporate Social ResponsibilityCommittee

Advice

Audit

Audit

Promotion

Selection/Dismissal

Internal Audit

Report

Accounting Audit

Selection/Dismissal Selection/Dismissal Selection/Dismissal

Focusing on quick decision-making and clear

responsibility for execution

System for Fulfilling Social Responsibility

■Corporate Governance System

Chugai's Basic View of CorporateGovernance

Chugai Pharmaceutical is committed to continuouslyincreasing corporate value and responding appropriatelyand fairly to the requests of all stakeholders, includingshareholders. To fulfill this commitment, the companyhas positioned the enhancement of corporategovernance as an important management task and isbuilding a system that emphasizes prompt decision-making, clarification of executive responsibilities, andmanagement transparency.

Toward this end, Chugai has been improving itsgovernance system by appointing outside directors andintroducing an executive officer system. AlthoughChugai is affiliated with Roche Pharmholding B.V. on aconsolidated basis, it is an independently listedcompany, and its decision-making is conducted underthe principles of autonomy and independence.

●Board of Directors

The Board of Directors is comprised of 14 membersincluding seven outside directors. It makes decisionson the most important management issues, as well asoverseeing business execution.

●Executive Committee

All major decisions concerning business operationsthemselves are delegated by the Board of Directors tothe Executive Committee, which is comprised of thepresident and the nine main executive officers.

●Board of Auditors

The Board of Auditors is made up of four corporateauditors, two of whom are outside auditors, and itcarries out careful audits of management decision-making and the status of business execution, throughtheir attendance at Board of Directors and Board ofAuditors meetings and examining business reportsfrom members of the Board.

● International Advisory Council (IAC)

Chugai has also established an International AdvisoryCouncil (IAC) composed of specialists from both inand outside Japan. Chugai receives consultation from

(December 31, 2008)

Approval

Matters submitted fordiscussion/Reports

Executive Committee

Advice

Suggestions/Proposals/Guidance

Chairman

Suggestions/Proposals/Guidance

Matters submitted fordiscussion/Reports

Liaison/Instructions

Reports/Proposals

Reports/Proposals/Matters submitted

for discussionReports/Proposals

Consultation/Reports, etc.

Guidance/EducationReports/Proposals

Liaison/Instructions Reports/Proposals

Director in charge of promotingcorporate social responsibility

Corporate Social Responsibility Committee

Corporate Social ResponsibilityAdvisory Committee

BCG Hotline

Corporate Ethics Promotion Committee

Corporate Social Responsibility Department

Environmental Safety Secretariat Meeting

On-site Environmental Committees

All Chugai Group Employees

Liaison/Instructions

■Corporate Social Responsibility Promotion Structure

13

crisis, an emergency headquarters is established,headed by Chugai's representative director.

Committed to Compliance

Compliance rules have been put in place, and aCompliance Committee has been established underthe Risk Management Committee. Chugai is able toregularly ascertain the status of compliance Group-wide, while striving for thorough adherence to the law.Specifically, the heads of all the organizations withinthe Chugai Group, serving as compliance managers,monitor and report on compliance status each quarter.The results are discussed by the ComplianceCommittee, and then reported to top management. Inaddition, the compliance manager and othersresponsible for compliance in each organization striveto ensure that all laws are properly observed. If asuspected compliance issue arises, it is reported tothe Risk Management & Compliance Department andthe department in charge of the legal issue involved.Suitable response measures are then taken.

Internal Control over Financial Reporting

In order to comply with Japan's new FinancialInstruments and Exchange Act (J-SOX) and theinternal control system for financial reporting that itrequires, the Chugai Group is taking necessary stepssuch as identifying internal control risks, documentingcontrol activities, and confirming the establishment ofinternal controls. With implementation of the newregulations in fiscal 2009, Chugai has worked hard toprepare for full compliance. Steady efforts areunderway to ensure that the entire Chugai Group willattain good results in its self-assessment and externalaudit concerning the internal controls.

●Cooperation with the external auditor

Chugai engages in ample consultation with itsexternal auditor based on internal control rules. It isalso making preparations for a smooth transition tothe start of the new regulatory requirements,including the clarification of the scope of evaluation.

●Trial evaluation of internal controls

Chugai has confirmed that there are no major internalcontrol problems, based on the results of trialevaluations by the company.

Framework for Promoting SocialResponsibility

The Chugai Group understands that it has a socialresponsibility to respond to the needs and expectationsof stakeholders. To fulfill this duty, the Corporate SocialResponsibility Committee discusses and decides onbasic policy and plans, and the Corporate SocialResponsibility Department manages activities. Inaddition, the Chugai Business Conduct Guidelines(Chugai BCG) serve as a code of conduct governingspecific decision-making situations, helping allemployees to carry out their jobs properly. To ensurethat the BCG are thoroughly embraced and put intopractice, the Corporate Ethics Promotion Committeeplays a key role in developing training programs,raising awareness, and monitoring activities. The BCGHotline provides a reporting and consultation channelfor employees to secure a more agreeable workplaceenvironment. Through all these activities, Chugai isalways striving to be a company of integrity and trust.

●Corporate Social Responsibility Committee

The Corporate Social Responsibility Committee meetstwice a year. It discusses and makes decisions onpolicies, targets, and action plans relating to socialresponsibility for all the business activities of theChugai Group, and reports to and proposes items fordiscussion for the agenda of the Executive Committeeas necessary.

●Corporate Ethics Promotion Committee

The Corporate Ethics Promotion Committee also meetstwice a year. The members come from each workplacein the Chugai Group and receive information andtraining, and exchange opinions. They then go back totheir respective workplaces and promote the ChugaiBCG and activities to enhance awareness on humanrights by supporting the heads of their organizations.

●BCG Hotline

The BCG Hotline has been set up in-house to provideopportunities for consultation about any suspectedissues or questions related to the law, company rules,and/or the Chugai BCG. The hotline helps to deal withand resolve problems that may be difficult to discussin the workplace. The aim is to foster a corporateculture that never ignores problems, while enhancingthe organization's capacity to address its own issuesand maintain proper functioning.

SharingOur Story

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System

forFulfilling

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(December 31, 2008)

14

■ Initiatives and performance in 2008

Items Main initiatives Main performance indicators in 2008Reference

page(s)

Patients and

consumers

・Pursuing the development and provision ofinnovative pharmaceuticals

・Activities to build awareness of disease inpriority fields

・Support for developing countries・Welfare initiatives for the elderly and people

with disabilities・Responding to inquiries and disclosing

information

・New therapeutic uses: Herceptin and Actemra・R&D expenses/sales: 16.3% (Chugai Group・Cumulative number of countries receiving free therapeutic drugs for

treating children with lymphangioma: 67 (program in its 18th year)・Disease awareness activities and co-sponsored events held: 21・2008 Roche Children's Walk fundraising: 2,800 employees raised ¥1.715 million・Recipients of vans equipped with lifts to provide transportation for home

welfare services: a total of 173 vans for five organizations over 23 years・Customer inquiries answered by Chugai's Drug Information Center: 60,906

(includes telephone, e-mail and fax inquiries)

Highest ethical

and moral

standards

・ Inculcating high ethical standards through training onthe Business Conduct Guidelines, continuous effortsto build human rights awareness

・Maintaining high animal welfare standards inaccordance with international guidelines

・Fair trade with suppliers and customers・Promoting compliance with the Pharmaceutical

Affairs Law, fair competition codes, promotioncodes, and other laws and regulations

・BCG and Human Rights training attendees: 12,123 (includes repeatattendees; Chugai Group in Japan)

・ In-house education and training for people who perform animalexperiments: 27 sessions attended by 581 people

・State of ethical and legal compliance survey within the Sales Division:Responses received from a cumulative total of 4,954 people

Shareholders

and investors

・Unbiased and highly transparent disclosure ofinformation

・Holding frequent dialogues with investors in andoutside Japan

・Holding general meetings of shareholders andshareholder receptions

・Realizing steady dividend payments

・Briefings for the media and investors: 17・Responses made to individual requests for information, such as by

securities analysts: 175・ Institutional investors outside Japan visited in person by top executives: 64・General meeting of shareholders and shareholders' reception: 676

participants at the Palace Hotel Tokyo on March 27, 2008・Return on equity (ROE): 10.1% (Chugai Group)・Dividend per share: ¥34 (annual)

Communities ・Holding charity events to contribute to localcommunities

・Nurturing the next-generation of individuals whowill carry science and technology forward

・Supporting the Training Program for Educatorsat Private Companies

・Supporting employee volunteer activities

・Contribution to the local communities wheresites are located

・Special sponsorship of a cancer charity event: "Christmas Concert inYokohama Featuring Star Philharmonic Chorus" (December 23, 2008 inYokohama, Japan); Participation in Relay For Life Japan 2008

・Video presentations given at Dr. Kitanomaru's Bio PharmaceuticalLaboratory exhibit: 40,632 (January-December, 2008)

・Summer Biotech Lab for Kids at the Japan Science Foundation's ScienceMuseum in Tokyo: 93 participants

・Educators accepted from the Training Program for Educators at PrivateCompanies: 10

・Employees taking volunteer leave: 1・Classes for the local community at Shizuoka Sangyo University

Employees ・Fostering human assets who are competent inthe global arena

・Building a work environment that is motivatingand fulfilling for every employee

・Building sound labor-management relations

・Creating safe, comfortable workplaces

・Programs for Future Core Leaders, Programs for Developing Human CapitalEssence, Programs for Developing Functional Expertise, and Programs forSelf-Innovation

・Number of employees taking childcare leave: 26・Users of wiwiw (an online tool that supports employees who return to

work after taking childcare leave): 22 (cumulative total)・Rate of employees with disabilities: 1.86% (as of the end of June 2008)・Occupational injury frequency rate: 1.43・Accidents resulting in absence from work: 2 (Chugai Group in Japan)・Lost workdays resulting from occupational accidents: 11 (Chugai Group in

Japan)

Environmental

protection and

occupational

safety and

health

・Promoting global warming countermeasures

・Pursuing resource conservation and waste reduction

・Enhancing environmental awareness

・Making environment-related contributions tolocal communities

・Disclosing environmental information

・Thoroughly managing chemical substances

・CO2 emissions compared with 2003: Up 26% (Chugai Group in Japan)・Petroleum-based fuel usage: 4.3% (total for plants and research laboratories)・Ratio of hybrid Sales vehicles: 18%・Volume of waste generated compared with fiscal 1990: Down 90% (Chugai

Group in Japan)・Final volume of landfill waste compared with fiscal 1990: Down 97.7%

(Chugai Group in Japan)・Participants in environmental e-learning course: 764 (Chugai Group in Japan)

3, 6, 73918

212222

20

9, 27

11

10

23, 39

23、3922

2115

25

25

25

3939

26, 39393232

35403537

37

38

Chugai's Unique Approach to Fulfilling Social

Responsibilities

CSR Initiatives

Collaborating with Stakeholders

Responsibleto People

PART2

Pursuing innovative contributions in various fields related to health and welfare

Relay For Life Japan 2008 in Yokohama

Comm

unit

y,N

PO

s,e

tc.

Shareholders and

InvestorsPat

ient

s

and Consumers

Bu

sine

ssP

artners

Employees

Teachers participating in the program

16

recurrent/advanced non-small cell lung cancer.

It is believed that non-small cell lung cancer cells arestrongly dependent on EGFR-mediated survival andgrowth signals. Tarceva is thought to demonstrate itsantitumor effects by curbing the proliferation of cancercells and inducing cell apoptosis by selectively targetingthis signaling pathway.

■Safety measures for Avastin and Tarceva

Chugai consistently assumes responsibility for allprocesses from the initial development stages in Japanthrough research, manufacture, and clinicaldevelopment to marketing. The company has evenorganized product lifecycle management teams forAvastin and Tarceva to make sure that safety measuresare acted on after manufacture and release to themarket.

