Notification with Respect to Commencement of Tender Offer for Shares of Kyowa Hakko Kogyo Co.,Ltd.

From Wednesday, October 31, 2007 through Thursday, December 6, 2007 (26 business days in Japan).

If the Target Company submits an opinion report requesting an extension of the tender offer period (the "Tender Offer Period") pursuant to Article 27-10,Paragraph 3 of the Financial Instruments and Exchange Law (the "Law"), the Tender Offer Period shall be extended to 30 business days, until Wednesday,December 12, 2007.

When determining the purchase price for the shares of common stock of the Target Company in the Tender Offer, the Tender Offeror asked JPMorgan Securities Japan Co., Ltd ("JPMorgan"), their financial advisor, to calculate the equity value of the Target Company as reference material. JPMorgan took into account trends in the market price of the Target Company's shares, business results and forecasts of the Target Company, and the synergy effects created between the Tender Offeror and the Target Company and conducted a valuation using methods such as the trading comparable companies method and the discounted cash flow method (the "DCF method"). According to the various valuation methods, the ranges in which the value per share of common stock of the Target Company were calculated are as follows. Please also refer to the Note hereinafter in connection with the calculation of the equity value of the Target Company by JPMorgan:

The Tender Offeror considered the appropriate purchase price of the Tender Offer within the range results of the valuation with emphasis on the DCF method,which reflects the future cash flow of the Target Company. Weighing such factors as the trends in the market price of the Target Company's shares, premium paid by a non-issuer in preceding tender offers, the impact of the Tender Offer on the earnings per share of the Tender Offeror, the possibility of approval by the Target Company with respect to the Tender Offer, the results of the operational, legal, accounting and tax-related due diligence and the outlook for the Tender Offer, the Tender Offeror determined the appropriate purchase price for the Tender Offer to be 1,500 yen per share.

The purchase price of the Tender Offer is equal to the closing price of 1,202 yen of the common stock of the Target Company quoted on the first section of the Tokyo Stock Exchange on October 18, 2007 plus a premium of approximately 24.8%(rounded to the nearest tenth of a percent), and is equal to the average closing price of 1,135 yen (rounded to the nearest whole number) of the common stock of the Target Company quoted on the first section of the Tokyo Stock Exchange for the past 3 months ending on October 18, 2007 plus a premium of approximately 32.2 % (rounded to the nearest tenth of a percent).

(Note) When conducting the calculation of the equity value of the Target Company, JPMorgan relied upon and assumed, without duty to independently verify, the accuracy and completeness of all information that was publicly available or was furnished to JPMorgan by the Company, Kirin Pharma or the Target Company, or information discussed with the Company, Kirin Pharma or the Target Company, and information that JPMorgan reviewed or which was reviewed for JPMorgan. Furthermore, JPMorgan has relied on the assumption that there were no undisclosed facts which could have a material impact on the valuation of the Target Company. JPMorgan has not conducted any valuation or appraisal of any assets or liabilities (including contingent liabilities) and have not been provided with any such valuations or appraisals, nor has JPMorgan evaluated the solvency of the Company, Kirin Pharma or the Target Company under applicable laws and regulations relating to bankruptcy, insolvency or similar matters. JPMorgan has relied on financial analyses and forecasts provided (including synergies)by the management of the Company, Kirin Pharma and the Target Company, and has assumed that they have been reasonably prepared based on assumptions reflecting the best currently available estimates and judgments by management as to the expected future results of operations and financial conditions of the Company,Kirin Pharma and the Target Company. JPMorgan does not express any view on such financial analyses or forecasts provided or on the assumptions forming the basis of such financial analyses or forecasts. The results of the valuation expressed by JPMorgan is necessarily based on economic, market and other conditions as in effect on, and the information made available to JPMorgan as of October 22,2007. It should be understood that subsequent developments may affect this valuation and that JPMorgan does not have any obligation to update, revise, or reaffirm this valuation. Furthermore,the valuation was submitted by JPMorgan to the Board of Directors of the Company as information to be considered during their calculation of the equity value of the Target Company, and was not prepared for the shareholders or creditors of the Company, nor for any other person, and such persons may not rely on this valuation. The valuation is not a recommendation of any course of action which common stock shareholders of the Target Company should or should not take in the Tender Offer, nor does JPMorgan express any opinion as to the prices at which the common shares of the Company or common shares of the Target Company will trade in the future.

