Ajinomoto Co., Inc. (2802) Earnings Call Transcript & Summary

Good morning, everyone. Thank you very much for taking your precious time to attend Ajinomoto's business briefing session despite your busy schedule. My name is Kaji from the IR Group. I'll be serving at as your MC. Let me first introduce the participants from Ajinomoto. We have a representative Executive Officer and President, Mr. Fujie.

This is Fujie. Thank you very much, indeed, from early morning.

Representative Executive Officer and Executive Vice President, Shiragami.

This is Shiragami.

Executive Officer and Vice President, General Manager of AminoScience Division, Mr. Maeda.

This is Maeda.

Executive Officer, Vice President in charge of Finance, Investor Relations, Mizutani.

This is Mizutani here. Nice to meet you.

Corporate Executive, President and Representative -- President and Represent Director of Ajinomoto Fine Techno Company. My name is Mr. Mago.

This is Mago here.

Specialty Chemicals department, Oshimura.

This is Oshimura here. Nice to meet you.

Executive Officer, General Manager of Amino Acid Department, Michael Lish.

This is Mike. Thank you.

The Corporate Fellow of R&D Department, Mr. Konishi.

This is Konishi here.

Kawasaki plant quality assurance and quality control department, Research Institute for Bioscience Products and Fine Chemicals, Aritomi.

This is Aritomi here.

And the Head of Bio-Pharma Service Department, Mr. Otake. And the Bio-Pharma Service department, Mr. Okuzumi.

And this is Okuzumi.

So we have 12 members from the company here. And we expect to finish this session in about 2 hours today. And the materials to be used for today's meeting will be posted in the IR webpage of Ajinomoto Corporation. So please refer to them as necessary. Please be advised that today's session will be recorded all the way to the Q&A session and will be posted on the IR side of the company later on. Please be advised of that in advance. So without further ado, we would like to begin the briefing. Mr. Fujie, the floor is yours.

Good morning, ladies and gentlemen. This is Fujie speaking. Thank you very much for taking time out of your busy schedule to attend our business briefing. Today, we are hosting this business briefing where we will explain business activities that are currently underway, both at present and for the future. And at today's business briefing, there are mainly four items that we'd like to convey. First, after announcing the 2030 road map under the midterm ASV initiative, after announcing this, the entire team is working together to achieve ASV indicators. Number two, by utilizing the -- our proprietary AminoScience, we've identified four BMX areas where we'd like to drive our growth through BMX. And we'd like to further accelerate the growth of existing businesses. And by integrating BMX with the existing business, we'd like to create new values in order to attain an exponential growth. #3, in healthcare. In core businesses, we'd like to further realize our growth. In addition, we'd like to concentrate our management resources on core strategic businesses so that we can capture cutting edge innovation and modality to keep evolving ourselves. In ICT, we'd like to further evolve ourselves into growing areas by utilizing our value chain network. Furthermore, we'll accelerate high-speed development and tap into new generation, new areas and new business material development. First of all, in terms of evolving our 2030 vision, which is already announced, our purpose has been renewed. And the new vision reached by AminoScience will contribute to the well-being of people and society as well as the earth. And the next page describes the management transformation under -- or towards the midterm ASV initiatives. While pursuing business forecast as our commitment, we will also keep challenging -- take on new challenges, such as ASV indicators for 2030 and then back track from there to take flexible measures in order to improve our execution. That is the management transformation that is underway. Number three, on the next page. This is our basic policy pertaining to growth strategy. As you can see on this slide, AminoScience as well as growth potential of the market and social values -- high social value areas, those will be the focus areas for us. And amongst this, we identified four BMX areas, namely healthcare, food and wellness as well as ICT and green. That is the center of our activities. Next slide, please. Regarding 2021, Foods generated about 30% of revenue or profits and the remaining was generated by AminoScience, but we'd like to grow both food and AminoScience business further, so that it can top more than 10% in CAGR for AminoScience. And by 2030, we'd like to reach the 50-50 breakdown between food and AminoScience. Now that way, Ajinomoto can become highly unique, not just food company, but not just AminoScience company. That is our vision. Today, we'll be introducing the specifics for growth strategy from each business. And if you have any questions, we'd like to keep exchanging our views so that we can further speed up and scale up our BMX areas and growth strategy. So thank you very much for all your contribution.

Fujie-san, thank you very much. And now we'd like to turn to baton to Shiragami-san.

Good morning. This is Shiragami. So today is a session for AminoScience business, ICT and healthcare. So I will first talk about the key to our growth in this domain, i.e. AminoScience and then share with you our views concerning the sustainable level of growth, leveraging AminoScience. As we presented in the road map presentation in February, AminoScience is a collective term for various materials, functions and technologies as well as services derived from the research and implementation processes with a rigorous focus on the function of amino acids. It also refers to Ajinomoto Group's unique scientific approach and strength to connect these to resolving social issues and contributing to well-being. So as stated in the corporate purpose, we will aim to contribute to the well-being of people, society and earth through AminoScience. Next page, please. The base of AminoScience, amino acid, has four key functions. In food business, flavoring function is very important as it makes food delicious. The nutrition function is self-explanatory. It delivers nutrition in one's body. In addition to these two, there is also this physiological function that helps maintain and recover one's mental and physical health and the reactivity function that allows conversion from amino acid into various useful substances. These four functions and their combinations are the sources of producing various useful effects for living beings. AminoScience created through amino acids are the sources of our competitive value creation. By brushing up and evolving these diverse and unique AminoScience, we have rolled out various businesses over the last century, such as food, health and functional materials that could lead to solving wide-ranging social issues. And we are committed to further improving and evolving AminoScience going forward to drive innovation and thereby creating new values and solving social issues in these four domains. In Healthcare, we will contribute to advancing treatment and design -- disease as well as extending healthy life expectancies. In food and wellness, we will contribute to people's well-being and self-realization through food. In the area of ICT, we will help address semiconductors and realize the smart society. And in the area of green, we'll strive to create a new standard for food and for the future generation to achieve symbiosis with the earth and reduce environmental impact. Through value creation in all four areas, we will lead such endeavors to the realization of our corporate purpose, i.e., making contribution to the well-being of human beings, society and our planet. From now, let me show you a 1-minute video here. which is entitled to working to a future of well-being. The video depicts how we plan to take on new challenges for the future in four areas, leveraging AminoScience, the source of Ajinomoto's strength. [Presentation]

