Kyowa Hakko Three-Month Net Sales up 10.8%; Raises Profit Forecasts

Kyowa Hakko Kogyo Co., Ltd. (Kyowa Hakko) (TOKYO:4151) today
announced its first quarter financial results for the three-month
period ended June 30, 2007. Consolidated net sales were 94.9 billion
Yen, an increase of 9.2 billion Yen, or 10.8% from the first quarter
of the previous fiscal year and ahead of initial plans for the fiscal
year, driven mainly by a strong performance from the Pharmaceuticals
business. Operating income decreased by 7.3% to 7.5 billion Yen, due
to a significant rise in R&D expenses, including a one-time payment
for the in-licensing of anti-cancer drug ARQ197 and despite an
increase of 4.3 billion Yen in gross profit. Net income was 5.3
billion Yen up 159.0% compared to the first quarter of last fiscal
year which recorded extraordinary losses of 3.4 billion Yen.

Commenting on the results, Yuzuru Matsuda, President of Kyowa
Hakko said, 'We are very pleased with the strong performances in our
Pharmaceuticals and Chemicals businesses that have helped us achieve
better than expected results. As a result, we have revised upwards our
interim and full-year forecasts for fiscal 2007 and we remain firmly
on track for achieving the growth outlined in our medium-term business
plan.'

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Summary of operating results for the three months ended June 30, 2007
(Amounts less than 100 million Yen have been ignored)
Billions of yen %
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Three months to Three months to Change
June 30, 2007 June 30, 2006
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Net sales 94.9 85.6 +10.8%
Operating income 7.5 8.1 -7.3%
Recurring income 8.3 8.4 -0.8%
Net income 5.3 2.0 +159.0%
Net income per share 13.37 4.86 +175.1%
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Segmental performance

In the Pharmaceuticals business, sales increased compared to the
first quarter of last fiscal year due to strong sales of Allelock
(Olopatadine hydrochloride), an antiallergic agent, and were supported
by sales of Patanol, an antiallergic ophthalmic solution launched in
October 2006. In exports and out-licensing, sales of Olopatadine
hydrochloride increased.

In the Bio-Chemicals business, sales increased significantly as a
result of strong sales of core amino acids, nucleic acids, and related
compounds primarily overseas, and as Daiichi Fine Chemical Co., Ltd.
was consolidated from the first quarter of this fiscal year.

In the Chemicals business, sales volumes remained broadly
unchanged but sales increased as the sharp rise in fuel and raw
material prices led to generally strong product prices in domestic and
foreign markets.

In the Food business, sales increased largely as a result of
growth in sales of bakery products and ingredients.

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Forecasts for the fiscal year ending March 31, 2008(a)
Billions of Yen %
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FORECAST Change compared to the
Fiscal Year ending previous fiscal year
March 31, 2008
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Net sales 395.0 11.5%
Operating income 36.0 17.3%
Recurring income 36.0 16.5%
Net income 26.0 104.8%
Net income per share 65.35 108.7%
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Results for the first three months of fiscal 2007 were ahead of
plan, driven in particular by strong performances from the
Pharmaceuticals and Chemicals businesses. As a result, our forecasts
for fiscal 2007 that were announced with the full year results for
fiscal 2006 on April 27, 2007, have been revised upwards.

(a) The above forecasts are based on information available and
assumptions made at the time of release of this document about a
number of uncertain factors that can affect results in the future. It
is possible that actual results are materially different for a wide
variety of reasons.

For further information please access:
http://ir.kyowa.co.jp/english/index.cfm

This document is an English translation of parts of the
Japanese-language original. All financial information has been
prepared in accordance with generally accepted accounting principles
in Japan. It contains forward-looking statements based on a number of
assumptions and beliefs made by management in light of information
currently available. Actual financial results may differ materially
depending on a number of factors, including fluctuations in exchange
rates, changing economic conditions, legislative and regulatory
developments, delays in new product launches, and pricing and product
initiatives of competitors.