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Fujifilm has a lot riding on a flu drug it says is effective against Ebola

TOKYO -- A Fujifilm Holdings influenza drug appears to be effective in fighting Ebola, the virus that has been wreaking havoc in West Africa and freaking out people all over the world.

     The Japanese company best known for its photographic film diversified into the medical business six years ago.

     Toyama Chemical, now a Fujifilm group company, is rushing to deliver additional shipments of Avigan, also known as favipiravir. It has a stockpile of the drug for 20,000 Ebola patients and aims to produce an amount sufficient for 300,000 people within this month.

     Avigan has yet to be approved as an Ebola treatment. But of the four patients who have taken the drug in Europe, a French nurse, the first patient to be treated with Avigan, was discharged from the hospital last month, and a Spanish woman is now recuperating.

     The government of Guinea, one of the worst-hit West African nations, is due to begin clinical trials of the drug on patients this month. But Fujifilm is boosting production of the drug before the trials are finished.

     "Ours is the only drug that can deal with the emergency," Shigetaka Komori, Fujifilm's chairman and CEO said.

Narrowly focused efforts

Digital cameras began disrupting the photographic film business, and Fujifilm realized it had to diversify into new fields. It set its sights on the drug business even though it knew it could not compete with major pharmaceuticals by copying their business models. Fujifilm decided to focus on three illnesses -- cancer, dementia and infectious diseases -- and began searching for novel treatments.

     When Fujfilm was considering the Toyama Chemical acquisitiion, Director Yuzo Toda became interested in how the Toyama Prefecture-based company's T-705 (now Avigan) could block viruses from proliferating.

     While Tamiflu and other drugs trap viruses inside cells to prevent proliferation, Avigan makes it impossible for viruses to replicate their genes inside cells. If new types of influenza that are impervious to the effects of existing drugs emerge, Avigan may prove effective. In theory, the drug should be capable of fighting Ebola.

     The workings of an Alzheimer drug Toyama was testing were also different from those of existing drugs as it prevented nerve cells from dying.

     Another thing that impressed Fujifilm executives was the fact that Toyama was commercializing about 43% of the drugs it tested, or more than triple the industry average.

     Toda urged Komori to acquire Toyama and the deal was made.

     Fujifilm persuaded Taisho Pharmaceutical, a Toyama investor, to let it take over Toyama, which was running in the red, for a little more than 130 billion yen in 2008.

     After the acquisition, Fujifilm offered Toyama its technical help. Komori said Fujifilm helped Toyama improve production efficiency by 30%. Fujifilm extended further financial assistance and sent in its personnel to research-oriented Toyama. The speed at which Toyama developed its drugs picked up as a result.

Nurturing earnings growth

Besides Toyama, Fujifilm purchased drug companies specializing in radioactive and biological medicines. It has also bought into Japan Tissue Engineering, the only company in Japan whose regenerative medicine products have won official approval. Fujifilm will make the company a subsidiary before the end of the year.

     As the company pioneers new fields in medicine, it is getting requests to do joint research from companies all over the world, according to Director Takatoshi Ishikawa.

     The Fujifilm group has begun research on an Alzheimer's treatment with Kyoto University's Center for iPS Cell Research and Application, led by Nobel laureate Shinya Yamanaka.

     Avigan captured international attention after a German researcher announced its effectiveness against Ebola in animals.

     Still, Fujifilm's drug business is in its infancy. Although it has begun turning a profit, Toyama's sales are only 35 billion yen ($298 million). The sales of Fujifilm's entire healthcare business, including medical equipment, are at 380 billion yen -- a small fraction of major drugmaker Takeda Pharmaceutical's 1.7 trillion yen in annual sales.

     "We want to boost the revenue of our healthcare business to 1 trillion yen by 2018," Komori said.

     Fujifilm stock closed Nov. 13 at 4,019.5 yen, up 37% from early August, before Avigan began making headlines in relation to Ebola. It will not be until the Avigan hoopla subsides that the stock market will be able to dispassionately assess the potential of Fujifilm's drug business. Meanwhile, the company needs to develop anticancer agents and other drugs to turn its healthcare business into a viable profit machine.

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