Other than this video, we plan to create a series of video content for all our employees so they can learn the source of our strength in AminoScience and our growth strategy in the four areas. Through dialogue with the employees, we plan to have each employee think and take on actions to realize AminoScience and ASV as well as the corporate purpose. Now for today, out of these four areas, in relation to ICT and Healthcare domains, we aim to achieve a significant increase in the business profit towards 2030 from the AminoScience-related businesses in the two areas. In AminoScience business, over the last 10 years, we have addressed the transition and concentration on high value-added businesses and successfully grew our business profit at a CAGR of approximately 18%. Going forward, we will continue to evolve our business model and address to speed up and scale up our growth. Our ICT business continues to grow and evolve based on a certain format of business model transformation. And the three key points are listed up here. Despite the case of ABF, we first need to foresee the innovations that take place in the semiconductor market, and through co-creation with ecosystem partners, we developed ABF that has a high entry barrier and realized evolution of semiconductors. This pattern of success will be repeated in all four areas, including food and well-being and green. And through the business development in these areas, there is a time lag between R&D and business growth. ABF, which currently contributes to our profits was initially developed 5 to 10 years ago and was adopted by customers. Through mid and long-term sustainable growth, through market modality and innovation, it is essential for us to make R&D a headline and to carry out appropriate inorganic investment to accelerate business development to attain first-mover advantage in the market. To realize the growth strategies in four BMX areas, we'd like to directly access to the global markets, customers and innovations in order to early detect changing markets. To do this, we will set up the innovation strategy team charged with speedy explanation and decision-making on inorganic investments, ecosystem creation and partnering opportunities. Doing so will drive growth in four BMX areas. We patent innovation outcomes to form IP or intellectual property to establish high entry barriers. According to each business characteristics, we'll access patent values to promote IP technologies which are then reflected in R&D business and regional strategies. And by visualizing this IP value, R&D strategies as well as other portfolio strategies are formulated to promote through the promotion of IP. When we announced the 2030 road map in February in four BMX areas, we presented the overview, linking the existing businesses and BMX to drive the growth strategy, spanning multiple domains. Today, we'd like to focus on the two areas on the left hand side. I am going to present the overall growth strategy, which will be followed by presentations on concrete business strategies presented by a person in charge. ABF, a mainstay product in ICT was engendered by AminoScience, of course. The product itself, MSG and nucleotide-based seasonings, are produced from sugarcane as a starting material utilizing our biotechnology or bio-capability. Prior to the current method though, they were produced from starch and soybeans as the starting materials. The ingredients, byproducts and intermediates were then utilized for a sustainable business to buttress our production. This led to the initiation of chemical business, including resin additives and eventually, ABF was created by the future -- by the further evolution of AminoScience such as compounding technology. With the advancement of semiconductors, ABF now became a de facto standard for the semiconductor package and serves as an essential part for high-end applications, including PCs and servers and for HPC. The usage volume is on the rise. Going forward, for AI semiconductors, which are expected to grow further, such as generative AI and GPU, ABF is in high demand and is expected to accelerate its growth. Furthermore, in the areas of photoelectric fusion, which is underway as a world cutting-edge technology for future innovation, we'd like to evolve our technology accumulated through ABF so that new materials can be developed into -- in order to contribute to a sustainable growth in ICT. The semiconductor industry is evolving at a great speed. There exists a semiconductor development value chain, which addresses the rapid advancement of precise and high-performance semiconductors. Amidst the value chain, ABF plays a key role in ensuring semiconductor performance, and it serves as a central role in its advancement. That ABF has established its unique and unparalleled position. A significant key element in ICT growth strategy is to utilize its advantageous position in order to enhance co-creating ecosystem together with semiconductor players to keep contributing to semiconductor advancement. Next, in Healthcare, let me outline the business strategy here. On the X-axis, we anticipate healthcare evolution in the market to be anticipated. And then on Y-axis, we show the business model that we are furthering. And through this combination or through these metrics, we advance this business. Based on the Healthcare core -- combined with AminoScience evolution, with amino acids for pharmaceutical companies at this core, we started out with medicine intermediates, including amino acid derivatives, utilizing the reactivity and physiological functions of amino acids and are now expanding our Bio-Pharma business in the biologics area. The other business expansion is from nonserum cell culture media, utilizing the nutrition function and physiological functions of amino acids into cell culture media for biological biopharmaceuticals and regenerative medicine. As a target for next-generation business, we paved the way for cell therapy and gene therapy, both of which are expected to grow significantly. Doing so will enable our business evolution going forward. Under the growth strategy in Healthcare, in addition to the existing businesses, in the BMX areas, which have immense market size and growth potential, we'd like to significantly grow nucleotide cell culture media as well as medical foods. Furthermore, we'd like to prepare for next-generation businesses, which have high market growth rates in order to accelerate and expand our growth. From here on, we'd like to invite a representative for each business to introduce specific growth strategy. In these areas, we have a deep bench of talent who have profound experience of research and production and are well versed in AminoScience. So I'd like to give the floor to those representatives.

Thank you very much Shiragami-san. Next Mago-san, please begin.

Hello. This is Mago from Ajinomoto Fine-Techno. I would like to talk about our growth strategies centered on ABF in relation to the ICT domain. So please look forward to this. Now next page, please. These are the four topics that I plan to cover today. First, I will give an introduction to our existing ABF and the overall functional materials business. Then I will talk about the semiconductor market, particularly the growth prospects for the semiconductor devices that use ABF. After that, I will explain our competitive advantage in the ICT space and then finally, share with you our medium- to long-term business strategies. First of all, let me give you an explanation on our functional materials product lineup, including ABF and their key applications. After the market launch in 1999, we have continuously expanded our Functional Materials business, primarily through ABF. Leveraging the compounding technology and molecule design that shapes ABF, we created a wide array of products in our lineup and they are used as key materials for personal computers, servers, automobiles, information network infrastructure and mobile devices and other computing platforms, making great contributions to people's well-being all over the world. The slide here briefly explains how ABF is used. Most of the computers out there in the market adopts ABF of Ajinomoto. In a personal computer, there is a substrate called motherboard that carries many different electronic components. One such component is a CPU, which is the most important component for personal computer. The CPU consists of the IC chip and the package substrate carrying the chip. And ABF is used inside the package substrate. The package substrate sits between the IC chip and the motherboard and precisely sends and receives electric signals, which enable stable operations of the personal computer. Here's a cross-section diagram of the package substrate, and the ABF is used as an insulator between layers. ABF is very thin with a thickness of only 20 to 30 microns. Thus, it is a very high precision insulation material. The average thickness of human hair is approximately 80 microns in the case of Japanese. So that gives an indication how ABF is thin. We launched ABF back in 1999. And over the last 20 years, ABF has been adopted as a de facto standard of package substrate insulation material by many semiconductor manufacturers. Here, I would like to talk about our new markets and the new application strategy. The slide here presents our growth metrics, posted from the market and product accesses. As for the existing products