Lonza Drops CHI Business to Focus on CDMO Services
Swiss manufacturing company, Lonza, has announced a strategic shift to focus on its CDMO business. The company will restructure its existing CDMO business into three new units - integrated biologics, advanced synthesis, and specialized modalities - as it focuses on its ambition to achieve and maintain leadership across therapeutic modalities.
As part of the move, Lonza plans to exit its capsules and health ingredients (CHI) business, despite its impressive annual sales of over USD 1.1 bn and industry-leading margins. However, Lonza projects impressive growth, with sales in its CDMO business expected to approach 20% of overall revenues in 2025 and will continue to target bolt-on mergers and acquisitions to further strengthen its position, like a previous acquisition that included Roche's Vacaville biologics production facility in California.
The following article originally appeared in FirstWord Pharma.
Lonza has decided that given the headwinds facing its capsules and health ingredients (CHI) unit, it will exit the business "at the appropriate time," with further steps to be outlined next year. The company indicated Thursday that despite CHI generating annual sales of over CHF 1 billion ($1.1 billion) — mainly driven by the hard empty capsules segment — and having industry-leading profit margins, the firm is "not [the] best owner anymore."
The decision to exit the CHI business is part of a wider overhaul at Lonza that will see the company focus on its contract development and manufacturing organisation (CDMO) offerings, which will be structured into three new units: integrated biologics, advanced synthesis and specialised modalities.
Wolfgang Wienand — who took up the role of CEO in July following the departure of Pierre-Alain Ruffieux last year — said the revamp "reflects our ambition to become a pure-play CDMO business," allowing the company "to achieve and maintain leadership across modalities with high therapeutic and commercial value."
Manufacturing expansion
Lonza has been expanding its manufacturing capacity this year, buying the Vacaville biologics production facility in California from Roche for $1.2 billion and more recently committing to additional capabilities at its existing facility in Visp, Switzerland. The latter investment is designed to run the processes needed to manufacture antibody-drug conjugates (ADCs) and other bioconjugates.
For next year, Lonza expects sales growth in its CDMO business to approach 20% on a constant exchange rate basis, including around CHF 500 million ($562 million) from the Vacaville site. Going forward, the company says it will also "elevate the importance" of bolt-on M&A.
The CDMO landscape is undergoing something of a transformation, with Novo Nordisk's controlling shareholder, Novo Holdings, on track to complete its $16.5-billion acquisition of Catalent before the end of the year. Meanwhile, Chinese contract research organisations are embroiled in a tussle with the US government over the BIOSECURE Act. However, the legislation — aimed at blacklisting companies including WuXi AppTec and WuXi Biologics — was recently excluded from a key defence budget bill.
For more, please find the original story source here.