The company undertakes careful reviews during thedrug development process and evaluates efficacy andsafety before a drug is actually used in a medicalsetting. It is difficult, however, to capture all theinformation about safety at that stage. Accordingly,Chugai conducts surveillance of all registered patientsfor a certain period of time after the launch of theseproducts in an effort to promote their proper use.

Innovative R&D

Chugai Pharmaceutical is constantly working to developinnovative, original drug candidates with potential forworldwide use. The company focuses on five mainfields―oncology, renal diseases, osteoporosis &cartilage diseases, diabetes, and hepatitis―as it strivesto build a strong, highly productive research pipeline ofpharmaceuticals under development. Chugai's researchsystem ensures that resources are allocated first toprojects that have the greatest promise of realizinghighly original products. The company has a strongfoundation in the technologies required to developentirely new drug candidates, and also enjoysadvantages in production technology for antibodydrugs.

Chugai is currently combining its own expertise andinnovation with the strengths of the Roche Group bysharing information and research infrastructure withRoche for research tools, chemical compound banksand chemical compound evaluation databases. Thecompany is also working closely with ForerunnerPharma Research Co., Ltd., in Tokyo, PharmaLogicalsResearch Pte. Ltd. in Singapore, and C&C ResearchLaboratories in South Korea. Leveraging the benefits ofjoint research as well as its alliances with universities,research institutions, and other firms in and outside

Providing innovative pharmaceuticals and services

based on superior science and theory

Initiatives for Patients and Consumers

Supplying Innovative Pharmaceuticals

■Avastin

Avastin (generic name: bevacizumab), a humanizedmonoclonal antibody that binds to the vascularendothelial growth factor (VEGF), which is centrallyinvolved in the formation of new blood vessels, is ananti-cancer agent with a completely new mechanism ofaction. It works by curbing the formation of new bloodvessels at the locus of cancer growth and normalizingthe function of those blood vessels.

Avastin was approved as a treatment for colorectalcancer (CRC) in the United States after a five-monthreview in 2004. Although approval in Japan came threeyears after approval in the U.S., Avastin was approvedin Japan through a priority review following a requestfor early application made by the fifth InvestigationalCommittee for Usage of Unapproved Drugs in July2005.

Approval of Avastin has led to reports of prolongedsurvival when it is prescribed in combination withstandard chemotherapy regimens for CRC. Manypatients are now benefiting from chemotherapyregimens including Avastin, which is becoming a newinternational standard treatment.

Chugai will move ahead with the development ofAvastin for other cancers, such as breast cancer andlung cancer, mainly through collaborative internationaltrials with Roche, and will strive to maximize Avastin'svalue and make it available to patients in Japan as soonas possible.

■Tarceva

In October 2007, Chugai Pharmaceutical receivedapproval to manufacture and market Tarceva (genericname: erlotinib hydrochloride) in Japan, as a treatmentfor non-resectable, recurrent/advanced non-small celllung cancer (NSCLC) aggravated followingchemotherapy. In December 2007, the companylaunched the product. Tarceva was prescribed to over6,000 patients within a year of its release.

Tarceva is a new type of anti-cancer drug called amolecular targeted therapy that has a selectiveinhibitory effect on epidermal growth factor receptor(EGFR) tyrosine kinases. In a Phase 3 study conductedoutside Japan, it was the first molecular targetedtherapy in the world shown to prolong survival in casesof advanced non-small cell lung cancer which failed torespond to standard chemotherapy when administeredorally as a single agent. Tarceva has already beenapproved in more than 90 countries and regions andhas become a standard therapy for non-resectable

Development of Provision of Pharmaceuticals1

17

Japan, Chugai is committed to pioneering research andthe creation of groundbreaking new technologies.

Ensuring a Stable Supply of High-Quality Pharmaceuticals

■Rigorous evaluation process used to select

suppliers of raw materials and packaging

materials

In order to manufacture and provide high-qualitypharmaceuticals to patients, Chugai must secure rawmaterials and packaging materials that are not only safeand effective, but that also meet various standards andgood manufacturing practice (GMP) requirements.Therefore, to ensure a stable supply of raw materialsand packaging materials, the company uses anevaluation and selection process that covers everystage from the time of material approval onward.

Before any raw material or packaging material isapproved for use, various aspects of the supplier'smanagement and technology, as well as the quality ofthe material itself, are evaluated. This evaluation andadoption process emphasizes not only finding the bestraw material for the new pharmaceutical product, butalso the capacity to smoothly procure a steady,continuous supply―from the development stagethrough mass production.

After the raw material or packaging material is selectedfor use, evaluation continues. Delivery deadlines andperformance, including the quality of the material, areclosely monitored. Any changes in managementconditions at the supplier after the start of the businessrelationship are also checked, in order to confirm thatthe material initially selected will continue to be reliablydelivered.

As described above, Chugai has built a solid systemthat ensures a stable supply of outstanding materialsfor the manufacture and packaging of high-qualitypharmaceuticals. The company carefully maintains thissystem by constantly working to improve itsrelationships with suppliers―always aiming for greatertrust and growth for both partners―while also payingclose attention to social expectations.

■Executing global supply chain management

Chugai Pharmaceutical has a mission as a supplier ofJapan's first original antibody medicine. To achieve itsstable supply, Chugai has established a global supplychain. Chugai's supply chain leader shared theworldwide demand information with Roche, and thenChugai and Roche developed a Global Demand &Supply Control System for suitable supply planning andmanagement. This system is now operated by bothcompanies.

In addition, when Roche products are imported, Chugaimakes purchase plans to meet Japanese demand, androutinely monitors product temperature during

transportation. Accordingly, supply chain managementis becoming more complicated and globalized. Chugaiis strengthening its risk management, while constantlystriving to deliver a stable supply of medicines in andoutside Japan.

■Reliably distributing pharmaceuticals and

promotional samples

All employees of Chugai Distribution Co., Ltd., faithfullycarry out their jobs with a commitment to putting thedelivery recipient first. The mission of this company isto consistently provide high-quality distribution servicesto pharmaceutical wholesalers and to Chugai's medicalrepresentatives (MRs). In order to ensure safe andstable supply,Chugai Distributionperformscomputerizedinventorymanagement. Italso employscreative employeesolutions, such asspecial packing forpharmaceuticalsand promotionalsamples that makeit easy for therecipient to tell theitems apart andhelp prevent anydamage duringtransport.

■ Information sharing for quality and safety

Fulfilling their mission to ensure a reliable supply ofmedicine for the public, Japan's pharmaceuticalwholesalers distribute pharmaceuticals to insurancepharmacies, hospitals, clinics and other medicalinstitutions. Chugai cooperates with these distributionpartners in providing information to medical institutionsregarding the efficacy and safety of drugs, as well asother details to ensure their proper use. Chugai strivesto deliver a steady supply of pharmaceuticals to thepatients that need them.

■Ensuring traceability

Chugai provides many biologically derived products andpharmaceuticals requiring strict distributionmanagement. In order to ensure the reliable delivery ofthese medicines to medical institutions and insurancepharmacies so that patients can use them safely,Chugai works together with pharmaceuticalwholesalers to ensure traceability. This effort includescareful management of expiration dates anddistribution management numbers using bar codes, aswell as safety measures relating to distributionprocesses.


2

Initiativesfor

Patients

andC

onsumers

①Packing pharmaceuticals

③Packing pharmaceuticals

①Higashi-Nihon-Distribution Center (Kobe)②③④Nishi-Nihon-Distribution Center (Kazo)

④Automatic racking

②Packing promotional samples

18

Shuhei Ogita Fund inherits belief

in putting patients first

From the time that Little Carlos Fund was established,I worked for Dr. Ogita as a Spanish interpreter. He wasalways very concerned about how his patients werefeeling and what problems they had, and he taught methe importance of listening to what patients and theirfamilies would like to say whenever possible.

In 1997 when Dr. Ogita visited Mexico, a femalepatient (then age 16) had a lymphatic malformation inthe entire left pelvis. She also had angioma, and herleft leg had been amputated at the knee. Her familydoctor had already given up hope for any recovery andshe was at the point of despair, so Dr. Ogita was like asavior to her. In addition to her treatment, she had oneother concern at that time: if she would still be able tohave children despite the disease. Dr. Ogita reassuredher that having a child would be no problem, and I stillhave not forgotten the look of joy and relief on herface when she heard that.

After her treatment was complete, she got marriedand gave birth to a healthy baby boy. As if takingresponsibility for his own words, Dr. Ogita decided togo to Mexico and see the new baby soon after thebirth. However, by this time, illness had started toundermine his health. He returned to Japan withoutanyone recognizing his condition. He said to me thathe finally felt released from the burden, when she wasable to have the baby as he had assured. He passedaway just four months later.

Dr. Ogita gave courage and hope to countless patientsand their families. Shuhei Ogita Fund is preserving hisbelief in putting patients first, true to the mission thathe carried out until the end. We continue to operate asan organization that not only provides support for thetreatment of lymphatic malformations, but also caresdeeply about patients and their families.

Region

South America

Number of Recipient Counties

7, including Argentina, Brazil, and Chile

Europe 28, including Belgium, Romania, and Turkey

Asia & Oceania 21, including Bahrain, South Korea, and Malaysia

Africa 3, including Egypt, South Africa, and Tunisia

North & Central America 8, including Canada, Cuba, and Puerto Rico

Helping People Suffering fromIncurable Disease

■Working with Shuhei Ogita Fund to provide

Picibanil to patients

It has been 18 years since Chugai Pharmaceutical,working with the nonprofit organization Shuhei OgitaFund (http://www.fund-ogita.org/), began providingthe therapeutic medicine Picibanil, a cancer andlymphatic malformation (lymphangioma) treatmentagent, free of charge to children worldwide sufferingfrom incurable lymphatic malformations.

Chugai and Shuhei Ogita Fund receive five or sixinquiries every day from the doctors or familymembers of patients around the world. As soon aslegal requirements in the recipient country are met,Picibanil is sent for the patient. Many children are nowable to overcome this incurable condition by receivingthe treatment in their own countries without comingto Japan.

■Shuhei Ogita Fund

In 1986, Dr. Shuhei Ogita, a pediatric surgeon at theKyoto Prefectural University of Medicine, used Picibanilinjections to achieve remarkable success in thetreatment of lymphatic malformations, for which surgicalexcision had been the treatment of choice for years.

In 1992, a baby boy from Mexico named Carlos, agedone year and two months, came to Japan with hisfamily to receive Dr. Ogita's treatment after theyfound out that a new treatment for lymphaticmalformation was available in Japan. When Dr. Ogitalearned about the financial difficulties of Carlos'family, as they had to sell their house and car in orderto afford the trip to Japan, he set up the Little CarlosFund in order to help children outside Japan sufferingfrom lymphatic malformations. The public responsewas great, and there was an outpouring of donations.Carlos and his family were able to visit Japan a total offour times for treatment as a result.

Dr. Ogita's persistent activities soon began making areal difference, and the number of participatingphysicians and medical institutions grew worldwide.However, in 2003, Dr. Ogita passed away suddenly atthe young age of 55. He had made a strong impact onmany people by putting his patients ahead of himself,right until the end of his life. After his death,likeminded people got together to continue theactivities of Little Carlos Fund by establishing ShuheiOgita Fund. The purpose of this fund is to enablechildren around the world suffering from lymphaticmalformations to have equal access to treatment,irrespective of their financial problems and medicalcircumstances.

