Thanks to drastic advances in medical technologies, Japanese people are expected to enjoy an even longer life expectancy with an unprecedented number reaching 100 years. Because of this trend, life-long health maintenance has become a matter of growing public concern. With this in mind, the Life Innovation Division, which upholds a policy of “respecting the dignity of life” and “protecting people’s health,” is strengthening its key operations backed by decades of accumulated technologies. At the same time, the division is accelerating the development of new businesses. Through these pursuits, we aim to expand the scope of our operations to include cancer remedies and gene-based diagnostics, building on the core antigen and antibody reaction technologies that helped us secure a robust track record, particularly in the field of infectious disease countermeasures. Furthermore, we will create new value and contribute to society by taking advantage of a combination of the material and processing technologies Denka has developed over the course of its operations as a chemical manufacturer.

Characteristics of the Business Division

The division handles vaccines and diagnostic reagents produced by Denka Seiken, a Group subsidiary boasting a history spanning nearly 70 years, and a macromolecular sodium hyaluronate preparation manufactured employing Denka’s biotechnologies. With these products serving as the core, the division is also engaged in the development of vaccines via the application of plant-based gene modification technologies possessed by Germany-based Icon Genetics GmbH while providing panel examination aimed at identifying cancer-associated genes. In short, the division is developing specialty businesses in fields of disease prevention, diagnosis and treatment.

Five-Year Divisional Performance Summary

• Note: The Life Innovation Division was established in April 2017 and is in the process of forward-looking investment aimed at expanding its operations.

Business Strategies under Denka Value-Up

1.The Market Environment

1. Growth in healthcare expenses due to the progressive aging of society and the sophistication of medical technologies
2. Increasing risk of infectious disease pandemics, reflecting the formation of a global traffic network on the back of economic growth in developing countries
3. Solutions for illness prevention and early diagnosis have become ever more important

2.Strategies

1. Step up key operations (influenza vaccines, diagnostic reagents, macromolecular sodium hyaluronate preparation, etc.)
2. Get new businesses smoothly on track (anticancer virus and panel examination aimed at identifying cancer-associated genes, etc.)
3. Promote open innovation to create products and technologies for future generations (Denka Innovation Center, Icon, Denka Life Innovation Research, etc.)

Main Achievements in Fiscal 2018

• Denka Seiken decided to construct a new production facility for manufacturing influenza vaccines, with the aim of significantly boosting its influenza vaccine supply capacity (July 2018)
• Denka Seiken donated Ebola virus rapid diagnostic test kits to the Democratic Republic of Congo (May 2018)
• Denka Seiken released a dedicated densitometry analyzer (optical density meter) for in-vitro diagnostic testing using its influenza virus antigen detection test kits (October 2018)

Outlook for Fiscal 2019

We will place particular focus on commercializing a panel examination service for identifying cancer-associated genes. Building on the Denka Group’ strong presence in the field of diagnostic test kits employing antigen and antibody reaction, we will expand into such businesses as gene-based diagnostic services. By doing so, we aim to provide an even broader range of solutions that transcend our traditional scope of operations focused on helping identify causes of disease.

Medium- to Long-Term Strategies

Denka Company Limited will merge with Denka Seiken, the latter of which has been charged with vaccines and diagnostic reagents—the Group’s mainstay offerings supporting its life innovation business. This move is expected to facilitate the business portfolio shift aimed at specializing our operations while supporting the realization of speedier decision making and stronger corporate governance. In this way, we will accelerate the expansion and development of our healthcare-related operations.
We will also strive to expand the scope of operations via the promotion of open innovation, which involves partners from academia as well as those from within and outside of the chemical industry, in addition to pushing ahead with our ongoing efforts to strengthen our key operations and launch new businesses.

Business development in the clinical diagnosis field

Value-Shift Diagram

Note: With the vertical axis and horizontal axis representing social issues/needs and advances in our technological development, respectively, the value-shift diagram indicates the characteristics of each product and solution as well as how they will contribute to future value creation.

