Executive Summary

Takedais pursuing a new mutual agreement procedure under US/Japan tax agreements in the hope of settling a payment of ¥57.1 billion ($530.7 million) which it was ordered to make by Japanese tax authorities in June 2006. This followed an official assessment of profits earned in the US over six years from the end of March 2000 under agreements between Takeda and its now-dissolved US joint venture withAbbott, TAP Pharmaceutical Products, for the proton pump inhibitor Prevacid (lansoprazole). Takeda paid the additional taxes in July 2006 but lodged an appeal on which no decision has yet been made. This will now be withdrawn, with the firm to seek a new resolution under a mutual advance pricing agreement which it is seeking for the period from April 2005.