Recently, Japan's Fujifilm Corporation announced a $200 million investment to expand its Cell** Contract Development and Manufacturing Organization (CDMO) capabilities.
Fujifilm's goal is to be TSMC in the pharmaceutical industry.
How did Fuji, which makes films, start to do the biomedical industry?
Fujifilm is no stranger to the Chinese.
Founded in 1934, this Japanese company is a world-renowned traditional film manufacturer.
At its peak, Fujifilm was the world's second-largest producer of color film after Kodak in the United States.
In 2001, color film accounted for 60% of Fujifilm's total sales, with profits accounting for 2 3.
With the spread of digital cameras and smartphones, the market for color film is shrinking.
Fujifilm's main film business also peaked in 2000 and has since declined sharply by 20 to 30 percent per year.
Fujifilm. As its core business shrank, Fujifilm began to think about whether it should turn to**.
The final choice is CDMO.
Generally speaking, the more mature an industry develops, the more detailed and professional the division of labor tends to be.
Typical examples are the semiconductor industry, from design, production, to packaging, testing, division of labor and cooperation, each performing its own duties.
TSMC, the world's largest semiconductor foundry, has risen in this context.
In the biomedical industry, the division of labor is becoming more and more detailed.
A CDMO (Contract Development Manufacture Organization) is a contract development and manufacturing organization that is commissioned by a pharmaceutical company to produce pharmaceutical products, manufacture clinical trial drugs used in the R&D stage, and develop production procedures.
To put it simply, CDMO is the foundry of the biopharmaceutical industry.
Fujifilm's move to CDMO was driven by the huge market potential.
The expansion of CDMO demand is related to the rise of biologics.
At present, the global pharmaceutical industry has entered the era of biological drugs, and the overall growth rate of biological drugs is higher than that of chemical drugs, and the proportion is gradually expanding.
Compared with low-molecular drugs, biopharmaceuticals using proteins and biological raw materials are more difficult to develop, have a longer cycle and require more investment.
At the same time, the production of biopharmaceuticals requires complex production technology and expensive equipment.
This is another huge investment for pharmaceutical companies.
In order to save costs and improve efficiency, many pharmaceutical companies tend to focus on the development and marketing of new drugs, and leave production to CDMO companies.
The CDMO business is getting bigger and bigger.
The development trend of the CDMO industry **Sullivan's 2022 Research Report on the Development Status and Future Trends of the CDMO Industry", edited by Zhang Tianzi.
According to statistics from consulting firm Sullivan, the global CDMO market size has grown from $39.4 billion in 2017 to $63.2 billion in 2021 and is expected to reach $124.3 billion by 2025.
You must know that the global semiconductor foundry market will be 136 billion US dollars in 2023.
The CDMO market is an industry that can be compared to semiconductor foundry.
With such a big cake, it's hard not to be impressed.
As the saying goes, there is a specialization in the art industry.
CMDO is good business, but the film industry is "interlaced".
Why does Fujifilm think it can do it?
This is because Fujifilm has a long history in the pharmaceutical industry.
In 1936, Fujifilm entered the medical industry with the introduction of its first medical X-ray film.
In 1983, Fujifilm introduced the world's first digital X-ray imaging diagnostic system.
Later, Fujifilm researchers discovered that the film required cutting-edge antioxidant technology due to oxidative fading caused by reactive oxygen species.
This technology is completely compatible with anti-aging and antioxidant cosmetics.
Fujifilm launched skincare products using antioxidant technology, and in 2008 it acquired Toyama Chemical Industry Co., Ltd. and entered the pharmaceutical industry.
Although Fujifilm has made some achievements in the field of medicine, its reserves in the CDMO industry are not sufficient.
Fujifilm's strategy is to throw money at acquisitions.
In April 2011, Fujifilm acquired Diosynth from Merck and formed Fujifilm Diosynth Biotechnologies (FDB), Inc., and began to gradually enter the biomedical CDMO field.
After that, turn on the buy, buy, buy, buy mode:
In 2014, Fujifilm acquired a 49% stake in Kalon Biotherapeutics in the United StatesIn 2015, Fujifilm was released with 3US$7.7 billion acquisition of Cellular Dynamics International, a U.S. pharmaceutical company
In 2018, Fujifilm acquired Irvine Scientific for $800 million
In 2019, Fujifilm 8Acquired Biogen's biologics manufacturing facility in Denmark for $500 million.