Countries that have Received Picibanil (67 Total)

＊Lymphatic malformations: A lymphatic malformation is caused by lymph fluid collecting in part of the body due to a lymph duct abnormality. Inmost cases the condition is discovered at the time of birth. Although the cyst is benign and does not spread like cancer, this incurable conditionimpedes an infant's growth. A lymphatic malformation in the neck may compress the respiratory tract, which can become life threatening.

Setsuko Shiina (left, secretariat) and Midori Ohgi (right)

Midori OhgiDirector & Secretary GeneralShuhei Ogita Fund (NPO)

19

conducted in Japan or overseas. Recently, before anapproved pharmaceutical can be widely used, studiesreferred to as "postmarketing surveys" areimplemented, and are started soon after approval withthe registration of all patients and medical institutionsinvolved in the use of the product. As well as thesharing of already known information on the properuse of the pharmaceutical product, the goal of thesesurveys is to collect, collate and analyze data frompatients on aspects of the product's adverse reactionsand effectiveness and to promptly notify patients,through their healthcare provider, and the healthauthorities of the latest information on the proper useof the product. In particular, large all-patient surveysinvolving several thousands of patients are beingconducted on products that have been approved since2007, including anti-tumor agents, such as Avastinand Tarceva, and the treatment for rheumatoidarthritis, Actemra. Although at least one year isrequired for completion of the surveys, the strictassurance of the safety of newly approvedpharmaceutical products is the reason why all-patientsurveys are conducted. Furthermore, Chugai has beenproceeding at a rapid pace with the implementation ofa system that can accurately and promptly processthe information gathered from these surveys. Also,the results of analysis of data gathered from the all-patient surveys are being provided to medicalinstitutions in a timely manner together with progresson treatment-related information, etc., and informationon safety assurance is being effectively shared withmore and more institutions providing treatment.Chugai also uploads similar information on its website, and is striving to ensure that patients can use itsproducts with confidence.

Building a System that can proactively detectand reliably respond to quality issues

The voluntary recall of "Vesanoid Capsule" and thetemporary shipment suspension of "Herceptin 60 mg",which occurred in 2007, were the basis for theimplementation of an improvement plan that wasreported to the MHLW. At the same time, Chugaireinforced its agreements with Roche- and Chugai-group manufacturing plants as well as contractmanufacturers, and in particular concluded newagreements on raw material control. Chugai is notresting with the conclusion of such new agreementsalone, but is also instituting a system of informationexchange on distribution control among theassociated companies and within Chugai. In particular,information on change confirmation and changecontrol for work processes between on-site


2

Initiativesfor

Patients

andC

onsumers

Pharmaceutical Reliability AssuranceSystem

With the aim of building, maintaining and improvingChugai's reliability assurance system for not onlyensuring that pharmaceutical products delivered tothe market are high in quality and superior in efficacyand safety, but also for ensuring that high-qualityinformation on the proper use of those products isdelivered in a timely and precise manner, Chugaiimplemented a "Pharmaceutical Reliability AssurancePolicy" and a "Pharmaceutical Reliability AssuranceSystem", which came into effect in October 2007.The policy is aligned with that of Roche, having aglobal perspective, and the system is broadlyclassified into three functions: 1) a reliability assurancesystem for application materials, etc.; 2) a reliabilityassurance system for quality and information, which isa system aimed at postmarketing reliability assurance;and 3) rules applicable to both systems, related tomatters such as computer validation and in-houseapproval, etc. These rules are further subdivided bydepartment into a number of rules and procedures, bywhich a thorough execution of duties allows Chugai tomaintain reliability assurance in a systematic manner.Further, adding support to these, Chugai placesspecific emphasis internally on the following fourpoints, by which it can aim at even tighter reliabilityassurance throughout a product's lifecycle.

(1) Assurance of product quality(2) Assurance of information quality(3) Assurance of the quality of work processes(4) Assurance of adequate human resources

All-patient Surveys

A pharmaceutical product is provided to a patientthrough a medical institution after its use has beenapproved based on information on its efficacy andsafety that is obtained from clinical trials, etc.,

Increasing Product Reliability2

Mission Statement and the Chugai BCG

Pharmaceutical reliabilityassurance system

Pharmaceutical reliability assurance policy

Reliability assurancesystem for applicationmaterials, etc.

Reliability assurancesystem for quality andinformation

Rules applicableto both systems

Product lifecycle management

Approval

R&D

Manufacturingand marketingApproval withdrawal

20

treatment; and the General Product ConsultationGroup deals with hepatitis and kidney, infectious, andcardio/cerebro-vascular disease treatment.

Tamiflu-related Activities

Since issuing emergency safety information (a "DearDoctor" letter) in March 2007 to address the issue ofthe safety of the anti-influenza agent, Tamiflu, Chugaihas been investigating the abnormal behavior thatwas reported in some patients who took the drug. Inaddition to being directed by the MHLW's SafetyDivision, an autonomous decision by Roche andChugai prompted the immediate conduct of additionalnonclinical and clinical studies in collaboration withRoche. The planned studies have now all beencompleted, but no evidence was found as a result ofthe studies that could demonstrate a causalrelationship between the abnormal behavior and theintake of Tamiflu. The results were reported to thehealth authorities, the MHLW's Safety MeasuresCommittee, and to each of the Working Groups, butthe MHLW's Safety Measures Committee is planninga further comprehensive discussion of the resultstogether with the results of the health authority'sepidemiological survey. Chugai's stance is to furtherpromote the proper use of Tamiflu, while at the sametime pursuing a more extensive knowledge base forthe disease, influenza. In other news concerningTamiflu, Chugai submitted an application to extendthe shelf-life to seven years for future-manufactured,government-stockpiled Tamiflu to be used as acountermeasure for new flu epidemics, and wasgranted approval in November 2008.

Response to GCP Violation duringClinical Trial

In February 2008, Chugai Pharmaceutical confirmedthat, during the clinical development of R744, whichwas being tested for the treatment of renal anemia,an employee (no longer with the company) violatedGCP (Good Clinical Practice: the implementationcriteria for clinical trials as determined by Japan'sMinistry of Health, Labour and Welfare) by improperlypreparing a portion of the required documents..

The company immediately reported this information tothe parties concerned and confirmed that no clinicaltrial patients' health had been affected. In response tothis incident the company set up an investigativecommittee. After examining and analyzing the cause,Chugai made extensive efforts to prevent arecurrence by strengthening its clinical trial systemand control structure, including enhancing theeducation of persons in charge of clinicaldevelopment, tightening operational controls, andconducting internal training programs.

manufacturing personnel is shared with Roche, whichmanufactures a large number of products, through asystem of periodic meetings and timely verification;and an emergency hotline between Roche and Chugaihas also been set up. Furthermore, by implementingpersonnel exchanges with Roche for obligatoryperiods of up to several years, Chugai is not onlystriving towards a system of direct exchange ofcurrent techniques and ideas on quality between thequality and manufacturing divisions, but also a systemof proactive risk avoidance, in which Roche andChugai mutually verify each other's processes. Chugaiwill continue to aim for future improvement in itsproducts to a global level, while also providing a stablesupply of product.

Drug Information Center Responds to InquiriesUsing Three Product Consultation Groups

Chugai's Drug Information Center providesinformation on pharmaceuticals to patients andmedical professionals. The center responds totelephone, email and fax inquiries and providesinformation on its website and via an emailnewsletter.

In 2008, Chugai received an average of about 5,000inquiries per month from patients and medicalprofessionals, for a total of about 60,000 contacts.Moreover, in 2007 about 75% of the inquiries werefrom outside the company, while in 2008 thispercentage increased to 80%. The number ofinquiries on cancer products increased accompanyingthe release of several new products and expandedindications in the field in 2007. The center respondsnot only during regular business hours, but also late atnight and on holidays, providing timely, accurateexplanations that make even very specialized topicseasy to understand.

● Inquiries handled by dedicated groups for each

treatment area

The Oncology Product Consultation Group handlesquestions about cancer treatment; the Bone Diseaseand Rheumatism Product Consultation Groupresponds to inquiries regarding bone, joint, and RA

(Inquiries)

Number of Inquiries Received bythe Drug Information Center

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

200820072006

52,781

64,79860,906

(Inquiries)

0

5,000

10,000

15,000

20,000

25,000

30,000

2008

Vascular / Infectious Disease (including Tamiflu)

Cancer Kidney / Bone

Inquiries by Treatment Ares

21


2

Initiativesfor

Patients

andC

onsumers

using a breast cancer examination model as well aspamphlets on breast cancer awareness. Since theearly detection of breast cancer begins with monthlyself-examinations, many visitors were happy toreceive water-proof cards to hang in the shower thatoutlined the steps for this important procedure.

Raising Awareness of Disease―――――――――■Aiming for the eradication of Hepatitis C

If hepatitis C is detected early, the onset of livercancer can be prevented. However, since it is oftenasymptomatic, it is estimated that more than onemillion people in Japan have the disease withoutknowing it. With the aim of early detection andtreatment, Chugai conducted an awareness campaignon TV and in newspapers, andheld public lectures and otheractivities across Japan. Thecompany also set up a websitewith information concerninghepatitis C, covering everythingfrom basic knowledge totreatment. Simple pamphlets onthe disease were also prepared.Chugai encourages everyone tolearn about hepatitis C so that itcan eventually be eliminated.

Supporting Developing Countries

Asia――――――――――――――――――――――■Fostering good medical and pharmaceutical

practice in Asia

Chugai has been working through the TokyoBiochemical Research Foundation (TBRF) since 1960to fund research and train researchers in the fields ofmedicine and pharmacology. Since 1995, TBRF hasoperated a program inviting young post-doctoralresearchers from throughout Asia to Japan.

Contributing to Patient-centeredMedical Care

Supporting Cancer Patient Associations――――■Special sponsorship of a cancer charity event

Christmas Concert in Yokohama Featuring Star

Philharmonic Chorus

As part of a fourth annual charity event to supportcancer patient associations, Chugai provided specialsponsorship to the Christmas Concert in Yokohamafeaturing the Star Philharmonic Chorus. The choruswas led by television personality Kuniko Yamada, andmade up of stars from the Japanese media andentertainment industry who wanted to offerencouragement to cancer patients and their families.The 2008 concert featured 29 stars, including actressChieko Baisho. In the lobby of the concert hall, 23cancer patient associations and support organizationsset up exhibits on their activities, explaining their aimto help create a future free from worry over cancer.The audience enjoyed Kuniko Yamada's talk, and wasencouraged by stories from chorus members whowere themselves still fighting cancer. The eventended on a high note with the entire chorus andaudience singing together.

Pink Ribbon Campaign―――――――――――――■All employees participate in breast cancer

awareness every October

For the third year in a row, Chugai employeesreceived pink ribbon pins. Each year, they areencouraged to wear them throughout October as partof breast cancer awareness month, and the numberof male employees wearing the pins is on theincrease. Each office carried outits own activities, and Chugai setup a booth in the NihonbashiMitsui Tower where the ChugaiHead Office is located, as it didthe previous year. The boothprovided opportunities for womento learn how to do self exams

Social Responsibility beyond Pharmaceutical Development3

The water-proof card Participants at the research outcomes presentation

The Christmas Concert inYokohama Featuring Star Philharmonic Chorus

Information service on hepatitis(Japanese website)

When this program wasstarted 20 some yearsago at a time whenhome care serviceswere not widelyavailable in Japan, thevans were important asa means to transport

seniors to day services. Home care services eventuallybecame widely available, but the importance of the vanscontinues to remain high as the population ages. This isbecause they are an indispensable transportation servicefor the community life of these seniors, at a time whenthere are a growing number of seniors and people withdisabilities that need daily support and medical care.Furthermore, in recent years there have beenimprovements made to the vans to enable thetransportation of people in stretchers, thereby servingseniors requiring higher levels of care.

