(EK) Fujifilm Holdings Corporation-Mitsubishi Corporation Enter Contract

Fujifilm Holdings Corporation (FUJIY.PK) and Mitsubishi Corporation (MSBHY.PK) entered into a partnership in the contract manufacturing business of biopharmaceuticals. Under this venture, Fujifilm agreed to transfer the ownership of 20% equity interests, in its pharma subsidiaries to the new partner, Mitsubishi Corporation.

Fujifilm’s wholly-owned, biopharmaceutical contract manufacturing subsidiaries include FUJIFILM Diosynth Biotechnologies U.S.A. Inc. (FDBUS) and FUJIFILM Diosynth Biotechnologies UK Limited (FDBUK).

FDBUS and FDBUK are the leading contract manufacturers of biopharmaceuticals established by Fujifilm on April 1, 2011 following the acquisition from Merck & Co. Inc. The subsidiaries have been operating in the field of advanced biotechnology and utilize microbial and mammalian cell culture to efficiently produce proteins, effective for cancer and rheumatoid arthritis treatments.

The business operations of the subsidiaries were developed initially through Fujifilm’s photographic film business, supported by the company’s knowledge in high-molecular collagen. Till date, Fujifilm supervised the business operations of its pharma subsidiaries, with expertise in production and quality management team.

Mitsubishi Corporation coupled with the joint effort of Fujifilm has already geared itself for managing the businesses of FDBUS and FDBUK. The business partnership further plans to reinforce the ties between the two companies and leverage the benefits of high efficiency pharmaceuticals market, thereby promoting expansion of the biopharmaceutical contract manufacturing business.

With this partnership, Mitsubishi Corporation plans to make use of its global sales network and marketing capability, thereby contributing to strengthen its biopharmaceuticals business while increasing sales capacity and attracting new customers. The contract manufacturing of biopharmaceutical is also expected to grow at a rate of over 15% per annum.

Fujifilm Holdings Corporation is a leading global producer of photographic imaging products. The company develops, manufactures and markets traditional, digital imaging products and provides solutions for consumers, professionals, and healthcare providers.  The company’s various structural reforms, partnerships and collaboration is anticipated to position it as a tough contender for its peers like Eastman Kodak Company (EK), Xerox Corporation (XRX), and Canon Inc (CAJ).

We currently maintain an Underperform recommendation on the stock. FUJIY has a Zacks # 4 Rank, which translates into a short-term Sell rating (1-3 months).

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