Over time, the need for diagnostic solutions has burgeoned and diversified. The Denka Group has mainly provided diagnostic reagents and diagnostic test kits employing antigen and antibody reaction technologies to meet such needs.
Looking ahead, we will strive to contribute to the enhancement of people’s quality of life (QOL) by expanding into the field of gene-based diagnosis.

• EIAEnzyme immunoassay
• CRPC-reactive protein
• POCTPoint Of Care Testing: Instead of requiring separate medical examination rooms for performing diagnostic tests, POCT reagents enable medical staff to quickly perform on-site diagnoses at their medical practices without the need for massive equipment.
• Liquid biopsyA biopsy technology that uses blood, urine or other bodily fluids rather than living tissue samples for examination purposes. This technology is less invasive than a conventional biopsy.

Development Example

CANCERPLEXⓇ(panel examination service for identifying cancer-associated genes and delivering cancer remedy information)

CANCERPLEX® is a comprehensive examination system for identifying cancer-associated genes via the combination of a next-generation sequencer*1 and bioinformatics technology.*2 This system is capable of detecting more than 400 cancer-associated genes by carrying out the accurate and detailed analysis of gene alteration attributable to a solid tumor. To contribute to the enhancement of people’s QOL, we will assist each patient in the optimal selection of treatment methods through the commercialization of CANCERPLEX®.

• *1Examination equipment that reads genome sequences at an extremely high speed
• *2A type of informatics technology that analyzes such data as genome sequences identified by the sequencer to overcome the complexities of genomic information and acquire useful insights in the life science and medical fields

Employing a variety of essential technologies, the Electronics & Innovative Products Division offers a robust lineup ranging from functional fillers, thermal solution components and electronic packaging materials to structural adhesives. In short, the division is delivering products that are essential to the field of electronic materials. To contribute to society in the environment and energy field, we are pushing ahead with the specialization of our operations, to this end accommodating the latest needs arising from the popularization of EVs and other eco-friendly vehicles while delivering products that help promote the miniaturization of electronics devices and enhance their performance, safety and reliability. Furthermore, we are engaged in the development of new products by taking advantage of Denka’s unique technologies.

Characteristics of the Business Division

Technologies

Ceramics sintering and calcining, particle manufacturing, nitride synthesis, precision processing and machining, material composite, sheet and film lamination, thermal conductive, heat and light curing, static electricity control, coating and painting and adhesive technologies as well as optical property control technologies, including those associated with controlling the refractive index

Products

Ceramics, inorganic fillers, resin sheets and films, electronic circuit substrates, adhesives, electron guns for electron microscopes, etc.

Business fields

Automobiles, electric and electronic devices, aircraft and spacecraft, rolling stock, marine vessels, the environment and energy, communication, power, etc.

Five-Year Divisional Performance Summary

Business Strategies under Denka Value-Up

1.The Market Environment

1. Formation of new markets due to the popularization of EVs, HEVs and other eco-friendly vehicles
2. Changes in people’s lifestyles due to the commercialization of autonomous driving technologies and the widespread use of high-speed communications
3. Possible emergence of a game-changing material that may pose a threat to Denka

2.Strategies

1. Expand our operations targeting the vehicle-mounted device market
   Supply materials for an even broader range of vehicle-mounted devices to secure a stable profit structure that is resilient against economic conditions
2. Boost production capacity to meet needs of growth markets
   Execute timely capital investment to enhance our ability to serve growth markets as we expect demand in semiconductor and communication fields to grow robustly
3. Launch new businesses at the earliest possible date
   Swiftly commercialize new specialty products

