BUSINESS
FUJIFILM REARRANGES THE PICTURE Photo giant BETS BIG ON R&D in the face of a rapid decline in its core film business JEAN-FRANÇOIS TREMBLAY, C&EN HONG KONG
IMAGINE GENERAL MOTORS not making cars or Dow Chemical getting out of chemicals, and you get a pretty good idea of Fujifilm's predicament. The company, one of Japan's best known brands, is in the process of remaking itself as its core photographic film business goes down faster than anyone had predicted. It's not a pleasant experience. Fujifilm has laid off thousands of people and closed plants. Yet thefirmis confidently looking ahead. A few months ago, it moved its headquarters to Tokyo Midtown, a spanking new office and shopping complex that has already become one of Tokyo's trendiest landmarks. And in April 2006, the company inaugurated an R&D center staffed with about 1,000 people working to invent the new products Fujifilm will need to start selling soon. 'We're establishing our Second Foundation," says Shinpei Ikenoue, a Fujifilm senior vice president who also heads R&D and is a board director. iCWe have the people, the technology portfolio, and the financial resources to set up a new foundation." In 2000, Fujifilm generated about 50% of its profit from photographic films. Now, these films barely contribute to the bottom
line and are actually a burden, considering the disruption and expenses the company has incurred to lay off people and close facilities. The worldwide photographic film market has shrunk in size from a peak of about $17 billion in 2001 to a bare $7 billion last year. Despite a name that still suggests photography, Fujifilm now defines itself as a company devoted broadly to "improving the quality of life of people worldwide." Otherfilmfirmshave also rethought themselves. Taking a more modest approach, Kodak now says it's mainly a supplier of digital cameras, printers, and camera accessories. Unlike Fujifilm, which has managed to remain profitable, Kodak posted nearly $2 billion in total losses in the past two years. Beyond redefining its corporate mission, Fujifilm has taken drastic steps to cope with the demise of photographic film. For starters, it has laid off 5,000 people since last year. It is also overhauling its research efforts. The new R&D center, in the countryside near Mount Fuji, in the prefecture of Kanagawa, will consume as much as one-third of the company's R&D resources and will focus mostly on long-term basic
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research. Between
An operator at a Fujifilm plant in Japan helps make triacetate cellulose film to improve the viewing angles of liquid-crystal displays.
2005 and 2010, the
facility will spend about $400 million. Ikenoue says many of the projects undertaken at the new facility will not pay off forfiveto 10 years. But there are limits to how basic the research will be. 'We try to think about what technologies will be important in 10 years, what the market applications will be," Ikenoue says. "Our goal is not to win a Nobel Prize." He adds that he constantly challenges researchers to see whether they are thinking of market implications. And if a technology appears interesting but has no clear real-world applications, he tells researchers to focus their efforts in the direction that appears most promising. "I tell them not to swim west if they're going to America," he says. For quicker paybacks, Fujifilm aims to simply modify some of its existing technologies. Its study of photography, Ikenoue explains, has provided the firm with insights in numerous areas. For example, the oxidation control mechanisms that Fujifilm invented to prevent photos from deteriorating over time can be modified to
Fujifilm At A Glance Headquarters: Tokyo Sales: $23.7 billion Net income: $293 million R&D spending: $1.5 billion Capital spending: $1.4 billion Employees: 76,358
BUSINESSES (% of total sales): Imaging (22%): Color films, digital cameras, photofinishing equipment and paper, photographic chemicals, photofinishing services Information (37%): Equipment and materials for the life sciences and graphic arts industries, flat-panel display materials, recording media, optical devices, electronic and inkjet materials Document solutions (41%): Photocopiers, printers, paper, consumables Website: www.fujifilmholdings.com NOTE: Figures are for the fiscal year that ended March 31. Monetary figures are converted at the March 31 rate of $1.00 U.S. = 117.56 yen. ;
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In-house Validation: Targeted Library vs. Diverse Library MC-4 Hit statistics versus EC50 (μΜ) for 10,000 compounds GPCR Library
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E C M Range (pM)
Melanocortin-4 Cell-Based Agonist Screening Experimental Results: GPCR Results: 35 Hits showing SAR
Diverse Control: 5 weak hits
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produce creams that protect human skin. Vitamin C, which is used in many health care products, is one of the antioxidants Fujifilm has studied in depth while devel oping ways to preserve pho tos, Ikenoue says. Although Fujifilm's main source of profits in the past was photographic film, the company has long supplied a wide range of products, directly or through its sub sidiaries. For example, Fuji Xerox is one of the world's top producers of photo copiers. And Fuji makes a broad range of cameras, both digital and traditional. The company also makes medical equipment such as I kenoue endoscopes and radiogra phy systems. THE PRODUCTS of the future, Ikenoue says, will make use of multiple tech nologies. In the past, he says, one new idea might have yielded one new product. In the future, sci entists who aren't used to each other's ways will have to cooperate. Some projects may require that an organic chemist work closely with a mechanical engineer, something that is easier said than done. "Even when they are both Japanese, they still don't speak the same lan guage," he notes. One major reason Fujifilm built its new R&D center was to encourage co- Makino operation between groups. Whereas most researchers at Fujifilm have been chemists, the company recently has been hiring specialists from fields as var ied as software engineering and antibody medicine. Fujifilm, Ikenoue notes, remains one of Japan's most desirable employers among recent graduates. Galled the Fujifilm Advanced Research Laboratories, the Kanagawa center is an architecturally pleasing facility with a ma jestic outdoor staircase and a vast lobby. There is a statue of an owl on the facility's
