Review of Operations: Specialty

Tosoh has developed its business centered on ethyleneamines, environmental chemicals, and bromine and flame retardants. The company’s distinctive products enhance people’s daily lives while also reducing environmental impact.

Business Vision

Daily life has finally begun to normalize after the drastic alterations imposed by the COVID-19 pandemic. Furthermore, energy prices, which soared due to Russia’s invasion of Ukraine, have now stabilized to some degree. Meanwhile, the international community is at risk of division, and the uncertainty surrounding the business environment has been brought into a stark sense of reality. Despite these conditions, Tosoh will continue striving to provide a stable supply of its mainstay bromine and ethyleneamines products and grow our customer base as a manufacturer situated in Asia, the most significant source of demand for these products.

Additionally, the Organic Chemicals Division's advanced organic synthesis and differentiation technologies will also play a role in achieving carbon-neutral society—a pressing global issue—and societal change based on the SDGs, including activity in the fields of environment and energy.

Medium-Term Business Policy (FY2023–FY2025)

Bromine and flame retardants

• Develop business based on supplying raw materials of superior quality
• Meet growth demand through capacity expansion

Ethyleneamines

• Stabilize earnings by adding value to low-amine products
• Stabilize earnings by strengthening derivative cost competitiveness

Eco products

• Expand market share by leveraging advantages related to raw materials
• Expand business domain through new product launches

New materials

• Cultivate new revenue sources by developing and launching new products and expanding applications

Japan’s sole manufacturer—Ethyleneamines

Japan’s top share—Bromine

Products Certified as Social Issues Solution

• TS Series Fly Ash Heavy Metal Chelating Agents

For more details, please visit Social Issue Solutions section

Medium-Term Business Policy Initiatives

Toward Specialty Business Operating Income in Excess of ¥100 Billion

The Tosoh business operational concept is 2+ Challengers. “2" refers to the division's two essential substances, bromine and amines. Combined with Tosoh's organic synthesis technologies, these will create “Challengers,” and new businesses that will hopefully open up new markets.

In the bromine business, the company plans to tackle the challenge of further raising bromine capacity by leveraging the strength of our proprietary seawater extraction process—less susceptible to manufacturing constraints such as brine depletion and environmental regulations—to capitalize on the growing demand in Asia for flame retardants used in electrical and electronic components. When it comes to amines, in addition to business development centered on high amines, we aim to maximize profits across the amine chain by adding higher value to low amines and developing CO₂ absorbents. Tosoh also intends to form a stable business structure with a suitable balance between active pharmaceutical ingredients (APIs) and derivatives by reinforcing our two API businesses—bromine and amines—and quickly develop and introduce new product “Challengers” within our new business sectors.

Differentiation Strategies

Tosoh Group's Strengths in Bromine

Demand for flame retardants—the most common application for bromine—is growing due to the increasing use of EVs and the advanced development of autonomous driving technology. Flame retardants, which help prevent combustion in electrical products, electronic equipment, and other flammable items that quickly generate high levels of heat or catch fire and burn, contribute significantly to saving lives and avoiding economic losses caused by fires.

Tosoh produces bromine by extraction from seawater, the supply of which is considered essentially inexhaustible. Compared with overseas manufacturers that extract bromine from salt lakes and brine, Tosoh’s method is less vulnerable to raw material depletion and environmental issues, making production more sustainable. Leveraging these strengths, the company has sought to boost its bromine capacity to further expand its earnings base. In the future, Tosoh will continue to widen the scale of its operations and bolster its earnings power by responding to rising demand while maintaining a stable and consistent supply.

Deployment of CO₂ Recovery Amine Products

Tosoh, one of the few ethyleneamines manufacturers in Asia, is developing amines for use in CO₂ recovery. The company’s strengths are its extensive knowledge of amines and the ability to use its amines in product development and manufacturing. Tosoh's CO₂ recovery amine is an agent that absorbs and captures CO_2, which is found in combustion exhaust gas, created from the use of coal, natural gas, and other fossil fuels. In addition to its superior energy-saving performance in CO₂ recovery, Tosoh’s recovery amine features low degradation against NOx and other substances found in combustion exhaust gas, along with stable long-term use. To further benefit from this technology, the company has decided to implement their proprietary CO₂ recovery amine at a new isocyanate feedstock conversion plant scheduled to begin operations in the fall of 2024. In the future, Tosoh plans to apply the mounting accumulated data they have obtained to optimize the amine and venture into external sales. Tosoh will accept the challenge to create innovations by combining all the technologies and experiences it has accumulated over the years to contribute to achieving a carbon-neutral society.

