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Press Release

April 22, 2005

Japan Tobacco Inc.
Torii Pharmaceutical Co., Ltd.
JT Group to Merge
Pharmaceutical Production Facilities
Tokyo, April 22, 2005 --- Japan Tobacco Inc. (JT) (TSE: 2914) and Torii Pharmaceutical Co., Ltd. (TSE: 4551), JT's pharmaceutical business subsidiary, announced today that the companies would merge JT's 32-person pharmaceutical production factory in Hofu, in Yamaguchi prefecture, and the 135-person Torii factory in Sakura, Chiba prefecture. The Hofu factory would then be closed at the end of March 2006.

Since October 1999, JT's pharmaceutical division has focused on the research and development of innovative drugs, while Torii has responsibility for the drug's marketing activities, creating an efficient R&D and marketing process.

Upon the full implementation of the amended Pharmaceutical Affairs Law1 in April 2005, the JT group decided to merge the two entities. Once the Hofu factory closes, most JT's prescription drugs will be produced in Torii's Sakura factory, under one roof, further boosting efficiency.

1 The previous Pharmaceutical Affairs Law in Japan stipulated that pharmaceutical companies which apply for the regulatory approval of new drugs should possess their own production facilities.

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Japan Tobacco Inc. is the world's third largest international manufacturer of tobacco products. Since its privatization in 1985, JT has actively diversified its operations into pharmaceuticals and foods. JT entered into the pharmaceutical business in 1987 and established the Central Pharmaceutical Research Institute in 1993. JT is currently engaged in the research and development of new drugs in various areas such as glucose and lipid metabolism, anti-virus, immune disorders and inflammation, and bone metabolism. The company's net sales were ¥4.625 trillion in the fiscal year that ended March 31, 2004.

Torii Pharmaceutical Co., Ltd., established in 1921, has manufactured and distributed ethical pharmaceutical products. In 1998, Torii became a member of the JT Group. To maximally leverage the synergy of the Group, R&D functions were transferred to JT and sales and marketing functions were transferred to Torii. Torii and JT continue to operate in close collaboration. Torii's net sales were ¥42 billion in the fiscal year ended March 31, 2004.


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