When selecting organizations to receive van donations,we consider the following points: (1) location, to ensurefair allocation to all regions of Japan; (2) urgency, toensure priority assistance for communities affected bynatural disasters; and (3) necessity, to ensure that thevan is vitally needed by the community. Chugai hasmade an important contribution by carrying out thisongoing donation activity over many years. We hope thatit will continue for many years to come.

22

Helping to Meet the Needs of an AgingSociety

■Donating vans with lifts to provide

transportation for home welfare services

In 2008, Chugai donated five vans with lifts to homewelfare facilities in Akita, Gunma, Toyama, Osaka, andEhime prefectures. Chugai has been engaged in thisprogram for 24 years, since 1985, donatingwheelchair-accessible vans to facilitate thetransportation of seniors receiving home care, andpeople with disabilities. This year's donations bringthe total number of vehicles donated so far to 173.

Africa―――――――――――――――――――――■2008 Roche Children's Walk

The Chugai Group took part in the 2008 RocheChildren's Walk (formerly AIDS Walk), held in variouslocations around the world on World AIDS Day,December 1. The walk is held every year with the goalof supporting orphans and children in need in theRepublic of Malawi as well as children's organizationsin their own countries.

This marked the fourth year that the Chugai Group hasparticipated in the event since 2005, and it has alreadybecome a fund-raising tradition. Last year, over 2,800employees contributed roughly 1,715,000 yen. Thisamount was matched by the company, resulting in atotal donation of 3.43 million yen made via Roche today care centers in Malawi serving more than 3,000children orphaned by AIDS.

1 2

3 4

5 6

Van donation

Koichiro YamashitaSecretary, Senior Welfare Department,Japan National Council of Social Welfare

■Stakeholder's Voice

Children's Walk participantsChildren's Walk posterHead OfficeHead OfficeHead OfficeNagoya BranchKamakura Plant6

5

4

3

2

1

23


2

InitiativesforPatientsandConsumers

WorkingwithShareholdersandInvestors

prospects, answer questions, and exchange views onmanagement, thus ensuring mutual understandingwith investors and improved managementtransparency. Also in 2008, the company began tohold meetings with individual investors at branches ofsecurities companies, with the aim of providing bettersupport to them.

On March 27, 2008, the company's 97th ordinarygeneral meeting of shareholders was held at thePalace Hotel in Tokyo. After an audio-visualpresentation of the financial report, all items on theagenda were approved by a majority vote. A record of676 people, mainly individual shareholders, attendedthis year's meeting. At the shareholders' receptionfollowing the meeting, a presentation on 2008 resultsand the mid-term business plan "Sunrise 2012" wasmade by the president. The shareholders respondedwith a lively round of questions.

FTSE4Good Index Series

Chugai is listed on the FTSE4Good Index Series,which includes companies that meet globallyrecognized standards in the area of sociallyresponsible investment (SRI). The FTSE4Good IndexSeries is maintained by the FTSE Group in the UK,which offers a variety of investment indices. Thisindex series tracks the stocks of about 2,400 listedcompanies in 23 countries worldwide. The companiesare selected based on international standards forenvironmental and social responsibility.

Selection for this global SRI index indicates thatChugai has been recognized for its efforts relating tothe environment, society, and human rights.

For more information on the FTSE4Good Index Series,visit: http://www.ftse.com/Indices/FTSE4Good_Index_Series/index.jsp

Basic Policy on Profit Distribution

With regard to income distribution, Chugai aims tostabilize the return of profit for all shareholders. Takingdue account of short-term fluctuation in earnings bythe effect of a flu epidemic as well as medium-to-long-term strategic investment funding needs andearnings prospects, Chugai aims to ensure aconsolidated dividend payout ratio of 30% or more onaverage.

To expand the return of profit for all shareholderswhile bringing the idea into focus, Chugai now aims toensure a consolidated dividend payout ratio of around40% on average.

Information Disclosure Policy

Chugai Pharmaceutical works hard to make all of itscorporate activities clear to shareholders andinvestors, including its business strategies andmanagement philosophies. The IR Committee,headed by the officer responsible for investorrelations, oversees the company's informationdisclosure system. The committee establishesinformation disclosure policy and manages itsapplication, and the Corporate Communicationsdepartment executes the information disclosure.

For details on policy regardinginformation disclosure to capitalmarket participants includingshareholders, investors, andsecurities analysts, visit:http://www.chugai-pharm.co.jp/english/help/disclosure.html.

Enhancing Investor Understanding

Chugai uses its website to ensure accurate, timelyand fair disclosure of information to shareholders andinvestors. The online information includes newsreleases, financial statements, product developmentnews, briefing materials, annual reports, and IRcalendars. The company also has a convenient servicefor individual investors to notify them by email whenthe IR website has been updated with news releasesand other information. Briefing material and other IRinformation is released simultaneously in Japaneseand English via email or the company website. Chugaistrives to ensure fair information disclosure toinvestors both in and outside Japan.

When announcing first-half and year-end results,separate briefings for analysts and investors and forthe media are held in order to directly explain thecompany's performance. Conference calls are alsooffered to brief institutional investors and analysts onresults at the end of the first and third quarters.Additional meetings are held as needed to provideinformation on the company's main products and onproducts under development. In order to provideample information to a broad range of stakeholders,the company makes these meetings available aswebcasts on its website. In addition, top executivesare committed to direct communication with overseasinvestors and make regular trips outside Japan. In2008, visits were made to Europe, the United States,and Asia. The direct contact between topmanagement and investors creates opportunities toexplain the company's performance and future

Ensuring accountability by securing management

transparency

Working with Shareholders and Investors

IR Front Page

Annual Report 2008

FTSE4Good certificate

24

should be returned with a polite letter. However,generally distributed promotional articles such as handtowels, calendars, and date books, may be accepted,within commonly accepted limits.

●Entertainment

Any offers of entertainment must be refused, and theincident must be reported to the head of theorganization concerned. If the enjoyment ofentertainment with an outside party is deemednecessary for business purposes, consent must firstbe obtained from the head of the organizationconcerned, and the necessary information should beexchanged.

Initiatives in 2008

The Chugai Group has promoted various initiativeswith the aim of ensuring even higher qualitypurchasing activities. This is done by reviewing thecharacteristics of business partners and commodities,based on accumulated purchasing activity norms.

However, 2008 brought extraordinary jumps in pricesfor raw materials and fuel, an unprecedenteddownturn in the global economy, and the need toaddress deterioration of the global environment.These developments made it necessary to adjust thepurchasing activity norms, which were based on pastdata.

During 2008, Chugai integrated its purchasingfunctions and revised the roles of organizations todeepen cooperation with business partners andimprove its highly specialized purchasing activities. Italso took on the challenge of creating new values andmechanisms to meet these conditions. Specifically,Chugai reconstructed effective purchasing processrules and flow for each commodity group, whichcorrespond with the characteristics of the commodity

group and transaction format. Whileclarifying internal roles andresponsibilities based on mutualunderstanding, the Group expects thelevel of fairness and transparency inpurchasing will further increase.Chugai will continue to pursuepurchasing activities that display agood balance of compliance, businessefficiency, and cost reduction.

Building fair, transparent relationships and

strengthening cooperation

Working with Business Partners

Initiatives for Building Fair,Transparent Relationships

The Chugai Group emphasizes cooperation with itsbusiness partners, and works daily to improve itsinitiatives to ensure fair and transparent relationshipswith partners and treat them as equals.

In 2005, Chugai introduced an electronic purchasingsystem as an optimal mechanism for building fair andtransparent business relationships, and has also beencomputerizing its purchasing activities. In addition,Chugai has also been standardizing and optimizing itsprocess for the purchasing of indirect materials suchas office supplies, pursuing the principle of open,competitive bidding in all of its purchasing activities.

Purchasing Policy

The Chugai Group's Purchasing Policy is designed tostrengthen cooperation and build fair and transparentrelationships with business partners. (See chartbelow)

Chugai Ethical Purchasing Standards

With the goal of building and maintaining soundtransaction relationships with business partners, theChugai ethical purchasing standards outline theprinciples for ethical conduct for all companies andindividuals participating in its purchasing process. Forexample, the standards specify actions that should betaken with regard to gifts and invitations forentertainment.

●Gifts

Any gifts that are offered must be refused, and theincident must be reported to the head of theorganization concerned. Any gifts received by delivery

Ethics, compliancewith laws andregulations

Impartial, fair,open policy

Comply with laws and regulations, social norms, Chugai Business Conduct Guidelines (BCG), and Chugai ethical purchasing standards to conduct fair purchasing activities and healthy business transactions.

Provide the opportunity for Japanese and overseas business partners to conduct business with Chugai openly, impartially, and fairly regardless of management size or trading performance.

Environment

Quality

Promote procurement activities that take into account the global environment by conducting green procurement with our business partners.

Respect the spirit of GMP and pursue high quality and safe material alongside our business partners.

Cost

Mutual trust andgrowth, protectintellectual property

Set appropriate prices and promote lower costs by considering volume discounts realized through the consolidation of business partners as well as the change of business partners.

Select andevaluate businesspartners

Select business partners based on an overall objective evaluation of their quality, price, timing, information, stable supply of material and products, and consideration towards social responsibility.

Fulfill our obligations faithfully under the contracts with our business partners, establish equally cooperative relationships, and aim for mutual growth. Do not disclose confidential information related to business transactions to third parties without the relevant supplier's permission.

PurchasingPolicy

25


2

Working

with

Business

PartnersW

orkingw

ithC

omm

unities

Chugai Group Sites Make Their OwnSocial Contributions

At sites across Japan, people from the Chugai Groupare working hard to make a difference in their localcommunities.

Summer Biotech-Lab for Kids

With the help of the Japan Science Foundation'sScience Museum, Chugai Pharmaceutical hosted abiotech-lab for kids over three days in August2008, as a way to show children how muchfun science can be. Over 90 childrenparticipated in the program, undertakingexperiments with bright-eyed curiosity. Thelab planning and management was entrustedto Leave a nest Co., Ltd.＊

Offering Classes for the Local Communitythrough Shizuoka Sangyo University

The Chugai Group offers a course at Shizuoka SangyoUniversity for both students and members of thepublic. The course is part of activities to help supportthe plant's local community of Fujieda, which is alsohome to the university. The course covered a total of12 classes, including one class held at the FujiedaPlant, and provided adeeper understandingof the pharmaceuticalindustry and theactivities of the ChugaiGroup.

Training Program for Educators atPrivate Companies

Chugai has participated in the Training Program forEducators at Private Companies every year since2004. The program enables teachers fromelementary, junior high, senior high, and special-needsschools to experience the work environment of aprivate company. The aim is to have teachers applythe experience and knowledge they obtain throughthe program to better educate children. In 2008,Chugai welcomed ten teachers from the Tokyo area.

Contributing to society by fulfilling the roles and

responsibilities of a good corporate citizen

Working with Communities

Kasai Rinkai Park cleanup(Tokyo Branch 1)

Wheelchair donation through the collection of can pull-tabs(Kyoto Branch)

Bread sales by the HumanHealthcare Group "Kohoen"(Ukima Site)

Nihonbashi Bridge washing(Head Office district)

I listened with great interest tothe latest research and the issuespharmaceutical companies arecurrently facing. During the planttour, I got a real sense of ChugaiPharmaceutical's socialresponsibility, and learned about

the company's sincere efforts in the lecture hall. Thank youfor the invaluable experience.

The Training Program forEducators at Private Companiesenables teachers to recognizethe challenges they face bylearning about corporateorganizational initiatives, and tobetter understand the role they

need to play. We expect that teachers will be able to thinkabout things from their students' point of view and todisplay leadership as role models.