S Global Sales Bases

Tosoh has sales bases in the United States, Europe, China, and Southeast Asia, where staff members dedicated to organic chemical products conduct extensive sales activities. The bases promptly report any information they collect directly to headquarters, and through close collaboration with each base, Tosoh conducts sales activities focused on customer’s needs in each region. Particularly notable is that Tosoh was one of the first companies to establish a global ethyleneamines network and pioneered the development of various sales channels overseas. Conducting this global expansion independently has allowed Tosoh to obtain firsthand information on global markets, which the company can now draw from in real-time when creating the division’s sales strategies.

O Dominance of Bromine and Ethyleneamines in Asia

Tosoh’s geographic proximity to Asia—particularly China, the largest source of demand for both bromine and ethyleneamines—gives the company an advantage in the form of short lead times for product supply chains. Even amidst the logistic disruption that was experienced during the COVID-19 pandemic, the company’s proximity to the demand area allowed us to provide a more stable supply of products than our competitors. As a result, we acknowledge that this has earned us an even higher level of trust from our users.

Furthermore, we are confident that this geographical advantage not only benefits us logistically; but also fosters the development of stronger relationships with our users due to proximity. Though the pandemic saw the introduction of a host of communication tools, face-to-face conversations with users remain our preferred method of communication. We will, therefore, establish a meticulous production and sales system, leveraging our capacity for frequent communications with many users.

Underpinned by our proprietary technologies, we are expanding our separations and diagnostics business. The Bioscience Division handles everything from the development, manufacturing, and sales of systems and reagents to maintenance and customer support, contributing to the fields of health and medicine.

Business Vision

In addition to successfully expanding sales in our existing separations and diagnostics businesses, Tosoh aims to achieve consolidated net sales of 100 billion yen in fiscal 2031 by expanding into peripheral areas within our existing businesses while also venturing into new businesses. Expansion has been the company’s policy since the introduction of the previous medium-term business plan, but we have also entered into technological collaborations and acquisitions with external parties, leading to multiple new business opportunities.

While we will essentially adhere to this fundamental policy, in the future, the company plans to continue looking for new projects while working hard to ensure the success of any new businesses we have launched.

Medium-Term Business Policy (FY2023–FY2025)

Diagnostics

• Accelerate transition to AIA®-CL series
• Expand inspection parameters
• Strengthen business foundation by creating new businesses

Separations

• Increase market share for biopharmaceuticals
• Expand products into related businesses
• Expand business scale by creating new businesses

Japan’s top share—Columns for high-speed liquid chromatography

Medium-Term Business Policy Initiatives

Toward Specialty Business Operating Income in Excess of ¥100 Billion

Tosoh’s fundamental policy is as described below.

1) New product development

Tosoh primarily develops products internally, but if this becomes difficult due to technological or time constraints, we will consider exploring external collaborations or M&A concurrently.

2) Bolster sales capabilities

Tosoh will strengthen its global marketing efforts to drive further penetration of the Tosoh brand and make sales activities more streamlined.

3) Stable supply structure

Tosoh will implement timely capacity expansion to take advantage of any new business opportunities. The company will also consider establishing new multiple manufacturing and distribution bases.

4) Human resource development

It is essential to have global collaboration in many areas, including sales, development, and manufacturing. With this in mind, we will foster an environment that encourages international business acumen, for example, by primarily assigning young employees to overseas sales offices.

Products Certified as Social Issues Solution

• IC-8100® Series High-Speed Ion Chromatography Systems
• AIA®-CL Series Fully Automated Chemiluminescent Enzyme Immunoassay Analyzers
• AIA Series Automated Enzyme Immunoassay Analyzers
• HLC-723® Series Automatic Glycohemoglobin Analyzers
• TRCReady®-80 Series Automated Nucleic Acid Testing Systems
• TOYOPEARL® Series Separation and Purification Media

For more details, please visit Social Issue Solutions section

Differentiation Strategies

Expansion of Product Lineup for Biopharmaceuticals

Driven by rising demand for antibody drugs, gene therapies, and infectious disease vaccines, the biopharmaceutical market is anticipated to experience substantial growth. In contrast to the batch production method of conventional liquid chromatography technology, continuous chromatography is attracting attention as a new and more effective method for responding to demand fluctuations and managing production costs.

Tosoh made an investment in Semba Biosciences Inc. (now Tosoh Bioscience Wisconsin Inc.), a company that specializes in the manufacture and distribution of chromatography systems. Through this collaboration, Tosoh introduced the world's first tabletop continuous chromatography system and expanded its product range, including developing the ProGMP™ continuous chromatography system. In 2021, Semba officially became a wholly owned member of the Tosoh Group, with the objective of expanding the continuous chromatography business and establishing synergies with TOYOPEARL liquid chromatography separation and purification media as well as the SkillPak™ column business.

