Recently, Fujifilm has expanded its CDMO production capacity again!In 10 years, Fujifilm has spent billions of dollars to build the largest CDMO base in North America and Europe. How did a film tycoon create a CDMO giant?When the Asian CDMO collective ushered in the "explosive period", the global pattern has been completely subverted
A year ago, Liang Hong, an industry insider, looked at the CDMO that was recruiting people against the trend and expanding and the whole line was red, and he was always a little uneasy, he felt that a huge earthquake was brewing under his feet. When I saw the whole line floating green, layoffs, factory closures, layoffs, and collective downward adjustment of expectations twice, everyone was thinking, what is the CDMO that can live well?
Fighting scale and production capacity can no longer completely answer this question - this is the first change in the industry, and then the second change is the pattern of CDMO. In the past, more people talked about old CDMOs in Europe and the United States, such as Lonza and Catalent, but now they are focusing on the Asian market, China, South Korea, Japan, and India, and new forces are quietly stirring up the global pattern.
Among them, the Japanese CDMO faucet called Fujifilm Diosynth Biotechnologies (FDB) made Liang Hong the most curious. This company has expanded in a high-profile and frequent manner in the past two years, and its performance has infinitely impacted the global CDMO TOP10 pattern, and more importantly, he has transformed from a layman, and the brand is the famous film giant Fuji. "Looking at its contrarian growth trend, it has the potential to become the next 'Samsung Biotech', but its growth path is significantly different from that of Samsung Biotech. Liang Hong sighed.
Why did a film tycoon create a CDMO giant?
When China's macromolecule CDMOs represented by WuXi Biologics rise at the same time as South Korea's Samsung Biologics and Japan's Fujifilm, who can be the first to break through into the battlefield of old European and American players?In the field of small molecules, when Piramal Pharma Solutions and SAI Life Sciences from India gradually replace China's cost advantage, will China's CDMOs hold on to the field or grow against the trend?
Finally, when domestic WuXi companies, Proton Co., Ltd., Jiuzhou Pharmaceutical, or such as Toyo, which have quite a few technical advantages in the subdivision track, and show their "muscles" on the same stage with Asian CDMO companies such as Japan, South Korea, and India, how much impact can it bring?Who is it that continues to grow against the trend and wins the CDMO industry?
A film king who wants to be the "TSMC" of the pharmaceutical industry
Around 2011, three Asian CDMOs, WuXi Biologics, Samsung Biologics and Fujifilm, were born, and after 10 years of accumulation, they are now singing on the same stage. All three focus on biologics, but they were initially established on different paths, with WuXi Biologics starting as the biologics division of WuXi AppTecSamsung Biologics is a joint venture incubated by Samsung Group and Biogen one year after entering biomedicineFujifilm CDMO, on the other hand, was formed after the group acquired all the shares of Merck & Co., Ltd.'s subsidiaries Diosynth RTP and MSD Biologics.
The same cross-bank transformation to CDMO with a golden spoon also benefits from the support of local policy development strategies, but the paths of Samsung and Fuji to do CDMO are obviously different.
First, the "foundation" of biotechnology and the "foundation" of transformation are different. One thing that can subvert the traditional impression is that Fujifilm has more than 30 years of experience in the research and development and production of recombinant proteins, vaccines, monoclonal antibodies and other technologies. In 2000, when the demand for color film peaked, Fujifilm realized that it needed to transform and cross industries, and sure enough, the film market gradually shrank to less than 10%. In 2003, Fujifilm, which started a complete transformation, focused on the field of medicine and medical devices, and formulated a five-year plan to focus on the life science and regenerative medicine sector with the strategy of large-scale mergers and acquisitions and consolidating self-research. Whether it is a concept or a series of implementations, it has laid a certain foundation for entering the CDMO in 2011 and providing multi-dimensional life science services for various businesses such as synergistic culture medium and photopure medicine.
Second, after the layout of CDMO, its expansion thinking is different. Samsung "from the inside out", after choosing biosimilars as the main track earlier, its first factory was set up in Incheon, South Korea, and although it has accelerated its overseas expansion all the way since then, its production capacity is currently relatively concentrated in the local area.
Fujifilm chose to "from the outside in", and the main line directly marched into Europe and the United States from the beginning, aiming to create scale effect and reputation in the European and American markets, and mainly landed key production lines in the United States, the United Kingdom and Denmark. The first two companies were acquired, one in North Carolina in the United States and the other in Billingham, England. According to the information on its official website, Fuji currently has seven overseas production bases in the United States, Denmark, and the United Kingdom. It wasn't until this year that Fujifilm began to send a clear signal that everything was ready, and that it would slowly enter the Japanese and Asian markets in the form of reverse imports. In June of this year, Fujifilm established a sales company for Japan and Asia, and plans to open its first CDMO plant in Japan in Toyama in 2026.
