With a new CEO at the helm, Swiss CDMO Lonza is looking to revivify its business by doubling down on contract manufacturing and jettisoning less profitable areas of its operations.
During an investor update Thursday, Lonza unveiled its “One Lonza” restructuring strategy, under which the company will reorganize its CDMO business, reshape its operating model, work to “elevate” manufacturing and engineering and expand its production footprint.
Perhaps most notably, Lonza has telegraphed its intention to hive off its capsules and health ingredients (CHI) business “at the appropriate time.”
In July, Lonza noted that CHI sales were down about 6% during the first six months of 2024. The CDMO attributed the downturn to “continued destocking in the pharma capsules business.” In October, the company said that demand for its CHI business remained “soft.”
Beyond the potential CHI exit, Lonza also intends to transition its existing three divisions of biologics, small molecules and cell and gene therapies—plus nine underlying units—into a simplified three-platform structure.
Moving forward, the company’s operations will center around integrated biologics, advanced synthesis and specialized modalities, Lonza said in the update.
Integrated biologics will wed Lonza’s mammalian and drug product services, while the company’s planned advanced synthesis segment will combine the former small molecules and bioconjugate divisions. Specialized modalities, meanwhile, will cover cell and gene technologies, as well as mRNA, microbial and bioscience technologies, Lonza explained in a release.
The new structure should be in place by 2025’s second quarter, the company added.
Aside from internal overhauls, Lonza will also seek to “elevate the importance of bolt-on M&A,” while adopting an “impartial view on organic and inorganic opportunities for future growth,” the CDMO said.
News of Lonza’s restructuring campaign comes just a few months after Siegfried veteran Wolfgang Wienand took the helm as the company’s new CEO.
“Since I joined Lonza in July 2024, I have spent time reviewing the business with the leadership team and identifying areas with unique strengths as well as areas where we can optimize value,” the helmsman said in a statement Thursday. “The strategy reflects our ambition to become a pure-play CDMO business.”
Wienand’s appointment followed a period of protracted leadership instability at Lonza, which kicked off with the departure of former leader Richard Ridinger in early 2019. Wienand, for his part, took up the CEO mantle from Albert Baehny, who filled the role on a temporary basis after Pierre-Alian Ruffieux left the company last September.
So far this year, Lonza’s performance has been relatively stable, with the company reporting at the half-year mark that revenue was up 1.8% compared with the same period of 2023.
Looking forward to 2025, Lonza expects sales growth to approach 20%, including a roughly half-a-billion Swiss franc ($563 million) contribution from the former Roche plant in Vacaville, California, that it bought for $1.2 billion in March.
So far, industry watchers seem to be on board with Lonza’s new direction, with analysts at ODDO BHF writing in a note Thursday that they expect the news to be “received positively.” The ODDO team noted that Lonza’s leadership has “decided against broader diversification … in favor of a stronger focus on its profitable growth drivers.”
By Fraiser Kansteiner
Source: fiercepharma.com
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