JPMorgan has acted as financial advisor to the Company with respect to the Strategic Alliance and has received fees from the Company. Furthermore, the Company has agreed to indemnify JPMorgan against certain liabilities arising out of its role as a financial advisor. JPMorgan or its affiliates have, to date,provided other investment banking services to the Company. JPMorgan or its affiliates may, during the ordinary course of business, engage in transactions for its own account or for customers' accounts with respect to bond certificates or equity securities of the Company, Kirin Pharma or the Target Company. Accordingly, JPMorgan or its affiliates may possibly hold a long or a short position with respect to these shares at any time.

The Tender Offeror has been considering and discussing with the Target Company the possibility of an integration with Kirin Pharma, a pharmaceutical subsidiary of the Tender Offeror, as well as the possibility of an alliance between the Groups since around March 2007.

As a result of these discussions and considerations, the Tender Offeror concluded around May 2007 that the most effective way to develop the business of both companies was an integration between Kirin Pharma and the Target Company through the acquisition of shares of the Target Company via a tender offer by the Tender Offeror. Accordingly, the Tender Offeror entered into more specific consultation with the Target Company.

When determining the purchase price for the shares of common stock of the Target Company in the Tender Offer, the Tender Offeror asked JPMorgan, their financial advisor, to calculate the equity value of the Target Company as a reference document around May 2007. JPMorgan calculated the equity value using methods such as the trading comparable companies method and the DCF method, with reference to considerations such as the trends in the market price of the Target Company's shares, the business results and the forecasts of the Target Company and the synergy effects created between the Tender Offeror and the Target Company. The Tender Offeror received the results of the share valuation from JPMorgan on October 22,2007. According to the various valuation methods, the ranges in which the value per share of common stock of the Target Company were calculated are as follows:

From July 2007 through August 2007 the Tender Offeror, in cooperation with third party specialists, also conducted detailed investigations into the business and financial affairs of the Target Company through operational, legal, accounting and tax-related due diligence.

After completing these fundamental steps, the Tender Offeror considered the appropriate purchase price for the Tender Offer within the range of the results of the equity valuation along with the advice of JPMorgan, their financial advisor, with comprehensive consideration given to the results of the equity valuation while emphasising the results rendered by the DCF method, which reflects the future cash flow of the Target Company. In addition, the Tender Offeror proceeded to price the Tender Offer with consideration to trends in the the market price of the Target Company's shares, premium paid by a non-issuer in preceding tender offers, the impact of the Tender Offer on the earnings per share of the Tender Offeror, and the results of the operational, legal,accounting and tax-related due diligence. Based on discussions and negotiations with the Target Company, and as a result of comprehensive consideration given to the possibility of approval by the Target Company regarding the Tender Offer, and the comprehensive outlook for the Tender Offer,the Tender Offeror determined, at the meeting of the Board of Directors held on October 22, 2007, that the purchase price of the Tender Offer shall be 1,500 yen per share.

The Board of Directors of the Target Company approved the Tender Offer at the meeting of the Board of Directors held on October 22, 2007.

None

Nikko Citigroup Limited
1-5-1 Marunouchi, Chiyoda-Ku, Tokyo

Nikko Cordial Securities Inc.
3-3-1 Marunouchi, Chiyoda-Ku, Tokyo

Nikko Citigroup Limited is currently moving its tender offer agent functions to the above address. Although the head office of Nikko Citigroup Limited is currently located at 5-2-20 Akasaka, Minato-ku, Tokyo, the location is scheduled to be changed to the above address by the date of the commencement of the Tender Offer.

