Page 1 of 8. April 27, To Whom It May Concern,

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1 To Whom It May Concern, April 27, 2012 Company Name: Taisho Pharmaceutical Holdings Co., Ltd. Head Office: , Takada, Toshima-ku, Tokyo Representative: Akira Uehara, Chairman and CEO (First Section of TSE: Code 4581) Contact: Masaki Tsuboi, General Manager Public Relations Section (Tel: ) Notice Concerning the Conversion of TOKUHON Corporation into a Wholly Owned Subsidiary of Taisho Pharmaceutical Co., Ltd., a Wholly Owned Subsidiary of Taisho Pharmaceutical Holdings Co., Ltd., through Share Exchange Taisho Pharmaceutical Co., Ltd. ( Taisho ), a wholly owned subsidiary of Taisho Pharmaceutical Holdings Co., Ltd. (the Company ), has resolved in its board of directors meeting held today to make TOKUHON Corporation ( TOKUHON ) a wholly owned subsidiary of Taisho through a share exchange with an effective date of July 2, 2012 (the Share Exchange ) to expand its range of topical products and plasters. The Share Exchange will be conducted pursuant to an agreement to exchange shares that has been executed between Taisho and TOKUHON (the Share Exchange Agreement ). TOKUHON has also resolved the Share Exchange in its board of directors meeting held today. The Share Exchange is subject to the approval of extraordinary general meeting of shareholders of TOKUHON, which is scheduled to be held on June 1, Through the conversion of TOKUHON into a wholly owned subsidiary of Taisho, Taisho will make efforts to further increase enterprise value in both OTC drugs and prescription pharmaceuticals in the future by utilizing TOKUHON brand, which is time-honored and proven in the topical product market for domestic OTC drugs, and various technologies, Transdermal Therapeutics System etc., of plaster and reinforcing collaboration in research and development. Further Details: 1. Overview of the Share Exchange (1) Schedule (i) Meetings of boards of directors to pass resolution April 27, 2012 approving the Share Exchange Agreement (Taisho and TOKUHON) (ii) Execution of the Share Exchange Agreement (Taisho and April 27, 2012 TOKUHON) (iii) Public announcement of record date for extraordinary May 1, 2012 (tentative) general meeting of shareholders (TOKUHON) (iv) Record date for extraordinary general meeting of shareholders May 16, 2012 (tentative) (TOKUHON) (v) Extraordinary general meeting of shareholders (TOKUHON) June 1, 2012 (tentative) (vi) Effective date of the Share Exchange July 2, 2012 (tentative) (Note 1) The Share Exchange falls under a case which an approval of general meeting of shareholders of the wholly owing parent is not required (share exchange) pursuant to the provisions of Article 796(3) of the Companies Act. (Note 2) The above schedule may be changed due to discussion or agreement between Taisho and TOKUHON. Page 1 of 8

2 (2) Method of the Share Exchange By operation of the Share Exchange, Taisho will be a wholly owning parent and TOKUHON will be a wholly owned subsidiary. The shares of common stock of the Company, Taisho s wholly owing parent, will be allotted to the shareholders of TOKUHON as consideration in the Share Exchange. The Share Exchange is subject to the approval of extraordinary general meeting of shareholders of TOKUHON, which is scheduled to be held on June 1, The Share Exchange is scheduled to take place as of July 2, Common shares of the Company were selected to be the consideration for the Share Exchange after considering factors that include the following: (i) if shares of common stock of Taisho, an unlisted company, were used as consideration, the shareholders of TOKUHON would be acquiring illiquid shares, (ii) delivering common shares of the Company instead of cash as consideration enables the shareholders of TOKUHON to protect profit of the shareholders of TOKUHON such as sharing in the opportunity to benefit from synergy gains arising the Share Exchange, and (iii) it is necessary to establish and maintain the capital relationships with the Company as a wholly owing parent, which is a purpose of the Share Exchange. (3) Allotments in Connection with the Share Exchange The Company TOKUHON (Wholly owing parent of Taisho, (Wholly