The company will continue working hard to enhance its existing business operations and expand into peripheral and new areas to become a comprehensive biopharmaceutical purification solution provider.

TOYOPEARL

Evolution to the Next Stage Through COVID-19 Initiatives

The TRCReady® series of nucleic acid testing systems has been recognized as effective for COVID-19 testing during the global pandemic. In response to the urgent demand for testing back in 2020, Tosoh focused its resources on this development. Subsequently, in August of that year, the company brought the TRCReady reagent for COVID-19 testing to market early. Moreover, by collaborating joint research with Yokohama City University and other institutions and accumulating Japanese clinical data—which was previously inadequate—we introduced sales of antibody detection reagents for AIA®-CL in December of the same year, followed by antigen test reagents in September 2021.

The COVID-19 pandemic reminded us of the critical importance of enhancing the medical system, and the role played by testing. More rapid testing leads to early detection of serious diseases while simplifying testing helps alleviate the burden on healthcare professionals at medical institutions. Moreover, the distinctive reagent formulation in the monomeric test packaging exhibits adaptable responsiveness to variations in test quantities, resulting in minimized reagent wastage and promoting cost and environmentally friendly practices.

Future testing for COVID-19 infection is anticipated to resemble influenza testing at local facilities. With this in mind, Tosoh will continue developing more convenient and compact testing systems.

S Proprietary Technology Through Separation

More than fifty years ago, Tosoh began its involvement in this business, drawing from its experience in liquid chromatography technology initially developed for internal use in R&D and quality control applications for chemical industry products like polyethylene. Subsequently, Tosoh commercialized liquid chromatography columns in response to requests from other companies. Following this, Tosoh introduced the world's first dedicated high-speed gel permeation chromatography (GPC) system, broadening the range of its applications from the chemical industry to include sectors such as pharmaceuticals, food, and environment. Moreover, the company launched the versatile Tskgel series of high-performance liquid chromatography columns, featuring various separation modes. This separation technology was also extended to the clinical field. Additionally, we have made contributions to the medical care field by introducing a system designed to rapidly and accurately separate and measure hemoglobin A1c (HbA1c), a diagnostic marker for diabetes used in monitoring blood glucose concentration. In addition to separations, we have also developed technologies for purifying both natural product ingredients and chemically synthesized products. The widespread use of our Toyopearl industrial separation and purification media in biopharmaceuticals is contributing to the rapid expansion of the business.

Moving forward, Tosoh plans to further evolve technologies related to separations, developing and launching continuous chromatography systems and Skillpak loaded with separation and purification media to meet the diverse needs of a wide variety of customers.

Tosoh caters to a global clientele with a broad range of product lines, including synthetic zeolite, zirconia, and silica glass. Our products, characterized by their distinctive features, contribute to enhancing the quality of life while also reducing environmental impact.

Business Vision

By delivering products and services with new value to the market, the Advanced Materials Division strives to establish itself as a specialty business group with a global presence. Tosoh continues to advance the development of providing distinctive products such as zirconia powder, synthetic zeolite, silica glass, sputtering targets, and electrolytic manganese dioxide (EMD) to customers around the world. This initiative aims to enhance the quality of life and reduce the burden on the environment. In every facet of our business, the company is committed to our mission of realizing a sustainable society. With this objective in mind, we will actively promote the development of new technologies associated with the circular economy and carbon recycling so we can contribute more to the actualization of a recycling society.

In response to the current situation in Ukraine, Tosoh will only pass on cost increases to customers when required in the attempt to minimize the impact of escalating prices for products such as raw materials and fuel. Additionally, in light of geopolitical risks such as tension between the United States and China, the company will reassess its raw material suppliers and sales regions.

Medium-Term Business Policy (FY2023–FY2025)

Ceramics

• Maintain supply of the world’s top share of zirconia powder for fine ceramics

Zeolite

• Expand market share by enhancing functionality and reducing costs

Electronic Materials

• Capitalize on the growing semiconductor demand through timely capacity expansion

Battery Materials

• Continue to introduce high-performance products
• Achieve stable profit growth by diversifying raw material ore

Japan’s sole manufacturer—EMD

World’s top share—Zirconia powder for fine ceramics

Products Certified as Social Issues Solution

• High-silica zeolite HSZ purifying catalyst for automobile exhaust gas
• High-silica zeolite HSZ adsorbent for VOC removal device

For more details, please visit Social Issue Solutions section

Medium-Term Business Policy Initiatives

Toward Specialty Business Operating Income in Excess of ¥100 Billion

Tosoh will achieve our objectives through the execution of three strategies: partnership, involving co-creation with customers; technology dissemination—the creation of new demand—and brand strategy. The company will continuously develop and introduce distinct products, propose solutions to customers, and progressively increase production capacity, specifically for silica, sputtering targets, and ceramics.