Thursday, December 13, 2007

A notice of purchase will be mailed to the address or location of the tendering shareholder (or the standing proxy in the case of non-resident shareholders) (the "Tendering Shareholder" or "Tendering Shareholders") promptly after the end of the Tender Offer Period. Payment of the purchase price will be made in cash.The Tender Offer Agent or the Sub-Agent will, in accordance with the shareholder's instructions, remit the purchase price for share certificates promptly after the commencement date of settlement to the account designated by the Tendering Shareholder.

If the total number of tendered shares and other securities is less than the "Minimum number scheduled to be purchased represented by shares" (79,849,000 shares), none of the tendered shares or other securities will be purchased by the Tender Offeror.

If the total number of shares tendered in this Tender Offer exceeds the number listed above in "Maximum number scheduled to be purchased represented by shares" (111,578,000 shares), none or some of the excess shares may be purchased, and pursuant to the pro rata method as defined in Article 27-13, Paragraph5 of the Law and Article 32 of the TOB Order, the Tender Offeror will make delivery and other settlements with respect to the purchase of shares. (If a part of a particular number of shares tendered consists of shares constituting less than a whole unit, the maximum number of shares purchased calculated according to the pro rata method shall be set at the number of shares tendered).

If the total number of shares to be purchased from all Tendering Shareholders is calculated pursuant to the pro rata method, in which shares constituting less than one unit were rounded off, and as a result is less than the "Maximum number scheduled to be purchased represented by shares", the Tender Offeror will purchase one unit from each Tendering Shareholder in descending order,beginning with shareholders that own the most rounded-off shares, until the total number of shares to be purchased is equal to the number listed in "Maximum number scheduled to be purchased represented by shares". (If by purchasing units the Tender Offeror will exceed the number of shares tendered in the Tender Offer, then the Tender Offer will purchase numbers of shares until the number of shares to be purchased is equal to the number of shares tendered.)

However,if the Tender Offeror purchased units from all Tendering Shareholders who hold equal numbers of shares that were rounded-up, and the result exceeds the "Maximum number scheduled to be purchased represented by shares" the Tender Offeror will select by lottery who the Tender Offeror will purchase units from,to the extent that the total number of shares to be purchased is no less than the "Maximum number scheduled to be purchased represented by shares".

If the number of shares to be purchased from all Tendering Shareholders is calculated pursuant to the pro rata method, in which shares constituting less than one unit were rounded off, and as a result such total number of shares exceeds the "Maximum number scheduled to be purchased represented by shares", the Tender Offeror will decrease by one unit the number of tendered shares from each Tendering Shareholder in descending order, beginning with shareholders that own the most shares which were rounded-up, until the total number of shares to be purchased is equal to the "Maximum number scheduled to be purchased represented by shares". (If a part of the total number of shares to be purchased calculated by the pro rata method consists of shares which constitute less than a whole unit, the relevant number of shares will be decreased).

However,if the Tender Offeror decreased the number of shares purchased from all Tendering Shareholders who hold equal numbers of shares that were rounded-up,and the result is less than the "Minimum number scheduled to be purchased represented by shares", the Tender Offeror will select by lottery whose number of shares to be purchased the Tender Offeror will decrease, to the extent that the total number of shares to be purchased is no less than the "Minimum number scheduled to be purchased represented by shares".

Upon the occurrence of any event listed in Article 14, Paragraph 1, Items 1.1 through 1.9 and Items 1.12 through 1.18, Item 2, Items 3.1 through 3.8, Item 4,Item 5 as well as Article 14, Paragraph 2, Items 3 through 6 of the Financial Instruments and Exchange Law Enforcement Order (the "Enforcement Order"), the Tender Offeror may withdraw the Tender Offer. Should the Tender Offeror intend to withdraw the Tender Offer, it will give notice through electronic disclosure and notify the disclosure in The Nihon Keizai Shimbun; provided, however, if it is deemed difficult to give such notice within the Tender Offer Period, the Tender Offeror will make a public announcement pursuant to Article 20 of the TOB Order and forthwith give public notice.