and market on the bottom left, we will defend our PC and gaming console business, which are the main application of ABF today. In the market for existing products on the upper left, we will aim to grow the use of ABF in high-performance computing, i.e., the servers, data centers, communication network infrastructure and AI. I will explain in more detail in the slides after this, but we believe the high-performance computing applications will become increasingly important as we cannot expect a significant growth in the volume of PCs going forward. Next, in the bottom right, the existing market for new products. We will propose magnetic materials generated as a byproduct of applying ABF. Nowadays, the rapid increase in power consumption in servers and data centers is becoming a social issue. And we believe this magnetic material offers a potential solution to this problem. And lastly, for the upper right, the new products for new markets, we plan to take on new challenges, leveraging ABF such as ABF-RCC and semiconductor sealing materials. The production site of ABF are shown here. The manufacturing process of ABF can divide it into two stages. One is the production process of liquid resin compositions called varnish and the other is the coating process, spreading out the liquid resin compositions into film coating. We have two sites for varnish manufacturing, Kawaski and Gunma and the film coating is done in three locations in Gunma and Niigata. The Gunma plant specializes in ABF mass production. This plant is co-located with our varnish plant, our outsource partners' coating plant and a warehouse for frozen storage of the finished ABF product, which allows for an efficient one-stop production. Also, to meet the growing demand from our customers in Taiwan in recent years, we secured a frozen storage in Kaohsiung, Taiwan, to realize timely and stable delivery and to ensure business continuity, BCP. Going forward, to respond to the demand growth of ABF 2030, as we announced earlier, we have a plan to further build up the production capacity of the Gunma plant starting this year. The new varnish facility will introduce automation systems in part of its processes to ensure high efficiency by design and also to be environmental cautious. We plan to invest some JPY 25 billion for this purpose. From here, I would like to talk about our growth projections in the market. As I explained on Page 5, the future growth of semiconductor package substrate is expected to be driven by high-performance computing such as servers, data centers, communication network infrastructure and AI. According to our survey, the total shipment of HPC devices is expected to quadrupole by 2030 compared to the level in 2023. We, therefore, expect the shipment of ABF will also increase in line with this trend. I mentioned in the previous slide that ABF for high-performance computing will increase significantly in the future, and this slide shows the background behind that trend. The semiconductor package substrate used for PC CPUs generally has a size of 3 to 4 centimeter square. Usually, 6 layers of ABF are used in the substrates, 3 above and 3 below. Meanwhile, the semiconductor package substrates for HPCs are becoming larger in size, usually has a size of more than 5 square centimeters or even 7 centimeters square in some cases. And the number may be greater for such substrates total 18 layers, 9 above and 9 below, meaning that the amount of ABF used is 10x higher compared to ordinary PCs. For these reasons, we believe the demand for ABF will be driven by high performance computing in the years ahead. From here on, I'd like to mention our competitive advantages in ICT. As was previously mentioned in the business briefings before, Ajinomoto conducts an integrated development activities across the entire value chain under the banner of high-speed development system. As the slide indicates, this encompasses not only direct ABF customers but also end users, manufacturers involved in the ABF-based substrate manufacturing processes, upstream ingredient and material manufacturers as well. Through external collaboration with a consortium from time to time, we detect customer and societal needs ahead of others. Furthermore, we will provide solutions in a timely manner. And also we utilize our own MI, materials informatics to accelerate the speed of development. This slide simplifies the high-speed development system that integrates the value chain shown in the previous slide. The left-hand side is the upstream of the value chain, while the right-hand side is the downstream. ABF was developed in 1997, but until then, liquid materials were used. In other words, ABF was the world's first interlayer insulating material in film form. This led to the development of the world's first manufacturing process for semiconductor package substrate using ABF. At that time, we collaborated not only with substrate manufacturers, but also with manufacturers of equipment and chemicals used in the manufacturing processes, such as plating to establish a substrate manufacturing process that truly integrates the entire value chain. This led to the creation of substrate development ecosystem. Likewise, we communicated with end user semiconductor manufacturers to share their next-generation needs and issues. This is leading to the creation of an even larger ecosystem to realize their needs. Meanwhile, we also deepened cooperations with upstream ABF raw material and material manufacturers to develop ABF that meets the needs of substrate and semiconductor manufacturers. Through the collaboration of these individual ecosystems, ABF has become the de facto standard for semiconductor package substrates and constitutes a major element of our competitive advantage. Furthermore, by leaving -- leveraging ABF's core technology and co-creation ecosystems, we are developing a variety of materials and applications. The following -- or those listed on the slide are just a few examples. By combining ABF technology with magnetic fillers or powders, we have developed magnetic materials which contribute to energy savings in semiconductor devices for HPCs through inductor products. Also the middle on the slide shows ABF-RCC. This is a combination of ABF or copy foil -- copper foil, which contribute to thinner and smaller motherboards for mobile devices. We are also developing sealing materials for IC chips. In many cases, IC chips mounted on ABF substrates are also encapsulated or sealed, and we can propose materials that are compatible with ABF. We are able to patent many of our technologies, providing a high [indiscernible] in terms of intellectual property. From here on, let me present our business strategy in the mid- to long-term perspective. First, the enhancement of R&D structure. We'd like to drive this through co-creation with customers. As part of this initiative, we constructed a new research ward last summer whereby latest substrate manufacturing equipment was installed. This is based in Kawaski plant. And this does not just enable material development but utilizing this facility, this enables us to codevelop next-generation technologies, together with our customers at this new building. On Page 4, I described value chain co-creation ecosystem to be enhanced. In mid- to-long-term, we'd like to realize stable growth for our future. And in 1999, when ABF was first adopted to semiconductor package substrate, since then, it has evolved a long way to become halogen-free and miniaturization of PC, some properties were enhanced and also the -- more advances were made for ABF as well. As a result, high-end semiconductors regard ABF as an essential part. We'd like to maintain this momentum and further contribute to the future evolution of ICT modality going forward. As you're aware, the semiconductor post processes are mainly handled in Asia. Most of the substrate manufacturers who purchase ABF located in East and Southeast Asia. To better serve these customers, we set up overseas offices and will ensure we fully support them to assess their business expansion. Meanwhile, to capture the evolving ICT modality beyond 2030, we will set up innovation strategy team in North America in ICT. In order to establish a closer relationship in California and San Jose, Ajinomoto Fine-Techno U.S. was set up, and we are connected with our end users to provide technical support and meticulous support to those local customers. Beyond 2030, to capture the evolving ICT modality, at this Ajinomoto Fine-Techno U.S.A., we will set up an innovation strategy team in North America by -- for future collaboration opportunities with academia and start-up firms. We'd like to detect their needs and challenges at an early phase. This slide shows an example of next-generation business domain and application. Based on AminoScience, we will provide key materials through our ABF-based development co-creation ecosystem, including newer computing as well as photo computing and quantum computing. Those were socially implemented. And also the next-generation communication networks, smart city, self-driving car and decarbonization, we'd like to make contributions in all these front areas. This is my last slide. In the ICT, we will expand and grow our business centered around ABF in ICT in such a way that social values and economic values can be cocreated for us to be able to contribute to people's well-being. Thank you very much, Mago-san.

