Fujifilm's drug move
Fujifilm, the #1 or #2 (depedning on sources) photographic film and paper company, in many was resembles its rival Eastman Kodak. Like Kodak, it is hard hit by the digitization of photography. Like Kodak as well, it is trying hard to get into allied digital fields, from photo printers and digital cameras and DVDs. and medical equipment (it is a leading make of endoscopes). And it has a serious position in the graphic arts industry, and with its Fuji Xerox division, it is a major Asian player in office equipment. It recently bought Olympus, the #3 Japanese digital camera maker.
But in one respect, it is doing the opposite of Kodak. Kodak decided to pull back from three areas in recent years, namely chemicals, medical imaging, and pharmaceuticals. It understood that the value of those divisions was hidden in the bas news about sinking volume in the core film industry.
But Fujifilm just announced it would buy Toyama Chemical, a Japanese pharmaceutical maker. The deal is for $1.4 billion. Toyama's biggest asset is a bird-flu treatment. It's a gamble, as Toyama hopes to replace Roche's Tami flu treatment.
Medical Imaging is a close vertical expansion from photography, but drug making and marketing is a whole different game. The area that Kodak abandoned, Fujifilm is charging into.
That also the opinion of a Financial Times story ("Fujifilm diversifies with Toyama buy", 2/14/08):
But the move to acquire a lossmaking, largely domestic drugs maker has befuddled some analysts. "There aren't any immediate synergies from this acquisition," said one at a foreign brokerage. "It will take at least two to three years for this to pay off."
