Nissho Iwai Corporation/Nissho Iwai American Corporation Tie Up with Fujisawa Pharmaceutical Co.,Ltd. and Invest Toward Medical Supply Research Venture,
a First Ever Full-Scale Approach by a Trading Company and Pharmaceutical Company.
Jul. 31, 2001
TOKYO (July 31, 2001)----Nissho Iwai Corporation and Nissho Iwai American Corporation are to invest US$1.25 million into FITE-II (Fujisawa Investments for Entrepreneurship, L.P.II), a U.S. investment company for medical supply research venture industry, and begin its full-scale launch into the bio business in Europe and United States through investment towards a research venture that is in its start-up stage.
Nissho Iwai Group and Orix Capital Corporation are investing 49.96% respectively into FITE-II, and the remaining 0.08% is invested by "FRIA (Fujisawa Research Institute of America, Inc.)", a 100% subsidiary of Fujisawa Pharmaceutical Co.,Ltd.
For Nissho Iwai Group, which has gained the state of the art technology and leading edge information input tool, this investment has three significances.
1. Creating the infrastructure for access to the bio market
Although it is essential for Nissho Iwai Group to accumulate the know-how, and cultivate human resources through finding ideas with partners that has the advanced specificity for opening up future business chance in the bio market, where rapid progress is expected in the future, a precise and timely action, information collection as well as cultivation of human resources through the assessment of Fujisawa Pharmaceutical Group become possible.
Nissho Iwai Group will be able to acquire the know-how such as analysis result, valuation method and follow-up etc of the Fujisawa Pharmaceutical Group in connection to its investment through this fund, which would become the steppingstone for Nissho Iwai Group's participation into the bio business.
2. Capital gain by IPO of the group of found industries
At Nissho Iwai Group, leading the found research venture into immediate IPO through FITE-‡U is kept in perspective. In addition, by including the investments of start-up ventures found by the Nissho Iwai Group independently, and open companies into the portfolio, further profits can be expected. The profitability of the bio investment cannot be generalized as it differs greatly by the subject field, but the stock prices after IPO are expected to be on the average from two to five times more compared to their purchased price. Moreover, the carry-over factor of up to IPO is generally high, and since the period is short, steady and certain returns can be expected, and the Nissho Iwai Group is aiming for capital gain of over 30% IRR.
3. Pioneering new related business chance
What realized biotechnology was the development of the leading-edge equipment from computers and analytical instrument down. With this fund, a ripple effect in business such as IT field etc can be expected, such as participation in the bio informatics industry, and marketing of products and management of raw materials related to medical care/pharmaceuticals through investment in the research venture.
The fund is managed mainly by FRIA and the Fujisawa Pharmaceutical Group, and they will carry out the search for companies to invest and assessments such as technological assessment etc. Moreover, the management period of the fund is ten years, but over ten to 15 investments at two to three years after set-up are targeted as actual investments.
The biotechnology industry markets are estimated at about \1.6 trillion a year (1998) in the United States, \1.2 trillion a year (1998) in Japan, and \800 billion a year (1995) in Europe, but as the Japanese government has set the target to expand the market size to \25 trillion by the year 2010, it is a field where rapid expansion is anticipated in a global scale while reforming various industries such as medical care, medicine, agricultural chemical, food, chemical products, environment and IT.
The analysis and interpretation of gene information have become possible in recent years, and in addition to the inflated expectation for the birth of new drugs, a full scale undertaking in the biotechnology industry for the future, such as commercialization of new food and new agricultural produce using genetic modification, and the rapid growth of leading-edge IT which enabled technological innovation and its peripherals markets, have become the prime task for Nissho Iwai Group. The United States is leading the world especially in the fields of medical care and medicine, and each company is scrambling to invest in ventures for launching into the bio industry business in the United States. The specificity in this field is extremely high, and a tie-up with medical company, hospital or scientific institutions with specialists becomes essential.
The Fujisawa Pharmaceutical Group is the most active among Japanese pharmaceutical companies in the search for bio related venture capital in the US, and is focusing on the fields of inflammation, immunity, infection, cerebrospinal disorder, central nerve system illness, and metabolic disorder. With the joint investment of 99.9% Fujisawa Pharmaceutical Co.,Ltd., and 0.1% FRIA , the 100% subsidiary of the said company, which specializes in carrying out research and development in the United States, the "FITE (Fujisawa Investment for Entrepreneurship, L.P.)" with a fund total of US$5 million was established in 1999, and it has already achieved the total investment of US$2.5 million into six research ventures in their start-up stage. The FITE-‡U is a matching fund with FITE's balanceiUS$2.5 millionj, and business investment will be carried out at FITE:FITE-II=1:1.
Fujisawa Investment for Entrepreneurship II, LP (FITE-II)
Evanston, Illinois, the United States
April 9, 2001
Investor/controlling share (investments):
Nissho Iwai Corporation 24.98% (US$625,000)
Nissho Iwai American Corporation 24.98%(US$625,000)
Orix Capital Corporation 49.96%(US$1,250,000)
FRIA 0.08% (US$1,250)
Nature of Business:
Investment towards medical supply research venture industry.