Thank you, Mago-san. Now we move on to the presentation by Konishi-san.

I am Konishi from the R&D Planning Department. I would like to talk about the growth strategy for the biopharmaceutical and regenerative medicine culture media businesses. So let me give you introduction to this topic. So this is today's agenda. I would like to cover these topics. First of all, I would like to explain what cell culture media is because I think you have a hard time understanding what this means. And secondly, I would like to talk about the biopharmaceutical culture medium called CELLiST and then explain our regenerative medicine culture medium called StemFit. This is -- has -- carries separate brand names. So I would like to explain this product as well and talk about the future of our culture medium business going forward. Now what is culture media? As you can imagine, human beings can grow only from the intake of nutrition from food. And they grow from a child to an adult. Likewise, cultured cells also can grow by taking in nutrition from this kind of dish-like container, taking nutrition from liquid containing various nutrients called cell culture media. Ajinomoto sells biopharmaceutical culture medium and regenerative medicine culture medium. On the bottom left, the biopharmaceuticals are produced by using cultured cells to create antibodies and other recombinant protein and then refining them into formulations. This is not part of this -- our business, but this process of manufacturing, in many cases, cultivation is done. In many cases bioreactor cultivation is done in the size of over 1,000 liters. On the other hand, if you look at the bottom right, for regenerative medicine, we grow IPS cells or ES cells and differentiate them to the target cells and formulate them for use. So it is reported that -- actually, the pharmaceutical companies produce these cells. But in the process of production, differentiation is needed. So for that purpose, culture media is used. And the bioreactor for this is reported to have a size of up to 10 liters in many cases. In both cases, the intake of nutrition in the process of cell culture is indispensable. And that is the reason why cell culture media is needed. Our biopharmaceutical culture medium is marketed under the brand name of CELLiST, and this is suited for cultivating animal cells for the production of recombinant protein. The culture media for regenerative medicine is marketed under the brand name of StemFit, and this is a product specialized for cultivating IPS and ES cells. IPS cells and ES cells have different origins. However, their biological characteristics are quite similar to each other. It is thus reported that ES cells can be well cultivated using StemFit because that was already tried out and it is very verified that ES cells can be cultivated as well. Then let me first explain our biopharmaceutical culture medium, CELLiST. From the 1980s, our company has been providing serum-free culture media based on our clinical nutrition products and pharmaceutical amino acid manufacturing technologies. Ajinomoto, this is called Ajinomoto serum-free culture medium, ASM culture medium for short. In 2012, upon the establishment of Ajinomoto Genexine in Korea, we launched the CELLiST brand and opened a customer service center in Korea and making a huge foray into the biopharmaceutical culture media business. Based on our 36 years of advanced nutritional and metabolite analysis technologies, we have been rapidly developing our culture medium in line with customer needs, primarily at our customer service center in Korea. The culture medium is created by many different elements. By producing the amino acids, the key raw material for cultivation in Ajinomoto Group and supplying them from the manufacturing site in Korea in the form of culture media, we are ensuring stable and speedy supply to the Asian markets, where we are witnessing a remarkable growth in biopharmaceuticals. As for the business foundation for biopharmaceutical culture media, we established a manufacturing plant in Songdo, South Korea, and also a customer center in Songdo as well as Shanghai, China. So as you can see, these offices are centered around the rapidly growing Asian markets. With respect to our biopharmaceutical culture medium CELLiST, we sell general products as well as custom-made products so we can provide the most suitable culture medium for the sale of each customer. In addition, as you can see from the bottom there, through the use of digital trends in AI technologies, we can determine the composition of custom-made products and provide optimization support for the cultivation conditions in a very speedy fashion. In other words, by combining the real-world cell cultivation technology, in which we cultivate inside the tubes, and by combining them together with digital cultivation technology, we can find out the best composition and cultivation conditions in a very short period of time. Generally, it takes a huge amount of time and effort to scale up from a few milliliter lab-level cell culture into thousands of liters of actual production. However, a simple scale up does not work properly. So therefore, it takes a huge amount of time and effort for scale-up. But with the use of the technology that I just mentioned, such as digital twin and AI, we can assist the customers' process development in a very speedy fashion. Also, at Ajinomoto Genexine, we not only produce our own culture media, but also we take outsourcing orders for custom production of culture media based on customers' recipes from weighing of raw materials to powdering to mixing and packaging in a GMP-compliant facility. We can manufacture powder culture medium from laboratory scale all the way to industrial scale. The global market for the small biopharmaceutical culture media is expected to maintain a very high growth rate of approximately 14% per annum, a very stable growth in the period between 2020 to 2030. We plan to offer cultural medium from prospective customer pipelines primarily for the fast-growing antibody drugs and thereby expand the size of our business. Let me then explain StemFit cell culture medium for regenerative medicine. We all developed StemFit together with CIRA, the iPS Cell Research and Application at Kyoto University. CIRA uses StemFit to culture iPS cells. But not only that, it also manufacturers iPS cell stocks for distributing to other researchers and developers. iPS cells are sensitive to culture environment, including cell culture medium. Therefore, it is not easy to switch the culture medium from iPS cells -- of iPS cells once they are grown in StemFit. In fact, there is no merit of switching cell culture media. Therefore, many customers keep purchasing StemFit from us once they receive iPS cells from CIRA. With the expansion of iPS cell stocks at CIRA, StemFit has become a de facto standard cell culture medium in Japan. Another thing to note for the cell culture medium business for regenerative medicine is that we provide technical and regulatory support in addition to the medium themselves. According to the development stage of customers' pipeline, seeds are discovered by academic laboratories and medical institutions from the regenerative medicine pipelines. Then those seeds are succeeded to bioventures and pharmaceutical manufacturers for clinical development. However, once a manufacturing process is established at the upstream of the development phase or process, cell culture medium remains the same, even as the developer or those who develop the product may change. If the cell culture media changes, it could change the entire manufacturing process, and it's very hard to control the process. As a result, as customers advance in their development pipeline, they use more of our cell culture media, leading to the growth of our business. That is why we'd like to provide a full-fledged technical and regulatory support pertaining to cell culture media at each critical phase throughout customers' development to help scaling up their pipelines. In the U.S. and Europe, there is no one-stop shop like CIRA, which distributes iPS cells in a centralized manner. Rather, various facilities manufacture their own iPS cells for their own distribution. Therefore, StemFit usage is smaller in those markets compared to Japan. However, iPS cells were first discovered by Dr. Yamanaka, originated in Japan. Therefore -- so iPS cell-based pipelines originated in Japan, then relocate to overseas for further development after completing the initial or early development phase. In such case, StemFit can be continued to be used. Therefore, we set up a customer support office in North America which is our main market for regenerative medicine to expand the cell culture medium business for regenerative medicine. When iPS and ABF cells are used for regenerative medicine, the cells need to be differentiated for different purposes. And on the diagram, upper left shows heart, blood, immune cells. So iPS cells or ES cells need to differentiate it into different forms of cells -- different types of cells. And those cells, in order to differentiate themselves, we need to add growth factors. Growth factors are, for example, if we want to turn those cells into heart, then a signal is given to differentiate those cells into the heart. So growth factors are the protein serving as a signal for the cells to promote their differentiation. And depending on the cell type and differentiation phase, various kinds of growth factors are in need. We offer many different kinds of growth factors, together with cell culture media under the brand name of Purotein. Based on our microbiology -- microorganism based fermentation technology, this technology is enabled. Since Professor Yamanaka discovered iPS cells in 2006, it's been 15 years. And the number of clinical trials using iPS cell based pipeline is increasing. It is expected that the market for cell culture media for regenerative medicine will grow as more pipelines advance through clinical development stages. And by 2030, the market will top CAGR 18% as a result. Taken together, we forecasted the entire cell culture media business, combining CELLiST and StemFit will grow more than 8x between 2020 and 2030. To encapsulate, our cell culture media business utilizes our AminoScience at its core to provide value-added products and services to customers. We'd like to stay side-by-side with customers in their journey of developing antibody medicine and regenerative medicine. And we'd like to grow together with our customers over a long period of time. That concludes my presentation. Thank you very much.