Pursuant to Article 27-6, Paragraph 1, Item 1 of the Law, if the Target Company takes any action enumerated in Article 13, Paragraph 1 of the Enforcement Order, the Tender Offeror may reduce the purchase price of the Tender Offer through the methods provided in Article 19, Paragraph 1 of the TOB Order.

Should the Tender Offeror intend to reduce the purchase price of the Tender Offer, it will give notice through electronic disclosure and notify the disclosure in The Nihon Keizai Shimbun; provided, however, that if it is impracticable to give such notice within the Tender Offer Period, the Tender Offeror will make a public announcement pursuant to Article 20 of the TOB Order and forthwith give public notice. If the purchase price is reduced, the Tender Offeror will purchase any shares or other securities tendered prior to the announcement of such change at the amended purchase price.

A Tendering Shareholder may cancel an application for the Tender Offer at any time during the Tender Offer Period. In case of such cancellation, the Tendering Shareholders must deliver or mail a document requesting the cancellation of the application for the Tender Offer ("Document of Cancellation"), attaching the Receipt of Application for the Tender Offer (if one was received) to one of the entities listed below by 15:30 on the last day of the Tender Offer Period. If mailing the documents, the cancellation of the acceptance of the Tender Offer will not be effective unless the Document of Cancellation is delivered to the entities listed below by 15:30 on the last day of the Tender Offer Period. (The hours in which each branch office of Nikko Cordial Securities Inc. operate and manage investment securities differ.Please confirm, in advance, details such as the business hours of the branch office you wish to use).

Entities authorized to receive the documents of cancellation:

No compensation for damages or penalty payment will be claimed to any Tendering Shareholder by the Tender Offeror in the event that the application by the Tendering Shareholder is canceled. The cost of returning the share certificates held in custody by the Tender Offeror will be borne by the Tender Offeror.

Except where forbidden by Article 27-6 of the Law and Article 13 of the Enforcement Order, the Tender Offeror may change the conditions or other terms of the Tender Offer.

Should any terms or conditions of the Tender Offer be changed, the Tender Offeror will give public notice thereof through electronic disclosure and notify the disclosure in The Nihon Keizai Shimbun; provided,that if it is deemed difficult to give such notice within the Tender Offer Period, the Tender Offeror will make a public announcement in accordance with Article 20 of the TOB Order, and forthwith give public notice. The purchase of the shares tendered prior to such public notice will also be made in accordance with the terms and conditions as changed.

If an amendment statement is filed with the Director-General of the Kanto Local Finance Bureau, except in circumstances provided for under the proviso in Article 27-8, Paragraph 11 of the Law, the Tender Offeror will forthwith make a public announcement of the contents thereof to the extent relevant to the contents of the public notice of the Tender Offer, in accordance with the manner set forth in Article 20 of the TOB Order. The Tender Offeror will also forthwith amend tender offer explanatory statement and provide the amended tender offer explanatory statement to the Tendering Shareholders who have received the previous tender offer explanatory statement. If the amendments are limited in extent, however, the Tender Offeror may, instead of providing an amended tender offer explanatory statement, prepare and deliver a document stating the reason for the amendments, the matters amended and the details thereof to the Tendering Shareholders.

The Tender Offeror will make a public announcement regarding the results of the Tender Offer in accordance with Article 9-4 of the Enforcement Order and Article 30-2 of the TOB Order on the day following the last day of the Tender Offer Period.

The Integration shall be conducted through the processes specified in (a) through (d) below.

