New Fujifilm CEO focuses on drug ingredients unit after Avigan stumbles
09/07/2021 06:06
By Rocky Swift
TOKYO, July 9 (Reuters) - Fujifilm Holdings Corp 4901.T is
banking on its fast-growing drug ingredients business to drive
future profits, the company's new chief executive said, after
stumbles in certifying its own Avigan anti-viral drug for
treatment of COVID-19.
CEO Teiichi Goto is heading up a three-year, $11 billion
investment plan to cement healthcare as Fujifilm's biggest
centre of revenue and profit as the company continues to
diversify from its original photo business.
"Businesses like healthcare are like a deep, blue ocean,"
Goto, 62 and a near 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) will deliver
predictable contracts from multiple buyers and provide a lower
"magnitude of risk" than full drug development.
"In the pharmaceutical industry, making a drug is a huge
investment, and there is no guarantee of success," Goto, who
became CEO on June 29, said.
Revenue from the CDMO segment exceeded 100 billion yen ($906
million) last year, 1.7 times that of the previous year, and it
is expected to double again by 2024, Goto said. The segment is a
major growth engine for the overall healthcare segment, which
currently accounts for a quarter of all income and is forecast
to grow to 32% in the next two years, Fujifilm said in April.
The company said in April it expects the focus on healthcare
to help drive operating profit to a record 260 billion yen in
fiscal 2023. Healthcare is seen accounting for 103 billion yen
of that total, eclipsing all other segments, including materials
and imaging.
Fujifilm's experience with Avigan, at one point Japan's
biggest 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 stockpiles of the drug, known
generically as favipiravir, and pledged donations to needy
countries. Based on early studies showing it eased the symptoms
of COVID-19 and reduced hospital stays for serious cases, the
drug was approved as a treatment in India and Russia.
However, studies in Japan have been inconclusive on its
efficacy and regulators have held off approving the drug.
urn:newsml:reuters.com:*:nL3N2EN2QS urn:newsml:reuters.com:*:nL1N2ME09B
Goto said a new phase III trial in Japan should yield data
by the end of October.
"I'd be happy if it's approved," Goto said. "But that's not
my decision. It's up to the health ministry."
Besides Avigan, Fujifilm had 11 drugs in its research
pipeline as of May. The company has also made high-speed
diagnostic tests for various strains of COVID-19, and it has
partnered with U.S.-based biotech VLP Therapeutics to make a
self-replicating mRNA COVID-19 vaccine. urn:newsml:reuters.com:*:nL4N2GS0JP
As part of the shift, it has invested billions of dollars
into European and American factories that make drug 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 NVAX.O coronavirus vaccine.
PHOTOS TO VACCINES
Though still known largely for its photo business, the
company's Imaging Solutions segment that includes film now makes
up just 13% of total revenue.
Goto was an early leader in the start of the pivot toward
healthcare in the mid-2000s under former CEO Shigetaka Komori,
whose previous push into digital technology saved the company
from bankruptcy that took down analog film rival Eastman Kodak
Co.
A remaining challenge is whether Fujifilm can successfully
integrate the medical imaging business it acquired from Hitachi
Ltd 6501.T , said JPMorgan analyst Seiji Wakao.
However, Wakao said the company's share price, currently
trading at about 8,197 yen, could have room to grow, depending
on performance of the CDMO segment that is "attracting a lot of
attention in the market."
Still, Fujifilm doesn't plan to leave the "film" behind in
either name or strategy. Decades of experience in photo
chemicals and layering technology are still paying off in other
business segments, Goto said, adding that film will remain a
lodestone for the company.
($1 = 110.3500 yen)
(Reporting by Rocky Swift; editing by Jane Wardell)
((rocky.swift@thomsonreuters.com;))