Fine Chemicals
Fine Chemicals sales increased 14.5 percent year-on-year to ¥215.7 billion, and operating income increased 104.5 percent to ¥22.5 billion. Ajinomoto continued to promote public awareness of the benefits of amino acids, leading to increased sales, while a strategic focus on strong niche products and global new drugs supported growth in pharmaceuticals.
AMINOSCIENCE
Amino Acids
• Strategic Initiatives and Results
   Although measures to reduce medical care costs continued around the world, sales of pharmaceutical-use amino acids during fiscal 2001 remained strong due to the continued implementation of sales strategies based on market trends such as the impact of the bovine spongiform encephalopathy (BSE) outbreak. While working to increase public perception about the benefits of amino acids, Ajinomoto is actively expanding sales in the areas of food and beverages.
 
•• Outlook
   Research breakthroughs such as genomic drug creation are likely to bring about major changes in the pharmaceutical and biotechnology industries. Growth can therefore be expected in applications for amino acids as a culture medium or as a nutrient. Food applications are another area with excellent growth potential, supported by increasing recognition of the health and nutritional benefits of amino acids. As the leading company in this field, Ajinomoto aims to contribute to society and expand its business by vigorously developing new materials and new applications, with a focus on fields such as pharmaceuticals and foods that are deeply rooted in human life.
 
MAIN PRODUCTS
´ Amino Acids and Related Compounds
  ´ As active pharmaceutical ingredients     
  ´ As food/food additives
Specialty Chemicals
• Strategic Initiatives and Results
   Cosmetic and toiletry ingredients and electrochemicals, Ajinomoto’s mainstay products in this field, performed well despite the depressed state of the chemical industry. Sales of the JINO line of cosmetics, including new product Amino Wrinkle Essence, steadily increased. ABF (Ajinomoto Build-Up Film) has been well received as the world’s first film-type insulation layer formulation material, and Ajinomoto has obtained a basic patent in Taiwan.
 
•• Outlook
   Although prices of cosmetic ingredients declined due to intense competition caused by the market entry of several major domestic and foreign surfactant manufacturers, Ajinomoto’s efforts to strengthen its production system are expected to support higher overall sales both in Japan and abroad. In the field of electrochemicals, Ajinomoto is focusing on customer-tailored product development as a means of keeping up with the accelerating pace of technological development.
 
MAIN PRODUCTS
´ Cosmetic Ingredients
  ´ Amisoft and Amilite surfactants
  ´ PCANa moisturizing agent
  ´ CAE and Amisafe conditioning agents
  ´ Eldew emollient
´ JINO Series of Cosmetics
´ Functional Chemicals
  ´ Empara and Reofos flame retardants     
  ´ Ajicure resin curing agent
´ Electrochemicals
  ´ ABF (Ajinomoto Build-Up Film)
insulation film for build-up

  		 PRODUCTS SHOT
Fiscal 2001 Highlights
PRODUCTS SHOT New Flavors Add Value to Slim-Up Sugar
  In February 2002, Ajinomoto launched flavored versions of Slim-Up Sugar in Japan. The three new flavors – caramel, café mocha and Irish cream – are an ideal match for the popular flavored coffee drinks sold at gourmet coffee shops. The explosive popularity of gourmet coffee shops in Japan has created a new market for flavored coffees, and the new versions of Slim-Up Sugar allow consumers to enjoy their delicious flavors at home.
Sweeteners
• Strategic Initiatives and Results
   In the bulk sweetener business, sales volume remained largely flat but net sales declined due to a decrease in sales prices. Initiatives are under way to broaden the use of aspartame in beverages. In the retail sweetener business, sales were strong, due primarily to a substantial increase in overseas sales.
 
•• Outlook
   In the bulk sweetener business, areas of focus will include expanding existing markets while generating new demand, pursuing cost reductions and strengthening business support. In the retail sweetener business, Ajinomoto will work to stimulate growth by expanding business domains in Japan, and overseas it will develop new markets and products while bolstering earnings in existing markets. A key R&D theme will be the development of new materials.
 
MAIN PRODUCTS
´ Sweeteners
  ´ Pal Sweet
  ´ Pal Sweet Calorie Zero
  ´ Slim-Up Sugar
  ´ Slim-Up Sugar Flavor Sugar     
PRODUCTS SHOT
Pharmaceutical Intermediates
• Strategic Initiatives and Results
   Sales of pharmaceutical intermediates declined due to lower demand, which reflected a decline in sales of end products and the termination of development projects at customers. However, sales of intermediates for antiviral agents, a mainstay product, were supported by stabilized production. Research and development was focused on core technologies to make process development more competitive. Ajinomoto has also strengthened marketing strategies and launched several promising new projects.
 
•• Outlook
   In fiscal 2002, Ajinomoto will concentrate on strengthening core technologies and launching new projects in order to increase growth and earnings.
 
