FUJIFILM : Strategy and Value Creation

Strategy and Value Creation

FUJIFILM, from

Top Management

Strategy and

Corporate Governance

Financial and

Founding to Now

Commitment

Value Creation

Corporate Information

The Fujifilm Group's Vision and Ideals

Realization of

a Sustainable Society

In April 2021, we formulated the new medium-term management plan VISION2023 covering fiscal 2021 to fiscal 2023. This action plan guides us toward achieving the goals set forth in Sustainable Value Plan 2030 (SVP2030), a long-term plan targeting fiscal 2030.

We will accelerate the growth of the Fujifilm Group and contribute to the realization of a sustainable society by promoting the priority measures set forth in VISION2023, and by providing valuable products and services based on our leading-edge, proprietary technologies.

Targets Under SVP2030

Fiscal 2030

Revenue: JPY 3,500.0 billion or more

CO2 emissions*: Down 45% (vs. fiscal 2013)

SVP

2030

through

• Resolving global environmental and social issues with innovation
• Impacting society in a positive way through a wide range of business
• Adequately responding to the expectations of society through stakeholder engagement

Targets Under VISION2023

Fiscal 2023

Revenue: JPY 2,700.0 billion

Operating income: JPY 260.0 billion

CO2 emissions*: Down 38% (vs. fiscal 2013)

VISION

2019

Fiscal 2017: Formulation of SVP2030

VISION

2023

Achievements under VISION2019

Fiscal 2019

Revenue: JPY 2,315.1 billion

Operating income: JPY 186.6 billion

CO2 emissions*: Down 30% (vs. fiscal 2013)

• CO2 emission reductions are based on the entire product life cycle.

Targets are set in four priority areas and in the basis of our business activities via a two-pronged approach: considering society and the environment in our business processes and resolving social issues through our business activities.

Priority Areas

Business Segments Goals in the SDGs

• Address climate change

Healthcare

Environ-

• Promote recycling of resources

Materials

ment

• Address energy issues

Business Innovation

• Ensure product and chemical safety

Imaging

•Reduce healthcare disparities and

Health

build a healthy society through the

global provision of leading-edge

Healthcare

products and services in all areas of

prevention, diagnosis and treatment

•Contribute to the creation of a

safe and secure society in the

age of advancing DX through the

development and provision of

Daily

leading-edge functional materials

Materials

Contribute to enriching and making

Life

•people's lives peaceful through

Imaging

the development and provision of

high-quality,high-performance

products and services in the field of

photography and videography

Work

•Contribute to social change where

every person is motivated in the

Style

workplace through global provision of

Business Innovation

products and solutions that increase

productivity and creativity

Basis of Business Activities

•Supply Chain

Strengthen CSR foundations across the entire supply chain

•including factors of the environment, ethics and human rights

•Governance

Improve and maintain governance structures by further

•disseminating an open, fair and clear corporate culture

Process for Identifying Materiality

Step 1

Clarifying the Basic Policies

Have a long-term perspective to contribute to resolving social issues as a global company and show the future vision clearly

Step 2

Extracting Social Issues

Based on Business Strategy

List issues from external perspectives (e.g., various guidelines such as ISO 26000, GRI and the SDGs) and in terms of potential of issue resolution by all our divisions

Step 3

Evaluation of Materiality

Evaluate materiality via a two-pronged approach:

1. Considering society and the environment in our business processes
2. Resolving social issues through our business activities

Step 4

Planning and Review

Promote measures as companywide policy after coordinating goals for identified materiality with the relevant business divisions and finalizing materiality in the deliberations at the ESG Committee

For details of each step, please see the Sustainability Report 2021 Management Performance, pages 9-12.

23 FUJIFILM Holdings Corporation

INTEGRATED REPORT 2021 24

Strategy and Value Creation

Opportunities, Risks, Targets and Initiatives in Priority Areas

By assessing opportunities and risks and setting targets for initiatives in each of our priority areas, and by developing these initiatives in our business segments, we aim to resolve social issues through our business activities.

