Yakult Vision Proposal

(FY2011FY2020)

January28, 2011
Table of Contents
[Background of Drafting of Long-Term Vision]
1 . Yakults Growth Trajectory
2. Concepts Sustaining Yakults Growth
3. Necessity for Long-Term Vision

[Long-Term Vision (FY2011FY2020)]

1. Qualitative Goals
2. Strategies for Achieving Goals: Global Business Portfolio Strategy
3. Quantitative Goals
(Ref. Management Benchmarks)
4. Three Phases of Long-Term Vision

[The First Phases of Long-Term Vision (FY2011FY2013)]

1. Qualitative Goals
2. Quantitative Goals
3. Category-Based Strategy: Food and Beverages(Japan), Food and Beverages
(Overseas), Pharmaceuticals, Cosmetics
Background of Drafting of
Long-Term Vision
1. Yakults Growth Trajectory

3,500 300 Food and Beverages(Japan)

Development of Yakult fermented milk drink

Sales (100 million yen) Introduction of home delivery system by
Yakult Ladies
3,000 2,907 Area marketing by sales companies

Operating income
(100 million yen) 250
Growth driven by complex products and
sales channels as well as added values
2,500 Food and Beverages(Overseas )
Non-consolidated Consolidated 2,248 200 Centralization of activities to promote Yakult
193 190 fermented milk drink
Driving forward business expansion with
2,000 mission-driven management
161 Practice of agricultural-style management
1,631 150
rooted in community
1,500 Area portfolio strategy that supports long-
term management
1,059 100 Pharmaceuticals
1,000 Defining itself as a specialty
77 pharmaceutical company focusing on
oncology
50 Development and sales of two anticancer
500 382 drugs that are being used around the
world for treating colorectal cancer
43
23 Cosmetics
0 0 0 Basic skin care products containing
1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2009 components developed based on lactic
acid fermentation technology
Introduction of door-to-door sales

Yakults businesses have been growing steadily over the years

2. Concepts Sustaining Yakults Growth

Preventive medicine
Emphasis should be placed on medicine that prevents illness,
rather than on treating illness once it develops

Shirota-
A healthy intestinal tract ism
leads to a long life A price anyone can afford
The goal of providing as many people as possible with easy
Human beings take in nutrition through their intestines. Making
access to Lactobacillus casei strain Shirota, which protects
the intestines strong leads to healthy and long lives
the intestines

Mission-Driven Management Agricultural-Style Management

Mission-driven management is
Agricultural-style management is
- employees uniting under Shirota-ism, the
- to steadily build products of assured quality and
founders philosophy, with passion and a sense
to create new values by spending sufficient
of mission to make contributions to solving
labor and time within the company
issues faced by local communities, and
- to pursue the above under any circumstances
- while corporate management would be
so as to win the trust of the local community,
impossible without profit, there would be no
which is a most valuable barrier against
point in operating a company if there is no sense
competition
of mission.
 3. Necessity for Long-Term Vision

Changes in the environment surrounding Yakult

Increase in world population

Customers

decline in Japanese population

Ageing of society While ensuring consistency of
Surging economies of emerging
countries mission-driven and agricultural-
style management that support
Rising raw materials cost Yakult even in turbulent
environment

Intensifying competition with global management environment, we

Industry

corporations shall draft a long-term vision

Strengthening of retail industrys buying that would serve as a signpost
power for responding to changes in
pursuit of overall group
Own company

Enhanced efforts for ensuring security

and safety and risk control
optimization and realizing goals
of taking on new challenges.
Heightened necessity for reorganization
of business structure
Long-Term Vision
(FY2011FY2020)
1. Qualitative Goals

Corporate Philosophy

We contribute to the health and happiness of people around the

world through pursuit of excellence in life science in general and our
research and experience in microorganisms in particular.

Yakult Vision 2020

Lets Build Yakults Future Together!

Lets promote the idea that a healthy intestinal tract leads to long
life, to as many people as possible on the earth!

Lets apply our unique combination of preventative medicine and

therapeutic medicine to realize a healthy society!

Lets offer satisfaction and happiness to our customers and

ourselves by whole-heartedly delivering the best technology
with gratitude!
2. Strategies for Achieving Goals: Global Business Portfolio Strategy
Continue to grow the group by deploying most appropriate strategies for each
phase of popularization, growth, maturation, and rebuilding in respective
areas of the global market
Expand and cultivate markets Rebuild business model
(penetration and expansion) Build a new business model including products,
As a leader in the field of probiotics, business, and organization based on the dairy
contribute to the health and happiness of product business with service for improving
people throughout the world by improving the peoples health at its core. Sustain the growth
name recognition of Yakult and offering its cycle by vertically deploying the business model
products on a global scale

Popularization Maturation
Growth period Rebuilding period
period period

Cycle leading to repeated growth based on the new model

Growth period Market Maturation Phases in Global Market

Maturation Popularization
period Growth period period
Maturation
period
Maturation Growth period
period
Popularization Rebuilding period
period

Growth period
Repeated
growth
Growth period

Maturation
period
Growth period

Maturation
period

Build a base of Domestic Business , to develop next generation of global business

3. Quantitative Goals

Number of bottles of dairy Consolidate

Consolidated sales
products sold operating income
(100 (100
million million
(10,000 bottles/day) yen) yen)
4,000 6,000 600
Overseas
3,650
5,000 500
Japan
5,000 500
3,000
2,640
4,000 400
2,600
2,000 3,000 2,907 300
1,777
190
2,000 200
1,000
6.5% 10.0%
1,000 100 of of
1,050 sales sales
863

0 0 0
FY2009 results FY2020 target FY2009 results FY2020 target FY2009 results FY2020 target

