With a view to strengthening its bio-healthcare business, in July 2017 Konica Minolta announced its joint acquisition (with the Innovation Network Corporation of Japan) of U.S.-based Ambry Genetics Corporation (AG), a company with world-class genetic analysis technologies. By helping to advance primary care, we are seeking to establish new earnings drivers.
The advancement of primary care (early diagnosis) is becoming a major theme in the world of healthcare as a means to quickly identify and treat medical conditions — cancer being a key example. Konica Minolta has been working to advance primary care by combining ICT services with image diagnosis systems that use X-rays and ultrasound to make it possible for even primary care doctors and other smaller healthcare institutions to provide diagnoses with precision. Another focus of ours going forward will be precision medicine.
Precision medicine refers to using molecular analysis to analyze a patient's genes, proteins, and other physiological characteristics, group those patients with precision, and provide treatment appropriate to their characteristics. This allows for greater accuracy and efficiency in treatment, medication, and preventive care compared to traditional standardized healthcare.
Precision medicine shows promise for use against cancer and other conditions for which treatment often involves a high susceptibility to adverse genetic and constitutional effects. Anticancer drugs, despite being expensive and carrying the risk of side effects, are said to have response rates between 20% to 30%. A greater proliferation of precision medicine will allow doctors to choose more effective treatments that carry fewer side effects, helping to improve patients' quality of life. Moreover, pharmaceutical companies will also be able to more efficiently develop drugs with higher response rates, while also shortening drug development time and costs, leading to lower drug prices. In addition, early detection and more efficient treatment will prevent long recuperation times and help to cut healthcare costs across the board.
Konica Minolta has developed HSTT (high sensitive tissue testing) to visually express certain proteins, and promoted the business using this technology in the field of precision medicine. HSTT is a method that utilizes the image processing and material technologies Konica Minolta has developed in photographic film, the wellspring of the Company's business, to quantify cancer cells and other specific proteins with high precision. This makes it useful for accurately and efficiently diagnosing cancer and for effectively developing and administering therapeutic agents. Since fiscal 2016 we have sought to develop a new drug discovery support system using this technology, and have begun conducting joint research with the France-based Pasteur Institute, which has made a number of achievements in fields that include immunology.
In addition to these existing technologies, our recent acquisition of Ambry Genetics Corporation (AG) grants us access to world-class genetic analysis technologies. Konica Minolta now possesses technologies pertaining to proteins and genes, two elements indispensable to precision medicine. With these technologies, we will become an unrivaled global provider of precision medicine to both healthcare providers and pharmaceutical companies.
AG has a large, state-of-the-art laboratory and provides a wide range of genetic diagnostic services in the U.S. In addition to pursuing greater synergy with this company, Konica Minolta will be focusing on open innovation with pharmaceutical companies and research institutes around the world. Our goal is to establish bioinformatics technologies that enable the high-precision grouping of patients into subsets, provide genetic diagnostic services in Japan, Asia, and Europe, and become a global leading company in precision medicine.
Since its establishment in July 2009, the Innovation Network Corporation of Japan has been seeking to make Japanese industry more competitive by making investments in a range of fields, a key example of which is health and medical care. Now, we have embarked on the joint acquisition of Ambry Genetics Corporation (AG) together with Konica Minolta. By combining the High Sensitive Tissue Testing technologies unique to Konica Minolta with genetic diagnostic technologies developed by AG, we are within shooting distance of establishing a global leading company with state-of-the-art technical expertise. We expect that this joint acquisition will help form the infrastructure for precision medicine in Japan, establish associated businesses, and achieve its full-scale practical application. The Innovation Network Corporation of Japan will also be promoting open innovation together with Japanese companies, academia, and healthcare providers in the hope that this will help pave the way to creating new added value in the health and healthcare industries.
Mr. Mikihide Katsumata
President and COO
Innovation Network Corporation of Japan
Pursuing a five-year sales goal of ¥100 billion
in the bio-healthcare business
Senior Executive Officer
General Manager, Healthcare Business Headquarters
In the U.S., where genetic diagnostics is covered by insurance, precision medicine is widely practiced that involves analyzing patients' unique constitutions from their genes and then either treating, medicating, or providing preventive care to the patient. AG is one of the leading companies in the genetic diagnostics business in the U.S.
But in Japan, where Konica Minolta has built up a customer base in the healthcare business, genetic diagnostics has yet to enter the mainstream. Yet, precision medicine that involves the use of genetic diagnostics should soon become widespread here as a means of combating the social problem that is rising social welfare spending amid an aging population. The advanced technologies, expertise, and network that AG has developed over the years should prove to be of considerable benefit in quickly establishing genetic diagnostics businesses in Japan.
