[Company analysis] Nippon Kayaku Co., Ltd. (日本化薬)

「Nippon Kayaku Co., Ltd. (日本化薬)」is a general chemical company headquartered in Tokyo, manufacturing not only chemical and explosive products but also pharmaceutical products such as pharmaceuticals and agricultural chemicals. This company was established in 1916, as a first industrial explosives manufacturing company in Japan. 「Nippon Kayaku」has eight factories and four laboratories in Japan, and many subsidiaries are located around the world. The number of consolidated employees is about 5,814.

 

1. Company Profile

2. Summary and Features

3. Major Business

4. Financial Information

 

 

 

1. Company Profile

 

※Unit is JPY million, as of 2019

Company name	Nippon Kayaku Co., Ltd.
Company name (Japanese)	日本化薬
Date of establishment	Monday, June 5, 1916
Headquarters location	東京都千代田区丸の内二丁目1番1号 明治安田生命ビル（19階、20階)
Capital	14,932
Consolidated sales	172,639
Consolidated operating profit	19,939
Consolidated total assets	293,571
Consolidated capital	229,043
Capital adequacy ratio	78.0%
Consolidated number of employees	5,814

 

 

 

2. Summary and Features

 
「Nippon Kayaku」was established as Japan's first private explosives manufacturing company. Since its establishment in 1916, they have focused on explosives for construction use such as mining and social infrastructure development including dam and tunnel construction. During the World War II, this company started  producing chemical dyes and pharmaceuticals, and now they are one of the top 10 pharmaceutical companies in Japan.

As mentioned above, explosives were originally their main product, but the ratio of sales in the explosives division has fallen every year due to the growth of the pharmaceutical and agricultural chemicals businesses. The current sales composition ratio is pharmaceuticals (45%), inflators (3%), catalysts (1%), functional materials (19%), coloring materials (12%), fine chemicals (15%), and explosives (6%).

In particularly, the pharmaceutical business was incorporated into「Nippon Kayaku」in 1943. With the launch of Bleomycin, an anticancer drug launched in 1969, they have been developing mainly anticancer drugs and cancer-related drugs. It is now said that「Nippon Kayaku」has the largest lineup of anticancer drugs in Japan. Recently this company also started biosimilar bussiness including generic anticancer and intravascular therapy (IVR) fields.

One of the features of「Nippon Kayaku」is the Global Niche Strategy. This is a strategy to increase sales by using the technological capabilities of Nippon Kayaku to develop products aimed at niche markets where existing market participants have not yet been able to respond. As a result, this company nw have a stable business environment in which the overall sales are not affected by the market conditions of some of its products.

 

 

3. Major Business

 

■ Functional Chemicals Business
「Nippon Kayaku」 manufacture polarizing films for liquid displays, mainly in the information and communication field. Epson has a global market share of more than 40% for epoxy resin for semiconductor resin encapsulation. 

■ Pharmaceutical business
This company has strengths in the cancer-related field and has a world-class lineup of anticancer drugs. They are also jointly developing a biosimilar with「Celtrion」in Korea.

■ Safety Systems Business
They are conducting research and manufacturing of gas generators for airbags, which are automotive safety components. In addition, 「Nippon Kayaku」have the world's top market share for micro gas generators for seat belts.

■ Chemical business
They handle not only pesticides such as pesticides and herbicides, but also chemical dyes and explosive products.

 

 

 

4. Financial information

 

※Unit is JPY million

		2016	2017	2018
Consolidated sales		159,117	167,888	172,639
Consolidated operating profit		19,646	22,606	19,939
Consolidated total assets		272,791	287,565	293,571
Consolidated net assets		205,866	220,602	229,043
Breakdown of sales	Functional Chemicals Business	64,029	67,664	69,688
	Pharmaceutical business	47,648	47,485	46,231
	Safety Systems Business	38,782	43,937	47,218
	Others	8,657	8,800	9,500