38% growth
72% growth 163% growth
(22% in Japan; 46% overseas)
Up roughly twofold Up roughly threefold
Up 10 million bottles
Reference: Management Benchmarks

FY2009 FY2020

[Growth]

Number of bottles of
dairy products sold per 26.40 million 36.50 million
day

[Profitability]

Operating income
6.5% 10.0%
margin
 4. Three Phases of Long-Term Vision

Phase III:
20172020

Phase II: Long-term vision

20142016
realization period
Company-wide optimization based
Dramatic growth
Phase I: on international expansion of all
20112013 period businesses

- Expand product marketing areas

Runup period before a - Recoup investment
- Expand value chains around the
- Accelerate growth in
leap forward international business
world
Prepare a base of Business Model, - Localize day-to-day operations
For Goal of FY 2020 - Create new drug candidates
2009 Results with international potential
- Allocate management resources
(personnel, goods, funds) to
in the pharmaceutical
1. Global dairy product business 1. Global dairy product sales
growth businesses
sales 26.40 bottles 36.50 million bottles/day
- Spread awareness of company-
million/day 2. Consolidated sales 500.0
wide optimization, process-
2. Consolidated sales
290.7 billion yen
focused approach, and group-wide billion yen
profit through implementation of 3. Consolidated operating
3. Consolidated
feasible medium-term
operating income income
management plan
19.0 billion yen 50.0 billion yen
- Prepare a base of domestic
modernization
The First Phases of Long-
Term Vision Plan
(FY2011FY2013)
1. Qualitative Goals

Medium- to Long-Term Qualitative Goals for Each Business

Food and Beverages(Japan) Food and Beverages(Overseas)

Build a new bond within the group and

carry out innovative value promotion to Yakult Global Vision 2016
enable continued growth
Communicate the Spirit of Yakult,
Rebuild the domestic food and beverages
business so that it serves as a model around Spread Joy of Living Healthy
the world

Pharmaceuticals Cosmetics

Spread Yakults unique concept that

intestinal health is a direct factor in
Contribute to the health of people around
producing beautiful, healthy skin, which
the world by achieving breakthroughs in
is based on innovation of proprietary
cancer treatments
technologies, to grow cosmetics into a
core business
2. Quantitative Goals

Number of bottles of Consolidated

Consolidated sales
dairy products sold operating income
(100 (100
million million
(10,000 bottles/day) yen) yen)
4,000 4,000 400
Overseas 3,450
Japan
3,011 2,907
3,000 3,000 300
2,640 260

190
2,000 2,100 2,000 200
1,777

1,000 1,000 100

6.5% 7.5%
of of
863 911 sales sales

0 0 0
FY2009 results FY2013 targets FY2009 result FY2013 target FY2009 result FY2013 target

Up 14% over 2009

Up 19% over 2009 Up 37% over 2009
(6% in Japan; 18% overseas)
Up 54.3 billion yen Up 7.0 billion yen
Up 3.71 million bottles
3. Category-Based Strategy: (1) Food and Beverages(Japan)

Improve ability to promote values and strengthen own sales

organization

Strengthen
existing Promote home delivery business that is suited to the times
sales Maximize store sales and profits
channels Improve vending machine income and expand sales

Develop products from the perspectives of both customer needs and our
technology and expertise to expand share in health food market
Strengthen
and
nurture
Dairy products: Strengthen existing products that embody Shirota-ism
brand Juice and soft drinks: Enhance high value-added products and promote planned
introduction of products

Strengthen management foundation to enable sustained growth

Improve
manage-
ment
quality Promote modernization to improve management quality and business structure

Promote structural reform of the domestic food and beverage business

3. Category-Based Strategy: (2) Food and Beverages(Overseas )

Continue to grow business of existing

Further operations
solidify
the Expand existing operations
existing
Strengthen financial position and improve profitability of existing operations
foundation

Stabilize management of newly

established operations and grow
their businesses
Expand Build operating bases in China, the U.S., and India and pursue their planned
business
in expansion
emerging Strengthen management bases and support growth strategy of operations in
markets
and make countries with presence
them
profitable
Enter into new countries

Examine and carry out research on new countries and enter those markets

Secure and nurture quality human

Enhance
resources
human
resources Strengthen personnel and organizational structure of international business
divisions
3. Category-Based Strategy: (3) Pharmaceuticals

Maximize sales of Elplat

Expand
sales Further spread the standard therapies of FOLFOX and XELOX
Promote and popularize adjuvant therapy

Promote smooth development of

additional therapeutic efficacies of Elplat
Develop
additional
efficacies Add Elplats therapeutic efficacies of pancreatic cancer treatments
Add Elplats therapeutic efficacies of gastric cancer treatments

Enhance drug candidate pipeline

Develop
new drugs
Create candidates for new drugs with international potential
License in anti-cancer treatments
3. Category-Based Strategy: (4) Cosmetics

Increase Sales Partners based on commercialization model

sales companies and acquire new customers

Increase the number of Sales Partners

Increase the number of new customers

Nurture Excellent Users through counseling that exploits

Door-to- advantageous of door-to-door marketing
door sales
channel Increase the number of Excellent Users
Control and use customers information

Develop primarily new skin care products based on

lactobacillus

Develop primarily new skin care products based on lactobacillus

Acquire new internet online customers

New sales
channels
Expansion into cosmetic stores and other boutiques and corporate
customers
The statements in this material with respect to the plans and forecasts are forward-
looking statements, except for the facts of the past, and involve uncertainties.
Actual business performance may significantly differ from these forecasts due to
various factors.

Information in this material is not aimed at soliciting any investment. The Company
does not provide guarantees of any kind regarding the contents of this material. The
Company or parties providing the information assume no responsibility for any
damages resulting from this material.