Posted: March 24, 2008

Fujifilm Wants to Apply its Production Expertise and Nanotechnology Techniques to Drugmaking

(Nanowerk News) Shigetaka Komori isn't one for subtleties. When the president and chief executive of Fujifilm Holdings (FUJI) announced, in mid-February, that his company would pay nearly $1.5 billion for a majority stake in Japanese pharmaceutical maker Toyama Chemical, he quickly established that this was no mere trophy purchase. "We aim to become a comprehensive health-care company," he boasted to reporters in Tokyo.
What do drugs have in common with the $28 billion company's longtime business in photo film? More than you might think, according to Komori. Fujifilm wants to apply both its production expertise and nanotechnology techniques, originally developed for film production, to drugmaking. One example that predates the Toyama deal: an experimental cancer treatment that's made from microscopic particles like those in gelatin coatings on film and that's spread on skin like an ointment. Selling pharmaceuticals complements Fujifilm's existing businesses in gene analysis and imaging technology for ultrasound and X-ray machines, Komori told the Japanese financial daily Nikkei in early March.
And Toyama could be on the verge of delivering something big. Next year it expects to market a new flu treatment that's already being talked about as a possible alternative to Roche Holdings' Tamiflu. Such a blockbuster could make Toyama's top-selling drug, Pentcillin, a penicillin, seem puny and provide a major earnings boost. (Toyama has forecast operating profits of $61 million, compared with last year's $57 million loss, on a doubling of sales to $317 million.) It would also show that Komori has turned Fujifilm around after two years of painful restructuring.
Yet analysts remain skeptical. In the past month, Fujifilm's stock has fallen by 9.5%, slightly more than the Nikkei 225 Stock Average's 9% slide. "Some investors wonder whether Fujifilm paid too much for Toyama," said JPMorgan Chase (JPM) analyst Hisashi Moriyama. "The question is: Can Fujifilm recoup its investment over the longer term?"
Source: Business Week
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