Thank you very much, Konishi-san. We would now like to move on to the presentation by Okuzumi-san.

This is Okuzumi from Bio-Pharma Services department. From myself, I would like to talk about the growth strategy of our Bio-Pharma Services business. Here, these are the topics that I would like to discuss today. I would like to first give you an introduction of the overview of the Bio-Pharma Services division, and also talk about the oligonucleotide contract manufacturing business that is growing rapidly. Then after that, I would like to talk about the ADC drug discovery and manufacturing service that is seeing a heightened demand. And then finally, talk about the initiatives for new value creation briefly. Then I would like to give you an overview of the Bio-Pharma Services department. As you can see here in the slide, this shows Ajinomoto's Bio-Pharma Services business, including the historical development. Ajinomoto Bio-Pharma Services business started in 1989 with the acquisition of Ajinomoto OmniChem. Thereafter, we rolled out small molecule drug contract manufacturing in Tokai and established a manufacturing plant in India to expand our business with a primary focus on small molecules, which account for the bulk of pharmaceuticals categories. In recent years, through the acquisition of Ajinomoto Althea of the United States and GeneDesign, we constructed a structure for contract manufacturing of advanced pharmaceutical modalities such as oligonucleotides, protein therapeutics and antibody drug conjugates. Furthermore, we acquired aseptic filling and formulation capabilities. From 2020 onwards, we have been working to expand our business by creating synergies between different sites under one brand of Bio-Pharma Services. To accelerate growth in the future, we plan to effectively utilize these tangible assets as our business foundation while also advancing our solutions, leveraging our unique technology and services such as flow chemistry, Ajiphase, Corynex, Talamax and Ajicap. In this journey, we will not only pursue scale but also aim to enhance value by strengthening the business that only can be provided by Ajinomoto. This shows our global footprint of Ajinomoto Bio-Pharma Services. In Japan, we have four locations, including the headquarters. We have a research office in Kawasaki, where new technology -- technical values are created. The Tokai office is the main location for oligonucleotide production using Ajiphase. And in Osaka, we have the office of GeneDesign, which is a CDMO dedicated for oligonucleotide. And in Belgium, we have the largest manufacturing plant of Ajinomoto Bio-Pharma Service which is called Ajinomoto OmniChem. This plant is mainly contract manufacturing small molecule drugs. Recently, it is also showing uniqueness as a plant for flow chemistry and Ajiphase. In India, we have a wholly owned subsidiary of Ajinomoto OmniChem, Ajinomoto Bio-Pharma Services India, which is mainly handling contract manufacturing of small molecule drugs. In San Diego, United States, there's an office of Ajinomoto Althea, which can handle large molecule APIs and aseptic filling. Next, I will talk about the contract manufacturing of oligonucleotide, which is growing rapidly nowadays. Nucleic acid-based drugs are drawing attention as a new modality after antibody drugs because it combines the benefits of mainstream small molecule and large molecule drugs in terms of the ease of production and pharmaceutical efficacy. Accordingly, the contract manufacturing market of nucleic acid drugs is expected to grow significantly. Among nucleic acid drugs in the contract manufacturing market of oligonucleotides targeted by Ajinomoto Group, the main competitors are Nitto Avecia, which holds solid-phase synthesis technology and the U.S.-based Agilent and Germany's BioSpring. Among these players, Nitto Avecia is the front runner, but we believe Ajinomoto has grown to the #1 position in the oligonucleotide business together with Agilent. However, for future growth, how to differentiate ourselves will become very important. The slide here summarizes the strength of our oligonucleotide contract manufacturing service. Companies other than Ajinomoto are producing oligonucleotide using the solid-phase synthesis method, which offers the benefit of shorter production period. However, solid-phase synthesis has issues in terms of scalability. And there's a limit to the volume of production in just one batch. On the contrary, our unique technology Ajiphase can use the same large reactor as low molecule -- as small molecule. For example, when 10,000 liter reactor is used, it is possible to produce oligonucleotide in a scale of over 100 kilograms in one batch. In other words, the larger the scale, the greater the benefit. Because every item start from small scale, we thought it was necessary to have a solid-phase synthesis in order to enter the market from early on and to acquire items. That's the reason why we acquired GeneDesign in 2016 to obtain the solid-phase synthesis capability in addition to Ajiphase. The combination of this technology will make us the only oligonucleotide CDMO in the world that possess both solid-phase synthesis as well as the liquid-phase Ajiphase for oligonucleotide production. This offers us the strength to provide the best solution to serve customers from only a few micrograms to over 100 kilograms. Here, I would like to introduce the breadth of the target of our oligonucleotide contract manufacturing business. In the oligonucleotide market, different types of oligonucleotides are used depending on the applicable disease or the action in the body. Among the different categories, the main target so far has been the antisense group of oligonucleotides. Antisense accounts for slightly less than half of the clinical pipeline in the market. However, the pipeline of a group called siRNA is the second largest in the percentage of oligonucleotide types. Accordingly, to approach this siRNA market, we tackle the development of a proprietary manufacturing method leveraging the advanced technology we accumulated in AminoScience and formulated a new method. Service utilizing this new method are already offered to a number of pharmaceutical companies. As a result of establishing this new manufacturing method, we can cover approximately 80% of the clinical pipelines in the market and the applicable diseases are expanding from previously only rare diseases to now cancer and metabolic diseases, where the number of patients is greater. Going forward, we will reinforce our business, leveraging Ajinomoto's unique technology services and other intangible assets and provide greater added value and accelerate our growth as a result. As for the sales forecast of oligonucleotide contract manufacturing business, we have revised the outlook upwards compared to what we explained in August last year. In 2030, the sales is projected to increase by 25x compared to the level in 2016 when we acquired GeneDesign. Oligonucleotide contract manufacturing service has grown into a large business, thanks to the acquisition of multiple pipelines of Ajiphase. In Ajiphase business, it is possible to expand the production capacity with a little amount of investment by converting existing generic synthesis facilities. Currently, we are converting a part of our small molecule facility into Ajiphase facility to make a transition to high value-added business model. We plan to accelerate this growth and use this as a driver for the next phase of Ajinomoto's business expansion. We can't comment on the details behind this growth projection because it relates to our customers' information, but we believe, these are very practical targets when the current pipeline, development stage and risks are taken into consideration. From here, I would like to talk about the ADC drug discovery -- manufacturing support service where the demand is beginning to mount. Well, first, let me provide the ADC market overview with this slide. ADC is a group of medicine consisting of antibody drug conjugates in which an antibody is linked with an anticancer drug. Antibodies designed to selectively bind to certain types of cell -- cancer cells and is loaded with anticancer drug. This enables the selective binding and delivery of cancer drugs in to cancer cells. It is like a bucket loaded with anticancer drugs that are guided towards cancer cells. The ADC market is increasingly growing as the graph indicates, left bottom. And the market size is expected to top $25 billion, 2.5x greater in 2032 versus 2022. As for the number of approved drugs in 2011 and 2013, first generation of ADS -- ADCs were approved. After some stagnant years, the number of approved drugs suddenly surged since 2017. And this drew attention. As a result, many companies have started entering and developing ADCs and the number of those in pipeline is significantly growing. Approximately 150 ADCs are in clinical development pipeline. This slide shows issues pertaining to ADC drug discovery and the values offered by our proprietary technology AJICAP. AJICAP is -- in one word is a groundbreaking technology that can easily generate a site-specific ADC, possessing high therapeutic effect and safety and the details will be reported from now on. Conventional ADCs have different binding sites to cancer drugs at random on their antibodies. And therefore, the number of drugs loaded deferred. Therefore, a mixture contains some unstable ADCs releasing cancer drugs before reaching cancer cells, causing damage to normal tissues. As a result, side effects emerged. Also because it was a mixture, quality control was difficult. In contrast, AJICAP enables the selective binding of an anticancer drug to a specific position on the antibody. This way, the technology can easily generate a stable site-specific ADC. This led to a significant reduction of side effects because it does not release the drug until it reaches cancer cells. It excels at generating safe ADCs because even at a high dose of AJICAP ADC has little side effects. Also, AJICAP-based ADC has a consistent structure, making quality control easier, which is also advantageous for the development. As I mentioned in my previous slides, AJICAP is a technology that binds an anticancer drug to a specific site of an antibody. On the diagram on the left, you may think that the antibody has a simple structure. However, it actually has an extremely complex structure consisting of about 1,400 amino assets. Now for -- to develop AJICAP based ADC that bind certain amino acids to anticancer drugs was technologically demanding. To solve this technological problem or issue, we made maximum use of the advanced technologies we have accumulated in AminoScience. And this is a typical example of how we have converted our intangible asset. The advanced technological capabilities of AminoScience into business value. AJICAP technology has been rated highly both domestically and internationally, including a high evaluation in the Nature Index, which profiles world-class research results and being selected as the best publication from more than 900 candidates as a world ADC, the world's largest academic conference in the ADC field. As a result, we are receiving more and more inquiries and orders from ADC creation. In this slide, I'd like to introduce the expansion of a wide range in application services utilizing AJICAP. The mainstream ADC has been, ADCs that link antibodies to anticancer drugs as was shown in the previous slides. However, in recent years, new modalities such as oligonucleotide, peptides and proteins are have been attracting an attention as new modalities. The creation of these modalities can be realized by combining AJICAP with AJIPHASE, Corynex and TALAMAX, all of which are our technologies. We are actually receiving an increasing number of orders from our pharmaceutical customers for these new modalities. The ability to provide services by combining several of our technologies means that we can synergetically increase [indiscernible] value of our technologies. Therefore, we are actively developing our business in order to aim for further adoption. And in the development of ADCs, it is necessary to flexibly adjust the number of binding depending on the type of drug, the potency activity of the drug and the indication. Through further development of AJICAP technology, we have made it possible to precisely control the number of drugs bound to the antibody from month to 10 or more. By taking advantage of wide-ranging AJICAP applications, we will continue expanding ADC drug discovery support and manufacturing services that flexibly meet the diverse needs of our client, pharmaceutical companies. And this slide shows the business model of our ADC drug discovery support and manufacturing services. Our ADC drug discovery support and manufacturing services using AJICAP are provided from ADC creation state or a development stage, which is the initial phase or early phase of development for our clients. We receive antibodies and drugs from our customers and synthesize ADCs based on AJICAP, which are then evaluated by our customers. This process is repeated several times to optimize the ADC in consultation with the customer. Once an ADC is obtained or manufactured, we conclude an AJICAP technology license agreement with the customer and then proceed to manufacturing and clinical trials. Our main revenue comes from upfront milestone royalty revenue which is paid as a compensation for technology for our technology license. We also provide CDMO support and manufacturing services at Ajinomoto Althea in San Diego depending on customers' requests. By making technology license fees the main source of revenue, we have realized asset-light business approach that leverages our intangible assets. AJICAP technology licenses have also been provided to several customers including U.S. Bright Peak and Exelixis in the United States, which were disclosed before. We will continue refining our technology to meet the needs of our customers and aim to increase the number of companies to which we license our technology through active business expansion. Finally, let me briefly introduce our unique initiatives that are underway in CDMO business. Today, I presented AJIPHASE based Oligonucleotide contract manufacturing business as well as AJICAP based ADC drug discovery and manufacturing business. In addition, we'd like to grow businesses that follow these 2. We have Corynex as a protein medicine, contract manufacturing service, which has been established as a practical and commercialized technology; and TALAMAX both of which may serve as growth drivers following AJIPHASE and AJICAP. Furthermore, we'd like to create new businesses utilizing mRNA based on RNA from intention technology and to establish a new cell therapy technology in order to attain a significant growth in Bio-Pharma business toward 2030. This is my last slide. By maximumly utilizing group's intangible and tangible assets, we have acquired so far, we will further the growth of our Bio-Pharma business by enhancing business and services. And we'd like to differentiate ourselves going forward as well. That concludes my presentation. Thank you very much for your kind attention.

Thank you very much. Now we'd like to entertain questions from the floor.

[Operator Instructions] If there are so many people requesting a question, there might be a possibility that we may not be able to finish all the questions. Please be advised of that in advance. Now we would like to begin the Q&A session. [Operator Instructions] We have a question from Saji-san of Mizuho Securities.

I have a question relating to healthcare, the last part. There was something that came to my mind. So I would just like to reconfirm, I think it was on Page 19. The outsourcing -- contract outsourcing outlook in 2023, CDMO last year had a sales size of JPY 72 billion, and we believe that this is expected to grow at a certain pace this year again. But how is it is different from what is written here? So can you elaborate on that point? And also, out of this JPY 72 billion CDMO sales and this contract business of Ajinomoto Group projected here, it says JPY 220 billion in fiscal 2022. Are these 2 identical numbers? So then in 2025 -- what are the growth drivers towards 2025? Would it be AJIPHASE and AJICAP you mentioned today or other things listed up here? Would that be correct? So can you confirm those points first and foremost?

Well, thank you very much for the question. This will be answered by Shiragami. Okay. So this relates to the details of the business. So I think Otake should be better positioned to answer this, okay?

This is Otake from Bio-Pharma Service Department. In 2023 -- for fiscal 2023, AJIPHASE, AJICAP that I introduced to you to today, we are expecting a significant growth in 2023 for these 2 products. And we have a good prospect to achieve that. Now on the other hand, OmniChem -- at OmniChem this year, flat growth is projected for this year according to our plan. The reason for this is because for AJIPHASE, they are modifying some of their facilities. So this year, the growth will be slow this year. But however, from next fiscal year onwards, we are expecting a significant growth. Towards 2030, the growth drivers would be AJICAP, AJIPHASE. Those will be the primary driving force for growth towards 2030. And also OmniChem also has flow reactor technology, the unique technology, and that is likely to make a big contribution to business profit. Thank you.

And the JPY 72 billion that we just mentioned, you disclosed that number as the contract manufacturing scale. So is that identical to JPY 200 billion in this chart?

Yes, that should be considered as identical.

