Business

Toyama Chemical set to become Fujifilm unit

Compiled From Kyodo, Staff Reports

Seeking to diversify into the pharmaceuticals industry, Fujifilm Holdings Corp. will spend about ¥130 billion to turn the midsize drugmaker Toyama Chemical Co. into a subsidiary, the companies said Wednesday.

Fujifilm, engaged mainly in the film and copier businesses with Fujifilm Corp. and Fuji Xerox Co. under its wing, will obtain a majority of the outstanding shares of Toyama Chemical, a long-standing drugmaker listed on the Tokyo Stock Exchange’s first section and known for expertise in supplying medicines to hospitals.

“We aim to develop our medical business — whose annual sales currently stand at ¥300 billion — into a comprehensive health-care business to generate ¥1 trillion,” Fujifilm Holdings President Shigetaka Komori told a news conference.

Komori said the company wants to achieve the ¥1 trillion goal in 10 years to make medical-related business the firm’s largest division.

“The potential of the medical market is promising on the back of technological development” in the area, he said, adding that the competition in the field is getting severe.

Fujifilm plans to acquire Toyama Chemical shares through the private placement of new shares by the drugmaker and a friendly tender offer that will start on Feb. 19, according to an announcement made at a joint news conference of Fujifilm, Toyama Chemical and Taisho Pharmaceutical Co., which is Toyama Chemical’s current top shareholder.

Fujifilm Holdings will eventually own 66 percent of Toyama Chemical, while Taisho Pharmaceutical, which currently has a 21.8 percent stake in Toyama Chemical, will also increase its stake to 34 percent, the companies said.

The string of share deals will clear the path for the three firms to enter into a broad tieup in a bid to boost their competitiveness in the pharmaceutical business, they said.

Such deals are also expected to help Toyama Chemical finance the development of new drugs, which requires huge financial resources.

Meanwhile, Toyama Chemical said this tieup will help the company to further develop new medicines and widen its sales network at home and abroad. “The capital and business alliance will lead us to grow further, with an eye on global development,” Toyama Chemical President Masuji Sugata said.

The formation of the trilateral alliance is likely to prompt other drugmakers to reconfigure capital and business ties to share development costs.

Fujifilm has been enhancing operations related to the medical field in recent years, including manufacturing of endoscopes and image-processing equipment, to which its photo film-related technology is applied.

In addition, it has been intensifying its exposure to the dietary supplement business.

Toyama Chemical has been funneling its resources into development of a range of medicines, including one to treat avian influenza.

But it incurred an ¥8.7 billion group net loss in the business year to March 31 last year due to large research and development costs as well as the government’s cuts in payments to hospitals under the state-run medical insurance system.

Under the system, the government pays predetermined subsidies to hospitals in the event that officially designated prescription drugs are used for insured patients.

Following the stock transactions, relevant parties do not plan to restructure the Toyama Chemical workforce for the time being, sources said.