Fujifilm – the clue is in the name, except it’s not. Fuji was a monster in the movie world, with Kodak his only rival. And then the film went bankrupt, and Kodak quickly followed suit. Meanwhile, Fuji assessed its business position and refocused primarily on the healthcare industry and document management divisions. The architect of this remarkable turnaround was Chief Executive Officer Shigetaka Komori. His retirement in March 2021 precipitated changes that could impact his Imaging Solutions division.
In the mid-2000s, Komori implemented the VISION 75 management plan, which saw the company undertake structural reform and target new areas of growth. The Millennium saw a spike in movie revenues, but quickly imploded thereafter, and Fuji knew they had to cut production, which ultimately led to the shutdown of production facilities. As part of this process, they audited their existing technology expertise to see how they might align with different industries and markets. Once these have been identified, they could concentrate their research and development in these areas. Healthcare was a prime target that integrated existing expertise in imaging and chemistry to target medical imaging and pharmaceuticals (where they were already present). The magnitude of the change was dramatic; Imaging solutions (almost entirely films) accounted for 54% of revenue in 2001, falling to 13% in 2021, while healthcare now accounts for 48%. Income is one thing; however, operating profit gives a better idea of a division’s contribution to bottom line. Healthcare comes in at 65%, while imaging is at 9.5%. It’s perhaps worth noting that, as a segment, imagery makes money; nothing like a deficit division to accelerate its closure!
Under Komori’s leadership, Fuji’s cameras have been favorably positioned within the company even though they have not generated significant revenue and revenue. New CEO Teiichi Goto took over the reins of Fuji in May, and we are already seeing signs that if he inherited the same strategy from Komori, his focus may well be different and it is possible that COVID has simply accelerated the change. which becomes apparent.
Solutions for health and materials
It should be noted that – to give it its full name – Healthcare and Materials Solutions was the only segment to experience an increase in its turnover during the previous financial year. The division represents three components of Fuji’s most successful business elements: medical diagnostics, pharmaceutical manufacturing and materials for chipmakers. That much, Bloomberg paints a grim picture for the photography industry, citing Goto:
Healthcare and semiconductor materials will be our future revenue drivers
This is not surprising, as COVID has simply accelerated the importance of drug development and manufacturing, while highlighting the fragility of the semiconductor industry, which has halted chip manufacturing. Manufacturers hired in the semiconductor industry are specialized and potentially lucrative jobs. Fuji is definitely in the right place at the right time.
Goto has worked at Fuji for 40 years and worked in medical systems before taking the top position, so he knows the company intimately. However, he sees contract manufacturing as an area where low risk growth is achievable, both in the pharmaceutical and semiconductor industries. As Reuters notes, as a contract development and manufacturing organization (CDMO), it would make pharmaceuticals for drug developers and mitigate the risk it saw when trying to certify its own Avigan for COVID-19. Expansion to the United States and Europe would be the key to this development and he recently announced an investment of 850 million dollars in its American sub-division which is the spearhead of an 11 billion dollar plan over the next 3 years.
Imaging solutions
So where is Imaging Solutions in all of this? The short answer is no. When asked in a recent Interview with Asahi.com about Imaging Solutions in particular, he replied:
Regarding the film and camera business, he said he would continue without selling the business. “It is also a succession of culture and it will continue. In ESG terms [Environmental, Social and Corporate Governance], it is S (contribution to society). “
While superficially encouraging, it highlights the strangeness of Fuji’s current business structure in which Document Solutions and Healthcare Solutions have had nearly matched revenues; Healthcare got ahead of the curve last year, and Goto’s expectation is that this is where the post-COVID growth will come from. Having healthcare and materials lumped together – with Imagery left out with just 13% of the revenue – is an odd situation and a hangover from its movie days. Imaging Solutions is now a small division within a very large company that only has three divisions in total. The fact that it has not merged with one of the other two divisions suggests that it is being deliberately kept separate.
Goto also suggests that the continued support for the Imaging Solutions division is due to being part of their legacy and contributing to society. It looks like history dies hard and Imaging Solutions just might be a labor of love for Fuji, who can trace their legacy of filmmaking to 1934 and camera making to 1948 ( in the form of Fujica Six). However, the division’s contribution to society seems spurious; However, there is no denying that it contributes to Fuji’s bottom line, and unlike Nikon and (probably) Pentax, it is not wasting any money.
This only highlights that Fuji is no longer primarily a camera company, although the cameras themselves are modestly successful and generate a profit. All of this suggests that if they pay their way, they will be welcomed into the Fuji family. The active development of the X-series and G-mount cameras is encouraging. In fact, of all the subdivisions of Imaging Solutions last year, Electronic Imaging suffered the smallest drop in revenue at 5%. Perhaps the strangest – and most important – part of Fuji’s strategy for imagery success, however, is … the movie! As I said before, Fuji sold 10 million Instax cameras in 2019, more than the entire digital camera industry sold in 2020! More importantly, Instax camera and film sales accounted for 9% of that 13% of Fuji’s revenue, with just 3% of its Electronic Imaging subdivision. Does digital really pay off? Who knows, but as long as Fuji is structured this way – and they make money – it seems to work as usual.
Main image used under Creative Commons courtesy of Laura Ockel via Unsplash. Body image used under Creative Commons and courtesy of Mjdestrator of worlds via Wikipedia.
