Who Would Have Known?
Yamaha Motor Co., Ltd. announced that it will withdraw from its Life Science business as of the end of December 2010 due to expected difficulties in achieving profitability attributed to limited market size and future growth prospects.
In 1997, Yamaha Motor began researching micro-plankton propagation as a means to convert carbon dioxide into value-added substances and reduce greenhouse gases.
In 2005, the company built its Life Science laboratory and established its Life Science Division, entering the field of biotechnology.
In 2006, the company began supplying PURESTA, a new product of its Life Science Division, to food and cosmetics/skincare manufacturers as an astaxanthin ingredient.
In 2007, the company released ASTIVO, an astaxanthin-based health supplement, to the general market, marking Yamaha Motor's full-fledged entry into the life sciences industry.
Despite these efforts, however, the cumulative sales for the three fiscal years between 2007 and 2009 did not exceed 500 million yen ($6M USD), proving market demand and the growth rate to be far below initial estimates.
As a result, Yamaha Motor's Life Science business remained unprofitable. Future projections indicate that it will be difficult to achieve further growth and improve the business' profitability.
To improve company-wide profitability, Yamaha Motor is currently implementing concerted reforms, which include reorganizing factories, optimizing personnel allocation and cutting costs.
The rapid appreciation of the yen and other conditions in the current business environment are making further structural reforms necessary.
In light of these circumstances, Yamaha Motor has determined that continuing to invest in its Life Science Division is unfeasible. The company has therefore decided to withdraw from the business, and redirect the limited corporate assets available toward other investments.
Yamaha Motor plans to consult individually on the future of its business with manufacturers to which it supplies raw astaxanthin, among other products.
The company plans to discontinue general market sales of ASTIVO as of the end of March 2011. Yamaha Motor will relocate Life Science Division personnel within the company.
The change will effect the 49 Life Sciences employees but overall the the impact to Yamaha Motor's business performance for fiscal 2010 is very slight.