(1) The Tender Offeror will commence the Tender Offer for the shares of common stock of the Target Company. (Note)

(2) If the number of shares purchased through the Tender Offer is less than 111,578,000 shares (the maximum number of shares to be purchased), conditioned upon approval being obtained at the Extraordinary Meeting of Shareholders of Kyowa Hakko which the Target Company plans to convene promptly after the conclusion of the Tender Offer for (i) the Share Exchange Agreement, and (ii) other agenda items necessary for the execution of the Integration, the Target Company will allocate new shares to the Tender Offeror through a third party allocation of new shares, at 1,500 yen per share, with the stock payment date set for March 25, 2008, in the amount necessary to enable the Tender Offeror to acquire, in conjunction with the shares of common stock delivered to the Tender Offeror in the Share Exchange between the Target Company and Kirin Pharma described below, shares equivalent to 50.10% of the Standard Number of Shares of the Target Company as of the effective date of the Share Exchange. If such Third Party Allocation of New Shares is implemented, the Target Company will obtain approval for the transaction by a special resolution at the Extraordinary Meeting of Shareholders of Kyowa Hakko.

(3) After the Tender Offer, the Target Company and Kirin Pharma will implement a share exchange (effective date for which shall be April 1, 2008). As a result, Kirin Pharma will become a wholly owned subsidiary of the Target Company and the Tender Offeror shall become the parent company holding, in conjunction with the shares acquired through the Tender Offer and related transactions, shares equivalent to 50.10%of the Standard Number of Shares of the Target Company. In the Share Exchange,8,862 shares of the Target Company for one (1) common stock of Kirin Pharma will be allocated and delivered, for a total of 177,240,000 shares. Provided,however, that the Share Exchange shall be implemented conditioned upon the occurrence of either (i) the completion of the purchase of 111,578,000 shares,equivalent to the maximum number of shares scheduled to be purchased by the Tender Offerer in the Tender Offer, or (ii) the completion of the Third Party Allocation of New Shares after the completion of the Tender Offer. All treasury shares of Kirin Pharma will be cancelled by the day before the Share Exchange becomes effective.

(4) Subject to the Share Exchange becoming effective, the Target Company and Kirin Pharma will merge, with the Target Company as the surviving company and Kirin Pharma as the merging company (the effective date shall be October 1, 2008).

It is confirmed that, with respect to the calculation of the Purchase Price, the amount to be paid in relation to the Third Party Allocation of New Shares, and the share exchange ratio for the Share Exchange, negotiations have been conducted on the assumption that (a) the Target Company will make a distribution of surplus of up to 5 yen per share at the ordinary general meeting of shareholders for the fiscal year ending March 31, 2008, and (b) Kirin Pharma will make a distribution of surplus of up to 230,000 yen per share at the ordinary general meeting of shareholders for the fiscal year ending December 31, 2007.

Promptly after entering into the Integration Agreement, the Target Company shall convene the Extraordinary Meeting of Shareholders of Kyowa Hakko, submit agendas necessary to execute the Integration and to implement changes to its management structure associated with the Integration, and make highest reasonable efforts to obtain approval for such agendas to the extent permitted by applicable laws and regulations. The Target Company shall set the record date for the Extraordinary Meeting of Shareholders of Kyowa Hakko on a date subsequent to the settlement date of the Tender Offer, in order for the Tender Offeror to be able to exercise its voting rights with respect to the shares of the Target Company purchased through the Tender Offer, at the Extraordinary Meeting of Shareholders of Kyowa Hakko.

After the Share Exchange becomes effective, the President and CEO of the Target Company shall remain in the same position, for the time being. Furthermore,the Target Company shall, subject to the Share Exchange becoming effective,make changes to its management structure pursuant to the Integration Agreement,including (i) seeking approval of the agenda with respect to electing two persons appointed by the Tender Offeror as Directors of the Target Company at the Extraordinary Meeting of Shareholders of Kyowa Hakko, and (ii) electing one of the Directors appointed by the Tender Offeror as Executive Vice President and Representative Director of the Target Company.