Main Achievements in Fiscal 2018

• Released a high-heat conductive metal circuit substrate designed as a substitute for ceramics-based substrates
• Released a highly reliable circuit substrate made using a metal material boasting an ultra-low stress-strain curve for use in headlamps
• Expanded sales of spherical alumina for use as a thermally conductive material for EV components
• Expanded sales of acetylene black for use in high-capacity LiBs for EVs and high-voltage power transmission cables for wind power stations in Europe

Outlook for Fiscal 2019

• Further expand sales in the vehicle-mounted device market
• Proactively consider and execute capital investment as we expect growth in demand for such products as silicon nitride-based ceramic substrates, spherical alumina and acetylene black

Business development centered on spherical filler

Value-Shift Diagram

Due to the growing trend toward the miniaturized, lightweight and low-profile electronic devices, ceramics powder suppliers are being called to manufacture products with even smaller particle diameters. Denka offers a lineup of spherical alumina and silica that boast superior sphericity and a great size variety encompassing coarse powder to ultra-fine powder while also engaging in product design aimed at accurately satisfying customer needs. In these ways, we are contributing to the creation of electronic devices with even more superior functions.

• Spherical magnesium oxideTwice as thermally conductive as alumina, this material is expected to achieve growing sales as a next-generation thermal dissipation filler for use in 5G high-speed communication devices.
• Spherical barium titanateEmploying its superior dielectric property, this material is expected to serve as a promising semiconductor encapsulant for use in fingerprint authorization sensors (components that read fingerprints via capacitance change detection) for smartphones.
• Spherical cristobaliteCreated via the crystallization of spherical fused silica (amorphous), this material boasts a greater thermal expansion property compared with spherical fused silica and is expected to help low-profile semiconductors better withstand the stress-induced strain that occurs at the time of packaging.

Product Example

Spherical alumina

In the face of the increasing popularization of EVs and the advancement of autonomous driving systems, there is a growing call for new technologies to control the heat emitted by LiBs and other car electronics components. Such technologies are seen as key to satisfying ever higher performance requirements for car electronics components with regard to various aspects, including capacity, energy efficiency, product life and safety, and are expected to facilitate the creation of more compact and even lighter devices.
Denka’s spherical alumina is widely used in high-molecular thermal materials to improve their thermal conductivity. In particular, THERMALLY CONDUCTIVE SPACER, consisting of a mix of spherical alumina and silicon resin, is serving as an essential material supporting LiB cooling devices. Today, Denka’s technological capabilities in this field, including those backed by unique production techniques associated with the maintenance of sphericity and the mix of particles with different diameters, are attracting growing attention and are expected to help promote the popularization of hybrid vehicles and EVs.

The Infrastructure & Social Solutions Division is pursuing the specialization of its operations via structural reforms of the commodity businesses, which have supported Denka for 100 years, and the creation of high-value-added products and businesses that yield solutions that meet the needs of the times. The latter pursuit focuses on employing Denka’s unique technologies to address environmental concerns, promote labor saving and deliver people-friendly products, with the aim of contributing to the realization of the United Nations SDGs and other universal goals related to ESG issues. In addition, we are developing a working environment that facilitates employee creativity via work style reforms. By doing so, we are becoming an organization that encourages all employees to take on challenging goals and help them work vibrantly and achieve success.

Characteristics of the Business Division

Technologies

In-house power generation, mining, concrete hardening, expansion and contraction, material design, construction and repair technologies and soil improvement and fertilization technologies as well as high-temperature calcining technologies for inorganic materials and polymer processing technologies

Products

Cement (made using recycled resources), special cement additives, functional fertilizers, alumina fiber, underground drainpipes and underground irrigation system-related products

Business fields

Civil engineering, construction, agriculture, automobiles, iron-making, ceramics, etc.