Priority	Opportunities	Risks	Main Business
Areas	Segments

FUJIFILM, from		Top Management		Strategy and		Corporate Governance		Financial and
Founding to Now		Commitment		Value Creation			Corporate Information

Major Initiatives and Targets for Priority Areas per Business

Target 1 Reduce CO2 emissions over product life cycles*1

Investment with Consideration of

Environmental Impact

Environ-

ment

• Growing needs for efficiently storing enormous volumes of data with less energy and at low cost in the era of big data
• Increasing demand for systems, products and technologies for weather monitoring and prediction in response to abnormal weather events, and for diagnosing deterioration of infrastructure such as buildings and water sources

● Supply chain disruptions and factory stoppages due

to abnormal weather events caused by temperature

increases (e.g., heavy rain, floods, drought, forest

thinning)

● Material shortages due to tree and forest withering

(Paper: pulp, Film: cellulose)

● Material shortages due to fossil fuel depletion

● Increase in manufacturing costs due to carbon taxes

on fossil fuel

● Securing water necessary for film production to

mitigate natural disasters, etc.

Healthcare

Materials

Business

Innovation

Imaging

Goals in the SDGs

30%45%

FY2019 (Actual)

FY2030 (Target)

Target 2 Reduce CO2 emissions through products and services*2

• Incorporating contribution to decarbonization in investment decisions
• • Targeting implementation of renewable energy at the new bio CDMO factories

Energy Strategy

• Switching to high-efficiency facilities across the Group
• Promoting social infrastructure development through environmental initiatives

Creating and Promoting Environmentally Conscious Products

● Increasing needs for solutions that support medicine	● Major, unpredictable changes in healthcare
and improve work efficiency due to an aging	administration policies due to healthcare reforms
population and shortages of medical practitioners	● Strengthened laws and regulations for medical	Healthcare
● Increasing unmet medical needs, mainly for cancer,	equipment
rare diseases and gene therapies	● Increasing difficulty of new drug discovery
● Expanding market for biopharmaceuticals, which

	16	90
	million tons
	million tons
	FY2019 (Actual)	FY2030 (Target)

• Reducing society's power consumption through promoting use of large-capacity magnetic tape as an alternative to hard disk drives
• Reducing power load by introducing printing plate materials that do not need development processing
• Developing materials contributing to energy storage

	are expected to deliver high efficacy with few	● Heightened competition in the market for contract	Goals in the SDGs
Health	process development and manufacturing of
side effects
biopharmaceuticals due to technological innovations

• Enhanced industrialization of regenerative medicine
• Rising awareness of healthy life expectancy and lifestyle-related ailments

	● Stronger demand for display-related materials with	● Tougher competition from alternative materials for
	growth in the OLED market	TAC film
	● Expansion in the semiconductor market from spread	● Fierce competitive environment in the
	of 5G and autonomous driving	semiconductor materials market
	● Expansion in the industrial printing markets for	● Weaker-than-expected demand in graphic arts film
	packaging and textiles, and growth in inkjet digital	and printing plates	Materials
	printing in these markets	● Higher raw materials prices
	Imaging
	● Growth in the number of images taken and printing	● Escalation of competition in the mirrorless digital
	needs due to smartphone proliferation	camera market
	● Expansion of demand for instant photo systems in
Daily	● Enhancement of smartphone camera performance	Goals in the SDGs
emerging countries	(driving users away from cameras)
Life	● Single-lens reflex camera and smartphone users
● Escalation of competition in the high-performance
	switching over to or purchasing mirrorless digital	industrial lens market due to competitors'
	cameras due to enhanced performance
	technological enhancements
	● Growth in demand for lenses as IoT advances and
	● Procurement risk due to tight supply-demand
	security becomes more important	balance in semiconductors

• Increase in demand for high-performance lenses from shifts to 4K and 8K imaging

*1 Reducing CO2 in the entire product life cycle (Figures vs. fiscal 2013 levels)

*2 Target of CO2 emissions reduction in society, which is to be achieved by replacing the conventional products with our environmentally conscious products and services (Cumulative reduction since fiscal 2017)

Target Implementing medical AI-based products and services in all countries and regions

57	196	● Implementing products and services based on
medical AI technology in all countries and regions
countries		countries	by fiscal 2030 to improve access to healthcare
FY2019 (Actual)		FY2030 (Target)

Target 1 Contribute to creation of a safe and secure society in the age of advancing DX through the development and provision of leading-edge functional materials

Target 2 Contribute to enriching and making people's lives peaceful through the development and provision of high-quality,high-performance products and services in the field of photography and videography