owned subsidiary) the wholly owing parent) Allotments in Connection with the Share Exchange Number of Shares of Stock to be Common stock of the Company: 720,000 shares (tentative) Delivered in the Share Exchange (Note 1) Share Allotment Ratios Taisho will furnish 0.12 shares of common stock of the Company per share of common stock of TOKUHON. (Note 2) Number of Shares of Common Stock of the Company to be Delivered in the Share Exchange Taisho plans to deliver 720,000 shares of common stock of the Company owned by Taisho through the Share Exchange. Taisho plans to acquire common shares of the Company by subscribing to treasury stock disposed by the Company. (Note 3) Overview of Company Issuing Shares as Consideration in the Share Exchange See 4. below. (Note 4) Matters concerning the Conversion of Consideration (i) Market on which consideration is traded (ii) Agents for trading (iii) In cases where there are restrictions on the transfer of consideration or other dispositions, the details of such restrictions (iv) If the approval, etc. of a third party is required to transfer or exercise rights in the consideration, the name and address of the person granting such approval, etc. and other procedures necessary to obtain such approval, etc. First Section of the Tokyo Stock Exchange Domestic traders of financial instruments (securities companies) act as agents for trading in common stock of the Company. Page 2 of 8

3 (v) If the consideration has a market price, items relating to that price (vi) If refund is possible through the acquisition of treasury stock, the redemption of shares or other similar procedure, items concerning such method The closing price of the common stock of the Company on the First Section of the Tokyo Stock Exchange on the business day immediately prior to the day of announcement of the Share Exchange is JPY 6,540. (Note 5) Treatment of Shares of Less Than a Trading Unit All shareholders that come to hold shares of less than a single unit (i.e., 100 shares) of the company (hereinafter odd-lot shares ) in association with the Share Exchange may participate in any of the following programs in connection with shares of the Company. Odd-lot shares cannot be purchased or sold on a financial instruments exchange Buyback program for odd-lot shares (sale of units of less than 100 shares) Under this program instituted pursuant to Article 192(1) of the Companies Act of Japan, any holder of odd-lot shares of the Company may require that the Company buy back the odd-lot shares held by the shareholder. (Note 6) Treatment of Fractions of Less Than a Single Share In association with the Share Exchange, instead of fractional shares of common stock of less than a single share of the Company being allotted to shareholders of TOKUHON will deliver funds in an amount equivalent to the amount that results from multiplying the market price of one common share of the Company by said fractions (with any fraction of less than one Japanese yen in the total being rounded up to the nearest whole Japanese yen). The phrase the market price of one common share of the Company means the closing price of regular trades on the Tokyo Stock Exchange, Inc. of common shares of the Company for the trading day preceding the effective date of the Share Exchange (or, if there is no such closing price available for the relevant preceding trading day, then the closing price for the most recent trading day preceding the effective date for which such closing price exists). (4) Treatment of Share Options and Bonds with Share Options in Connection with the Share Exchange TOKUHON has not issued any share options or bonds with share options. 