We want companies to utilizethe Science Museum as abridge for conveying the results,processes, and challenges ofresearch to children, creating aplace for industry and educationto work together. This was the

first time for the museum to plan a science lab, which canbe difficult to carry out. We would like to continue this kindof lab activity, as it allows parents and children to learntogether, and then talk about their experience at home.

＊Leave a nest Co., Ltd.:With the mission to convey how much fun science can be to as many people as possible, the company holds sciencelabs and promotes science education at elementary, junior high and senior high schools throughout Japan in cooperation with governmentagencies, local governments, universities and companies.

■Stakeholder's Voice ■Stakeholder's Voice


Hiroyuki TsukamotoAssociate professorInstructor for the public courseSchool of Information Studies, Shizuoka Sangyo University

Susumu YamamotoPerson in charge of the programTokyo Metropolitan School Personnel In-Service Training Center

Hisao OguraSupervisorPerson in charge of the lab Science Museum, Japan Science Foundation

26

Offering a work environment that celebrates

diversity and helps employees stay motivated and

build strong careers

Working with Employees

With the aim of creating a vibrant work environmentthat allows every employee to achieve personalgrowth, Chugai offers a range of programs to helpemployees. This enables the creation of supportiveworkplaces that allow employees to succeedaccording to their personalities, abilities, and ambition.

Support for Career Growth

●Personnel systems

Chugai Pharmaceutical has personnel systems toprovide support for the individual goals of employees,who represent the company's greatest asset and areits driving force as an enterprise. In 2008, Chugaibegan to use the new job title, "Professional," as partof its effort to more accurately evaluate and treatemployees as specialists.

●Career Support Center

The Career Support Center makes counselingavailable to all employees to help them realizerewarding careers, including the provision ofinformation relating to career planning and skillsdevelopment. It helps employees to access various in-house personnel systems, and has assisted over 120employees since it was established.

●Chugai Future Core Leader program

The company has initiated a new Future Core Leader(FCL) program designed to develop its human assetsinto the management leaders of the future over themedium and long term. The program providesopportunities for employees at each level of thecompany to have their leadership skills evaluated. Theresults are then used for the creation and execution ofskills development plans for these employees.

●Leave system for study abroad and qualification

acquisition

This system provides employees with the opportunityfor personal career development, by granting them upto three years of leave to obtain a degree orqualification.

● In-house Staff Recruiting System

This system allows for the advertising of internal jobopenings across the company along with the selectionand posting of the best applicants. The aim is toenergize the organization, to encourage individualmotivation, and to place the right people in the rightjobs, all based on employee initiative.

Respecting and Supporting EmployeeDiversity in Work Styles

●Equal opportunity policy

The Chugai Group treats and compensates itspersonnel equally regardless of gender, age, ordisability status.

●Employment of persons with disabilities

As of June 30, 2008, the percentage of employeeswith disabilities was 1.86%, which is above Japan'slegal requirement.

●Employment of senior employees

Based on Japan's Law Concerning Stabilization ofEmployment of Older Persons, Chugai adopted asenior employment system in 2001. However,starting in 2013, a new senior employee system willbe established for personnel over 60. Along with thecareer change support system mentioned below,senior personnel will have more employment choices,and will be able to keep working until age 65.

Creating Supportive WorkEnvironments

●Facilitating a healthy work/life balance

Chugai Pharmaceutical aims to be a company thatsupports human resources development. Based onthe desire to retain employees as long as possible,the company has programs that allow personnel tostay employed during, forexample, childbirth andchildrearing years. As aresult of these efforts tosupport employees raisingchildren, in 2008 Chugaiacquired the KuruminMark, a certificationprovided by Japan'sMinistry of Health, Labour

System

Senior employmentsystem

Content

Allows employees to make a choice at age 55, and tokeep working until age 65

Career changesupport system

Allows those employees of a certain age or with a certainnumber of years of employment to opt for retirementbefore the mandatory age, and provides them withsupport for a smooth transition into a new career

0.0

0.5

1.0

1.5

2.0

2.5

200820072006

1.95 1.92 1.86

(%)

Japan's legalrequirement 1.8

Certification mark: Kurumin Mark

27


2

Working

with

Em

ployeesand can also make a negative impact on the workenvironment as a whole.

The Chugai Group provides confidential channels foremployees to consult about their worries without fearof reprisal: the BCG Hotline and internal and externalhelp lines for sexual harassment issues. Chugai isstriving to resolve such problems in a fair manner toensure that employees enjoy a working environmentwhere they can perform at their full potential in anatmosphere of mutual respect for personality,individuality, and values.

Improving Understanding of theCompany's Personnel Systems throughFrequent Dialogue

In order to ensure the operation of fair, rationalpersonnel systems, Chugai worked to improveinterview skills during the year, through trainingseminars for all managers.

Fair and Impartial Hiring

Chugai maintains fair and impartial employee hiringpractices, by evaluating candidates' abilities, skills,and experience using a diverse team of interviewers.Chugai also actively seeks to hire persons withdisabilities.

Labor-Management Relations

Regular meetings are held between management andthe labor union at various levels. Cooperative labor-management relations are maintained based onmutual trust. The company's labor union operatesdemocratically, and had 3,624 members as ofDecember 31, 2008.

Mental Healthcare Initiatives

Chugai Pharmaceutical has already implemented anEmployee Assistance Program (EAP), to helpemployees maintain good mental health. Recently,the company also introduced an adaptation periodafter medical leave, which allows employees to returnto work smoothly.

Dialogue between the President andEmployees

Chugai sets up dialogues between the president andemployees as part of its efforts to maintain clearcommunication about its mid-term business plan,Sunrise 2012. Dialogues were held in seven divisionsduring 2008.

and Welfare, under the Law for Measures to Supportthe Development of the Next Generation.

●Welfare initiatives

Chugai offers welfare programs for its employees,mainly through the CHUGAI Wellnet Club, operatedtogether with the company labor union. Theseprograms are part of a system that helps employeesto maintain rewarding social lives, mainly throughcultural activities, health management and mutual aidactivities.

Raising Human-Rights Awareness:Encouraging People to Think aboutHuman Rights

Every year, human-rights awareness training is held ineach Chugai Group workplace. In 2008, training wascarried out on the topics of harassment and bullying inthe workplace, in order to impart the properawareness to all employees.

During the annual human rights week in December,Chugai invited its employees to submit human rightseducation slogans that express their deep insights andheartfelt sentiments about human rights. The mostoutstanding of the entries were selected for use inthe creation of human rights awareness posters. Theposters were then put up in workplaces throughoutthe Chugai Group, in order to help employees developtheir own awareness of human rights issues.

Help Lines

Experts believe that harassment and bullying in theworkplace tend to increase during difficult economictimes, as people under stress may become lesssympathetic with others. Insensitive words andactions can have a damaging effect on the individual,

28

Chugai Group Code of Conduct forOccupational Safety and Health

In January 2007, Chugai established guidelines for theassurance of environmental protection and safety inorder to improve its occupational safety and healthactivities.

These guidelines aim to facilitate the reliableexecution of the PDCA (plan, do, check, act) cycle toensure continual improvement, a process that isexpected to support the development of occupationalsafety and health activities at each facility.

In order to ensure activities are based on theseguidelines, each facility is required to systematicallyplan and execute activities on an annual basis. Tofurther increase the effectiveness of these plans, thecompany formulated the Chugai Group OccupationalSafety and Health Code of Conduct and is pursuing itsinitiatives based on this code.

The code of conduct incorporates current topics suchas legal revisions or individual company issues to helppromote employee awareness of these issues. Forexample, if there is a revision to Japan's IndustrialSafety and Health Law, or if a trend is identified in thecause of work-related accidents, the code of conductwill be revised in consideration of these newdevelopments.

Each year, Chugai plans to select five new items forinclusion in the code of conduct. The company iscommitted to moving ahead in the area of

occupational safety and health by incorporating thehighest priority items and activities for each facility,into the targets and plans.

Ukima Site Safety Seminar

In July 2008, a safety seminar was held foremployees at the Ukima Site, for the purpose ofraising safety awareness. The instructor was anenvironment and safety representative from the HeadOffice Corporate Social Responsibility Department.

The Ukima Site is a facility that includes a plant, aresearch laboratory, and some head office functions.The seminar covered basic content such as theimportance of occupational safety and healthactivities, human errors, and the responsibilities oforganizational managers.

Training Class for Drivers withAccident Records

Traffic accidents can affect a company's business andits customers, not to mention its reputation forcorporate social responsibility. Chugai provides adriving course for medical representatives who havehad traffic accidents of any kind, including minoraccidents. The aim is to improve the person's drivingskills, while instilling a greater awareness of drivingsafety, based on analysis and study of individualaccident characteristics.

Ukima Site Safety Seminar

Training Class for Drivers with Accident Records (Osaka Branch)

Chugai Group Occupational Safety and Health Code

of Conduct (fiscal 2009 edition)

●Deepening understanding of the guidelines for theassurance of environmental protection and safety

●Eliminating occupational or traffic accidents●Promoting employee health and creating pleasant

workplaces●Creating cheerful accident-free workplaces without

any unsafe aspects or behaviors●Encouraging employees to greet one another and

be aware of their actions

Established inJanuary 2007

Chugai Environmental and Safety Charter

Chugai Environmental and Safety Policy

Division policies

Facility targets Facility targets Facility targets Facility targets

Guidelines for the Assurance ofEnvironmental Protection and Safety

Chugai Group Occupational Safety and HealthCode of Conduct (fiscal 2009 edition)

Environmental and Safety Initiatives

Caring forthe Earth

PART3

Group-wide commitment to protectingthe global environment and promotingoccupational safety

The Fujieda Plant of Chugai Pharma Manufacturing, Co., Ltd.

Wild ducks visit a reservoir at the Fujieda Plant every year.

As an initiative to promoteenergy conservation in thehome, ChugaiPharmaceutical lends theEcowatt, a device formeasuring the powerconsumption of electricalhome appliances, toemployees so they can takeenergy saving measures.

Promoting energy saving lifestyles with the Ecowatt

30

Chugai Environmental and Safety Charter

The Chugai Group aims to add exceptional value forthe benefit of the medical community and humanhealth around the world by creating innovative medicalproducts and services. The Group strives to conductits business activities with full attention to harmonywith the natural environment, based on the principleof preserving our precious planet, and to occupationalsafety.

Chugai Environmental and Safety Policy

1. System to Facilitate Action

In accordance with its guidelines for the assuranceof environmental protection and safety, the ChugaiGroup maintains a system to facilitate actionregarding specific environmental and safetymatters, and strives to ensure that it is appliedthoroughly Group-wide. The heads of all basicorganizations and the presidents of subsidiarieswithin the Group are responsible for allenvironmental and safety matters at theorganizations they manage.

2. Regulatory Compliance

The Chugai Group complies with all legislation andregulations relating to environmental protectionand safety, all other requests that the Group hasagreed to, and management standards voluntarilyset as needed.

3. Environmental Protection Initiatives

The Chugai Group actively addresses the issue ofglobal warming, conservation of resources andreduction of waste, and prevention ofenvironmental pollution at every stage― researchand development, manufacturing, transportation,marketing, and disposal of its products―whilecooperating in the environmental protectionactivities of local communities.

4. Occupational Safety Initiatives

The Chugai Group makes every effort onprecautionary measures to prevent occupationalaccidents in all of its business activities,recognizing that safety and health are the basis ofemployee welfare.

5. Promotion of Continual Improvement

Each facility and subsidiary in the Chugai Groupvoluntarily sets environmental and safety policiesand targets for continual improvement. The Grouppromotes these initiatives in accordance with theguidelines for the assurance of environmentalprotection and safety in order to effectivelyachieve continual improvement.

