NOF Corporation is strengthening its role as a “delivery vehicle” for drugs by supplying the raw materials that support lipid nanoparticles, alongside its well-known defense-related business. While sales growth this fiscal year has coincided with lower profit margins, the company is expanding its supply capacity for materials including propellants and propulsion components.
NOF Corporation has positioned as a core business the supply of materials encapsulating lipid nanoparticles (LNPs) to global companies, thereby supporting the delivery of drugs inside the body. In particular, by supplying components such as PEG lipids and ionizable lipids, it supports the stable supply of nucleic acid medicines and mRNA vaccines.
From its core oil and fat chemistry business, the company has branched into a diverse range of industries, with operations spanning fats for mayonnaise, surfactants, explosives and solid boosters. Its delivery-vehicle business, regarded as its most profitable, has characteristics that make long-term customer relationships more likely, partly because raw materials and other information are disclosed in regulatory approval applications.
Meanwhile, other companies are also researching materials to replace PEG, creating a risk that the current high-profitability structure could temporarily reach a plateau. According to the earnings presentation materials, sales are set to increase significantly this fiscal year, while the quarterly operating margin on sales has declined year on year.
As for the market reaction, it has been pointed out that the share price hit a year-to-date low after the earnings announcement. The focus is on how NOF Corporation will improve its materials supply capacity and business balance.