Schematic diagram of Fujifilm's life science industry layout.
So far, Fujifilm has basically completed its layout in the CDMO field.
As a latecomer, Fujifilm wants to be the "TSMC of the pharmaceutical industry", and there are two "killer features":
One is technology. Fujifilm has established the world's first continuous production system.
This production method can realize continuous production from cultivation to purification process, reduce production cost by 3%, and increase production efficiency by 3 times.
Fujifilm's bioreactors.
The second is scale. In the past 10 years, Fujifilm has invested nearly 40 billion yuan to build five production bases in the United States and Europe.
In 2026, Fujifilm will also build a CDMO plant in Japan.
At that time, Fujifilm's CDMO production capacity will be among the highest in the world.
Fujifilm plans to increase the operating income of its CDMO business to approximately double the operating income of 200 billion yen in FY2020 (ending March 2021) by FY2024 (ending March 2025), and then aim to achieve an annual growth rate of 20.
Fujifilm does have the confidence to do so.
In terms of operating income over the years, Fujifilm's operating income peaked in 2008 and then declined.
The operating income in 2022 has exceeded that of 2008 and hit a record high.
Fujifilm's operating income.
The key to Fujifilm's stable and rebounding operating income is the healthcare sector.
At present, the imaging business accounts for only about 13% of Fujifilm's total revenue, and healthcare has become the most important segment.
Changes in the share of Fujifilm's various business areas.
Transforming healthcare has tasted the sweetness, which is one of the reasons why Fujifilm continues to bet on the CDMO business.
However, it is not so easy for Fujifilm to become the TSMC of the pharmaceutical industry.
At present, the global CDMO market pattern is Thermo Fisher Scientific (Thermo Fisher Scientific) in the United States, Lonza (Switzerland), WuXi in China is in the top three, and Catalent in the United States and Samsung Biologics in South Korea are ranked fourth and fifth.
Global CDMO company revenue ranking.
Fujifilm is in ninth place, and although it does not report revenue, it is speculated that it is far from the top three.
There are strong rivals in front of them. Some time ago, Thermo Fisher Scientific, the No. 1 ranked company, officially opened a new factory in Hangzhou, China, covering an area of 80,000 square meters with clinical and commercial drug substance and drug product production capacity.
Samsung Biotech has invested 160 billion yen in the construction of a new plant, which is expected to increase production by 70% by 2022.
There were pursuers behind. Major traditional medicine manufacturers are also entering the CDMO field, and a number of new CDMO companies are quickly landing.
For example, in July this year, Zhongke New Life completed the delivery of the first batch of production of mRNA-LNP from its customers, marking the company's successful establishment of mRNA drug CDMO capabilities and its official entry into CDMO.
For another example, in August this year, CanSino, a vaccine leader, announced that it had signed a framework agreement with AstraZeneca, under which the company would provide CDMO to AstraZeneca to support its mRNA vaccine project, production and specific products, and provide related specific services.
The CDMO industry is "involution".
Fujifilm Factory.
This means that not only Fujifilm, but also Chinese CDMO companies will have to think about how to deal with the competition.
Especially in the field of small molecules, India's Piramal Pharma Solutions and SAI Life Sciences have brought great pressure to Chinese companies by virtue of their cost advantages.
South Korean and Japanese companies have started a "first-class war", and Samsung Biotech even won orders at a low price of 30% to seize the market.
In early December, WuXi Biologics, a leading Chinese CDMO company, lowered its full-year 2023 revenue growth rate from an expected 30% increase to a 10% increase, and its net profit will decline to single digits year-on-year.
It is important to know that WuXi Biologics' performance growth rate has been maintained at 40% for a long time.
Another leading CDMO in China, Gloria Young, achieved revenue of 63 in the first three quarters of this year8.3 billion yuan, down 1829%；The net profit attributable to the parent company was 22100 million yuan, a year-on-year decrease of 1877%。
Although the CDMO market is growing rapidly, companies are flocking to the game, and the blue ocean will eventually become a red ocean.
Only by practicing internal skills can Chinese enterprises break the involution.