6. Enhancement of Environmental and Safety Awareness

The Chugai Group encourages its employees todeepen their understanding and appreciation ofenvironmental and safety issues by regularly andsystematically conducting education and trainingsessions.

7. Disclosure of Information

The Chugai Group appropriately discloses, bothinternally and externally, information about itspolicies, targets, and activities relating toenvironmental protection and occupational safetyand health.

Expanding activities Group-wide based on guidelines for

the assurance of environmental protection and safety

Basic Position on Environmental Protection and Safety

Basic Position on EnvironmentalProtection and Safety

In 2007, the Chugai Group integrated itsenvironmental and safety systems to make itsenvironmental and safety initiatives even moreeffective. As part of this endeavor, Chugai formulatedguidelines for the assurance of environmentalprotection and safety to help each facility to developspecific environmental and safety initiatives. Theguidelines call for appropriate use of the PDCA (plan,do, check, act) cycle and offer a framework for thedevelopment of integrated initiatives at all Groupfacilities. Further, since the understanding of allemployees is vital for Group-wide deployment, acommentary on the guidelines was prepared to makethe details even more readily accessible. Thecommentary explains specific activities and how theyshould be undertaken at the facility level, in order tomake the development of environmental and safetyinitiatives more efficient.

In addition, Environmental and Safety SecretariatMeetings are held every year to ensure that initiativesare being implemented in accordance with theguidelines. At these meetings, the results of initiativesand the action plans for the next term are presentedto the persons responsible for environmental andsafety initiatives at each facility, ensuring consistent,Group-wide action.

At an Environmental and Safety Secretariat Meeting

31

Caring for the Earth

3

Internal Environmental and SafetyAudits

In fiscal 2008, internal environmental and safety auditswere carried out at four facilities, including plants andresearch laboratories, and at four branches (includingfour sales offices). While the environmental measurestaken at the plants and research laboratories weregenerally good, minor issues needing improvementwere identified in regard to the treatment of industrialwaste in some instances. Regarding safety, somelocations where safety measures had not yet beenimplemented for newly installed equipment andlocations requiring immediate improvement wereidentified.

Among the audited branches, some had incompleteimplementation of environmental and safetymanagement systems, but had actively undertakensafety education efforts. The issues identified by theaudits were all minor and the improvement planscreated during the last audit had all been steadilyexecuted. No items with potentially serious impactwere identified. Chugai will continue to formulateimprovement plans and properly implement the PDCAcycle in its internal environmental and safety auditprocess.

Initiatives at Sites

BasicPositiononEnvironmentalProtectionandSafetyEnvironmentalandSafetyManagement

Warm Biz saves energy in winter

In fiscal 2008, the Chugai Group expanded its Warm Bizcampaign throughout the Group. While paying specialattention to health, in this campaign Chugai set a goalof reducing standard office temperature by 2 degreesCelsius from December 1 to March 31. The Ukima Siteeven put up a notice in the lobby of its administrativeoffice to inform visitorsabout the Warm Bizcampaign and its otherenergy conservationefforts and ask for theircooperation.

Kamakura Site uses water stop devices

Since fiscal 2006, the Kamakura Site has been gradually examining the interiors ofits buried drainage pipes which have been in place since the late 1960s. It has alsoinstalled balloon-type water stop devices as aprecaution against a potential emergencyrunoff of harmful substances and anticipatedfuture repair work on the drainage pipes.These balloons reliably stop leaks and preventany harmful substances that may flowthrough drainage pipes from being releasedoff-site. The site has also implemented drillsusing these water stop devices.

Sharing eco-responsibilities

Tokyo Sales Group 3 (Tachikawa) of Tokyo Branch 1has implemented a rotating duty system for recyclingpaper every Friday. Teams of four to five people taketurns separating copy paper, printed paper, andcardboard and bringing it to the designated collectionpoint. Implementation of this simple system hasimproved employee awareness that paper waste mustbe recycled and led to adramatic increase in theoffice's recycling rate. Theoffice also recycles importantdocuments and pamphlets ata recycling center.

Regular internal environmental and safety audits

improve on-site operations

Environmental and Safety Management

Internal environmentaland safety audit at Ukima Site

32

Global warmingcountermeasures

Striving for continuous improvement by establishing

efficient environmental and safety action plans

Action Plans and Performance

The Chugai Group has been carrying out initiatives in line with its guidelines for the assurance of environmentalprotection and safety which were established in fiscal 2007. Starting in fiscal 2009, we will prepare a newedition of the Chugai Group Occupational Safety and Health Code of Conduct every year to ensure that highlyeffective initiatives based on the guidelines are developed at every facility.

As we continue to develop our business activities, environmental protection and occupational safety and healthinitiatives are two of our highest priorities. During our internal environmental and safety audits in fiscal 2008, weshortened the auditing time and streamlined document reviews by conducting preparatory audits. This alsoenabled us to increase the time devoted to on-site inspections.

○

Item

Achievement of thereduction target for carbondioxide emissions

Limited carbon dioxide emissions in 2008 to a26% increase compared with 2003

2008 objective 2008 performance Evaluation

Limit Group-wide carbon dioxide emissions for 2008to a 40% increase or less compared with 2003 (dueto operation of new wings at three facilities)

○Promotion of carbon dioxideemissions reduction projectsto achieve the 2012 goal

Reviewed carbon dioxide emissions forecasts forfiscal years up to 2012 and implementation ofmeasures to achieve the goal

Collection of data on carbon dioxide emissionsreduction compared with the 2012 goal andimplementation of measures to achieve the goal

○

○

Introduction of more hybridvehicles in MR fleet

Use of Green PowerCertification

Introduced 148 hybrid vehicles in MR fleet(cumulative total, 307) in 2008

Installed 30 kW photovoltaic power generationequipment at the Ukima Site

Introduction of 100 or more hybrid vehicles in MRfleet in 2008

Ongoing review regarding introduction ofphotovoltaic power generation

○

○

○

○

Reduction in the volume ofwaste generation

Reduction in the finalvolume of landfill waste

Reduction in the volume ofPPC paper purchased

Purchased Green Power Certification of 2,000,000 kWh in the year

The volume of waste generated in 2008 was 10%of the fiscal 1990 level

The final volume of landfill waste in 2008 was2.3% of the fiscal 1990 level

The volume of PPC paper purchased in fiscal 2008decreased by 8% from the 2007 level

Purchase Green Power Certification in 2008

Reduction in the volume of waste generation for2008 to 20% or less of the fiscal 1990 level

Reduction in the final volume of landfill waste for2008 to 3% or less of the fiscal 1990 level

Limit the volume of PPC paper purchased for2008 to the 2007 level

○

○

○

○

○

○

▲

○

○

▲

Improvement in therecycling ratio of PPC paper

Qualitative improvement inCEMS＊

Retention and renewal ofISO 14001 certification

Disclosure ofenvironmental performancedata

Thorough management ofchemical substances

Thorough implementationof safety and disasterprevention measures

＊CEMS: Chugai Environmental Management System

Achievement of a recycling ratio of 89% for PPCpaper

Performed internal environmental and safetyaudits at plants, research laboratories, asubsidiary, and four branches

Implemented in-house designed e-learning,industrial waste seminars, etc.

On-site Environmental Committee meetings wereheld at almost all Group facilities

Successful retention and renewal of ISO 14001certification at all the accredited plants

Rapidly tabulated and disclosed environmentalaccounting data

Updated the websites by uploading the latestenvironmental information

Revised chemical substance managementguidelines

Reduction of emissions of VOCs (volatile organiccompounds) into the air for fiscal 2008 by 41%from the fiscal 2003 level

Two accidents resulting in absence from work and 11 lost working days were reportedRenewed OHSAS 18001

Achievement of a recycling ratio of 80% or morefor PPC paper

Implementation of internal environmental andsafety audits at Group facilities in Japan andestablishment of audit results evaluation systems

Implementation of planned, periodic environmentaleducation and training, and activities to enhanceenvironmental awarenessSmooth implementation of PDCA cycle forenvironmental protection at all Group facilities

Successful retention and renewal of ISO 14001certification at all the accredited plants

Disclosure of environmental accountinginformation (Group-wide data compilation)

Disclosure of environmental information onwebsitesThorough implementation of unified Group-widechemical substance management guidelines andpromotion of their operation

Reduction of emissions of VOCs (volatile organiccompounds) into the air for fiscal 2008 by 20% ormore from the fiscal 2003 level

Zero accidents and zero disasters

■Fiscal 2008 Action Plans and PerformanceScope of operations covered: Chugai Group in Japan Period covered: January 1, 2008 to December 31, 2008

Wastereduction

Resourceconservation

Environmentalawarenessenhancement

Environmentalinformationdisclosure

Chemicalsubstancemanagement

Safety anddisasterprevention

33


3

Action

Plans

andP

erformance

The year 2008 marked the beginning of the commitment period of the Kyoto Protocol,and world concern about global warming continues to rise. We are working to reducethe CO2 emissions of the Chugai Group to do our part in the fight against climatechange. We have not yet achieved our goal for 2012 due to the effects of increasedproduction related to the launch of new products, intensified R&D activities, and otherfactors, but we remain committed to implementing energy conservation measures aswe strive to reduce CO2 emissions.

Evaluation: ○Target achieved ▲Target 75% or more achieved×Target less than 75% achieved

2009 target or mid-term targetLimit carbon dioxide emissions for 2009 to a 40% increase or lesscompared with 2003Limit carbon dioxide emissions by the end of 2012 to the 2003 levelCollection of data on carbon dioxide emissions reductioncompared with the 2012 goal and implementation of measuresto achieve the goal

Achievement of a hybrid vehicle ratio of 50% or more by theend of 2012

Introduction of photovoltaic power generation of 100 kW or more

Purchase of Green Power Certification until 2012

Reduction in the volume of waste generation for 2009 to 15%or less of the fiscal 1990 level

Reduction in the final volume of landfill waste for 2009 to 3% orless of the fiscal 1990 levelReduction in the final volume of landfill waste for 2010 to 2% ofthe fiscal 1990 level

Decrease the volume of PPC paper purchased in 2009 by 5%over the 2008 level

Maintenance of a recycling ratio of 90% or more for PPC paperin 2010

Perform internal environmental and safety audits at plants,research laboratories, a subsidiary, and four branches

Implementation of planned, periodic environmental educationand training, and activities to enhance environmental awareness

Smooth implementation of PDCA cycle for environmentalprotection at all Group facilities

Successful retention and renewal of ISO 14001 certification atall the accredited plants

Disclosure of environmental accounting information (Group-wide data compilation)Consideration of the adoption of an environmental index anddisclosure of such information

Disclosure of environmental information on websites

Thorough implementation of unified Group-wide chemicalsubstance management guidelines and promotion of their operation

Reduction of emissions of VOCs (volatile organic compounds)into the air for fiscal 2009 by 50% from the fiscal 2003 level

Promotion of occupational safety and health education as plannedSuccessful retention and renewal of OHSAS 18001 at a certified sitePromotion of Group-wide implementation of guidelines for theassurance of environmental protection and safety

Roche Safety, Health and EnvironmentalProtection Goals

The Roche Group, which employs about 80,000people, has set Group-wide goals in the areas ofsafety, health and environmental protection, andpublished those goals in its annual report andelsewhere. The base year is 2005, and the yearfor achieving the targets is either 2010 or 2015,depending on the item. The main goals are:

Reduce the accident rate by 20% by 2010Reduce energy consumption by 10% by 2010Improve eco-balance by 10% by 2015Provide four hours of education per person each yearZero legal violations

The term "eco-balance" refers to environmentalimpact per employee. This is calculated by addingthe quantity of chemical substances released tothe atmosphere and discharged water, landfilledwaste, consumed energy, consumed rawmaterials, and other such inputs/outputs fromcorporate activities―each multiplied by their ownenvironmental impact coefficient―and thendividing that figure by the number of employees.

