Lonza to exit capsules and health ingredients business, focus on CDMO services
Targeting customers from small biotechs to Big Pharma, Swiss-based contract development and manufacturing organization Lonza announced it is restructuring the company with an increased focus on its core CDMO business.
At Thursday’s Investor Update 2024 event, Lonza CEO Wolfgang Wienand said the goal is to become a “pure-play CDMO” for the biopharma industry as part of the company’s new strategy and organizational structure.
“This will allow us to achieve and maintain leadership across modalities with high therapeutic and commercial value, while pioneering the manufacturing technologies of the future,” Wienand told investors.
Under a new One Lonza strategy, the company plans to exit its Capsules & Health Ingredients (CHI) business “at the appropriate time” with the next steps laid out in 2025. During Thursday’s presentation to investors, Lonza said the CHI business — which continues to be negatively impacted by destocking of pharma hard capsules — differs significantly from its long-term contracted services with a “different manufacturing model, technologies and very limited actionable customer overlap.”
William Blair analysts in a Thursday note to investors said Lonza’s decision to divest its CHI business and reorganize its remaining core CDMO business “creates some moving parts in the near term, but it also rids Lonza of the main drag on the story over the last year or more and creates a much cleaner and more compelling pure-play CDMO story.”
Lonza’s CDMO business will be restructured from three divisions with nine underlying units to three integrated platforms: Integrated Biologics (mammalian and drug product services), Advanced Synthesis (hybrid chemistry and biology solutions), and Specialized Modalities (cell and gene, mRNA, microbial, and bioscience).
Lonza will begin to operate under the new structure starting in the second quarter of 2025. For now, the company said the “market softness” in the CHI business in 2024 is “expected to be offset by the strong performance of the CDMO business,” delivering on its overall growth and margin outlook for the current year with “strong profitable growth” projected in 2025.
In March 2024, Lonza bought Genentech’s facility in Vacaville, California, one of the world’s largest biologics manufacturing facilities, from Roche for $1.2 billion. The company on Thursday said the Vacaville site integration, which significantly extends Lonza’s mammalian manufacturing capabilities in the U.S. with a total bioreactor capacity of around 330,000 liters, is “fully on track” with an expected “significant contribution to sales in 2025.”