The accumulation of 12 years in Europe and the United States is roughly divided into two periods: in the first 7 years, Fujifilm's expansion was relatively low-key and stable, but it has quietly completed the layout of 3 production bases, and mainly focuses on recombinant proteins, monoclonal antibodies, viral vaccines and CGT, and has established a certain production capacity and brand advantage.
2019 was a real watershed year, when Fuji ended with 8$500 million acquisition of Hiller D, Biogen's largest biologics manufacturing facility in Denmark (which at the time owned six 1.).50,000 l bioreactor). As the fourth production site, Hiller D has embarked on a high-profile expansion of Fujifilm. Importantly, since then, Fujifilm's CDMO's strategic priorities and division of labor have gradually become clear: First, it is necessary to significantly increase production capacitySecond, we need to support preclinical projects;The third is to make a division of labor in the delivery of small to very large-scale output.
Finally, the strategy is reflected in the establishment of two strategic business units (SBU) structures, one with a large-scale SBU (with a capacity of more than 20,000 L) covering two plants, Hiller D, Denmark and Holly Springs, North Carolina, which are now the largest end-to-end CDMOs in Europe and North America, respectivelySmall-scale SBUs provide services for biologics, CGTs, oncolytic viruses and viral vaccines, primarily at Teesside, UK, Triangle Park, North Carolina, University City, Texas, Watertown, Massachusetts, and Thousand Oaks, California.
The return on Fujifilm CDMO is most pronounced by Hiller D in Denmark. According to the financial report, last year, Fujifilm's CDMO business revenue exceeded the original expectation, with a year-on-year increase of 292% (194.2 billion yen) was mainly contributed by the business volume of the Danish plant. Taking advantage of this trend, in June this year, Fuji quickly made adjustments in the organizational structure and promoted Lars Petersen, the chief operating officer of Hiller D in Denmark, to the CEO of Fuji CDMO. Lars Petersen was a key figure in Fujifilm's CDMO expansion, driving the multi-billion dollar expansion of two of the largest factories in Hiller D and Holly Springs.
Over the past three years, Fujifilm's CDMO expansion has been frequent.
In 2021, due to the impact of the epidemic, Fuji Investment 8500 million US dollars, focusing on its own advantages in recombinant proteins and virus vaccines, while expanding the production capacity of gene ** (10 times the production capacity of the United Kingdom), and launching an original system in continuous production capacity. In the same year, the company announced an investment of more than $2 billion to establish the largest CDMO in North America, and built a new factory in Boston. According to data, so far, Fujifilm CDMO's total investment in the past ten years has reached 600 billion yen (nearly 5 billion US dollars), and it said that it will also step on the accelerator and use the CDMO business as an important breakthrough to build "TSMC in the pharmaceutical industry".
In the past year, Fujifilm's expansion has really started to pick up again: the total investment in two CDMO expansion projects in Denmark and the United Kingdom in Europe reached 20 percent for the whole yearUS$3.5 billion, acquired Shenandoahbiotechnology, a recombinant protein company, and acquired the cell purchase base of Atara Biotherapeutics, and continued to make efforts in CAR-T** production. Partnered with Chimeronbio to increase its strength in the RNA field and invest $1.6 billion to expand the production capacity ...... of its factories in Denmark and Texas
This year, under the trend of general layoffs and factory closures of CDMO companies, Fuji still bucked the trend and continued the expansion wind of the previous two years. Shortly after taking office, Fuji announced a new plan for the Fuji CDMO: to increase revenue to 200 billion yen in fiscal 2025 and 500 billion yen in fiscal 2030, with an annual growth rate of 20%. These numbers look conservative, but based on the current performance exceeding expectations and the momentum of high-profile expansion, many industry insiders believe that the performance will exceed expectations.
A film and a biomedical CDMO, two seemingly unrelated industries, Fujifilm has put them side by side. From the perspective of transformation, Fujifilm has long judged the development trend of medicine, interlocking, CDMO is the natural choice after its time comes, and after choosing to take this track, it will focus on it with all its might, and be more specific and clear in strategy, but at the same time, it will judge the situation and have cautious and conservative expectations for its future.
From the perspective of CDMO's advantages, Fujifilm's most prominent point is in the European and American markets. Overseas customers evaluate a CDMO, the focus of the examination is the company's international integration capabilities, such as whether the management system is in line with the international, whether the daily documents are in English, whether the company's employees have overseas backgrounds, etc., and at the beginning of the production line in Europe and the United States, now the establishment of North America and Europe almost the largest CDMO, and the organizational structure of the reuse of local talents, Fuji has created a certain degree of international brand trust, is slowly highlighting the encirclement. However, it seems that the last three years have only ushered in his period of rapid expansion, and it is still unknown whether he can be among the forefront of CDMO in the future.
Embattled, "grabbing" China
Not only is Japan's Fuji a rising star, but China's CDMO is facing a "rush to order" in almost the entire field from small molecules to large molecules. In the field of macromolecules, South Korea's Samsung Biotech "took advantage of the situation", and in the field of small molecules, CDMO companies from India are also eyeing up.