MAIN PRODUCTS
´ Pharmaceutical Intermediates
  ´ Amino acid derivatives
  ´ Nucleic acid derivatives
  ´ Optically active compounds        
´ Pharmaceutical Active Ingredients    
Functional Nutritional Foods
• Strategic Initiatives and Results
   During fiscal 2001, sales of the Amino Vital series exceeded ¥10 billion on a consumption basis due to heightened awareness of the benefits of amino acids among consumers, as well as Ajinomoto’s efforts to make the product available in retail stores. Also contributing to sales were efforts to expand the consumer base by promoting Amino Vital as a healthy everyday drink as well as a sports drink.
 
•• Outlook
   Objectives for fiscal 2002 include further expanding distribution of the amino acid supplement Amino Vital and actively developing new products in the growing daily care segment. To further increase sales, Ajinomoto will continue to improve product quality while spreading knowledge of amino acids using the phrase “The twentieth century was the age of vitamins and the twenty-first century is the age of amino acids.”
 
MAIN PRODUCTS
´ Amino Vital series
PRODUCTS SHOT
Fiscal 2001 Highlights
Photo Amino Vital Gaining Recognition as a Sports Supplement
  The Amino Vital series received a prize for 2001 at the 20th Great Hit Food Product Awards, sponsored by the Japan Foods Journal. In addition, since 1999 the product has been the official sports supplement drink of the JAL Honolulu Marathon. Since 2000, Amino Vital has also won recognition from sports organizations including the Japan Association of Athletics Federations, the Professional Golfers’ Association of Japan and the Japan Paralympic Committee, and was named the official nutrition drink of the Japan Tennis Association National Team.
PHARMACEUTICALS
 
• Strategic Initiatives and Results
   During fiscal 2001, sales of the antidiabetic agent nateglinide increased. Ajinomoto is the licensor and supplier of nateglinide marketed in Japan under the brand names FASTIC by Sankyo Co., Ltd., which began sales in March 2002, and STARSIS by Yamanouchi Pharmaceutical Co., Ltd. As the licensee of the marketing rights outside Japan, Novartis Pharma AG has launched the drug in more than 60 countries. Other major products, such as LIVACT Granules, ELENTAL and ATELEC also performed well. Ajinomoto commenced sales of four new products during fiscal 2001: MEDI-F Bag and MEDI-F Amino Plus medical foods in April, and Harmonic M and Harmonic F defined enteral formulas, developed by SSP Co., Ltd., in October. Ajinomoto also licensed to Aventis Pharma S.A. the worldwide manufacturing and marketing rights for AC-7700, an anti-cancer agent created by Ajinomoto.
   As a result, based on National Health Insurance prices, consolidated sales increased 11 percent from the previous fiscal year to ¥71.4 billion.
 
•• Outlook
   In May 2002, Ajinomoto launched the osteoporosis treatment Actonel (risedronate) in Japan. Actonel has proved effective in clinical trials overseas by Procter & Gamble Pharmaceuticals Company and is expected to contribute to effective treatment of osteoporosis in Japan.
   Impact is a liquid immunonutrition diet that has been clinically proven with data on more than 2,500 patients to lower the risk of infection and shorten hospitalization time. Ajinomoto has obtained exclusive production and marketing rights in Japan from Novartis Consumer Health S.A. and launched a Japanese version of Impact in July 2002. The product is expected to increase the cost-effectiveness of medical treatment and improve quality of life for patients with critical illnesses with accelerated metabolisms in the ICU or surgery, or for those with high risk of infection.
   In R&D, Ajinomoto strives to create innovative drugs in the three main fields of clinical nutrition, gastrointestinal diseases and lifestyle-related diseases. In particular, Ajinomoto’s strategic focus is to enhance its presence and expertise in hepatic diseases, inflammatory bowel disease (IBD) and diabetes, based on its core competence in amino acid technology.
MAIN PRODUCTS
´ Diabetes: Nateglinide (Fastic)
´ Infusions, Clinical Nutrition and Gastrointestinal:
Livact Granules, Hepan ED, Elental, PNTwin,
Elemenmic, Niflec
´ Cardiovascular: ATELEC
´ Medical Foods:
Impact, Medi-F Bag, Medi-F Amino Plus,
Healsh Calcium, Healsh Fiber
´ Others: Risedronate (Actonel)
PRODUCTS SHOT
  Ajinomoto is developing global markets for its expanding portfolio of successful pharmaceuticals.
  PRODUCTS SHOT
  Medical foods represent an excellent opportunity for Ajinomoto to profit from its expertise in using amino acids to
contribute to good health.
NEW DRUG PIPELINE (As of March 31, 2002)
Area Development Theme Pre-Clinical
Tests		 Stage Application/
Approval
Phase
I		 Phase
II		 Phase
III
Clinical nutrition Trace element mixture
ELEMENMIC Kit		         check 
(Approved
March 2002)
Intestinal cleaning solution
NIFLEC (additional indications)		 check        
New infusion check        
Gastrointestinal Irritable bowel syndrome (IBS) treatment check        
Crohn’s disease treatment check        
Lifestyle-related diseases Antidiabetic drug FASTIC
(additional indications – Japan)		       check  
Antidiabetic drug STARLIX 1 
(additional indications – overseas) 2 		      check  
Osteoporosis treatment Risedronate         check
(Approved
January 2002)
Anti-hypertensive drug ATELEC       check  
Antiplatelet drug AJW200   check      
Others Immunosuppressant check        
Neuropathic pain treatment check        
Anti-cancer drug AC-7700
(AVE-8062) 3		   check      
Notes:
1. Novartis Pharma AG brand name.
2. Tests are being conducted by Novartis Pharma AG, which holds the license for the rights to develop, manufacture and sell the drug outside Japan.
3. Under development by Aventis Pharma S.A., which holds the license for the rights to develop, manufacture and sell the drug worldwide, and currently in Phase I in the United States and Europe.
Fiscal 2001 Highlights
PRODUCT SHOT Launch of Risedronate in Japan
  Risedronate, a new treatment for post-menopausal osteoporosis, was launched in Japan in May 2002. Risedronate is a third-generation bisphosphonate with fewer gastrointestinal side effects than other bisphosphonates that significantly reduces vertebral fractures, as proven in clinical trials. Ajinomoto has obtained the exclusive license for Japan from Procter & Gamble Pharmaceuticals, Inc., and carried out development in collaboration with Takeda Chemical Industries, Ltd. and Aventis Pharma Ltd. Ajinomoto is the licensor and supplier of risedronate marketed under the brand names Actonel by Aventis and BENET by Takeda. Expectations are high for risedronate’s ability to improve the quality of life of patients with osteoporosis.
FEED-USE AMINO ACIDS
 
