TOKYO, July 9 (Reuters) – Fujifilm Holdings Corp (4901.T) is banking on its fast-growing drug ingredients business to generate future profits, the company’s new chief executive said after stumbling in the certification of its own antiviral drug Avigan for the treatment of COVID-19.
CEO Teiichi Goto leads a three-year, $ 11 billion investment plan to make healthcare Fujifilm’s largest revenue and profit center as the company continues to diversify from its photo business. ‘origin.
âBusinesses like healthcare are like a deep blue ocean,â Goto, 62 and a nearly 40-year veteran of the company, told Reuters on Wednesday. “It’s not going anywhere.”
Goto said supplying other drugmakers as a so-called Contract Development and Manufacturing Organization (CDMO) would provide predictable contracts with multiple buyers and provide a lower “magnitude of risk” than full development. of the drug.
âIn the pharmaceutical industry, making a drug is a huge investment, and there is no guarantee of success,â said Goto, who became CEO on June 29.
Revenue from the CDMO segment exceeded 100 billion yen ($ 906 million) last year, 1.7 times the previous year, and is expected to double again by 2024, Goto said. The segment is a major growth engine for the entire healthcare segment, which currently accounts for a quarter of all revenue and is expected to grow to 32% over the next two years, Fujifilm said in April.
The company said in April that it expects the focus on healthcare to help push operating profit to a record 260 billion yen in fiscal year 2023. Healthcare healthcare accounts for 103 billion yen of that total, eclipsing all other segments, including materials and imaging.
Fujifilm’s experiment with Avigan, at one point Japan’s greatest scientific contribution to the fight against COVID-19, shows the pitfall of betting on the development of individual drugs.
Former Prime Minister Shinzo Abe ordered Fujifilm in April last year to triple national stocks of the drug, known by the generic name of favipiravir, and pledged donations to countries in need. Based on early studies showing that it relieved symptoms of COVID-19 and reduced hospital stays for severe cases, the drug was approved as a treatment in India and Russia.
However, studies in Japan have not been conclusive on its effectiveness and regulators have delayed approval of the drug. Read more
Goto said a new Phase III trial in Japan is expected to provide data by the end of October.
âI would be happy if it’s approved,â Goto said. “But that’s not my decision. It’s up to the Ministry of Health to decide.”
Besides Avigan, Fujifilm had 11 drugs in its research pipeline as of May. The company has also performed high-speed diagnostic tests for various strains of COVID-19 and has partnered with US biotechnology VLP Therapeutics to make a self-replicating mRNA vaccine against COVID-19.
As part of this change, he has invested billions of dollars in European and American factories that make pharmaceutical ingredients. It also makes bulk chemicals for use in COVID-19 treatments made by Eli Lilly (LLY.N) as well as ingredients used in Novavax Inc’s coronavirus vaccine (NVAX.O).
While still widely known for its photo business, the company’s imaging solutions segment, which includes film, now only accounts for 13% of total revenue.
Goto was one of the early leaders at the start of the pivot to healthcare in the mid-2000s under former CEO Shigetaka Komori, whose previous push into digital technology saved the company from bankruptcy that toppled its analogue cinema rival Eastman Kodak Co.
A remaining challenge is whether Fujifilm can successfully integrate the medical imaging business it acquired from Hitachi Ltd (6501.T), JPMorgan analyst Seiji Wakao said.
However, Wakao said the company’s stock price, which is currently trading at around 8,197 yen, may have room for improvement, depending on the performance of the CDMO segment which “is attracting a lot of attention in the market. “.
Still, Fujifilm has no intention of leaving the “film” behind, either in terms of name or strategy. Decades of experience in photo chemicals and overlay technology are still paying off in other industries, Goto said, adding that the film would remain a cornerstone for the company.
($ 1 = 110.3500 yen)
Reporting by Rocky Swift; edited by Jane Wardell
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