Approaching his 200th day as the new Chief Executive Officer of Lonza, Wolfgang Wienand discussed the company’s plans to exit the Capsules and Health Ingredients (CHI) business and concentrate on core contract manufacturing at the 43rd JP Morgan Annual Healthcare Conference.
Some in the audience of Wienand’s presentation on 14 January expressed concern about the loss of shareholder value following the future CHI divestiture. When asked about the financial rationale and future performance of the CHI business, Wienand affirmed that Lonza is not under pressure to sell and that the company has “reasons to expect a strong interest for that business…[which is a] market leader in an attractive space and…will be able to return to the previous margin levels and growth levels as well.” He added that the company “will take the necessary time to find a value-adding good solution for shareholders and stakeholders.” Lonza first announced the decision on 12 December, 2024 to exit the CHI business so that it could focus on CDMO services.
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At JPM, Wienand highlighted that the new operating model, which was originally announced in Q4 2024, is currently being finalised and is set to be implemented in Q2 2025. Wienand explained the reorganisation: “it’s about taking three very autonomous divisions and translating them into differently set up integrated business platforms: [integrated biologics, advanced synthesis, specialised modalities].
Wienand added that Lonza “took out one management level to provide for faster decision-making and [decreased] complexity. And in the end, [the company] translated the divisional strategies into a unified Lonza strategy.”
Reflecting on 2024, Wienand reported that Lonza’s organic growth rate was 2–3% ahead of the market, with a mid-to-high teens capital expenditure in percentage of sales over time. These positive results allowed for an organic Constant Exchange Rates (CER) sales growth of low teens percentage on average over time and a core Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) margin of 27–29%, thus growing ahead of sales growth itself. The success of the CDMO business was offset by the lower-than-planned Capsules and Health Ingredients (CHI) business performance, the CEO explained.
Looking ahead at the CDMO business in 2025, the company expects a CER sales growth approaching 20%, including approximately $500m from the acquisition of the Vacaville, California site from Roche, and a core EBITDA margin approaching 30%.
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By GlobalDataThe Vacaville site has already had one letter of intent signed before closing, which turned into the site’s first hard commitment. A second firm manufacturing commitment from another customer for the Vacaville site was noted by Wienand as well. “[The] overall reception and interest for the Vacaville capacity is actually very promising, and [they] are looking forward to fully exploit[ing] that additional potential available,” Wienand said.
When asked about the US BioSecure Act’s potential impact, Wienand noted that Lonza’s 22 current manufacturing capacity growth projects are “based in the Western hemisphere. But in the end, [Lonza] will always look at opportunities in a global way. Our footprint [in Asia] and the current facilities [there] are important in our current network. However, currently our investment…flow[s] into the Western markets [based on] what we are currently doing.”
In Lonza’s day-to-day business development for early-stage service offerings, Wienand noted that the company has seen a recovery in biotech venture capital funding, including an “uptake in early phase biotech opportunities.” In 2025, Wienand expects Lonza to be “able to take on more molecules than in the trough of [funding] development.”
With a projected pharma market growth of 9% in cell and gene therapies, 6% in biologics, and 4% in small molecules by 2029, combined with an expected 20% increase in outsourcing during 2019–29, Wienand predicts the CDMO market to grow by 8–10%. With the $6bn in revenue generated from the latest financial year, Lonza is in a very strong position to capitalise on these market segments, the CEO claimed.