Subject to the Share Exchange becoming effective, at their respective ordinary general meetings of shareholders for the fiscal year ending December 31, 2007, (i) Kirin Pharma shall elect one person whom the Target Company appoints as a Director of Kirin Pharma, and (ii) the Tender Offeror shall seek approval with respect to the election of the President and CEO of the Target Company as a Director of the Tender Offeror.

The Kirin Group shall not acquire any new shares/stock acquisition rights of the Target Company, or dispose (including sale or disposition as collateral) of shares/stock acquisition rights of the Target Company which the Kirin Group holds,for a period of 10 years from the date of the execution of the Integration Agreement, except as prescribed, without the consent of the Target Company.

The Target Company shall not issue or dispose of its shares/stock acquisition rights, acquire or cancel its treasury shares, consolidate its shares, engage in organizational restructuring involving the issuance or delivery of its shares,or any other actions which may change the Ratio of the Standard Number of Shares of the Target Company.

After the Merger the surviving company will become a consolidated subsidiary of the Tender Offeror which, as a pure holding company, will hold a majority of the shareholder voting rights of the surviving company. The surviving company will,while respecting the fundamental principles of the Kirin Group operation,conducting an autonomous business activity based on independence and mobility,ensure the independence of its management as an ongoing public listed company,and continue to promote the maximization of profits for all of its shareholders and the sustained expansion of corporate value. In addition, the ratio of Standard Number of Shares of the Tender Offeror in the new company shall be 50.10% in priciple for a period of 10 years from the date of the execution of the Integration Agreement, and, after the Integration, the Tender Offeror will cooperate in the highest reasonable manner to maintain the listing of shares of the surviving company of the Merger.

During the period between the conclusion of the Integration Agreement and the completion of the Merger, the Target Company may not solicit, provide information, discuss, negotiate, or enter into agreements with respect to a solicitation, proposals, information request or other request by a third party regarding (1) a tender offer targeting the shares of the Target Company by an entity other than the Tender Offeror, (2) issue shares of the Target Company to an entity other than the Tender Offeror, (3) engage in any organizational restructuring activities with an entity other than the Tender Offeror or Kirin Pharma, or (4) disposition of any material part of the business of the Target Company to an entity other than the Tender Offeror, or any other actions which have the effect of transferring any material business or assets of the Target Company. If a tender offer by a third party is commenced during the Tender Offer Period, the Target Company shall act giving sufficient consideration to the fact that the Tender Offer is part of the transaction for the realization of the Integration, the purpose of the Integration, and the benefits to be brought to the corporate value and shareholders of the Target Company through the realization of the Integration.

If the Target Company substantively withdraws its approval of the Tender Offer, (including approving of a tender offer by a third party, but excluding cases where the substantial withdrawal of its approval of the Tender Offer arises from a material breach by either Kirin Pharma or the Tender Offeror of a duty, representation or warranty included in the Integration Agreement), the Tender Offeror may terminate the Integration Agreement. In the event of such termination, the Target Company shall pay the Tender Offeror a fixed amount as a breakup fee.

(millions of yen)

(yen)

The Target Company revised its consolidated business forecasts for the interim period and fiscal year ending September 30, 2007 and March 31, 2008, respectively, which were originally announced together with the financial results on April 27, 2007. The upward revisions were made in light of the favorable business operations in the first quarter with developments exceeding original plans, especially in the Pharmaceuticals Business Unit and the Bio-Chemicals Business.

Net sales for the current interim period are expected to remain at around the same level as the previous forecasts. However, as a result of a shift in research and development and other expenses to the second half of the fiscal year and cost savings, profits, both consolidated and unconsolidated results, are expected to exceed the previous forecasts.

Because the research and development and other expenses are expected to be incurred in the second half of the fiscal year, the full year forecasts, as disclosed on July 27, 2007, will not be revised.