2. Basis for Calculating Allotments in Connection with the Share Exchange (1) Basis for and Circumstances Surrounding Calculations In order to achieve fairness and appropriateness in the share exchange ratios used for the Share Exchange, it was decided that the Company and TOKUHON would each invite a financial advisor to perform the calculations. The Company selected SMBC Nikko Securities Inc. ( SMBC Nikko ) and TOKUHON selected A.G.S. Consulting Co., Ltd. ( A.G.S. ) to perform such calculations, and progressed with consultations. SMBC Nikko calculated the value of shares of the Company by utilizing the historical share exchange ratio analysis, and the value of shares of TOKUHON utilizing comparable companies analysis and discounted cash flow analysis ( DCF Analysis ) methodologies. The historical share exchange ratio analysis used the closing share prices of the Company on the Tokyo Stock Exchange and as of April 26, 2012 ( Record Date ) and average closing share prices during each of the one (1) month and three (3) month periods prior to and including the Record Date. The following is the calculation range for the share exchange ratios obtained from each calculation Page 3 of 8

4 methodologies, assuming that the value of one share of the Company is one. Valuation Methodologies Share Exchange Ratio Range Comparable Companies Analysis DCF Analysis In calculating the share exchange ratios, SMBC Nikko has as a general rule used, as-is, such things as information provided to it by TOKUHON and the Company and publically available information, and assumed that this data, information and the like is entirely accurate and complete and that there exist no circumstances that have not been disclosed to SMBC Nikko that would have a material impact upon the calculations of the share exchange ratios. It has not made an independent study of the accuracy or completeness thereof. In connection with the relevant assets or liabilities (including contingent liabilities) of TOKUHON, the Company or any of their affiliates, SMBC Nikko has also not made an independent assessment, appraisal or evaluation (including evaluation and/or analysis of individual assets and individual liabilities) and has not requested an appraisal or evaluation from any independent institution. Moreover, it has been assumed that the financial projections of TOKUHON, the Company and their affiliates referenced in the relevant calculations have been reasonably prepared and produced pursuant to the best forecasts and judgments that could be obtained from each such company at this time. The calculations of the share exchange ratios made by SMBC Nikko are based on information and economic conditions existing as of April 26, The results of the calculations of the share exchange ratios submitted by SMBC Nikko do not constitute an opinion as to the fairness of the share exchange ratios used in the Share Exchange. A.G.S. calculated the value of shares of the Company by utilizing the historical share exchange ratio analysis, and the value of shares of TOKUHON utilizing discounted cash flow analysis ( DCF Analysis ) and adjusted book value methodologies. The historical share exchange ratio analysis used the closing share prices of the Company on the Tokyo Stock Exchange and as of April 25, 2012 ( Record Date ) and average closing share prices during each of the one (1) month and three (3) month periods prior to and including the Record Date. The following is the calculation range for the share exchange ratios obtained from each calculation methodologies, assuming that the value of one share of the Company is one. Valuation Methodologies Share Exchange Ratio Range DCF Analysis Adjusted Book Value Methodology In calculating the share exchange ratios, A.G.S. has as a general rule used, as-is, such things as information provided to it by TOKUHON and the Company and publically available information, and assumed that this data, information and the like is entirely accurate and complete and that there exist no circumstances that have not been disclosed to A.G.S. that would have a material impact upon the calculations of the share exchange ratios. Moreover, it has been assumed that the financial projections of TOKUHON, the Company and their affiliates referenced in the relevant calculations have been reasonably prepared and produced pursuant to the best forecasts and judgments that could be obtained from each such company at this time. The calculations of the share exchange ratios made by A.G.S. are based on information and economic conditions existing as of April 25, The results of the calculations of the share exchange ratios submitted by A.G.S. do not constitute an opinion as to the fairness of the share exchange ratios used in the Share Exchange. After having comprehensively considered the results of analysis of the calculation ranges for the share exchange ratio derived using each of the valuation methodologies as submitted by the financial advisors described above and evaluated TOKUHON s net asset value according to their advice, and given that the Page 4 of 8