Work Style

• Stronger demand for office equipment and related services in emerging markets such as China and Southeast Asia
• Increased demand for IT infrastructure development/ management services related to security, network and so forth, in response to the changes in work environments such as telecommuting
• Growing market for business solutions and services that utilize AI and the cloud for DX and improving productivity in office work

• Decreased demand for printing with establishment of telecommuting and advancements in business process digitization
• Decline in profitability due to tougher competition in office equipment markets

Business

Innovation

Goals in the SDGs

Target Provide solutions and services bringing business innovation to 50 million people around the world

50	● Providing 50 million workers with work styles helping
them be more productive and creative through
solutions and services that bring innovation to their
million people	businesses
FY2030 (Target)

25 FUJIFILM Holdings Corporation

INTEGRATED REPORT 2021 26

(Billions of yen)

For details, please see the Sustainability Report 2021 SVP Stories, pages 14-15.

Strategy and Value Creation

Targets for Achieving SVP2030 and Initiatives in Fiscal 2020

FUJIFILM, from		Top Management		Strategy and		Corporate Governance		Financial and
Founding to Now		Commitment		Value Creation			Corporate Information

Reflecting on the VISION2019 Medium-Term Management Plan, and on Fiscal 2020

Priority Area	Priority Issues	Major Targets for FY2030	Major Activities in FY2020
						● Reduce the Fujifilm Group's	● Raising our FY2030 targets for reducing CO2
					1. Address climate change	CO2 emissions by 45% by	emissions
					FY2030 (compared to the	(Targets on the left are revised targets)
					2. Promote recycling of
					FY2013 level)	● Obtained SBTi certification with higher targets
					resources
					● Contribute to a reduction in the	● Newly certified 30 products under the Fujifilm
					3. Address energy issues
					CO2 emissions generated in	Group Green Value Products certification system
					toward a decarbonized
					society by 90 million tons by	(total: 166 products)
Environment	society
FY2030	● Named on the CDP A List for Water Security,
					4. Ensure product and	● Minimize adverse effect of
					earned the highest "Leadership" rank in the CDP
					chemical safety	chemical substances on human	Supplier Engagement Rating for three consecutive
						health and the environment	years
							● First time selected for Health and Productivity
					1. Fulfill unmet medical needs	● Develop new treatment	Stock Program
					2. Improve accessibility to	solutions / Improve	● Opened a cancer-focused medical screening
					accessibility to new treatment	center in India
					medical services
					solutions	● Released PCR test kits, manufactured APIs for
					3. Contribute to identifying
					● Expand and scale up AI and IoT	COVID-19 vaccine candidates and provided
					diseases at an early stage
					technologies to reduce burden	contract manufacturing for drug preparations
					4. Contribute to health
Health	on medical professionals	● Announced large-scale investments in Denmark
promotion and beauty
					5. Promote management of a	● Promote management of	and U.S. biopharmaceutical manufacturing
					health and productivity to	facilities
					healthy workplace	maintain employees' vitality	● Launched SYNAPSE Radiotherapy, a radiotherapy

Enhancing our business portfolio and building the foundation for the next leap forward

In the VISION2019 medium-term management plan, we positioned our businesses in the following three stages: improving profitability, accelerating further growth and investing to create a future. Taking measures according to the stage of growth, we worked to improve the profitability of each business and set priority issues such as accelerating growth in the healthcare field and establishing a new growth strategy and further improving profitability of the document solutions business.

In healthcare, with the medical systems business and the bio CDMO business as growth drivers, we have been proactively making investments for sustainable growth, including the acquisition of Hitachi, Ltd.'s diagnostic imaging business, the acquisition of a facility in Denmark for the bio CDMO business and large-scale capital investment. In the document solutions business, we achieved an operating

margin of more than 10% in fiscal 2019, one year ahead of the initial plan, by improving profitability through promotion of operational reforms and shortening development lead times. In addition, by making Fuji Xerox a wholly owned subsidiary of the Company, we have established a foundation that will lead to faster decision-making and further synergy creation within the Fujifilm Group.

