Fujifilm focuses on biotech future

Photo media-centric firm snaps up Merck’s contract manufacturing and service subsidiaries Diosynth and MSD Billingham

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TOKYO—Fujifilm Corp. and pharma giant Merck & Co. Inc.—known as MSD outside the United States and Canada—announced at the close of February an agreement under which Fujifilm will acquire the Merck BioManufacturing Network, a leading provider of contract manufacturing and development services for the biopharmaceutical industry.

The pact calls for Fujifilm to purchase all of the equity interests in two Merck subsidiaries, Diosynth, located in North Carolina's Research Triangle Park, and MSD Biologics Ltd., located in the United Kingdom, which together comprise the Merck BioManufacturing Network.

"Fujifilm positions the Medical Systems and Life Science business as one of our key growth areas," says Toshihiro Matsumoto of Fujifilm's corporate public relations division in Japan. "We have been aggressive in boosting capital investments and research and development, and expanding the business through active mergers and acquisitions."

The deal is not unusual given Fujifilm's evolution as a company. Fujifilm began selling X-ray films in 1936 shortly after the company was established. Since then, Fujifilm continued to expand its diagnostic solutions, and lists among its accomplishments the world's first digital X-ray imaging and diagnostic system, Fuji Computed Radiography and endoscopes.

In March 2008, Fujifilm acquired Toyama Chemical, launching its ongoing foray into the pharmaceutical space. It has branched out into the field of therapeutic radiopharmaceuticals, including RI-labeled monoclonal antibodies, with the establishment of Fujifilm RI Pharma.

In February 2010, Fujifilm established Fujifilm Pharma, which undertakes the development, manufacturing and marketing of pharmaceutical products.

The Merck deal is part of Fujifilm's continued aggressive entry into the evolving field.
"Through the acquisition of Diosynth and MSD Biologics, Fujifilm will make a full-scale entry into the biopharmaceutical business," adds Matsumoto.

The deal pairs the continually evolving Fuji with two companies with biopharma expertise in two critical markets.

"As biopharmaceuticals are made from proteins, biopharmaceutical production has various challenges, including the need for advanced technologies and know-how, such as protein culture, extraction and purification; high-production costs; and difficulty in verifying stability and antigenicity," continues Matsumoto. "Fujifilm can apply its production and quality control expertise developed in the photographic business, and knowledge of high-molecular materials such as collagen to this business."

Included in the transaction are manufacturing contracts, business support operations and two highly skilled workforces.

As part of the agreement, Merck/MSD has agreed to move forward with development and manufacturing activities within the network that are currently underway. Financial details of the transaction were not disclosed.

Representatives of Merck declined to comment on the transaction.

Fujifilm's Matsumoto says that as of March 31 of last year, the company's medical systems and life science business activities represented about 12 percent of the company's overall revenues. By 2018, Matsumoto adds that Fujifilm expects that the newly augmented segment of the company will see global revenues of $1 trillion.

"Therefore, we are confident that the deal is logical and consequential for our further growth," Matsumoto says.

"When Merck/MSD combined its biopharmaceutical manufacturing services businesses in the U.S. and U.K. into the Merck BioManufacturing Network, we established one of the world's leading biopharmaceutical contract manufacturing organizations," says Willie A. Deese, president of Merck's manufacturing division, in a prepared statement. "With this transaction, Merck/MSD becomes a key customer that will continue to benefit from the expertise and experience of the combined businesses in biologics development and manufacturing."

The agreement is subject to the expiration or earlier termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act, if applicable, as well as other customary closing conditions.

"Fujifilm continues to build upon its ongoing commitment to delivering pharmaceutical business," said Shigetaka Komori, president and CEO of the corporation, in a prepared statement. "This acquisition provides an important addition to our pharmaceutical business with diverse capabilities and technical expertise in production of protein therapeutics."

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