Jan. 18, 2008

Corporate name: Kobayashi Pharmaceutical Co., Ltd.
President & COO: Yutaka KOBAYASHI
(Code No. 4967 The First Section of TSE/OSE)

Kobayashi Pharmaceutical Announces Results for the Third Quarter Ended December 31, 2007

Kobayashi Pharmaceutical, Ltd. (TSE: 4967), a leading importer and distributor of medical equipment and pharmaceutical and consumer goods wholesaler, today announced consolidated financial results for the third quarter ended December 31, 2007.

Net sales amounted to 202,197 million yen, a decrease of 0.1% from the same term in the previous fiscal year, while operating income was 15,886 million yen, a decrease of 0.9%. Ordinary income was 13,815 million yen, a decrease of 1.9%, and net income for the quarter was 7,901 million yen, a decrease of 6.7%.

While the Japanese economy continued on a broad recovery trend in the third quarter, driven by an improvement in corporate profits and firm personal spending, the outlook remains uncertain amid the protracted steep rise in crude oil prices and US subprime loan problem.

The Kobayashi Pharmaceutical Group continued to develop the latent needs of its customers by providing products and services that unearth new markets and revitalize markets in which Kobayashi has presence by offering new value-added products and services, demonstrating to the fullest the "create and innovate" spirit that is the business philosophy of the Kobayashi group.

(1) Consolidated Operating Results                    (Millions of Yen)
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                                  April 1 - Dec. 31,           FY 3/31,
                                2007     %      2006     %        2007
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Operating Revenues          202,197  (0.1)   202,442   5.3     257,022
Operating Income             15,886  (0.9)    16,031  12.5      18,029
Ordinary Income              13,815  (1.9)    14,076   6.4      15,012
Net Income                    7,901  (6.7)     8,470  22.1       8,297
Net Income per Share (yen)   191.06           204.98            200.77
Net Income per Share,
 diluted (yen)               190.87           204.67            200.47

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(2) Consolidated Financial Position
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                                   As of December 31,  As of March 31,
                                 2007            2006            2007
------------------------------------------------------------------------
                      
Total Assets                  172,400         171,050         164,555
Shareholders' Equity           81,083          77,592          77,236
Shareholders' Equity Ratio      45.3%           43.6%           45.2%
Shareholders' Equity
 per Share (Yen)             1,887.20        1,803.96        1,799.87

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(3) Consolidated Cash Flows 
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                                  April 1 - Dec. 31,           FY 3/31,
                                2007     %      2006     %        2007
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Cash Flows from
 Operating Activities           4,098          6,768           8,833
Cash Flows from
 Investing Activities          (3,848)        (9,821)        (11,803)
Cash Flows from
 Financing Activities          (5,571)        (4,328)         (2,433)
Cash and Cash Equivalents,
 End of term                   13,750         16,989          19,090

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Please download the full Financial Results for the Third Quater Ended December 31, 2007, at http://kobayashi.corpnet.jp/pdf/Kobayashi080118.pdf , or via Bloomberg, MultexNet, Reuters Research or Thomson One Analytics.

Summary of Performance by Business Segment

Consumer Products Operation -

The launch of new products in the period, including Sarasaty Sara Li E (pantiliner), Naripitan (medicine to improve tinnitus), and Toilet Shoshu Shabon (a deodorizer that gives toilet bowls a refreshing clean scent), contributed to segment sales. Sales of Naisitoru 85, a product that helps the body break down and burn intra-abdominal fat, and toilet tank cleaner Bluelet also remained firm.

Sales in Consumer Products grew 5,655 million yen (6.9 %) from a year earlier to 87,637 million yen. While sales were growing, the Company also enforced cost-cutting measures in areas such as manufacturing costs, and as a result operating income rose 1,095 million yen (7.3%) from a year earlier to 16,102 million yen.

Wholesale Operation -

The Wholesale Operation segment saw poor market conditions for contact lens care products, one of the company's major categories, but steady performance from kampo and other herbal medicines, summer and winter seasonal products, and foods pushed sales by 4,069 million yen (3.2%) from a year earlier to 131,975 million yen.

Kobashou, which runs the wholesale operation, will become a wholly owned subsidiary of Mediceo Paltac Holdings when the transfer of shares via a stock swap is completed in January 2008. As a result, the wholesale operation will cease to be a consolidated business segment from the fourth quarter of this period.

Medical Devices Operation -

Kobayashi Medical Division concentrated sales efforts on mainstay products, including operating room equipment and orthopedic products, a market that is expected to grow. The business results of artificial respirator maker eVent Medical, whose shares were acquired in November 2006, was included in the consolidated annual accounts from this period, but as all shares in the three Shield Healthcare Center home medical care companies were sold in November 2006, sales decreased 5,887 million yen (42.9%) from a year earlier to 7,836 million yen, with operating loss of 317 million yen.

Changes in Financial Position

Total assets increased 7,845 million yen as compared with the end of the previous fiscal year. Equity capital rose by 3,641 million yen, and shareholders' equity ratio increased to 45.3%, an increase of 0.1% from the end of the previous fiscal year.

- Cash flows from operating activities -
Cash flow from operating activities amounted to 4,098 million yen. Third-quarter net income before taxes and other adjustments was 13,998 million yen, but the Company made a corporate income tax payment of 7,724 million yen.

- Cash flows from investing activities -
Cash flow used in investing activities totaled 3,848 million yen. This was due to the acquisition of 2,085 million yen in tangible and intangible fixed assets and 2,524 million yen net increase in marketable securities, which more than offset 1,277 million yen in income from the sale of trade rights.

- Cash flows from financing activities -
Cash flow used in financing activities amounted to 5,571 million yen, mainly due to the start of an interim dividend distribution from this period, which resulted in dividend payments of 3,184 million yen.

(4) Consolidated Projections for the FY ending March 31, 2008
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                                                     (Millions of Yen)

Net Sales                                           229,000     (10.9)%
Operating Income                                     18,500       2.6%
Ordinary Income                                      16,000       6.6%
Net Income                                            8,750       5.5%
Net Income per Share (yen)                           211.51

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*The projections shown above are prepared based on information available as of the issuing date of this report, and therefore the actual results may differ from the projected figures due to various unknown factors.

About Kobayashi Pharmaceutical

Kobayashi Pharmaceutical (TSE: 4967; OTC: KBYPF) first opened for business in 1919, and its management policy has always been to provide people and society with wonderful comfort through "Creativity and Innovation". Over the years the Company has expanded its scope, developing into a cluster of enterprises with three principal businesses: Consumer Products Operation, Wholesale Operation and Medical Devices Operation. In the fiscal year ended March 31, 2007, Kobayashi achieved increases in sales and profits for the ninth consecutive year since the introduction of consolidated accounting. For more information, please visit www.kobayashi.co.jp .

Contact:

Kobayashi Pharmaceutical Online
http://www.kobayashi.co.jp/english/contact/index.html?lid=1