Okay. My second question relates to the question for Mr. Mago-san from Fine-Techno. On Page 12 of your presentation, ABF technology, core technology deployment, Mr. Fujie also mentioned that for the magnetic materials, that will make a contribution to power saving. And that has already achieved a track record in the last 1 to 2 years according to the statement by Fujie. ABF-RCC, you mentioned that this will be applied for smart phones which is an area that you are not really making a significant contribution so far. So this magnetic material ABF-RCC sealing materials. Can you talk about the plans as to how you establish a competitive advantage in this area? And how will this contribute to your business expansion going forward? Can you elaborate on that point? For example, this year -- right now, we are seeing some prospects in the magnetic materials, I believe. So for electronic materials, you disclosed functional materials, and that is -- has a track record of JPY 70.1 billion last fiscal year. But what is the impact of these materials right now? And how will this impact your -- as a driver for growth in the business in the future?

Regarding the business contribution and for sales contribution, I'm very sorry, but these information are not disclosed by the company. Server data centers consumes a huge amount of energy and power. So magnetic materials are expected to be very, very effective, and the customers are showing great response, great acceptance. We believe we make -- we shall be make to make a great contribution to our business. RCC is used as a semiconductor package and the insulation performance and the motherboard is going to be necessary in the future. So therefore, we will -- we have high expectations that this can be contributing to that effect.

If you can just single out the magnetic material, let's say, out of your total sales -- what is the proportion of this contribution in terms of percentage? And how significant it will grow in the future. Can you just talk about that?

We are sorry, this is not something that we disclose as a company. So I hope that they one day disclose that information.

Saji, thank you very much for the questions. Now we'd like to move on to the next question.

This is Fujiwara speaking from Nomura Securities. I'd like to raise 2 questions. First, with ABF. I'd like to deepen my understanding. On Page 8, this is a presentation for Mago-san. On the right-hand side, you described that ABF shipment volume growth that the graph. And -- for FY '22, what was the figure or volume on this graph for FY 2022? And also FY '25 -- during '23 and '24 and '25, how will these sales grow -- or excuse me, shipment volume growth in the next 3 years? In short term, ABF substrate, there seems I think that you are still struggling with the ABF shipment. So do you expect a huge recovery in '25, but how will things trend during the '23 to '25 period of time? That is my first question. And the second question pertains to the cell culture media. I'd like to educate myself. This is a very fresh material to educate myself. On Page 17 of your slide for the bio-pharmaceuticals and regenerative medicine sales figures. And I just want to know the size of the sales for its FY 2022, which you just closed. So those 2 are my questions.

Thank you very much for the questions. First, I'd like to address the first question. This is Mago speaking. In terms of sales figures, we cannot actually unfortunately disclose details. However, during my presentation, I reiterated that this AI and server network and centers, high-performance computers use significant amount of ABF. That is why would you expect that the shipment can grow significantly. And we have high hopes.

This is Fujie. I'd like to expound on the matter. Previously, we indicated that in '23 or midyear of this year, there will be some inventory level adjustment, which could slow the shipment of ABF. However, after the second half of '23, recovery will emerge. That is what we -- that is the customer feedback we get and assessing the level of customer inventory. So after second half of '23, things will go back on track and recover the trend. But there are various moving parts and things remain quite uncertain. And even if the recovery is made, then we may have a surge in the orders, incoming orders. Therefore, we needed to make sure that we can capture the demand, and we can respond to the demand. So we are investing JPY 25 billion in terms of CapEx investment to make sure that we can be prepared for the sudden surge in demand. And second question will be dealt by Maeda regarding the cell culture.

Unfortunately, we cannot disclose the details of each brand sales figures, especially because we are dealing with a custom-made cell culture medium for pharmaceutical companies. Therefore, we cannot actually disclose on an individual basis. And some of them are in clinical stage. Therefore, the business size is not so sizable yet at this stage.

This is Shiragami, I'd like to expound on the matter. In terms of regenerative medicine, as you're aware, the market is about to boom or about to grow depending on the clinical development phase, as they advance. So we would like to contribute to the growth of the market for regenerative medicine.

The next question will be from Daiwa Securities, Morita.

This is Morita from Daiwa Securities I've got 2 questions. The first is about the Bio-Pharma, Page 10 of the presentation. You said that oligonucleotide contract manufacturing is expected to grow. So if I can just develop an image from 2025 to '30 years huge growth is projected. Do you have -- is this dependent on a certain pipeline. First and foremost, how many pipelines do you have right now? And when there is a steep increase towards 2030, is this dependent on a number -- a few number of our pipelines or is it so that there is a general increase across multiple pipelines. So I just wanted to know what is the image of the pipelines, the number of pipelines that will drive this growth. If you could just elaborate and give some color to that, that would be appreciated. My second question, well, I think I've asked a similar question in previous session, but for the ICT or for [indiscernible]. I think you have a very ambition plan for the future, and that's very encouraging to hear the ambitious target. But of course, this is a business. So there are some uncertainties. But if you dare try to project the future of the mid to longer term, what are the risks that you perceive right now? So if you can just talk about the risks, if you just pay attention to that, what are the potential risks that we have to bear in mind? Can you share that with us?

This is Otake. I would like to answer your question. Regarding your first question. Regarding the pipeline, a number of pipelines. At this moment, multiple pipelines are up and running. So not only with AJIPHASE alone, there are multiple pipelines and the risks already factored in, in our plan. And therefore, we believe these are well achievable as a target. The dependency on the certain pipeline is not the case in our plan. And as for the second question regarding risk, is that only related to Bio-Pharma? Or that's about overall, including Bio-Pharma business.

Well, this is -- thank you very much, Morita for your question. I would like to answer that question. Regarding the risks. Actually, for this ICT and healthcare domains that we cover today, the risk that we have to be most aware of is about how to capture the trend of modality ahead of the time. That is going to be the key element. So in that regard, innovation strategy team, we have established this global team so that we have all these people with that kind of 4 sites. They are working together with the people in the academia and other fields. So that we can strengthen our capability in this area. And -- the other thing, be it ICT or be it healthcare, the speed of the modality evolution is taking place quite rapidly. So we have to accelerate the speed of our development as well to keep abreast with that, and that is the potential risk. So therefore, we would like to leverage a lot of our digital technology and improve the efficiency of our R&D activities in order to accelerate the pace of our development. And when it comes to the medical modality for medicine, for example, when it comes to regenerative medicine, at which time in this modality change will happen, it may be later than what we had anticipated. So when speed accelerates or slows down, including all these potential scenarios, we have to be confer to be able to discern that. So that kind of response will be needed. So for that purpose, we have to have an efficient business model so that we can eliminate wasteful capital expenditures, so that we don't get affected by such changes in the market. And of course, On the other hand, when it comes to the electronic materials, we have to be able to respond swiftly to any surge in demand. So those are the important elements when we think about risk taking.

Just one thing to Shiragami. I do understand your explanation regarding modality, but I think your competitors are also thinking about similar things. So if you just can identify your advantage over the competition, that would be appreciated.

Yes. Thank you very much for the question. Exactly, as you pointed out. This is a growth market and the competitors are also going to come into play because we are now looking at a very attractive target in this market. So as I said at the beginning, we would like to -- our leverage -- our advantage is the strength that we have accumulated with the AminoScience. We have a track record of over 100 years in this field. So we have our own unique strength in this area. So for these strengths, I think we will never be inferior to the competition in these strong points. When it comes to new businesses, it's not that we are going to start everything from scratch. We would like to leverage the strength that we own in AminoScience, and we have the business foundation already, including tangible and intangible assets. We would like to leverage them and take advantage of them and connect these assets to the next business. And I think that is one our strengths. So that whenever when we encounter the new entrants from greenfield, I don't think we are inferior to them. We don't think we will be defeated by them. And by concentrating our resources, we would definitely like to win in the game. That's our approach.

Now we'd like to take questions from Takagi, SMBC Nikko Securities.

This is Takagi speaking. I'd like to raise 2 questions. These are very big questions, but I'd like to educate myself. Regarding the cell culture media. Thank you very much for the presentation. That was very wonderful and easy to understand. Speaking on the cell culture medium business, on Page 17, I'm looking at -- but in 2025 and 2030, between those periods, the sales forecast is accelerated between 2025 and 2030. Why is this? Could you elaborate on this matter? You mentioned that the regenerative medicine may be accelerating. But could you please repeat the explanation? And also what is the competitive landscape for the cell culture medium? Also, what is your strength? And what is your weakness? Could you clarify these points? That's my question pertaining to cell culture media. I have another question. Regarding Bio-Pharma service oligonucleotide on Page 9. Well, oligonucleotides, the nucleic acid types may diversify in the future and siRNA can be expanded or explored. And if so, then, -- does it solidify your AJIPHASE competitive advantage by expanding the target. Does that change or affect your competitive advantage of AJIPHASE if you expand into sIRNA.

