Zurich (awp) - new brushes brush well. under new CEO Wolfgang Wienand, Lonza is taking the final step towards becoming a pure contract manufacturer for the pharmaceutical industry. Because the business with capsules adn nutritional supplements is being given up.
The group wants to separate from the Capsules & Health (CHI) division “in due course,” Lonza announced on Thursday. In 2023, it accounted for 17 percent of group sales at just under 1.2 billion francs. However, the management has not communicated too many details about this; the next steps will not be decided until 2025.
And this is how CFO philippe Deecke explained the decision: “Although the capsule business is a market leader, it has a different business model than the other parts of the company and does not offer many synergies.” Therefore, “other people would probably be better owners.”
What Deecke didn’t say: The capsule business recently shrunk and generated less profit than Lonza’s other divisions. Above all,the commercial production of active ingredients on behalf of pharmaceutical customers generates much higher margins.
The second step after chemical separation
This is strongly reminiscent of the last major step towards a Contract Advancement and Manufacturing Organization (CDMO), which Lonza started four years ago. At that time, the chemicals division, which was also less profitable and accounted for a quarter of sales, was put up for sale.
The agreement was then finalized in the summer of 2021, and the chemicals division went to two financial investors for 4.2 billion francs. This meant that lonza finally separated himself from his roots.
And Lonza Specialty Ingredients needed a new boss to step up. At the time, interim CEO Albert Baehny stepped in.
Core business is a growth area
with this latest step, Lonza is completing the largest takeover in the company’s history. At the end of 2016, the Basel-based company bought the American capsule producer Capsugel for $5.5 billion. Now the business is on display again.
Once the division is gone, Lonza will be just a pharmaceutical supplier. And the remaining core business is an area of growth,said company boss Wolfgang Wienand.
According to Wienand, Lonza expects the CDMO market to grow 8 to 10 percent annually by the end of the decade. And Lonza would like to exceed this value by 2 to 3 percent.
When he took office over the summer, the new CEO found the company “in an excellent position” he said, but he sees room for improvement here and there. Today’s Lonza,for example,is too complex and organized in a “silo-like” way.
Easier organization
Therefore Wienand is bringing a new, simplified and smoother organization to the company. The whole thing is called “One Lonza” and should be implemented by the middle of next year.
The idea behind it: Lonza should absorb the expected future growth “in a structured way”. “One day we will be a 10 billion company,” Wienand recalled.
There was applause from the stock market: at the end of trading, Lonza shares rose 4.9 percent in a slightly firmer overall market. The planned separation and focus on the core business was also well received by analysts.
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