	VISION2019	FY2019	FY2020
	(Actual)	(Actual)
Revenue	2,600.0	2,315.1	2,192.5
100%	100%		100%
Operating	230.0	186.6		165.5
income	8.8%	8.1%		7.5%
Net income	150.0	125.0		181.2
attributable	Record
to FUJIFILM	5.8%	5.4%	high	8.3%
Holdings
ROE*	7.3%	6.3%		8.7%

* Return on equity

			planning support software that utilizes AI in Japan
	1. Contribute to creating a	● Aim at 100% preservation of	● Developed technology for magnetic tape storage
	media with high recording capacity of 580TB,
	safe and secure society	records archived on tapes.
	which is 50x the conventional capacity
	2. Contribute to enriching	● Offering opportunities to enjoy
	● Enhanced the AI functionality of "Hibimikke (Crack
	humanity and relationships	photos that give forms to
Daily Life	Finder)" a social infrastructure image diagnostic
between people	memories
			service

Addressing Priority Issues and Performance Trends

Priority issues	Measures FY2017	FY2018	FY2019	FY2020
			Acquisition of Biogen	Bio CDMO business
Accelerating growth in	Acquisition of Wako Pure	Acquisition of Irvine	(Denmark) Manufacturing	Decision to make large-scale
Decision to acquire Hitachi,
the healthcare field	Chemical Industries, Ltd.	Scientific	capital investment
			Ltd.'s diagnostic imaging	Transfer of J-TEC shares
			business*
Establishing a new			Converted Fuji Xerox to a	Established FUJIFILM
growth strategy and	Announced structural		wholly owned subsidiary
	RIPCORD, a service company
further improving		Decided to terminate the
reforms at Fuji Xerox		to drive DX alongside
profitability of the			technology agreement with	U.S.-based RIPCORD
document solutions business			U.S.-based Xerox Corporation

	1. Create environments	● Support work-style reform for
	that lead to a motivated
	customers
	workplace
	● Improve the rate of women in
	2. Develop and utilize diverse
Work Style	managerial positions
human resources

	Strengthen CSR foundations
● Supply Chain	across the entire supply	● Promote sustainable
chain including factors of
procurement
	the environment, ethics and

human rights

● Received the Nikkei Superior Products and

Services Award and the Nikkei Business Daily

Award for the CocoDesk personal workspace,

supporting telecommuting for businesspersons

● Launched provision of our IT Expert Service, an

outsourcing service helping SMEs to leverage IT

● Improved the rate of women in managerial positions

(14.5% in FY2019 to 15.4% in FY2020)

● Re-informed our suppliers across the world about

the Request to Suppliers and collected receipts

from 213 suppliers

					* Acquisition completed on March 31, 2021
Healthcare Field: Performance Trends	Document Solutions Business: Performance Trends
Revenue Operating income		Operating margin	Revenue Operating income		Operating margin

(Billions of yen)			567.8		(Billions of yen)
600			504.1	12.0%	1,200	1,047.8	1,005.6			14.0%
	484.3		958.3
	443.0
								854.7
			9.8%						11.0%
								9.6%
		6.8%								8.6%
300		6.6%		6.0%	600					7.0%
	4.5%	33.3	33.1	55.8			0.8%		96.4	105.0	73.3
	19.7			8.4
0	FY2017	FY2018	FY2019	FY2020		0	FY2017	FY2018	FY2019	FY2020

	Improve and maintain	● Improve compliance awareness
● Governance	governance structures by
across the entire global Group
further disseminating an open,

fair and clear corporate culture	and reinforce risk management

● Establishment of the Fujifilm Group AI Policy

● Revision of Corporate Governance Guidelines

● Establishment of the Fujifilm Group Global

Healthcare Code of Conduct and providing

education to employees engaged in related

businesses

● Surveying all Group employees on understanding

of Company policies and awareness of compliance

A business portfolio with steady profits, even amid the COVID-19 pandemic

In fiscal 2020, both sales and profits decreased year-over- year due to the impact of the spread of COVID-19, but the medical systems business, bio CDMO business and regenerative medicine business performed particularly well in contributing to pandemic control. Sales also increased in the highly functional materials field, which captured demand for working and learning at home. This was a year

in which we built a resilient business portfolio and generated solid profits even amid the COVID-19 pandemic. In addition, net income attributable to FUJIFILM Holdings reached a record high, thanks to gains on the sale and valuation of investment securities, which gained significant value from strategic investments in venture companies, mainly in the healthcare segment. Also contributing were improvements in losses attributable to noncontrolling interests as a result of converting Fuji Xerox into a wholly owned subsidiary.

