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U.S.-Japan Technology Linkages in Biotechnology: Challenges for the 1990s
As a result of the long-term vision adopted in 1980, which put forth the goal of becoming a company that "contributes to life and health around the world," Kirin began to diversify into services (restaurants); engineering; information services; food products (dairy, tomatoes, coffee); and life sciences (pharmaceuticals, agricultural biotechnology). Corporate R&D spending is $110 million per year. The firm's principal subsidiaries are the Kirin-Seagrams joint venture, Coca-Cola bottling franchises in western Japan and New England, and the Kirin-Amgen joint venture to manufacture and market EPO and G-CSF (see Case III below). Kirin has more than 30 domestic and overseas subsidiaries.
The focus of Kirin's Agribio Division is the plant laboratory. Kirin is seeking to utilize biotechnology to develop new varieties for mass propagation. To compete with established seed companies, a new strategy was adopted that incorporates the use of cell fusion and artificial seed technology for breeding and propagation, an emphasis on "seedlings" rather than seeds, leveraging the strong brand consciousness of Kirin products, and formation of a global network of subsidiaries and joint ventures. Globalization makes it possible to exploit market opportunities quickly. Joint ventures with companies possessing complementary technologies are particularly attractive because they allow Kirin to maximize the return on technology developed internally. Kirin's other partnerships in agricultural biotechnology include Tokita Seed (vegetables), Flower Gate, and Twyford (in vitro plants).
Calgene, founded in 1980, is a publicly traded company that focuses exclusively on agricultural biotechnology. The firm's projected revenues for 1991 were $35 million; it has spent a total of $70 million on R&D; and it has raised $120 million to $130 million in capital since its founding. It was the first company to apply for Food and Drug Administration (FDA) approval of genes to be introduced into plants. The firm's core products are genetically engineered tomatoes, cotton, and rapeseed. Calgene has 300 employees, including 100 scientists, in five operating groups. Half the employees are located at its headquarters in Davis, California.
Calgene is actively pursuing vertical integration, seeking direct access to markets in all of its core businesses.
Origins of the Linkage
Long-established business and personal relationships as well as a "strategic fit" were crucial in putting the partnership together. In 1984 Kirin bought an equity stake in Plant Genetics, Inc. (PGI), the agricultural biotechnology company that later merged with Calgene. PGI also performed contract research for Kirin in the area of synthetic seeds. Zachary Wochok, a founder of PGI, worked with Yoshihiro Imaeda and Kirin's legal repre-