5 resolutions relating to the share exchange ratio would be heavily based on such results, Taisho and HOKUHON discussed and negotiated based on financial condition, performance and stock price movement of the Company and TOKUHON, and they reached a conclusion that the share exchange ratio described in the above 1. (3) would advance the interests of shareholders of the Company and TOKUHON. This eventually resulted in the adopting of a resolution by the board of directors of each company at a board of directors meeting held today. If any material changes occur to the basic terms and conditions for the calculation of the share exchange ratio, the share exchange ratio for the Share Exchange may be changed after discussion between Taisho and TOKUHON. (2) Relationships with Institutions Performing Calculations Neither SMBC Nikko nor A.G.S. is a related party of any of the Company, Taisho or TOKUHON, and neither has a material relationship of interest requiring disclosure in connection with the Share Exchange. 3. Overview of Companies that are Parties to the Share Exchange (as of March 31, 2012) (1) Name Taisho Pharmaceutical Co., Ltd. (Wholly Owning Parent in Share Exchange) TOKUHON Corporation (Wholly Owned Subsidiary in Share Exchange) (2) Address , Takada, Toshima-ku, Tokyo Shiba, Minato-ku, Tokyo (3) Title and Name of Representative Akira Uehara, Chairman and CEO Yoshio Tanabe, CEO & Representative Director (4) Primary Business Manufacture and sale of over-the-counter (OTC) drugs, foods, and other goods, etc. and manufacture and sale of prescription Development, manufacture and marketing of drugs and quasi drugs pharmaceuticals (5) Capitalization JPY 29,804 million JPY 300 million (6) Date of Establishment May 5, 1928 September 30, 1948 (7) Total Number of Shares 300,465,510 shares 6,000,000 shares Issued and Outstanding (8) Settlement Date March 31 March 31 (9) Number of Employees 5,951 persons (as of December 31, 2011) 220 persons (as of March 31, 2011) (10) Main Customers Taisho Toyama Pharmaceutical Co., Ltd. Mitsubishi Tanabe Pharma Matsumotokiyoshi Holdings Co., Ltd. Corporation Abbott Japan Co., Ltd. Alfresa Healthcare Corporation OHKI Co., Ltd. (11) Main Banks Sumitomo Mitsui Banking Corporation The Bank of Tokyo-Mitsubishi UFJ, Ltd. The Bank of Tokyo-Mitsubishi UFJ, Ltd. Resona Bank, Ltd. (12) Major Shareholders and Taisho Pharmaceutical 100.0% Michimasa Suzuki 23.1% Shareholding Percentages Holdings Co., Ltd. Hiromi Mita 6.3% (as of March 31, 2012) Miki Suzuki 6.3% Yasutaka Nakao 4.9% Kayo Nakao 4.8% (as of September 31, 2011) Page 5 of 8

6 (13) Relationships among Party Capital Relationships Companies Personal Relationships Transactional Relationships Taisho and TOKUHON have signed a basic agreement to collaborate in the development and sales of an anti-inflammatory analgetic patch formation that contains the ingredient S-flurbiprofen. Relevant Facts Concerning Related Parties (14) Management and Financial Performance over the Immediately Preceding Three Years Settlement Date Taisho (Wholly Owning Parent in Share Exchange) (Consolidated) TOKUHON (Wholly Owned Subsidiary in Share Exchange) March 2009 March 2010 March 2011 March 2009 March 2010 March 2011 Net assets 514, , ,231 3,726 3,848 3,406 Total assets 591, , ,434 6,369 6,267 5,222 Net assets per 1, share (JPY) Net Sales (JPY 256, , ,632 5,502 5,558 4,997 million) Operating 37,935 34,686 44, income Ordinary 39,902 36,671 54, income Net income 8,815 19,485 34, Net income per share (JPY) Dividends per share (JPY) Page 6 of 8