Five-Year Divisional Performance Summary

Business Strategies under Denka Value-Up

1.The Market Environment

1. Growing demand for solutions supporting infrastructure development, maintenance and upgrading (related to post-disaster reconstruction, publicly funded investment in new facilities and countermeasures to the aging of facilities)
2. Burgeoning infrastructure development needs in China and Southeast Asia and growing demand for high-performance specialty products in Europe and the United States
3. In farming, trends are toward labor saving and large-scale operations to shore up Japan’s agricultural sector
4. Growing need for ecological solutions

2.Strategies

1. Develop products that support infrastructure maintenance and cultivate relevant markets
2. Facilitate the utilization of recycled waste and thereby help develop a recycling-oriented society
3. Step up overseas expansion by developing our local network for special cement additives in Asia
4. Maximize profitability by optimizing our production system
5. Promote the development of novel farming materials, thereby reinforcing our solution business targeting the agricultural sector
6. Propose and implement solutions to help create energy-saving, environment-friendly steel and industrial furnaces

Main Achievements in Fiscal 2018

• Cement: Upgraded resource recycling facilities and expanded the scope of waste accepted
• Special cement additives: Promoted the use of the clear shot method employing shotcrete with low dust generation for tunnel construction
• Agri-products: Achieved growth in sales of humic acid liquid fertilizers
• Inorganic materials: Launched the full-scale provision of alumina fiber for automotive applications
• Environmental materials: Made a full-scale entry into the irrigation system market with the release of the RaRaSui underground irrigation system

Outlook for Fiscal 2019

• Cement: Reduce the external emission of in-house industrial waste to zero via the effective utilization of resource recycling facilities
• Special cement additives: Seize opportunities arising from growing demand associated with natural energy development projects (e.g., supply products for hydroelectric power station conduits) while making a full-scale entry into the overseas road repair business and the European market for tunnel construction solutions
• Agri-products: Make entries into biostimulant markets worldwide
• Inorganic materials: Augment production facilities to meet growing demand for automobile-related products while expanding sales of such products
• Environmental materials: Initiate expansion into overseas markets for agricultural irrigation systems

Agricultural solutions

Value-Shift Diagram

With the aim of developing biostimulant-related products, we will take full advantage of our solution capabilities backed by Denka’s robust track record in functional fertilizer production spanning 100 years since its founding. Simultaneously, we will create a variety of agricultural solutions associated with farmland diagnostics and cultivation management.

• Calcium cyanamideThis product is known to serve as a pesticide before decomposing into fertilizer in the soil.
• TOYODRAINThe first resin-based helical corrugated pipe marketed in Japan.
• RaRaSuiThanks to its ability to adjust underground water levels, this system enables farmers to switch the use of fields between irrigated paddy rice cultivation and upland crop cultivation. The system also helps farmers maintain an optimal watering regime tailored for the type of crop being cultivated.

Product Example

Biostimulants

Denka’s humic acid liquid fertilizer is a biostimulant that invigorates the growth of roots and facilitates nutrient absorption, thereby contributing to higher crop quality and larger crop yields. Furthermore, this fertilizer enhances plants’ resilience against abiotic stress. Thanks to these features, the humic acid liquid fertilizer is expected to help resolve global food issues arising from food supply shortages due to population growth and serious crop damage attributable to the impact of global warming and other climate change-related phenomena.

The Elastomers & Performance Plastic Division is in charge of three business categories: the elastomer business, which includes our flagship global market-leading chloroprene rubber (CR) operations; the performance plastics business, which boasts highly functional styrene-based products in an array of grades; and the styrene and chemicals business, which centers on styrene monomer and acetyl chemicals and is backed by Denka production facilities that boast the largest capacity in the Kanto area. Currently, the division’s overseas sales ratio is holding stable at over 60%. In addition to our production bases in Japan, we operate overseas plants in the United States and Singapore to meet global market needs. Acutely aware of our mission to support Denka’s largest, flagship business segment in terms of sales and profit, we will strive to maintain stable operations while promoting specialization, with the aim of achieving goals of the Denka Value-Up management plan.