The first is Samsung Biologics, although the CEO of WuXi Biologics said at a ** communication meeting this week that in the real competition between WuXi Biologics and Samsung Biologics, in the CMO field, WuXi Biologics did not have production capacity on the M-side before, so the downward revision of performance growth rate is not due to competition with Samsung Biologics. But that doesn't mean Samsung's rise doesn't pose a threat to China's CDMOs.
After all, Samsung Biotech's growth rate is too alarming. Not long ago, Samsung Biotech released its Q3 results, and its revenue in the third quarter exceeded one trillion won, a year-on-year increase of 184%, meanwhile, Samsung Biotech also raised its maximum guidance for 2023, from 15%-20% to more than 20%.
It is reported that Samsung Biologics' customers include 14 of the world's top 20 pharmaceutical companies, and as of October this year, it has signed contracts worth more than $11.8 billion.
And the rise of Samsung Biotech is also beyond expectations. It was only in 2011 that Samsung Group officially entered the biopharmaceutical industryIn 2012, he co-incubated Samsung Bioepis with Biogen, specializing in biosimilarsIn 2022, the entire stake in Biogen** Samsung Biopis accelerated the expansion of Samsung Biologics.
In fact, behind the "overdrive" development of Samsung Biologics is to win a number of orders for global drug "sales", such as BMS's O drug, Roche's "old troika" and Pfizer's biosimilars are its customers.
In addition, in recent years, Samsung Biologics has been increasing its production capacity in the field of biologics. In the field of traditional biologics, Samsung Biologics currently has a total production capacity of more than 600,000 liters in its four factories, which can already compete with global CDMO giants such as Lonza and BIAt the same time, Samsung Biotech is also making a layout in the CGT and ADC fields through mergers and acquisitions.
In 2022, Lotte Group also announced the establishment of Lotte Biotech, which also aimed at biopharmaceutical CDMO, and also embarked on the old road of self-built production capacity + mergers and acquisitions, and spent 1Acquired BMS's plant in East Syracuse, New York, USA for $600 million. It is worth mentioning that Rakuten Biotech has also received an order from BMS.
Earlier this year, Lotte Biotech announced that it would invest $3 billion over the next seven years to build three large factories in South Korea with a total production capacity of 360,000 liters.
If China's CDMO and South Korea's CDMO are actually on the same starting line in the field of biopharmaceuticals, it may not be called "order grabbing", but in the field of small molecules, CDMOs from India do pose a substantial threat to Chinese companies.
On Nov. 27, Reuters polled about 10 pharmaceutical companies, all of which said they were looking to service providers in other countries to reduce their reliance on Chinese CXO service providers. Huahai Pharmaceutical, a leading domestic API exporter, has also pointed out in this year's interim report that due to the deepening of geopolitics, the "de-Chinaization" of the United States and Europe, and the gradual forward movement of the industrial chain of some manufacturers in India, the competition in the API market has become more and more fierce, resulting in a decline in the price of some of the company's APIs and intermediates.
For a long time, labor costs and APIs are the competitive advantages of China's CDMO, but these advantages also exist for Indian CDMOs, public information shows that as early as the 90s of the 20th century, Divi's Laboratories, Jubilant and other Indian head CDMOs have established cooperation with European and American pharmaceutical companies. Although it started with bulk APIs, there is a certain gap between generic API and CDMO companies, with the latter placing more emphasis on process development and customized services. According to a report by Haoyue Research, by 2007, the biotechnology industry had also become a highly encouraged field in India, and since then, a number of CDMO companies such as Divi's Laboratories, Jubilant, Biocon, Piramal Pharma Solutions and Sai Life Sciences have been born with the advantages of advanced technology and relatively low cost, and they are also "supported" by European and American pharmaceutical companies today Companies used to reduce the demand for CDMOs in China.
For example, both SAI Life Sciences and Aragen have reported increased revenue in recent years, with the former even increasing by 25% to 30%, while the latter has increased its total number of employees from 2,500 to 4,500 in the past five years.
Interestingly, India has also been weaning itself off China's "dependence" on some APIs since 2021, with a KPMG report pointing out that in 2019, India imported nearly US$3.5 billion worth of APIs from around the world, of which 67% came from China. Therefore, India has developed a special action plan of "Atmanirbhar Bharat" to promote the production of APIs in India. Piramal Pharma Solutions has publicly stated this year that 15% of its APIs come from China and is currently reducing that percentage.
However, some analysts said that the barriers to CDMO are high quality, verified by multiple projects, and rich successful experience. Therefore, for Chinese pharmaceutical companies, whether it is the decrease in orders for innovative drugs due to the capital winter or the impact of geopolitics are objective factors, the cost advantage in the early years will sooner or later become a thing of the past. In the future, whether it is facing the "best war" of Japanese and South Korean companies in the field of biopharmaceuticals, or the "cost war" of Indian CDMOs in the field of small molecules, China's CDMOs will accumulate more experience externally, cultivate internal skills internally, and hone their ability to be in line with international standards.