Thank you very much for the question, Takagi. I'd like to provide an overview and then I'd like to appoint Maeda and Mic to follow-up on the specific answers. Regarding the reason why rapid growth is expected between '25 and 2030, this covers both cell culture media for bio-pharmaceuticals as well as regenerative medicine. And for the cell culture of bio-pharmaceuticals, as Konishi indicated, India and China can grow the volume growth and can lead the volume growth. And for regenerative medicine cell culture, as I mentioned earlier, the development stage as well as pipeline could expand all of a sudden in the future. And we forecast that which is reflected in sales forecast. So regenerative medicine is going to make a significant or more contribution after 2025 compared to cell culture media for bio-pharmaceuticals. That is my view. Yes. I think my comment will be overlapping with Shiragami's comment. But regarding the cell culture media for bio-pharmaceuticals, the market is expanding. And India and Asia, we have -- we can provide a high-quality cell culture media to attract customers. Regarding growth. Regenerative medicine in a few years' time, we -- well, clinical trials are on and there are many promising ones that which could drive a significant graph to 2025. That is our expectation. Regarding the competitive landscape, Thermo Fisher, Stem Cell technology, those are quite formidable or big players and we are competing with them and our business unit leader and Manager, Mike Lish is planned with us. So we'd like to turn it on to Mike. Could you please expand on this, sir?

Sure. I'd like to expand on the competitors. Maeda's comment on regenerative medicine with Thermo Fisher and stem cell but also Merck and Cytiva are also main competitors on both landscapes, both for cell culture media and for regenerative medicine. And I think your comment is -- question was what are our strengths maybe against these competitors. And I'll reference back to the slides before. We own the supply chain all the way from the raw material ingredients, the amino acid through these growth factors all the way to manufacturing and AGX and the optimization of the media itself. That is a very unique position that Ajinomoto has from our technology standpoint. That really sets us different from the competition and we can actually provide a significant value and solutions to the customer.

And regarding question on Bio-Pharma Service on Page 9. Your question pertains to Page 9 of my presentation. Today, I mentioned, didn't actually provided the details of the technology here on the slide. but this is [indiscernible] base enzyme will be combined to touch highly unparalleled technology proprietary to Ajinomoto. So seeing of the business opportunity, this is all about antisense, which is half the size of -- we were only able to cover half of the antisense. But with this technology, we can actually cover -- 3/4 of the targets with siRNA. And after this technological advancement, there will be 2 benefits. One is that we can stabilize the quality of our product and enable our steady production supply. Another benefit, although I cannot disclose the technological details, but process wise, this is very easy. Therefore, it can minimize the manufacturing risks on the line. That is another merit that we can enjoy. And I'd like to supplement what [indiscernible] just mentioned. When you look at antisense, which is a single-stranded DNA and siRNA, the double-stranded RNA. As you can see, siRNA is difficult, more difficult to synthesize and stability declines with siRNA. But that is where we can utilize our own technology by overcoming these difficulties associated with siRNA. And this could double the size of a target size. When it says indication, antisense used to deal with rare hereditary diseases, but with siRNA can further expand into cancer and metabolic diseases. So volume-wise, if a successful plan, we have -- we can actually expand the business quite significantly with just one successful case in the pipeline. Takagi, to answer your question. So on top of AJIPHASE, you're going to use Corynex to create even further value-added technology and item. Yes, that's right. Not only AJIPHASE, but also Corynex and other capabilities that we have accumulated will be utilized to create this hybrid technology for siRNA. And what is your competitive advantage with siRNA? Is it the same for AJIPHASE [indiscernible] AJICAP. Sorry, we were confusing you. But in terms compared to our competition, siRNA is difficult to be synthesized, but we can actually manufacture it with high efficiency in high stability in large quantity. That confers our competitive advantage.

Thank next question from Mitsubishi UF Morgan Stanley, Tsunoyama.

Hello. Thank you very much. My name is Tsunoyama from Mitsubishi Morgan Stanley. I have 2 questions as well. I'm sorry that I I'm not so informative about this topic. So I just wanted to confirm your approach. One is about your cell culture business, medium, culture medium. I heard that you are very competitive and understand your point. But maybe this is covered in today's presentation. But in your food business, what is the strength that can technology offer in your food business? If you just share you have some thoughts about that, that would be appreciated. And my second question relates to ABF. The future risk pertaining to ABF. Of course, we talked about the short-term inventory adjustments and so forth, but set aside that story because the competitive landscape in the manufacturers are now changing in a value chain, if you're just tilted and skewed towards one customer. Do you have that kind of risk out today? I just wanted to reconfirm your views on that. So would be appreciated.

Thank you very much for your questions. Regarding your first question regarding green food. This is Shiragami. I would like to answer to that point. Green and food and wellness in these areas, the next presentation is scheduled for December. We are going to have another best briefing covering 2 areas in more detail. In the area of green, we are now taking this opportunity of sustainability. We would like to drive innovation, leveraging AminoScience so that we can achieve a coexisting with earth and lower the impact the environment and create new start for food for generation and thereby contribute to the well-being of society, people and earth. That's the basic approach and especially that we have. What this means in more detail is that those green food and also based on new approaches, we would like to establish new standards for food and in addition to that, as for the precise content, the flavors and also the fermentation biocycle, we will have a green process by having green Ajinomoto process, and also for green food alternative protein quality improvement solutions is well considered. And right now, we are expanding the present fermentation capacity, and regenerative agriculture. Those are expanded. So through these, we would like to reduce environmental pressure and also secure alternative protein. Those are the major initiatives that we are planning to expand that business in the future. For the question, this will be answered by Maeda.

Okay. This is Maeda. I would like to answer. Regarding the risk pertaining to ABF business because that's how I considered your question. As we have been pointing from previously, we have more than 90% market share with ABF. So it's not that we are depending on to certain customer and there is, therefore, the risk of losing significantly by the concentration of a certain sector is very minimal. And also, the JPY 25 investment is planned for so that we can be prepared for the recovery market. So I was thinking about 2 points. Right now, we have more than 90% market share. But a risk of more than 2, 3 companies on board who can produce similar product. We would like to, therefore, continue speedy development so that we can of the best product in a faster manner compared to the competition, so that can reduce the risk by doing this initiative. The other one is the optical and electric conversion. So that could be a major game changer, changing the entire [indiscernible], so the optical and electrical could be converged together or maybe electricity cannot be converted into and switched and made a transition optical solutions in the future. When that kind of game change happens, we shall never be kept behind. Maybe this is going to be further down the road like 10 years ahead. So those are potential game-changing elements, we are now continuing our research.

Thank you very much, Mr. Maeda. If I just add one more comment here. If you look at this page, next page. The ecosystem of ABF, I just introduced this slide. Semiconductors [indiscernible] is a very high precision device, which guarantees high performance. So in the entire manufacturing value chain, the performance and precision is realized throughout the entire value chain. Amid that environment, ABF in order for the semiconductor to exert its performance, ABF is playing a very important role. So if anything similar to ABF comes out in terms of [indiscernible] even that happens in the entire ecosystem. Semiconductor manufacturers switching to those new products is quite risky because if anything happens, all the high performance delivered by the semiconductor will be undermined and they shall not be able to deliver the expected performance. So we were able to come into this market first ahead everybody and continuous fast development cycle. We have a strong collaboration with the semiconductor ecosystem and led this entire value chain. So based on this track record, the risk of being switched over by any other manufacturer is very minimal if any. And for future evolution, we are receiving high expectations for the evolution in the future by many ecosystem players, so the risk is rather being unable to keep up with the evolution, so therefore we are committed to making positive contributions to this evolution of the technology, so we are making necessary resource investments in order to achieve that. Thank you very much for that comment. If we come back to the green food topic once again, maybe this is out of the scope of today’s discussion, but when you talk about the bio meat in the future in 2030, maybe this will become already a viable business by 2030, so in that – when that is taken into consideration, this culture media technology, will that be a source of your [indiscernible] bio food or bio meat. Well, that’s a very good point. Exactly as you pointed out. The synergies within different areas is going to be great. So as for the growth factors and also for the culture medium, those technologies will be very important and because we deal with many bio meat players, of course the production of bio meat ourselves, we are involved in that process. So for the manufacturing and production and bio meat and also when it comes to the quality of bio meat, I think our culture media will have a very positive impact and I think our technology will be taken advantage of in order to bring down the cost and also to ensure quality. So we believe we can lead to affordable products, and I think AminoScience has a great role to play there. Thank you very much. I understood very well. So I look forward to the presentation briefing session in December. Thank you.