27 FUJIFILM Holdings Corporation

INTEGRATED REPORT 2021 28

Strategy and Value Creation

Medium-Term Management Plan VISION2023

In April 2021, we announced our medium-term management plan VISION2023, effective through fiscal 2023. Through four priority measures, we will accelerate growth in healthcare and highly functional materials and build a more resilient business platform to facilitate sustainable growth.

Accelerate business growth in healthcare and advanced materials and build a more resilient business platform to facilitate sustainable growth

• Continue active growth investments
• Concentrate management resources on "New/Future Potential" and "Growth Driver" businesses
• Accelerate and strengthen the cash generation and investment cycle

FUJIFILM, from		Top Management		Strategy and		Corporate Governance		Financial and
Founding to Now		Commitment		Value Creation			Corporate Information

Performance Targets					(Billions of yen)
			FY2021	FY2021	FY2023
		FY2020 (Actual)	Latest Earnings
		VISION2023	VISION2023
			Forecast*6
	Revenue	2,192.5	2,440.0	2,500.0		2,700.0
	100%	100%	100%		100%
	Operating income	189.5	215.0	235.0		270.0
(Excluding one-time expenses)	8.6%	8.8%	9.4%		10.0%
	One-time expenses	24.0	35.0	35.0		10.0
		165.5	180.0	200.0		260.0
	Operating income	Record
	7.5%	7.4%	8.0%	high		9.6%

1 Reinforce business portfolio management

Implement appropriate strategies according to business phase

Optimal allocation of group-wide management resources

3 Enter into new markets for further growth

Continue to invest in fields and markets where our technological strengths*4 can be leveraged

2 Strengthen cash flow management

Thorough business approach that emphasizes capital efficiency

Improve ROE*1, ROIC*2 and CCC*3

4 Create stronger integrated business synergies through M&A

FUJIFILM Healthcare*5

→Combine AI technology with our extensive product lineup to create new value

Income before	235.9	185.0	220.0		265.0
Record
income taxes	10.8%	7.6%	8.8%	high	9.8%
Net income attributable to	181.2	130.0	160.0		200.0
Record
FUJIFILM Holdings	8.3%	5.3%	6.4%	high	7.4%
Earnings per share for net income	¥453.28	¥325.18	¥400.18	¥500.27
attributable to FUJIFILM Holdings
ROE	8.7%	6.2%	7.1%		8.4%
ROIC	4.3%	4.6%	4.9%		6.1%
CCC	123 days	124 days	124 days	103 days

FUJIFILM Business Innovation

• • Accelerate global business deployment
  • Strengthen solution and service businesses

(Note 1) Fiscal 2020 exchange rates (actual): USD = JPY 106, EUR = JPY 124, silver price (per kg) = JPY 84,000 VISION2023 exchange rate assumptions: USD = JPY 104, EUR = JPY 124, silver price (per kg) = JPY 84,000 Latest exchange rate forecast for fiscal 2021: USD = JPY 109, EUR = JPY 132, silver price (per kg) = JPY 95,000

(Note 2) Operating income fluctuation per change in one foreign exchange unit: USD = JPY 0.3 billion, EUR = JPY 0.8 billion

VISION2023:

Four priority measures

VISION2023 is based on the principles of accelerating growth in healthcare and highly functional materials and building a more resilient business platform to facilitate sustainable growth. Here, we will promote four priority measures to achieve these goals.

Reinforce business portfolio management

With our business segments reorganized into four areas- Healthcare, Materials, Business Innovation and Imaging- we will execute strategies befitting the phase of each business within these segments, with each business classified into one of four stages-New/Future Potential, Growth Driver, Earnings Base and Non-Core.

Strengthen cash flow management

In addition to growth in revenue and operating income and achieving ROE targets, we will adopt ROIC and CCC as new indicators and strengthen our ability to generate cash, through rigorous business management mindful of capital efficiency. In particular, we will focus on ROIC, an indicator of management efficiency in terms of effectively utilizing

invested capital, with a group-wide target of 6.1% in fiscal 2023. In addition, through the efficient use of assets and business portfolio management, we will generate a cumulative total of JPY 1 trillion in operating cash flow over three years, which we will prioritize use in growth investment.