Meanwhile, the ability to now exercise technological synergy between the two companies to conduct analyses based on genes (the blueprints of cells) and proteins (the components of those cells) holds great significance in expanding our businesses around the world. Konica Minolta shares with AG a vision to play a role in advancing primary care around the world, and will strengthen our presence in this arena not just in Japan and the U.S. but on a truly global level.
The global precision medicine market is estimated to be roughly $4 billion. This is expected to grow quickly, hitting $7 billion in five years and $10 billion in ten years. By providing high added-value diagnostic services not achievable by any other company in the industry, we will construct a high profit business model that will aim for sales of ¥100 billion and a 20% operating profit ratio by fiscal 2021.
The first step is to launch a genetic diagnostics service by fiscal 2018 in Japan, where we have a network with healthcare providers. Concurrent with this will be our collaboration with Innovation Network Corporation of Japan, who will help us gain approval to offer insurance that covers genetic diagnostics, and otherwise put in place the necessary business infrastructure. This will see us quickly establish a business model in Japan, where genetic diagnostics has yet to take root. Future efforts will focus on creating a database of genetic information gleaned from performing diagnostics. The database will allow us to contribute to conducting genetic analysis based on the unique characteristics of Japanese and to developing effective and efficient therapies and medicines informed by these results. As an extension of these efforts, we will also work with genetic research organizations to play a role in advancing Japan's national genome strategy.
Future Plan for Bio-health Business
Leveraging the Resources and Technologies of Two Companies to Contribute to Precision Medicine
Aaron Elliott, Ph.D.
Chief Executive Officer
Ambry Genetics Corporation
Ambry is a molecular diagnostics company with a mission to understand disease better so cures can come faster. For nearly 20 years, our customers have come to trust our evidence-based research and quality genetic testing to help them find answers so they can more precisely guide patient care.
Our comprehensive test menu includes single-gene analysis, multigene panels, microarrays, exome sequencing and novel paired testing (germline/ somatic). We focus on hereditary testing for oncology, cardiology, women’s health, preventive care, neurology and general genetics. Our Translational Genomics Lab (ATG Lab) is a unique lab service offering novel evidence through validated functional assays to bring clarity to variants of unknown significance (VUS). We developed the ATG Lab with the goal to give clinicians a better understanding of their patient’s test results and offer clear guidance on future medical management.
Founded in 1999, Ambry began by sequencing samples from cystic fibrosis (CF) patients, using a methodology that produces more complete and accurate results. We continued to specialize in the application of new technologies by offering microarray, and in 2010, we were the first commercial lab to offer Next Generation Sequencing (NGS). The following year we became the first lab to provide CLIA-approved exome services for applications in clinical diagnostics. In 2012, we achieved another first with our hereditary cancer panel offering. Then in 2013, making both history and headlines, we took on the daunting challenge of eliminating gene patents and won in a precedent-setting case against Myriad Genetics. Through this crowdsourcing of genetic data from individuals with specific diseases, we believe we can accelerate scientific discoveries like new candidate genes and targeted treatments.
In 2016, we built a customized 65,000 square-foot highly automated CLIA/ CAP certified lab. To ensure proper tracking and testing accuracy, samples are DNA ‘fingerprinted’ before and after testing using a unique set of genetic markers. Our ‘super lab’ produces some of the fastest turn-around-times in the industry, with uncompromising accuracy and specificity.
At any one time, we have over 200 on-going research collaborations with the top clinicians and academic institutions in the world, in an effort to bring about a better understanding of genetic disease and clinical utility. Our methods of detecting deletions and duplications have been validated through extensive research, using more than 30,000 samples that we analyzed using arrayCGH and NGS. We have published the largest accuracy study to date for NGS panels and are the only lab with established and published criteria for validating genes. We continually keep our tests up to date and clinically relevant as new genes are identified.
Above all, Ambry is a place of taking risks, where passion and a patient-centered philosophy blend with sweat equity and innovative research. We are proud to be leaders of scientific innovation, not because of a profit-driving mindset, but with heart, guts and an uncompromising commitment to improve patient care.
We strongly believe we have a responsibility to evolve science and move us closer towards precision medicine, which can ultimately improve patient care and quality of life. Unlike other labs that try to blur the line between screening and clinical diagnostic testing, Ambry focuses on quality and accuracy, above all else.
Over the years, Ambry has been approached regarding an acquisition and each time we asked ourselves the same questions. Does this company truly care about finding answers? Do they have what it takes to go the extra mile to improve patient care? Do they share the same vision to progress the science in a responsible and life-giving way?
Ambry is very excited to partner with Konica Minolta because together we can accelerate the development of new diagnostic tests for many different diseases for patients throughout the world. Together we have the combined resources, technology, and scale to advance biomedical research on a global scale resulting in better tests for doctors and more precise treatments for their patients.