Contract development and manufacturing organization (CDMO) Lonza said it exceeded its full-year 2017 guidance. The company reported sales of CHF 5.1 billion. Having closed the acquisition of Capsugel in July 2017, Lonza consolidated the Morristown, NJ-based US specialist in drug delivery technologies for nearly six months in 2017. Lonza standalone sales were CHF 4.6 billion for the full year, 10.4% up in reported currency from 2016. Including Capsugel, the Swiss company had sales of CHF 5.1 billion in 2017, a 23.5% increase compared with the previous year.

„With 120 years of company history, we are now stronger than ever,“ said Richard Ridinger, CEO of Lonza, remarking that Capsugel had already shown its potential to add to Lonza‘s growth, especially as synergies were expected to materialize starting in 2018. „With such a rapid step-up in size — of our sales, employees and entities — we are now optimizing all of our processes and structures to ensure profitable growth continues well into the future,“ he added.

With the $5.5 billion acquisition of Capsugel the Swiss fine chemicals and biologics producer accelerated the consolidation trend in the global contract manufacturing industry. Aiming to become the leading integrated solutions provider for the pharmaceutical and consumer healthcare markets, Lonza has been investing heavily in its Pharma & Biotech business, which is positioned to serve customers along the healthcare value chain.

Only a month after the closing of the Capsugel deal, in August in 2017, Lonza announced the take­over of Micro-Macinazione. The Monteggio-based Swiss specialist in the micronization of active pharmaceutical ingredients (APIs) and excipients extends Lonza’s capacity for particle engineering in Europe and Lonza´s existing micronization clinical and commercial manufacturing capabilities based in Quakertown, PA, USA.

The latest strategic move was announced on February 8 when Lonza Pharma & Biotech disclosed that it agreed on an exclusive partnership with Denali Therapeutics, a San Francisco, CA, USA-based biopharmaceutical company that works on discovering and developing a broad portfolio of therapeutic biologic candidates for neurodegenerative diseases.

Getting Closer to the Patient and End Consumer

The Capsugel acquisition also supports Lonza’s strategic ambition of getting closer to the patient and end consumer by offering an integrated portfolio of industry-leading technologies, from APIs through excipients to dosage forms and delivery technologies. The combined business creates a leading integrated, value-added solutions provider in drug development, formulation, delivery technologies and manufacturing for the global pharma and consumer healthcare industries.

A key focus for the combined capabilities of Lonza will be highly-potent active pharmaceutical ingredients (HPAPIs), a key trend in the industry according to Christian Dowdeswell, Lonza Pharma & Biotech, head of Dosage Forms & Delivery Systems. Spea­king to CHEManager’s Michael Reubold he explained the strategy behind the Capsugel acquisition: “We saw three trends in the market that drove us towards making an acquisition. First, our customer base is continuing to change. Small emerging specialty companies that are driving innovation nowadays have limited internal resources and different needs when it comes to outsourcing. The second trend is an increasing complexity in what a customer is producing, and that complexity cuts across all aspects of the drug. It is within the molecule itself but also includes the challenges to increase its solubility and bioavailability. And third, there is still, and increasingly a trend for high potency APIs. Those trends and challenges drove the acquisition of Capsugel.”

With the further expansion of its Drug Product Services labs in Basel (CH), Lonza also expanded its footprint for parenteral dosage form development offerings, which is highly complementary to Lonza’s oral dosage form. Dowdeswell explains: “With recent acquisitions, we bring in not just our core expertise in development, production and commercialization of APIs but we extend that into drug product intermediate and into drug product.”

Capsugel Acquisition and Integration

With the acquisition of Capsugel, Lonza has added a large breadth of technologies that it believes will expand the market reach of both companies’ contract development and manufacturing as well as products businesses. After the successful closing of the transaction the post-deal integration began immediately. During 2017 Lonza set up its organizational structure to be ready for the full integration of Capsugel and to align the segments for further growth in the future. From Jan. 1, 2018 on Capsugel has been integrated into both Lonza segments — Pharma & Biotech and Specialty Ingredients.

Within the Pharma & Biotech segment, Capsugel‘s drug product intermediate, development and manufacturing offerings, as well as its bioavailability and targeted release expertise, synergistically complement Lonza‘s drug substance development and manufacturing capabilities. This addition has further strengthened the breadth and depth of Lonza‘s offerings for small molecules.

Further Investments in Growth

In July 2017, Lonza announced the creation of Ibex Solutions, a new large-scale biologics campus embedded in the company’s existing manufacturing ecosystem in Visp, Switzerland. When completed, the modular complex of five buildings will offer 100’000 m² of flexible biomanufacturing space and could reduce time to market by 12 months or more. One of the two first buildings, due to be completed in the summer of this year and fully operational by 2020, will be built and operated as a joint venture with French drugmaker Sanofi.

Shortly afterwards, in October, the Swiss CDMO acquired Shire’s clinical-stage mammalian manufacturing site in Hayward, CA, USA, boosting its cGMP capacity and supplementing existing assets in Slough, UK. Also, in 2017 Lonza acquired PharmaCell, a Dutch cell-and-gene-therapy contract manufacturer, to strengthen its offering and global footprint in this area. The acquisition adds to the ongoing construction of the ­world’s largest dedicated cell-and-gene-therapy facility in Pearland, TX, USA, which is expected to come on-stream before the end of the first quarter of 2018. To support and accelerate the growth of this priority area and advance the company’s strategy of being a leading, integrated solutions providers along the healthcare continuum, Lonza will establish centers of excellence for cell and gene therapy as announced mid-February 2018. These centers will include the Lonza sites in Pearland, TX, and Portsmouth, NH, US, Geleen/Maastricht, NL, and Singapore. The focus on cell- and gene-therapy centers of excellence will shift Lonza‘s cell-therapy operations out of Walkersville, MD, USA, and enable the Walkersville site to focus entirely on the Bioscience Solutions business.

The Swiss fine chemicals and biologics producer also announced an investment in the former Capsugel site in Edinburgh, Scotland, in December 2017, less than half a year after Lonza acquired Capsugel, to improve anti-counterfeiting security for the global supply chain specific, in this case, to the liquid-filled hard capsules. This investment came three months after Capsugel had expanded the clinical trial capabilities at its Edinburgh facility. The expansion — initially announced in 2015 — also includes additional high-containment capabilities for handling highly potent and cytotoxic compounds at all stages of product development and manufacturing.

Commercial integration is also progressing, according to Dowdeswell, with the first joint-product offerings in consumer health and nutrition and positive customer response to the combined Lonza-Capsugel value proposition. Dowdeswell confirms: “With Capsugel now being an integral part of Lonza, we have a real strength and breadth of technology and a strong compelling value proposition. Customers are looking for people to solve problems. We have changed fundamentally the way we do business with our customers in that we found ways to be more responsive and to add even more value and speed to market. Our customers trust us to do things right and to do them in short time.” (mr)