Characteristics of the Business Division

Technologies

Polymer structure design and control technologies, polymer composite technologies and material compounding technologies that aid in the creation of products for a variety of applications in line with customer intentions

Products

Synthetic rubber, styrene-based synthetic resins, styrene monomer, acetyl chemicals, etc.

Business fields

Automobile parts, transmission belts, adhesives, civil engineering (soil erosion prevention agents), home appliances, office equipment, food packaging materials, household goods for daily use, etc.

Five-Year Divisional Performance Summary

Business Strategies under Denka Value-Up

1.The Market Environment

1. Fear of supply chain disruptions due to the emergence of nationalism
2. Signs of changes in the automotive industry with regard to its needs for materials in the face of the radical shift to eco-friendly vehicles
3. Stably growing needs for solutions in the environment and healthcare fields

2.Strategies

1. Establish a business portfolio that is capable of securing stable profit and resilient against changes in trade conditions by stepping up technical services, developing highly functional grades that help Denka focus on non-price competition, and maintaining a sales mix consisting mainly of high-value-added products
2. Maximize synergies by taking full advantage of domestic and overseas production bases
3. Upgrade our quality management functions as part of efforts to enhance chemical content management and quality assurance systems

Main Achievements in Fiscal 2018

• Released Evolmer, the third functional elastomer introduced by Denka after DENKA Chloroprene and DENKA ER (Evolmer boasts excellent mechanical strength, oil resistance and abrasion resistance as well as well-balanced properties that set it apart from any previous elastomer)
• Reinforced DENKA ER production facilities (to supply materials for hoses for automobile turbo engines)
• Released AN-modified IP (IPX), which boasts the lower VOC content as well as superior heat and chemical resistance in addition to coating retention property
• Developed a high-value-added variation of DENKA POVAL (for use as a high-performance polyvinyl chloride dispersion agent, a cement additive for oil well construction, etc.)

Outlook for Fiscal 2019

There has been a downturn in macroeconomic trends due to the deceleration of China’s economic growth reflecting U.S.-China trade tension, a looming sense of anxiety about Brexit issues and the overall future outlook of the European economies, and the slowdown of Japan’s economic recovery. Nevertheless, we will remain attentive to signs of changes and agilely take necessary action to accelerate the aforementioned strategies and achieve the goals of the Denka Value-Up management plan.

Chloroprene rubber (CR)

Value-Shift Diagram

Having developed CR via the application of unique technologies, Denka was the first in Japan to commercialize this synthetic rubber. Today, the Denka Group boasts the world’s largest CR production capacity. As CR is an excellent oil- and heat-resistant material, it has become sought after for a variety of applications, including automobile parts, construction and civil engineering machinery components, medical gloves and adhesive ingredients. In addition, efforts are also under way to create new elastomer materials via, for example, the combination of CR and precision polymerization technologies.

• CR-based compound material for infrastructureA new compound material made using CR to prevent the age-related deterioration of concrete structures and lengthen their lifespans
• Compatibility accelerator technologiesTechnologies to improve adhesion force by facilitating the osmosis effect between the adhesion layer and the surface of the adhered material
• Technologies to control particle shapeTechnologies to alter particle shapes to reduce the elastomer’s weight and give it sound insulation properties

Product Example

Evolmer®

Evlomer is a new elastomer material created via the combination of elastomer technologies Denka has long accumulated over the course of the manufacture of DENKA Chloroprene and DENKA ER and its sophisticated precision polymerization technologies that have been cultivated in the course of the development of highly functional styrene-based resin. Evolmer boasts superior oil resistance and robust resilience against bending fatigue in dynamic environments. Accordingly, this product is expected to contribute to the advance of automobile technologies aimed at supporting driving safety and lengthen the lifespans of vehicles.