Enter into new markets for further growth

We will invest in areas where we can leverage the Fujifilm Group's technological strengths, such as AI technology, biotechnology and photo regulation materials technology as we work to enter new markets.

Create stronger integrated business synergies through M&A

Fujifilm will create synergistic benefits with FUJIFILM Healthcare, which has taken over Hitachi, Ltd.'s diagnostic imaging business. Also, FUJIFILM Business Innovation will generate integration benefits in accelerating global operational presence and reinforcing the Solutions & Services Business.

*1 Return on equity

*2 Return on invested capital

*3 Cash conversion cycle. Number of days from when payment is made to purchase raw materials to when payment is collected for products or services

*4 AI/IT technologies, biotechnology, optical control material technology, etc. *5 Successor company for diagnostic imaging business of Hitachi, Ltd. acquired

on March 31, 2021

Performance Targets in the

VISION2023: Record profits

We are targeting revenue of JPY 2.7 trillion in fiscal 2023, with operating income to reach a record high in fiscal 2022 and further grow in fiscal 2023. Our goal for net income attributable to FUJIFILM Holdings is to reach a record high of JPY 200 billion in fiscal 2023. The plan does not incorporate one-time gains such as the gain on the sale and valuation of investment securities recorded in fiscal 2020, but it does include expected temporary profit declines in fiscal 2021. In addition, we will achieve ROE of 8.4% in fiscal 2023.

*6 As of the Q1 fiscal 2021 financial results announcement *7 After segment eliminations

*8 Fiscal 2020 figures are forecasts as of the time when VISION2023 was announced

*9 Revenue in the fiscal 2020 earnings forecast reference data is based on the reclassification of revenue from "Production Services" under Business Innovation (Document Solutions) to the Materials area in the forecast announced on February 9, 2020 (reference data)

Performance Targets by Segment	(Billions of yen)
		FY2021	FY2021	FY2023
Revenue*7	FY2020*8	Latest Earnings
		VISION2023	Forecast*6	VISION2023
Healthcare	550.0	750.0	770.0	860.0
Materials*9	570.0	600.0	620.0	720.0
Business	780.0	800.0	800.0	820.0
Innovation*9
Imaging	280.0	290.0	310.0	300.0
Total	2,180.0	2,440.0	2,500.0	2,700.0
Operating income		FY2021	FY2021	FY2023
[Operating	FY2020*7	Latest Earnings
margin]		VISION2023	Forecast*6	VISION2023
Healthcare	56.0	70.0	78.0	103.0
[10.2%]	[9.3%]	[10.1%]	[12.0%]
Materials	52.0	56.0	62.0	95.0
[9.1%]	[9.3%]	[10.0%]	[13.2%]
Business	71.0	75.0	75.0	82.0
Innovation	[9.1%]	[9.4%]	[9.4%]	[10.0%]
Imaging	11.0	16.0	22.0	25.0
[3.9%]	[5.5%]	[7.1%]	[8.3%]
Corporate expenses /	-30.0	-37.0	-37.0	-45.0
consolidated
adjustment
Total	160.0	180.0	200.0	260.0
[7.3%]	[7.4%]	[8.0%]	[9.6%]

29 FUJIFILM Holdings Corporation

INTEGRATED REPORT 2021 30

Strategy and Value Creation

Medium-Term Management Plan VISION2023

Message from CFO

Strengthening our business portfolio management and building a more resilient business foundation facilitating sustainable growth

Masayuki Higuchi

Director and Corporate Vice President

CFO and General Manager of

Corporate Planning Division

FUJIFILM Holdings Corporation

Reinforcing Business Portfolio Management-Strategic execution fitting business phases

FUJIFILM, from		Top Management		Strategy and		Corporate Governance		Financial and
Founding to Now		Commitment		Value Creation			Corporate Information

Planting seeds from a long-term perspective

Driving growth and profit in the medium term

High

New/Future Potential

Growth Driver

Medical Systems:

Medical Systems:

AI/IT systems, endoscopes (rigid endoscopes,

Endoscopes (flexible endoscopes, treatment tools)

surgical tools)

IVD (equipment, reagents)

potential)

Bio CDMO: Gene therapeutics CDMO

Diagnostic ultrasound systems (POC, stationary)

Life Sciences: Drug discovery support

X-ray equipment (CT, MRI, DR, etc.)