[indiscernible] from JPMorgan Stanley [indiscernible]. I am responsible for pharmaceutical sector -- and thank you very much for the intriguing presentations today. siRNA and EDC, those are my questions. ADC, that is. If we look at the pharmaceutical sector, the siRNA and ADC, both are hot topics. Regarding siRNA, of your contract manufacturing projects, what are the number of inquiries? And what is the most advanced? Or is there any products that are being launched with sRNA? And what is the share for siRNA market.

[indiscernible] thank you very much for the questions. Well, it relates to customer information, therefore, we need to observe our relationship and most of which cannot be unfortunately disclosed, but [indiscernible], could you please answer to the extent you can?

Yes. Regarding this technology, this is very brand new. And we are actually advertising this or touting the technology at academic conferences. And in early stages of clinical process, there are many inquiries and we are offering samples to customers. Going forward, we hope that we can expand this business so that it can contribute to profits going forward. And because it pertains to customer information, we cannot disclose, unfortunately, any further details. I'm sorry.

So regarding ADC, Mega Pharma as well as Daiichi Sankyo, they started their own development of ADCs. My question pertains to your linker technology where you excel at, what is your competitive advantage with the linker technology? Compared to Daiichi Sankyo, and Mega Pharma, they have their own technologies. Compared to them, what is the strength of your linker technology? Technology-wise, maybe that you are at par with others. But the target is your pharmaceutical companies who only have antibodies, but do not have a linker technology. What is your strategy? And also technological-wise, what is the value? Well, royalty ratio, royalty revenue will be the testament to the technical value that you are offering. Starting from this early phase in research, this royalty, if the IP value is quite significant, then the royalty revenue may be significant. So is it just a single-digit royalty revenue that you are enjoying? What is the level of the royalty revenue? And also, you have this contract manufacturing service as an option -- as an optional service. If this product is successful to generate certain profits and sales in the future, then speaking of this contract manufacturing potential, what is the size for the potential contract manufacturing business?

Thank you very much for the number of questions. You are well verse in this part of area because you are the commissary in the healthcare market. Let me first address your question about the linker technology. Speaking of the linker, the types of linkers, rather than that, we focus on opportunity. That is the specific location on antibody, payload as well as linker need to be bound. That involves affinity technology where we excel at. And this is -- this characterizes AJICAP. So whether it be linker or payload or the type of antibody, we can exert our flexibility with the technology. Also, a certain amount or present number of drugs can be attached to antibodies by other technologies, but in that case, the antibody itself must undergo a certain modification or processing. So is this cumbersome with other technologies. So AJICAP is a very easy-to-use technology, easy process, simplified process to ensure site-specific and number-specific payload. That can be attached to the antibody. So AS Okuzumi presented earlier, during the screening phase, we work with customers to optimize drug discovery, right the start from the screening phase. So we'd like to further expand this business utilizing those strengths. And another question regarding the royalty ratio or royalty rate, which cannot be disclosed. But speaking of royalty, we receive an upload amount and milestone amounts or payments, which are -- both of which are set with customers. And as the development phase advances from clinical to product launch phase, the revenue or return we receive can expand or can grow. Those are the conditions applied to each customer. Otake could you please answer other questions?

Yes. I may be overlapping with Shiragami. But on the part of us, the IP value is quite significant with AJICAP because -- excuse me, AJICAP and Corynex -- AJIPHASE and Corynex but all of which are excellent technologies. But the target medicine at customers need to be manufactured through Corynex and other technologies of us. But AJICAP is the designing technology for that medicine itself. So in a sense, we are creating the medicine by ourselves, by our technology. So if you don't have AJICAP, does this target medicine cannot be manufactured. So it's so essential and that's why it poses a significant value. And that's why royalty revenue would be much higher than your anticipated -- that value you're anticipating. We already concluded certain contracts with companies and royalty revenue was set quite high.

So let me confirm. I think this technology is widely applicable, but you are dealing with Mega Pharma, not just the biotech firms, but Mega Pharma as well.

Yes, we have a large customer base and globally, a few dozen customers are in direct negotiations.

Next question from Nomura Securities, Matsubara.

This is Matsubara from Nomura. I also have 2 questions. The first is about the growth factor, recombinant protein. The -- you're using this to academy or companies use [indiscernible] or is it the customers who are using whatever technology, whatever stems cell [indiscernible]? As for the differentiation in the future, the launch is going to be very important. So therefore, what is the timing of launch that you're contemplating right now? And for each product, they [indiscernible] quality? Is that what you're producing? Can you just confirm on these points.

Thank you very much for the question. Okay. Then Mike and Konishi, can you answer these questions, if you can.

I will give the first answer, and Konishi can follow. Your first question on growth factors on where they're going today. We are actually actively selling these growth factors that are highlighted in Blue ink. I believe, on Page 15. And as you can see on the coming soon and under development, we're not at liberty to talk about the schedule at this time. Konishi?

This is Konishi. I would like to add some comments. For the GMP products, actually, the -- this is regenerative product for GMP qualified. So therefore, GMP compliance needed. So in a sales approach, we are going to provide products that are GMP compliant over time.

Well, we are moving close to the closure of this QA session. So next question will be the last. Yoshida, JPMorgan Securities.

This is Yoshida speaking from JPMorgan. After expert professional club question, I have a very basic question. Regarding the overview of CapEx. So in ICT, in 2023, you're going to invest JPY 25 billion as you announced in the 2030 road map presentation and in over what period of time this JPY 25 billion is going to spend. According to your presentation, you are actually observing the risk and trying to prevent the risk of falling short of the surge in demand. So what portion of JPY 25 billion is going to be spent this year? And also in the healthcare arena, sales forecast is very optimistic again very rosy. And I truly look forward to that. But as you say, you were converting the existing facilities that are used for small molecule, but that was the case to minimize your investment. Will the situation continue to be the same with AJIPHASE, but we have now newly emerging technology is evolving. So are they going to require a significant amount of CapEx going forward?

Thank you very much for the question Yoshida. Maeda, would you like to answer those questions?

Yes. Thank you very much for the questions. Regarding CapEx, I'm an expert of the money or CapEx. Speaking of electronics materials, JPY 25 billion is going to be the CapEx investment. And towards 2030, this figure remains the same until 2030. But depending on the market condition. And the market is advancing. So if necessary, we will be flexible in terms of increasing. We can even increase the amount of any further than JPY 25 billion, but JPY 25 billion should be enough until 2030. Regarding AJIPHASE, the amount of investment. As we explained today, at OmniChem, there is a production facility in India as well, where we are concentrating all the small molecule production. At OmniChem, AJIPHASE is going to be expanded. So we are fully utilizing the already invested in existing facilities and equipment to achieve the best efficiency so that we can maximize our output for AJIPHASE. That is according -- that is our plan. Therefore, during this period of road map, the planned investment will suffice until 2030.

And -- but how about the later technologies AJICAP and cell culture -- is my understanding correct that there will be no significant investment increase involving these arena?

So culture -- as the regenerative medicine market grows by 2030, we may need to make in a necessary investment. That's quite likely. And with AJICAP, because it's license-oriented business, so we can actually handle mainly with the intangible assets and ROIC is quite high with this technology. I understand. So points to be noted is the cell culture media CapEx. Yes, that's right. From the perspective of CapEx, yes.

With this, we would like to finish the Q&A session. And finally, Fujie has some final remarks.

Well, ladies and gentlemen, thank you very much for your precious time and to attend this meeting. Today, we talked about our current business conditions and also the outlook for the future. Because of some confidentiality arrangements with customers, there were some information that we were not able to disclose. If the customer starts disclosing this information, we shall also be allowed to also put this information to the public arena. So we would like to collaborate with these partners so that you can better understand how our business is progressing smoothly towards our roadmap 2030 or ahead of the -- making faster progress or do we have any challenges in the achievement of the targets. And in the future, in some cases in the future, we might anticipate some headwinds or some challenges. In such case, we will discern the situation swiftly so that we can take agile actions. So we are now trying to improve our execution capability. So we will try to provide you with easy to understand explanation as much as possible. Well, after receiving your questions and suggestions today, I learned a lot myself. So I look forward to having this kind of arena for our conversation with you as much as possible as we move forward. Once again, thank you very much for this opportunity today, and we look forward to your continued support and patronage. Thank you very much.

With this, we would like to finish the business briefing session for today. Thank you very much for your participation. Have a good day. Thank you. Goodbye.