The Living & Environment Products Division will take on the pursuit of new value without insisting on limiting the search to a particular material or field and, to this end, fully take advantage of its strengths in the areas of technology and quality, with the aim of supporting the entire Group in its role as a chemical engineering division. In these ways, we will create and deliver products that satisfy market needs to in-house and external partners. Currently, the division is engaged in a range of operations associated with chemical engineering products aimed at supporting people’s lifestyles and improving living environments. In line with the Denka Value-Up management plan, we will accelerate global expansion via the development of unique products designed to satisfy market needs. At the same time, we will develop and deliver solutions aimed at helping reduce environmental burdens. In these ways, we will create shared value toward resolving issues society is confronting.

Characteristics of the Business Division

Technologies

Sheet film manufacturing technologies, adhesive manufacturing and adhesion coating technologies, resin compounding technologies, plastic ejection processing technologies, etc.

Products

Rain gutters and other construction materials, food packaging materials, industrial tapes, synthetic fiber for hairpieces, fluorine-based films, etc.

Business fields

Automobiles, electric and electronics equipment, civil engineering and construction, food, aircraft and aerospace, rolling stock, medical and nursing care, the environment and energy, agriculture, logistics, etc.

Five-Year Divisional Performance Summary

Business Strategies under Denka Value-Up

1.The Market Environment

1. The maturation of the domestic market and intensifying competition
2. Growth in market potential reflecting the burgeoning purchasing power of emerging economies
3. Growing public need for environmental load reduction
4. Growing interest in food safety

2.Strategies

1. Expand the lineup of specialty products in the commodity businesses while promoting the development of specialty businesses
2. Seek new applications of fluorine-based films in the fields of mobility, infrastructure and commercial graphics
3. Promote the global marketing of industrial tapes and synthetic fiber for hairpieces while enhancing their profitability
4. Develop products that give due consideration to environmental concerns arising from plastics
5. Strengthen our marketing capabilities to create new markets and new value

Main Achievements in Fiscal 2018

• Engaged in development activities to create an environment-friendly food packaging material and thin adhesive tape with an eye to addressing plastic-induced environmental problems that have become the subject of international debate
• Promoted the development of fluorine-based films targeting the automotive field
• Improved the profitability of synthetic fiber for hairpieces by scrutinizing every cost element, with Luxeena, a strategic product, achieving greater sales in the U.S. market
• Launched a dedicated team charged with creating products that accurately satisfy market needs

Outlook for Fiscal 2019

• Promote the development of specialty products in the commodity businesses
• Push ahead with marketing activities aimed at getting our specialty products on track as materials chosen by major manufacturers
• Step up other sales and marketing activities in a way that fully takes advantage of our strengths in the areas of technology and quality
• Proactively address plastic-induced environmental problems via involvement in Reduce, Recycle, Reuse and Renew

Business development centered on adhesive tapes

Value-Shift Diagram

In 1951, Denka became the first in Japan to commercialize a vinyl chloride-based insulated adhesive tape via the release of VINI-TAPE. Since then, we have long endeavored to improve our technologies, securing a robust product lineup for automobile bundling tape and electric wiring applications. Looking ahead, we will create tapes with even more superior functions and lighter weight while improving adhesives and other elements to deliver products with even smaller environmental footprints.

• Wire harnessAn electrical wiring assembly for use in equipment like automobiles and home appliances to transmit electronic signals and power
• Non-solvent adhesiveAqueous adhesive designed with due consideration given to environmental concerns

Product Example

Cold-resistant thin harness tape

The thinnest and lightest tape in the industry, this product is used as an adhesive tape for bundling automobile wire harnesses—essential car components that transmit electronic signals and power—designed for vehicles operating in harsh environments, such as those in cold regions. Denka is the first Japanese company to commercialize a vinyl chloride-based tape of this kind. Building on its accumulated technological capabilities and expertise, Denka is currently striving to meet customer requests for solutions that help reduce the weight of automobile parts while enhancing their safety and reliability in the face of the ever greater popularity of EVs and the emergence of autonomous driving systems.