Concentrated investment in biopharmaceutical CDMO and the ¥1-trillion vision (2011)

Choosing contract manufacturing over the gamble of drug discovery

The heart of this decision lies in the fact that a company which had lost its founding business concentrated its resources not on the one-shot gamble of drug discovery — landing a new drug — but on the plainer business of contract manufacturing, making other pharmaceutical companies’ drugs on their behalf. Drug discovery pays off big when it hits, but the odds of failure are high too. Fujifilm bought a running contract-manufacturing site whole, buying the time of a start-up, and moved the coating and mass-production techniques honed on photographic film over to the production of antibody drugs. It was a choice befitting a photography company — one made after seeing through the character of a business in which the scale of facilities and the skill of mass production decide the contest, and the barriers to entry are high.

That said, a structure that ties capital investment directly to sales turns into a heavy fixed cost the moment utilisation falls. Demand for biopharmaceuticals, exchange rates, the policies of various countries over production sites — a trillion-yen-scale investment is constantly exposed to variables that are hard to control. This business, which Shigetaka Komori decided to enter and Teiichi Goto expanded into a mass-production system, now carries Fujifilm’s growth while at the same time posing to management the question of how far it can hold to the discipline of ‘not making a bet you are bound to lose.’ How far the mass-production technology that once fought the world in photography will hold up as the unseen hand behind medicine is a test still to come.