Tanabe Seiyaku Co., Ltd., Mitsubishi Pharma Corporation and Mitsubishi Chemical Holdings Corporation have reached an agreement in principle on the proposed merger between Tanabe Seiyaku and Mitsubishi Pharma on October 1, 2007. Each of the respective party's Board of Directors approved the basic agreement executed today.

The pharmaceutical industry is one of the most important industries for supporting
Japanese economic growth through responses to the increased medical needs in an
aging population and progress of technological innovations of life science.

At the same time, penetration of medical cost reduction policy may drive out
pharmaceutical companies that lag behind in terms of global competitiveness.

Tanabe Seiyaku and Mitsubishi Pharma share their goals to pursue business opportunities to respond to the changing medical environment while enhancing drug discovery capabilities and accelerating overseas business development.

The companies understand that expansion of the business scale and strengthening the business infrastructure are necessary to become a top-tier pharmaceutical company in Japan. Based on such common understandings, the two companies have reached a basic agreement on this merger to create global new drugs and challenge new business opportunities.