The company has begun to boost production capacity at manufacturing facilities dedicated to sputtering target materials used for semiconductor thin film formation, as well as for silica materials and fabricated quartzware. Among our recent product launches are zirconia powder, designed with a low sintering temperature to minimize environmental impact, and high-silica zeolite, which features high thermal stability and compliance with automobile exhaust gas regulations. Moreover, we are positioning ourselves for future profit growth by developing gallium nitride sputtering targets for gallium nitride thin film deposition.

As we explore new business opportunities, Tosoh’s goal is to develop new products and provide solutions that align with societal demands. This involves utilizing both forecasting, where business strategies are formulated based on available patent and non-patent information, and back casting, a method that begins by envisioning the desired future and then working backward to identify and develop the most suitable measures required.

Differentiation Strategies

Zirconia: Development of environmentally friendly Zgaia^TM

By redesigning the zirconia particle structure, Tosoh succeeded in developing the world’s first low yttria (Y₂O₃) additive grade Zgaia 1.5Y-HT—previously not possible with conventional products—achieving high bending strength and fracture toughness. Zgaia 1.5Y-HT can also be sintered at a lower temperature (1,250°C) in contrast to the conventional sintering temperature (1,500°C), thereby contributing to a reduction in CO₂ emissions.

Silica glass: Secured competitive advantage through collaboration with Tosoh Group (materials + processing)

Tosoh's semiconductor silica business features comprehensive production capabilities—covering materials to fabricated quartzware—which enables the company to promote advanced development materials to customers, obtaining certification, and addressing customer issues in a coordinated manner. We will also intensify our efforts to capitalize on the rising demand for semiconductor growth in different regions, capitalizing on the strength of our global processing operations.

High silica zeolite: Reducing environmental impact

The widespread adoption of electric vehicles (EVs) faces various challenges—especially for large commercial vehicles that are still dependent on internal combustion engines. In addition, stricter emission regulations are in the planning stages globally. With regard to high silica zeolite, Tosoh is continuously introducing next-generation products, underpinned by its extensive track record in catalysts for exhaust gas purification and our partnerships with customers. Based on the company’s unique material design and manufacturing technology, the stable purification and durability of our high-silica zeolite have been praised under the Euro 7 emissions regulations as an innovative and responsive technology.

Sputtering targets: Develop solution-based business for customers requiring state-of-the-art semiconductors

Tosoh will enhance its technical capabilities to provide advanced solutions, strengthen customer relationships, and broaden its portfolio with differentiated and new product lines. The Tosoh Group possesses technologies for handling various types of metals—including low-melting point, high-melting point, and alloys—as well as ceramics. The company aims to optimize and complement the Group’s strengths to enhance customer value.

Electrolytic manganese dioxide: Continuously launch high-end products

Tosoh is committed to continuously improving its product technologies and constantly delivering world-class, high-performance products. One of the company’s strengths is its global supply system centered in two bases in Japan and abroad.

Moreover, there are high expectations for manganese-based raw materials in the energy sector, and new developments are in progress based on existing technologies.

S Lineup of High-Performance Products Based on Proprietary Technologies and Global Brand Strength

Regarding zirconia powder, Tosoh’s unique hydrolysis method provides a significant quality advantage, and the company has secured the world’s top leading market share for zirconia powder, which is used in the production of fine ceramics. The utilization of high-silica zeolite, supported by high-precision material design technology and excellent quality, is prevalent in exhaust gas systems for diesel vehicles, contributing to a global reduction in nitrogen oxide (NOx) emissions. Quartz products, adopted by major semiconductor equipment manufacturers worldwide, demonstrate high-quality materials and precision processing technology. Tosoh sputtering target materials integrate metal melting and powder metallurgy technologies, while the company’s battery materials are made possible through our electrolysis technology, enabling the production of high-performance manganese dioxide. Continued global development for both products remains a priority.

O Toward the Realization of Carbon Neutrality

The oxygen ion conductivity of zirconia makes it well-suitable as an electrolyte for environmentally friendly and highly efficient solid oxide fuel cells (SOFCs), which do not emit CO_2, and solid oxide electrolyzer cells (SOECs) that efficiently produce hydrogen. Tosoh’s goal is to encourage the extensive use of the company’s zirconia materials and contribute to carbon neutrality.

Zeolites play a crucial role as adsorbents and catalysts in the recovery of CO₂ and the production of fuels and chemicals from non-fossil fuels. We are actively developing zeolites designed for the recovery of CO₂ from industrial exhaust gases, transforming fuel into sustainable aviation fuel (SAF), and producing chemicals using methanol as the key component.