The Mitsubishi Chemical Holdings Group consists of three core business companies: Mitsubishi Chemical Corporation, Mitsubishi Tanabe Pharma Corporation which formed by merger between Mitsubishi Pharma Corporation and Tanabe Seiyaku Co., Ltd. in October 2007, and Mitsubishi Plastics, Inc. which became a wholly owned subsidiary of Mitsubishi Chemical Holdings Corporation in October 2007. As a result, our consolidated net sales is expected to reach 2.9 trillion yen and be one of the world's leading chemical companies by the end of fiscal year ending March 2008 (FY2007). President Yoshimitsu Kobayashi says with a cheerful expression, and in a natural style, "By making the most of the strengths of our three pillars of petrochemicals, performance and functional products, and healthcare, we aim to contribute to society with our competence in chemistry."

Chemnet (C): How do you feel about achieving annual sales that are at the level of a world-leading chemical company?

With a turnover of 20 billion dollars, that is, close to 3 trillion yen, that means we are the sixth in the world and I want to further increase our annual net sales, though this depends on how one defines the chemical industry. Recently, American and European companies such as Bayer, Dow, and DuPont have been narrowing their business focus, by concentrating on pharmaceutical products or chemicals, for example. However, our Group is based on the three pillars of petrochemicals, performance and functional products, and healthcare. I want to continue to center on these three.

C: Tell us more about the strengths of having "three pillars."

The most important one is steadiness in performance. For example, while it is true that presently pharmaceuticals are profitable, how about in 20 years time? There are risks involved in our not knowing how welfare reforms and the medical system will change, in conjunction with the further aging of society. Also, because the amount of time and money involved in R&D is so enormous, the probability of new pharmaceuticals being developed has decreased.

How about performance and functional products? We will continue to deliver high-value-added materials and products. Electronic products such as optical discs have an extremely short product life, ranging from six months to three or five years at the most. Meanwhile, the investment involved is high. For these types of products, although at the moment they are performing well and are profitable, we don't know how long that will last, and I feel concerned about the long-term performance.

In contrast, we have long product life businesses. For example, we have 70 years of history in coal chemistry, that is, traditional-type chemistry based on carbon, although we've had our ups and downs, we have achieved consistent steady performance in this business. Petrochemicals are tough, with competition arising from the Middle East, China, and India, but if we work cooperatively with refineries, we can survive somehow. In that sense, our business foundation is solid.

As for Mitsubishi Chemical Holdings Group, we want to thoroughly look at the risks and strengths involved in each of these three pillars, and expand them in a well-balanced way. This is a theme for the future, but in that sense, the three pillars are very important.

C: What kind of "global group" would you like to be?

We are now in the process of determining our new mid-term management plan, and we are including strategy that looks towards 2025. The important point for the future is to estimate what society will be like 10 years and 20 years from now, and to consider what kind of contribution we can make as a group of companies based on chemistry.

First, we will create a vision of how we would like to be in 2025 as the goal, and then think about our ideal condition in 2015 in order to achieve that goal, and then summarize these ideas concretely. We should be able to announce this new plan around February next year.

In terms of numbers, for FY2007, we will be able to more or less achieve our own goals of net sales of 2.9 trillion yen, operating income of 140 billion yen, and ROA of 5.5% or more. However, in relation to how things will be after that, from FY2008 on, we are now adding up the figures to work that out.

C: In that connection, what will be your key words?

When we think about what will be necessary in society in 15 or 20 years from now, first of all there will definitely be "the environment." For example, one important issue will be the reduction of CO2. Our Group should also contribute by making use of the power of chemistry.

Next will be "health". As Japan increasingly becomes an aging society, health awareness will grow even more. We would like to not only focus on treating illness, but also contribute to the twin aspects of health and medical care, by implementing an integration of pharmaceuticals and diagnostics, through including IT technology, and so on.

The third need will be the search for "comfort," meaning how to live a more pleasant, enjoyable daily life. We will perform the role of a group of companies based on chemistry here.

The direction of our Group activities is based on these three key words.

Especially, in relation to health, this April we formed Mitsubishi Chemical Medience Corporation by integrating three healthcare companies of our Group. We will concentrate not only on curing illness with medicine, but also on diagnostics and prevention of illness. That is, we will move from "sick care" to "health care."

Also, the same medicine has different effects on different people. These effects can be monitored and the most appropriate medicine can be prepared.. Recently, this kind of medical care is being called "personalized medicine." To proceed with this, our Group has a clear advantage, since we have competence in both chemistry and pharmaceuticals.

C: How about the development of traditional chemicals, that is, the petrochemicals business?

We are a group of companies based on chemistry, but we don't intend to go as far as seeking raw materials in the Middle East. We will maintain ethylene center. There are, however, new players such as India and China. We aim to strengthen our competitiveness by measures including alliances with refineries, and will increase high-value-added petrochemical products. On the other hand, we have blast furnace coke business. We have a 70-year history of coal chemistry, and look forward to products such as carbon fibers and nanotubes in the future.

C: What are the areas of focus in the R&D for your growth strategy?

We are considering seven areas of research, targeting growth markets. One is the electronics field such as solid-state lighting; the second is display components such as for organic EL; the third is energy-saving materials for lightweight automobiles; the fourth is sustainable resources; the fifth is lithium-ion battery materials for use in HEVs; the sixth is support for drug discovery ; and, finally, organic solar cells.

Organic solar cells differ from current solar cells in that they are cells that are in the form of ultra-thin film. If you wear them like clothes they become thermal clothing, and if you stick them on walls they become lighting materials. However, it will take at least ten years to put them into practical use. In the future, it will be good if these kinds of products keep on appearing on the scene, to enrich people's lives more and more. As a Group also, we want to have that kind of large-scale, enjoyable dream.

C: The synergy among your three core business companies acting as one must be considerable.

Yes, it is. We must get the maximum possible benefit out of that synergy. However, although the vertical lines in each separate business operation in our Group are strong, the horizontal lines are not strong enough. The "exits" for our products, in other words, their destination, are the same as before - namely, automobiles, electronics, housing, daily necessities, and so on, so for the growing markets, we want to strengthen the functions through strong horizontal "skewers" or "threads."

C: What kinds of issues do you think lie ahead for the chemical industry?

One is the fact that there are too many manufacturers. Out of the total annual sales of the automobile industry, of 65 trillion yen, Toyota has a one-third share. For the electric appliance industry too, out of 85 trillion yen, Hitachi at the top has a turnover of 10 trillion yen. But in the chemical industry, of annual sales of 25 or 30 trillion yen, we, also at the top, has no more than one-fifteenth.

C: So you feel that alliances are absolutely necessary?

Yes, I do. But, the sales profit ratio for the chemical industry is about 8%, which is relatively high compared to other industries. Manufacturers of high-quality products and materials are steadily increasing their profits. In times like these, when things are going well for everyone, nobody sees a need to join up with others. The fact that alliances steadily progressed in the pharmaceuticals industry was because there was a strong awareness of problems, but in the chemical industry, unless it's an extremely good alliance, at the moment it would not be at all easy to do.

C: We've heard that you have currently set a goal for yourself of "early to bed, early to rise."

(laughing) "That's just because I want to please my wife!" Actually, all the first-class business managers that I admire get up early. I am emulating them, by going to sleep early at night and getting up at 5:30 in the morning, and being at my office by 7:30 am. As long as I am president, I intend to keep on following this routine.