TOKYO -- Fujifilm Holdings announced Monday it will increase its stake in Toyama Chemical and make it a wholly owned subsidiary, while merging it with Fujifilm's existing RI Pharma unit to create an expanded drug business. Fujifilm is expected to spend 60 billion yen to 70 billion yen ($549 million-$640 million) on the deal.
With its mainstay office equipment business struggling, the Japanese business has been spending big through mergers and acquisitions in the health care sector, a growth industry. The new company, to be created Oct. 1 and called Fujifilm Toyama Chemical, will add to Fujifilm's current strengths in nano technologies and regenerative medicine, improving its competitiveness in the global market.
Fujifilm entered the health care sector when it bought a 66% stake in Toyama Chemical in 2008. This time, Fujifilm will acquire the remaining 34% ownership from Taisho Pharmaceutical Holdings, seeking to increase mobility in management decisions and maximize profitability at the subsidiary.
Toyama Chemical, for its part, will gain access to the expertise of the parent company. The chemical business specializes in new drug development for flu and other infectious diseases, as well as Alzheimer's. It conducts clinical trials of drugs with high potential in the U.S. and elsewhere.
The chemical unit will be able to leverage Fujifilm's nano technologies to enhance precision in applying active treatments to patients' affected areas.
Fujifilm has been on a buying spree, positioning its health care business as an area of growth. In 2017, Fujifilm bought Wako Pure Chemical Industries from Takeda Pharmaceutical for about 150 billion yen. In March, it announced it would buy two regenerative medicine companies -- Irvine Scientific Sales of the U.S., and IS Japan -- from JXTG Holdings for 85 billion yen.
Fujifilm plans to increase sales in its health care business by 30% in the fiscal year through March 2020 from about 380 billion yen in the year through March 2017. Its office equipment business, which makes up for about half of Fujifilm's group sales, has remained sluggish.