Canon to branch out into biotech business

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Japanese office equipment and camera maker Canon plans to branch out into biotechnology by commercialising DNA chips for use in medical diagnosis, aiming to build a new pillar for future growth.

The move comes on the heels of plans by Canon, the world`s largest office machine maker, to enter the flat-television market by launching advanced flat panel displays as part of efforts to widen its business portfolio.

Canon will seek approval at its shareholders meeting today to include "production and sales of pharmaceutical products" in its operational objectives, getting ready for the commercialisation of biotechnology products, a spokesman said.

"We have conducted biotechnology research in the past several years using our core technology stored up from office equipment development, and we`ve made some progress," the spokesman said.

"Like SED TVs, which we hope will become a new pillar to boost our earnings growth, biotechnology could be another pillar in the future," he said, referring to televisions that use surface conduction electron emitter display (SED) panels.

SED panels are seen as promising next-generation displays as they are thinner than existing flat panels and use less energy.

However, Canon has not yet decided on any specific plan on when and how to commercialise biotechnology products, he said.

As part of its biotechnology research, Canon is developing systems for the mass production of DNA chips that use the bubble jet technology employed in its printers and are aimed at helping with the diagnosis of cancer and infectious diseases.

The new method would allow DNA chips for diagnosing cancer and diabetes to be mass-produced more cheaply than with existing technology.

Growing market

The Nikkei Business magazine reported this year that Canon planned to spend up to 10 billion yen on mass production of DNA chips possibly in 2005 and that it wanted to post 100 billion yen of biotechnology-related sales in 2010.

However, the Canon spokesman reiterated that the company had not mapped out any investment plans or financial goals.

Existing DNA chips are generally expensive and their uses largely limited to biological and chemical basic research using genetic analysis.

However, demand is likely to grow as medical institutions and drug makers seek to identify genes associated with certain diseases and funnel more resources to develop genome-based drugs.

The DNA chip market, led by US firm Affymetrix, is expected to double to 20 billion yen in Japan by 2010 and could grow globally to several hundreds of billions of yen, the Nikkei magazine said.

"Affymetrix now dominates the DNA chip market for use in basic genetic research, but others, including Japan`s Toshiba and Toppan Printing, are trying to develop other types of DNA chips for use in drug development," said Minoru Tomita, senior analyst at Mitsubishi Research Institute.

"It is still too early to tell if Canon`s chip will gain the upper hand over its opponents` products as chips involve not only manufacturing technology but also many other aspects including patent and gene content," he said.

In addition to hi-tech makers, food and beverage producers such as Kirin Brewery and Takara Holdings are also reinforcing their biotechnology business as a key growth segment.

In an effort to create a new growth area, Canon said last year that it and electronics maker Toshiba would invest 200 billion yen in a joint venture to manufacture advanced flat panel displays.

The two companies have carried out research since 1999 on SED panels.

Shares in Canon closed up 0.36% at 5 630 yen despite a 1.63% drop in the benchmark Nikkei share average.

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