• Strategic Initiatives and Results
   In the feed-use Lysine segment, after the large spread (price difference between soybean meal and corn) due to strong demand for soybean meal in summer 2001, an estimated bumper crop in South America led to a contraction in the spread in early 2002. As a result, the market price of feed-use Lysine fluctuated between US$1.30 and US$1.80/kg, averaging US$1.60/kg for the fiscal year. In the feed-use Threonine segment, the second pillar of Ajinomoto’s feed-use amino acids business, the Company maintained its market position, although sales prices dropped precipitously during the second half of the fiscal year due to increased competition triggered by newcomers. Supply of feed-use Tryptophan became tight, as a number of companies appear to have ceased production due to the intense competition. Ajinomoto remained committed to maintaining a stable supply for its main customers, and continued to steadily develop the feed-use Tryptophan market.
   Ajinomoto reached earnings targets despite a stagnant market during fiscal 2001. Factors included efforts to manage a more flexible pricing system for feed-use Lysine according to the commodity price and the competitive situation, steadily expand sales of feed-use Threonine and feed-use Tryptophan, and reduce costs.
 
•• Outlook
   Working toward its annual production target for feed-grade Lysine of 300,000 tons by fiscal 2005, Ajinomoto will expand the production capacity of facilities in the U.S., Italy and Thailand by a total of 40,000 tons per year during fiscal 2002, bringing overall annual production capacity to 240,000 tons. Construction of a new plant in the U.S. and expansion of an existing facility in France during fiscal 2002 are expected to raise total annual production capacity for feed-grade Threonine from 19,000 tons to 45,000 tons, thus accelerating the development of new markets.
   By 2005, Ajinomoto expects to hold a more than 35 percent share of the feed-use Lysine market and a more than 70 percent share of the feed-use Threonine and feed-use Tryptophan markets, for a strong number-one position in all three markets.
 
MAIN PRODUCTS
´ Feed-Grade Lysine
´ Feed-Grade Threonine
´ Feed-Grade Tryptophan    
PRODUCTS SHOT
PHOTO
Global brand building programs include the feed-use amino acids business.
Fiscal 2001 Highlights
PHOTO Threonine: A New and Growing Market
  Threonine is now Ajinomoto’s second major feed-use amino acid, and AJINOMOTO EUROLYSINE S.A.S. in France produces 19,000 tons annually for a 60 percent share of the global market. During fiscal 2001, Ajinomoto plans to establish a new Threonine plant with an annual production capacity of 10,000 tons at Ajinomoto Heartland, Inc. in the United States and raise production capacity at AJINOMOTO EUROLYSINE S.A.S. to 35,000 tons. By the end of 2002, Ajinomoto’s total Threonine supply capability will be 45,000 tons, putting the Company in an excellent position to meet rapidly growing demand in various regions.
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© 2002 AJINOMOTO Co., Inc. All rights reserved.