Bio CDMO:

(iPS cells, cell culture media, reagents)

Electronic Materials, Display Materials and Other

Antibody drug CDMO

(growth

Electronic Materials:

Advanced Materials: New materials

etc.

Graphic Communication:

Semiconductor materials

Digital printing, inkjet

Business Solutions

etc.

attractiveness

Non-Core

Earnings Base (cash cows)

Market

Judged based on compatibility with strategy, growth

Office Solutions

potential and profitability

Consumer Imaging

Professional Imaging

Graphic Communication:

Analog printing

etc.

Along with the formulation of our medium-term management plan VISION2023, we have reorganized our businesses into four segments: Healthcare, Materials, Business Innovation and Imaging. Starting in fiscal 2021, we are disclosing financial information such as revenue and

respective growth phases. In order to classify the businesses, we examined each business from various perspectives, including its positioning, potential and stage. Our basis for this examination is the approach of concentrating investment in areas where we can leverage

Low		Our profitability			High
		The arrows (	) indicate the flow of management resources, including cash.

operating income for Healthcare as an independent segment to illustrate progress in this management plan.

In addition, each of our businesses will be categorized as one of New/Future Potential, Growth Driver, Earnings Base and Non-Core. For each of these, we will implement appropriate strategies and reallocate management resources across the Group in accordance with their

the Company's strengths and where we can generate higher returns over the medium to long term. We will concentrate investing our management resources into New/Future Potential and Priority businesses for growth, as these will drive our future generations. Meanwhile, we will pursue management efficiency and control investments in Earnings Base businesses, maximizing cash flow.

Specifically, over the three years of the VISION2023 plan, we will invest a total of more than 1.2 trillion yen in R&D, capital expenditures and other growth investments, of which 1 trillion yen will be concentrated in New/Future Potential and Priority businesses. By newly disclosing the revenue results of the medical systems business, bio CDMO business and electronic materials business, each are either New/Future Potential or Growth Driver, we will visualize the progress of growth in each of these businesses.

Revenue and Operating Income Composition

	FY2020*1
13%	25%	6%
30%
Revenue		Operating
	Income
Composition
	Composition*2

Reorganizing into Four Business Segments

			Medical Systems		Life Sciences
Healthcare			Bio CDMO	• Life sciences (drug discovery support: iPS cells, cell culture media, reagents)
		• Pharmaceuticals
					• Consumer healthcare (cosmetics, supplements)
							Other Advanced Materials			Graphic Communication
			Advanced Materials
Materials							• Industrial products			• Graphic communication
		Electronic Materials
				• Fine chemicals			• Inkjet
			Display Materials			• Recording media

In the Earnings Base businesses, we will focus on profitability and efficiency to maximize cash generation and generate resources for investment in growth. Businesses that we have positioned as Non-Core in terms of strategic fit, growth potential and/or profitability will be examined with a view to either transforming them into Earnings Base businesses through thorough reform, or potentially disposing of them through sale or withdrawal.

Through these measures, we aim to grow Healthcare to become the Group's largest segment, with revenue accounting for 32% across the Group in fiscal 2023 (vs. 25% in fiscal 2020) and operating income of 34% in fiscal 2023 (vs. 30% in fiscal 2020).

36%	26%	37%	27%

Healthcare	Healthcare grows
Materials	into largest segment
Business Innovation	in both revenue and
Imaging	operating income.

	FY2023
11%	32%	8%
	34%

Business		Office Solutions
Innovation		Business Solutions
Imaging		Consumer Imaging
	Professional Imaging

As of fiscal 2021, results are disclosed for four segments (healthcare, materials, business innovation and imaging) and

11 subsegments ( )*

• Revenue and operating income are disclosed for the four segments, and revenue is disclosed for the 11 subsegments.

	Revenue	Operating
	Income
	Composition
	Composition*2
		27%
30%	27%	31%

*1 Figures for fiscal 2020 are forecasts as of the time when the medium-term management plan was announced.

*2 Operating income composition■ ■ ■ data■ is売group上高-wide and before consolidation adjustments.

31 FUJIFILM Holdings Corporation

INTEGRATED REPORT 2021 32