7 4. Overview of Companies Issuing Shares as Consideration in the Share Exchange (as of March 31, 2012) (1) Name Taisho Pharmaceutical Holdings Co., Ltd. (2) Address , Takada, Toshima-ku, Tokyo (3) Title and Name of Akira Uehara, Chairman and CEO Representative (4) Primary Business Management and administration of subsidiary companies, etc. engaging in manufacture and sale of over-the-counter (OTC) drugs, foods, and other goods, etc. and manufacture and sale of prescription pharmaceuticals; and businesses incidental or related thereto. (5) Capitalization JPY 30,000 million (6) Date of Establishment October 3, 2011 (7) Total Number of Shares 90,139,653 shares Issued and Outstanding (8) Settlement Date March 31 (9) Number of Employees 6,022 persons (consolidated) (as of December 31, 2011) (10) Main Customers Taisho (11) Main Banks Sumitomo Mitsui Banking Corporation The Bank of Tokyo-Mitsubishi UFJ, Ltd. (12) Major Shareholders and The Uehara Memorial Foundation 14.31% Shareholding Percentages Shoji Uehara 11.64% (as of September 30, 2011) Sumitomo Mitsui Banking Corporation 3.33% The Bank of Tokyo-Mitsubishi UFJ, Ltd. 3.33% Uehara Museum of Modern Art Foundation 3.33% Akira Uehara 2.38% Sumitomo Chemical Co., Ltd. 2.34% Japan Trustee Services Bank, Ltd. (trust account) 1.88% Kajima Corporation 1.83% Japan Trustee Services Bank, Ltd. (The Sumitomo Trust & Banking Co., Ltd. Retrust Account / Sumitomo Chemical Company, Limited Employee Pension Trust Account) 1.70% (13) Relationships among Party Companies Capital Relationships The Company owns % of the total shares issued and outstanding of Taisho. There are no capital relationship between the Company and TOKUHON. Personal Relationships Eleven of the directors, two corporate auditors and two outside auditors of the Company also serve as director, corporate auditor and outside auditor of Taisho, respectively. Further, 71 employees of Taisho are seconded to the Company. There are no personal relationship between the Company and TOKUHON that require mention here. Transactional Relationships The Company leases offices and other facilities from Taisho, and the businesses on administration unit are delegated between both companies. Relevant Facts Concerning Related Parties The Company is a parent company of Taisho, and constitutes related party. Page 7 of 8

8 (14) Management and Financial Performance over the Immediately Preceding Three Years Settlement The Company (Consolidated) March 2009 March 2010 March 2011 Net assets 514, , ,231 Total assets 591, , ,434 Net assets per share (JPY) 1, , , Net sales 256, , ,632 Operating income 37,935 34,686 44,082 Ordinary income 39,902 36,671 54,077 Net income (JPY) 8,815 19,485 34,892 Net income per share (JPY) Dividends per share (JPY) (Note) As the Company was incorporated through a sole-share transfer with the effective date of October 3, 2011 in which Taisho became the wholly owned subsidiary company, the major shareholders and shareholding percentages and the consolidated figures of former Taisho before incorporation of the Company are used for (12) Major Shareholders and Shareholding Percentages and Management and Financial Performance mentioned above. 5. Status Following the Share Exchange (1) Name Taisho Pharmaceutical Co., Ltd. (Wholly Owning Parent in Share Exchange) (2) Address , Takada, Toshima-ku, Tokyo (3) Title and Name of Akira Uehara, Chairman and CEO Representative (4) Primary Business Manufacture and sale of over-the-counter (OTC) drugs, foods, and other goods, etc. and manufacture and sale of prescription pharmaceuticals (5) Capitalization JPY 29,804 million (6) Settlement Date March 31 (7) Net Assets To be determined (8) Total Assets To be determined 6. Outline of Accounting Treatment The Share Exchange is expected to qualify as an acquisition under the Accounting Standard for Business Combinations. It is expected that goodwill (or negative goodwill) will appear in the consolidated financial statements of the Company in association with the Share Exchange, but at present, no determination has been made as to the amount of goodwill (or negative goodwill) that will be generated. 7. Future Prospects As a result of the Share Exchange, TOKUHON is expected to become a consolidated subsidiary of the Company. The impact of the Share Exchange on the business results of the Company on a consolidated basis is currently under investigation, and the Company will promptly disclose information in case of necessity of revising earnings estimate and occurrence of matters to be disclosed. Page 8 of 8