Biopharmaceuticals Fujifilm Enters Biomanufacturing With Purchase From Merck

Just a year after creating Merck Biomanufacturing Network, Merck & Co. will sell it to Fujifilm, the Japanese photography and imaging company. Merck will become a “key customer” of Fujifilm, according to the companies.

Fujifilm, which faces a declining photography market, already sells instruments to the life sciences and medical sectors. In 2008, its parent, Fujifilm Holdings, entered the pharmaceutical business by buying a majority stake in Japan’s Toyama Chemical. Now, the deal with Merck marks its entry into biopharmaceutical contract manufacturing.

The deal is an important addition for Fujifilm because it brings “diverse capabilities and technical expertise in the production of protein therapeutics,” CEO Shigetaka Komori says. The company won’t confirm a Japanese news report that it is spending $490 million for the business, which has estimated annual sales of $160 million.

Under the agreement, Fujifilm will purchase Merck’s MSD Biologics and Diosynth Biotechnology subsidiaries, operations that form the network. MSD Biologics runs a facility in Billingham, England, that Merck bought from Avecia in early 2010. Diosynth, which Merck acquired through its 2009 purchase of Schering-Plough, has a plant in Research Triangle Park, N.C. The deal also includes manufacturing contracts, business operations, and a technical workforce.

The network produces recombinant proteins, vaccines, and monoclonal antibodies for drug industry customers. Since late last year, Merck has announced four new commercial production agreements.

“We think it makes sense to be acquiring the seeds of new growth businesses,” Credit Suisse analysts wrote about Fuji­film’s pharma-related strategy in a report to clients. Fujifilm, like the Japanese firms Sumitomo Chemical and Mitsubishi Chemical, wants to leverage chemical technologies in the pharmaceuticals area, they note.