facade and one of the Roman goddess Mi nerva just inside the entrance. Yasutomo Sasaki, operations manager for the R&D center, says Minerva was revered _ for her thirst for knowledge. ί She had a pet owl to assist - her in her discoveries. FuS j ifilm chose her as a patron £ of the center, Sasaki says, m because "we need to find £ new markets and fight our ω competitors." 8 While leading a tour of £ the lab, Sasaki repeatedly 1 points out that it was de^ signed to maximize inter actions among groups of researchers. Shaped like a cube with a hollow center, the lab has internal walls made of glass, making it easy to see what other people are doing. Sa saki says the center currently employs 800 researchers and could eventually accom modate 1,200. Most researchers moved to the site from other Fujifilm labs. The research center is home to four labs focused on life sciences research, synthetic organic chem istry, advanced marking research, and frontier core technology. The marking center seeks to develop new marking technologies such as jet inks, and the core technology center conducts basic research. When a new product begins to emerge, managers integrate the researchers into multidisciplinary teams that work together until the envisioned product's basic concept is established and its core technologies dis covered. Sasaki says these teams become cohesive units that eventually move out of the central research lab together to perform product development work at other Fujifilm R&D facilities. These facilities include the company's life sciences lab, flat-panel display materials lab, electronic materials research lab, and medical systems develop ment center. In recent years, one of Fujifilm's most
"We try to think about what technologies will be important so 10 years." WWW.CEN-ONLINE.ORG
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striking achievements has been to estab lish itself as the world's top producer of triacetate cellulose (TAC) films used in the manufacturing of polarizers for flat liquidcrystal displays. Fujifilm controls about 80% of this market, with KonicaMinolta standing in a distant second place. Joel Scheiman, a Tokyo-based analyst covering the Japanese chemical industry at the brokerage firm KBC Securities, esti mates that, in the current fiscal year, TAG film for flat displays will contribute about one-quarter of Fujifilm's earnings, even though it will account for less than 10% of sales. The business has been growing at about 35% per year. Katsumi Makino, deputy general man ager of Fujifilm's flat-panel display materi als division, says Fujifilm's expertise in TAC derives directly from its knowledge of photographicfilms.Before heading the dis play-materials business, Makino spent 25 years conducting photographicfilmR&D. Although the TACfilmsused in displays are the same basic substance found in a roll of camerafilm,there is an important differ ence. "The TACfilmsused in displays are flawless," Makino says with pride. "Even under the microscope, they are very even, and there are no foreign particles." He notes that making TACfilmof such high grade gets more difficult as the surface area of thefilmincreases. Fujifilm learned to produce higher grades of TACfilmsby working closely with local display manufacturers and polarizer makers in the early days of the flat-panel display business, when all play ers were Japanese, Makino says. Now, the know-how Fujifilm has accumulated is such that it would be very difficult for a competitor to seriously challenge the company's position. And whereas TACfilmwas at first used only as the protective layer of a polarizer, Fujifilm later came up with a "wide view" TACfilmthat increases the viewing angles of flat-panel displays. Before the invention of wide-viewfilms,the displays could not be watched from a position off to the side. A VISIT to Fujifilm's Kanagawa factory, the company's oldest, revealed surprising things about the manufacturing of wideviewfilm.One would think that human intervention would be minimized in the production of afilmthat is free from impu rities and perfectly even. But about a dozen operators roamed around the clean-room shop floor.
The production line on which thefilmis made is able to turn out aflawlessmaterial, but the tools that make up the production line do not look very different from the equipment used to make more ordinary products. Rather than inventing fancy new robots, Fujifilm appears to have made intelligent use of rather simple machinery to mass-produce an advanced material
that almost no one else is yet able to make. Scheiman, the KBC Securities analyst, believes Fujifilm maybe correct in claiming that its TACfilmknow-how is so developed that it's unlikely to face heated competi tion. But he's less confident that Fujifilm will be able to bring out other products that will enjoy similar market success. "You look at some of the things they're
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working on, and creativity is definitely not a problem at Fujifilm," he says. "The problem I have is that a lot of them sound so futuristic, or are such basic research, that in terms of getting a return, it's probably a long way off." If investors have confidence in Fujifilm, he says, it is largely because it has been aggressive in restructuring its ailing imaging business.
Roche Excellence in Chemistry 2007 Awardees Nutley, New Jersey, June 4 and 5, 2007 The "Roche Symposium on Excellence in Chemistry" is an annual forum to recognize outstanding graduate students and faculty who
PARTICIPANTS: Front row (I. to v.)
Yi Zhang Harvard University Professor Dan Kahne, Advisor
are providing significant contributions to the field of organic chemistry. We are pleased to
Sze-Sze Ng Massachusetts Institute of Technology Professor Timothy Jamison, Advisor
acknowledge our faculty awardees, our graduate awardees and their faculty advisors for their selection as 2007 recipients of the Roche Excellence in
Lopa V. Desai University of Michigan Professor Melanie Sanford, Advisor Professor Sanford
Chemistry Award.
PLENARY SPEAKERS: Professor Melanie Sanford University of Michigan Department of Chemistry Professor David W.C. MacMillan Princeton University Department of Chemistry