Most of the Roche Group's goals dovetailperfectly with the Chugai Group's own goals, andno other items or indicators needed to be added.Accordingly, Chugai's initiatives to achieve itsown goals will help the Roche Group to do thesame, thereby helping Roche to demonstratestrong environmental and safety performance.

Yoichi YamanakaVice PresidentGeneral ManagerCorporate Social Responsibility Department

34

Improving environmental efficiency by assessing the

environmental impact of our business activities and

employing environmental accounting

Material Flow / Environmental Accounting

■Material Flow

Annual investments and costs for environmental protection (Unit: millions of yen)

Input

■Energy

Electricity

Heavy oil

Kerosene

Gasoline

City gas

LPG

LNG

127 million kWh

1,890 kL

255 kL

2,806 kL

14,100 km3

32 tons

2,877 tons

■Water

2,700,155 tons

■Materials

Raw materials(Including 19 tons of chemical substances covered by PRTR Law)

The above data are totals for the Chugai Group, including the Head Office and branches.

Breakdown of costs

551

115

1

667

0

302

3

1

0

973

699

499

288

1,486

149

332

9

134

5

2,115

342

39

11

392

0

22

0

22

0

436

557

177

485

1,219

41

359

325

186

1,293

3,423

461

239

1

701

0

8

0

1

0

710

627

139

289

1,055

15

294

198

125

442

2,129

1,461

1,835

11

3,307

0

3

0

3

0

3,313

580

302

233

1,115

126

216

98

131

3

1,689

FY 2005Investments Costs




(1) Businessarea costs

(2) Upstream and downstream costs

(3) Administration costs

(4) R&D costs

(5) Social activity costs

(6) Environmental remediation costs

Total

(1)-1 Pollution prevention costs

(1)-2 Global environmental protection costs

(1)-3 Resource recycling costs

Subtotal

Output

■Air

CO2

NOx

SOx

■Wastewater

WastewaterBOD

■Waste

GenerationFinal disposal at landfills

■Recycled containers andwrappings

Glass bottlesPlastics

■Environmental Accounting

The environmental accounting data compiled for allGroup facilities in Japan are shown in the table below.Environmental remediation costs include expenses forsoil contamination measures from the past.

The main investments in fiscal 2008 were for theintroduction of photovoltaic power generation at theUkima Site, refurbishment and new construction of a

high-efficiency air conditioning system, and newconstruction of an effluent treatment facility. On theother hand, there was a significant increase in costdue to the higher number of discharged watertreatment facilities and expenses for energyconservation. In fiscal 2008, the economic benefitobtained through these environmental protectionmeasures amounted to ¥27 million.

990 tons

3 tons

101 tons

1,370,324 tons

4 tons

96,048 tons

34 tons

2 tons

3,538 tons

82 tons

35


3

MaterialFlow

/EnvironmentalAccountingCO

2EmissionsandMeasuresforReduction

Kamakura Site's Energy ConservationReport

Every month the Kamakura Site prepares an energyconservation report, which it displays at the site withthe aim of establishing awareness of energyconservation and preventing energy waste. Thecolorful report uses photographs and illustrations tocapture employees' attention. The report includesarticles on the content of energy conservationimprovements and bits of knowledge about energyconservation, includingdescriptions of the wayenergy is used by thesite, details of theGroup-wide Cool Bizcampaign, and energysaving measures thatcan be used at home.

Introduction of Low Emission Sales

Vehicles

In 2006, Chugai set a target of increasing thepercentage of hybrids in its fleet of sales vehiclesused by medical representatives (MRs) to 50% ormore by the end of 2012. Since then, it has workedsteadily to introduce more hybrids. With the additionof 148 new hybrids in fiscal 2008, the fleet now has atotal of 307 hybrid vehicles. Now, 18.1% of Chugai'sleased MR fleet (15.8% if including privately ownedvehicles) are hybrids. Moreover, 98%, or nearly theentire fleet, are low emission vehicles (two or morestars). Chugai will continue striving to achieve its goalfor the introduction of hybrids and will considerintroducing fully electric vehicles.

In fiscal 2008, the Chugai Group's total CO2 emissionswere 8.7% higher than in fiscal 2007, and 26% higherthan in fiscal 2003, the target base year. Theseincreases are attributable to higher energyconsumption required by the increased productionfollowing the launch of new products and theoperation of a new building. While future increases inenergy consumption are projected, measuresdesigned to control the increase in CO2 emissions willbe proactively developed Group-wide, including theadoption of environmentally friendly facilities andequipment and other energy-saving initiatives.

Introduction of Photovoltaic Power

Generation Equipment

The Chugai Group has been working to introducephotovoltaic power generation, which is a source ofclean energy, at its plants and research laboratories.Its goal is to attain the capacity to generate 100 kW bythe end of fiscal 2012. In December 2008, the UkimaSite finished installing 30 kW photovoltaic powergeneration equipment on the roof of its investigationalbiopharmaceutical drugs wing.

Photovoltaic power generation is considered to haveoutstanding environmental performance. However,compared to other ways of reducing CO2 emissions,photovoltaic power generation's cost-benefitperformance is rather low. Nevertheless, Chugai haspositioned it as a major element of its activities toreduce CO2 emissions.

Developing proactive measures to help fight

global warming

CO2 Emissions and Measures for Reduction

Photovoltaic power generation equipment installed on the roof ofthe investigational biopharmaceutical drugs wing at the Ukima Site

Author of the EnergyConservation Report

New★★★★1,111

New★★★79

★★★ 158

★★ 2Hybrid vehicles

307Others 37

Total

1,694

(as of December 31, 2008)

2008200720062005200420030

20,000

40,000

60,000

80,000

100,000(Tons-CO2)

(FY)

Head Office, branches, and Chugai Distribution Co., Ltd.

Plants and research laboratories

CO2 Emissions by the Chugai Group

＊See the following webpage for information about starrating standards for low emission vehicles.http://www2.kankyo.metro.tokyo.jp/kouhou/env/eng_2006/environment02.html

36

Chemical Management Committee

The research, development, and productiondepartments within pharmaceutical companies are allmajor handlers of chemical substances. Every day, theChugai Group handles compounds that show strongphysiological activity (highly-active substances such asanti-cancer agents).

In fiscal 2008, Chugai reformed its controls relating tochemical substance management and launched across-organizational Chemical ManagementCommittee. The committee is composed of membersselected from relevant fields, including chemistry,toxicology, engineering, production technology, andenvironment and safety. Activities are now underwaywith the objective of revising guidelines on thehandling, transport, and disposal of chemicalsubstances and the provision of information, as wellas exchanging and sharing information relating tointerdepartmental issues.

Chugai is moving toward the establishment of aGroup-wide chemical management system with theaim of ensuring the safety of employees andpreventing environmental pollution. Toward that end,the Chemical Substances Management Committeeanalyzes, discusses, and identifies solutions to Group-wide issues. This process will help to make theGroup's chemical management system fully worthy ofan advanced technology-based pharmaceuticalcompany.

Appropriate Management of ChemicalSubstances

Among the harmful chemical substances covered byJapan's PRTR Law,＊ the following four were handledin annual amounts of one or more tons in fiscal 2007(April 2007 to March 2008) by the Chugai Group:acetonitrile, 2-aminoethanol, dichloromethane, andtoluene. The graph below shows the amounts ofthese substances handled over time.

New guidelines for chemical substance control havebeen established, further strengthening themanagement of chemical substances. The guidelinesare voluntary rules founded on the selection ofinstruments and/or facilities and the specification ofprotective equipment based on risk assessmentsconducted in light of the hazardous properties of thesubstances handled and type of work. Appropriatemanagement of chemical substances will be drivenforward through the establishment of detailed rules ofoperation.

Ensuring safety and preventing environmental pollution

by establishing a new organization for the appropriate

management of chemical substances

Chemical Substance Management

＊PRTR Law: Pollutant Release and Transfer Register Law. A lawrelated to the monitoring of amounts emitted to the environmentof specified chemical substances and the encouragement of theirimproved management.

0

2

4

6

8

10

12

2006200520042003

(Tons)

Acetonitrile

Toluene

2-Aminoethanol

N, N-Dimethylformamide

Dichloromethane

Formaldehyde

2007 (FY)

Handled Amounts of Chemical Substances Covered by PRTR Law

(fiscal year, April to March)

Chemical Management Committee

37


3

ChemicalSubstanceManagementW

asteReduction/SoilContaminationCountermeasures

Aiming for efficient waste treatment and taking

soil contamination countermeasures

Waste Reduction / Soil Contamination Countermeasures

Waste Treatment

The volume of waste generated in fiscal 2008increased by 45% compared with fiscal 2007. The main factor behind this increase was the volumeof organic solvent generated during production andthe generation of waste alkali during the production ofhighly active substances. Regardless of these factorsbehind the overall increase, the final volume of landfillwaste decreased by 13% to 82 tons, putting the entireChugai Group's ratio of final landfill waste at 2.3%.The Fujieda Plant of Chugai Pharma ManufacturingCo., Ltd., and the Fuji Gotemba Research Laboratorymaintained their zero emissions＊ status. Otherfacilities have also generally reduced their finaldisposal ratio. The Chugai Group will strive toimplement more efficient waste treatment methodsby promoting recycling of waste and reconsideringdisposal methods.

Soil Contamination Countermeasures

Initiatives completed at the Kyushu Plant site of

Eiko Kasei Co., Ltd.＊＊

In September 2002, before Japan's SoilContamination Countermeasures Law came intoeffect in February 2003, voluntary soil surveys werestarted at the Kyushu Plant. In December 2006, theremoval and treatment of contaminated soil andgroundwater purification work were completed.Regular on-site groundwater surveys were thenconducted over the next two years, with all monitoreditems clearing the environmental standards.

The soil remediation work was carried out with theunderstanding and cooperation of neighborhoodresidents and the shopping center that was built andopened during the period of groundwater monitoring.All initiatives were completed in December 2008.

＊Zero emissions: Final disposal/waste generated equals no more than 1% (Chugai Group standard)＊＊Eiko Kasei Co., Ltd.: An agricultural chemicals and insecticide manufacturing subsidiary transferred to Lion Packaging Co., Ltd., on

December 31, 2004.

0

10,000

20,000

30,000

40,000

200820072006200520041990

(Tons)

(FY)

Waste Generation

New shopping center at the old plant site.

0

1,000

2,000

3,000 15

0

5

10

20082006200520041990

●

2007

●

●

● ● ●

●

Final volume of landfill waste

Final disposal ratio (final volume of landfill waste /volume of waste generated)

(FY)

(%)(Tons)

Final Volume of Landfill Waste and Final Disposal Ratio I am very grateful for all the

cooperation that the Eiko Kaseiplant provided for our localevents during its years ofoperation.

When I first heard that the soilat the plant's old site waspolluted I thought, "That's

unacceptable!" But, when I later saw the sincere reactionof the people from Eiko Kasei, the parent company ChugaiPharmaceutical, and the construction company, I washopeful that the soil would certainly be cleaned up.Watching the large-scale remediation work go on for overtwo years, I was astonished at the lengths they weregoing to. Residents had different views and opinionsabout the work, and anxieties too, since the intended useof the land was unclear. Settling the matter was quite anordeal, and I was genuinely delighted when theremediation work was all completed without mishap.

Munetoshi AotaniCitizens' representative, Hanami Ward,Fukutsu City, Fukuoka Prefecture


38

Environmental Education atSubsidiaries

Chugai Distribution provided the same content as theenvironmental e-learning to all of its employees atgroup training sessions. The company receivedvaluable feedback to apply to future training sessionsfrom participants, including "I would like to have moretime to go into the details during the training," and "Iwould like to take environmental training which notonly covers the topic of global warming but deals withbroader issues, as well."

Chugai Business Support Co., Ltd., conducted atraining session on global warming during a meetingof its environmental committee. In this way, ChugaiGroup companies are also implementingenvironmental education.

Group-wide environmental education to help

employees to take environmentally friendly action

against global warming

Environmental Education and Communication

Environmental e-Learning

From October to November 2008, all 764 Head OfficeSales Division employees, branch staff, andemployees of Medical Culture Inc. were provided withenvironmental education on the topic of globalwarming via e-learning. Like 2007, a wide range of e-learning content was produced, covering topicsranging from basic knowledge on global warming tothe Chugai Group's environmental initiatives.

The results of a questionnaire given to evaluate the e-learning program indicated that the education waseffective. The employees who took the coursegenerously provided positive feedback, such as, "Ilearned a lot, since I usually do not have anopportunity to study these things," and "I was able toclearly grasp the status of the Chugai Group'sinitiatives."

Comment from an Environmental e-Learning Participant

As the entire world worriesabout environmentalproblems, the company istaking various initiatives,and employees are alsodoing their part in-house.But, after taking this

course I felt the importance of individuals changing theirlifestyles. I now have a heightened awareness of theneed to think deeply about the impact each of ouractions has on the Earth and to search for a better wayto address environmental problems.

Employees taking the training

At a briefing during aplant tour

Tours of Chugai PharmaManufacturing's Fujieda Plant

Chugai Pharma Manufacturing is reorganizing itsproduction system. As part of that reorganization, itfinished constructing a new Solid-form Drug Wing atits Fujieda Plant in February 2008. The new wingfeatures a cogeneration system for saving energy andreducing environmental impact as well as seismicisolation to minimize damage in the event of a large-scale earthquake. Containment facilities have alsobeen installed to protect the environment and ensureworker safety when manufacturing highly activepharmaceuticals. The need to tour these kinds offacilities is increasing among nearby residents, groupsfrom the pharmaceuticals industry, and people fromother industries. More than 800 people have touredthe new wing since its completion.

Environmental e-learning screen

Hitomi OkamuraBusiness Coordination Section, Osaka Branch

39

Net salesResearch and development expenses 5)

Operating incomeNet incomeIncome taxes (including deferred income taxes) 6)

Annual dividends 7)

Total net assetDonations (non-consolidated) 8)

5,9054,371

49913 (7)4 (2)

38years6months14years1month

1.95%28202

37 (cumulative total)

―52,781

86612

45,464559,493,113

70.28%6.97%0.75%

0.004%

6,3834,671

13814 (7)4 (2)

39years3months14years7months

1.86%26201


860,906

9648

44,372559,685,889

74.92%7.07%1.43%

0.003%

6,2574,611

33213 (7)4 (2)

38years6months14years1month

1.92%37101


964,798

106410

49,111559,636,061

71.79%7.56%2.22%

0.0005%

Socialarea

Economicarea

Performance Data on CSR

OurPerfomance

PART4

Including Chugai corporate overview, we report our various performance data on CSR

Full-time employees (consolidated) 1) 2)

Full-time employees (non-consolidated) 1) 2)

Number of persons employed(new graduates + mid-career personnel) 1)

Number of the board members: Directors 1) 3)

Auditors 1) 3)

Average age 1)

Average service years 1)

Rate of employees with disabilities 4)

Number of employees who take maternity leave Number of employees who take family-care leave Number of employees who use volunteer leave system Number of employees who take a volunteer holidayEmployees using the program for returning to work after taking childcare leaveNumber of lectures on health management Number of inquiries to the drug information centerNumber of investors' meetingsNumber of overseas investors which were visited on a road-showNumber of study sessions for mediaNumber of Shareholders 1)

Number of outstanding shares 1)

Rate of the number of shares which non-Japanese own 1)

Rate of "individual /other" shareholders 1)

Occupational injury frequency rateOccupational injury severity rate

Chugai GroupChugaiChugaiChugaiChugaiChugaiChugaiChugaiChugaiChugaiChugaiChugaiChugaiChugai GroupChugaiChugaiChugaiChugaiChugaiChugaiChugaiChugaiChugaiChugai

2006 2007 2008

2006 2007 2008

5) Chugai maintains its R&D expenditure at a high level to supply and develop innovative and reliable pharmaceutical products continuously.6) Chugai recorded corporation tax of 223 billiom yen in 2008.7) Chugai paid 163 billion yen in dividends to stock holders in 2008.8) The donation figures are extracted in the viewpoint of CSR.

Unit: millions of yen

Occupational injury frequency rate = casualty of an industrial accident x 1,000,000/total working hoursOccupational injury severity rate = (lost working days/total working hours) x 1,000

1) Indicates figures as of the end of December.2) The number of employees includes workers on loan to the Chugai Group from outside the Group but excludes workers on loan from the Chugai Group to firms outside the Group.3) Numbers in parentheses refer to non-executive members.4) Indicate figures as of the end of June

326,10954,60958,34738,41722,87418,821

391,6041,977

344,80854,24366,70340,06124,53718,146

385,7972,770

326,93753,22551,56339,26422,27616,344

397,0662,786

Chugai GroupChugai GroupChugai GroupChugai GroupChugai GroupChugaiChugai GroupChugai

Social and Economic Areas

40

FY 2003 FY 2008FY 2004 FY 2005 FY 2006 FY 2007

FY 2003 FY 2008FY 2004 FY 2005 FY 2006 FY 2007

＊1: CPMC is an abbreviation for Chugai Pharma Manufacturing Co., Ltd. ＊2: CMS Suwa is an abbreviation for the Suwa Branch of Chugai Research Institute for Medical Science, Inc.

10,411 10,588 10,717 10,965 11,282 12,662 2,956 3,264 3,438 2,605 2,352 1,890

784 753 532 326 272 255 2,319 2,447 2,344 2,772 2,879 2,806 7,023 7,328 10,506 12,615 12,493 14,100

― 265 755 807 2,601 2,877 2,688 2,952 1,162 27 28 32

76,385 80,197 82,897 83,150 88,337 96,048

13,050 11,224 20,220 8,757 2,437 3,538 3,130 527 895 709 752 846

330 129 103 69 94 82 4,280 3,553 5,916 2,726 1,687 2,692 57.8 87.1 86.9 79.4 69.2 76.1 2.5 1.1 0.5 0.8 3.9 2.3

Electricity (10,000 kWh)Heavy oil (kL)Kerosene (kL)Gasoline (kL)City gas (km3)LNG (tons)LPG (tons)CO2 Emissions (tons)

1. Annual Energy Consumption and Carbon Dioxide Emissions

GenerationDisposalFinal disposal at landfillsRecyclingRecycling ratio1）(%)Final disposal ratio2）(%)

3. Annual Waste Generation

909 653 524 5 747 373 130 27 110 59 ― 252 422 4 1 83 1 10 35 39 ― 50 ― ― ― 8 1 10 7 6

909 401 102 1 746 290 129 17 75 20

Ash Sludge Waste oils Waste acids Waste alkalis Waste plastics Waste metals Waste glass & ceramics Infection waste OthersGenerationDisposalFinal disposal at landfillsRecycling

4. Fiscal 2008 Waste Generation

Ukima Site Fujieda Plantof CPMC＊1

Utsunomiya Plantof CPMC＊1 Kamakura Site Fuji Gotemba

Research Laboratory CMS Suwa＊2 Total

85,636 31,070 69,205 97,991 22,817 13,659 320,378― 1,639,152 ― ― ― ― 1,639,152

124,302 ― 416,444 ― 199,879 ― 740,625209,938 1,670,222 485,649 97,991 222,696 13,659 2,700,155192,561 598,247 371,101 51,433 146,312 10,670 1,370,324

885 973 886 1,216 30 ― 3,990

City water Well water Industrial water Total water consumption Wastewater Total BOD (kg/year)

6. Fiscal 2008 Water Consumption and Wastewater by Site or Facility

FY 2007FY 2003 FY 2004 FY 2005 FY 2006589.2 795.1 867.5 0.1 0.1

0.2 0.9 0.5 0.3 0.1 6.8 6.9 11.7 5.2 4.2 3.7 3.7 5.8 4.3 5.3 1.4 0.5 0.3 0.2 0.3 6.6 7.9 6.6 6.3 3.1 0.8 6.2 4.0 0.5 1.0 0.1 1.3 1.0 0.2 0.1

PyridineFormaldehydeAcetonitrile2-AminoethanolChloroformDichloromethaneTolueneN, N-Dimethylformamide

5. Handled Amounts of Chemical Substances Covered by the PRTR Law (fiscal year, April to March)

Ukima Site Fujieda Plantof CPMC＊1

Utsunomiya Plantof CPMC＊1 Kamakura Site Fuji Gotemba

Research Laboratory CMS Suwa＊2 Chugai Distribution Head Office &branches

3,509 1,473 3,118 2,005 1,593 81 111 7713 13 ― ― 1,873 ― ― ―― 0 ― ― ― 255 ― ―― 2 ― ― 4 3 ― 2,797

4,741 ― 6,158 3,188 ― ― ― 13 ― 2,877 ― ― ― ― ― ―― ― 10 ― 22 0 ― ―

Electricity (10,000 kWh)Heavy oil (kL)Kerosene (kL)Gasoline (kL)City gas (km3)LNG (tons)LPG (tons)

2. Fiscal 2008 Energy Consumption by Site or Facility

1）Recycling ratio = the volume of waste recycled / (the volume of waste disposed + the volume of waste recycled)2）Final disposal ratio = the final volume of landfill waste / the volume of waste generated

※The total energy consumption is converted into CO2 emissions. The electric power is converted into CO2 emissions by applying a conversion coefficient rate of 0.368 kg-CO2/kWh.

Environmental Area

Unit: tons

Unit: tons

Unit: tons

Unit: tons

This entire report is printed on paper from forests certified by the Forest Stewardship Counciland other controlled sources under the standards of the FSC. The ink used contains lessthan 1% volatile organic compounds (VOCs). The report was made using waterless printing,which avoids solvents containing harmful substances.

Of the power consumed by Chugai Pharmaceutical,2 million kWh per year is green power generatedfrom biomass.

―Editorial Policy―

This report presents the Chugai Group'sapproach to corporate social responsibility(CSR) and details the Group's initiatives tomeet or exceed social expectations. Itdescribes Group-wide commitments such asChugai's Mission Statement and its corporategovernance practices, and providesinformation about what the Group did tobenefit its various stakeholders and protectthe environment in 2008. Readers are cordiallyinvited to provide feedback and opinions.

Scope of this report

This report primarily presents data on the Chugai Group (ChugaiPharmaceutical Co., Ltd., and its consolidated subsidiaries in andoutside Japan). In places, it also gives data specifically on ChugaiPharmaceutical Co., Ltd.

Timeframe covered

January 1, 2008 to December 31, 2008

Reference guidelines

The contents of this report conform to the EnvironmentalReporting Guidelines (Fiscal Year 2007 Edition) of Japan'sMinistry of the Environment, and the 2006 SustainabilityReporting Guidelines of the Global Reporting Initiative (GRI).

Issue dates (English version)

CSR '08: June 2009CSR '07 (previous issue): June 2008CSR '09 (next issue): June 2010 (scheduled)

Inquiries:

Corporate Social Responsibility Department, Chugai Pharmaceutical Co., Ltd.E-mail: [email protected]: +81-3-3273-4909

＊Product names in the body text omit the Registered Trademark symbol ®.All rights reserved.

Documents

Contents · The Chugai Group's mission is to dedicate itself to adding exceptional value through the creation of innovative medical products and services for the benefit of the medical