Lonza benefits from outsourcing growth as Swiss franc fluctuations stall 2015 projections

22-Jan-2015 - Last updated on 22-Jan-2015 at 08:22 GMT

Lonza saw growth from its biopharma business in 2014

Biopharma outsourcing growth has helped to boost the bottom line of Lonza, the world’s largest manufacturer of drug ingredients, though a topsy-turvy Swiss franc has caused the company to hold off on making any projections for 2015.

The growth comes during a year in which Lonza closed its Hopkinton, MA, site, though the company has now successfully transferred most of that work to Visp, Switzerland, where higher demand is resulting in higher capacity utilization.

The unexpected move of the Swiss national bank, which caused the company’s shares to plummet briefly, also means raw materials will be cheaper moving forward, CEO Richard Ridinger said in a conference call on Wednesday.

“We think there’s no need for an over-reaction but we’ll prepare for an answer to these challenges in any case,” Ridinger said. “We need a few weeks to see if it will stabilize a little more.” Mid-term guidance until the end of 2018 will be provided during Q1 of 2015.

Riding also noted 15.2% growth in the company’s biopharma and pharma business.

Manufacturing Moves

A second large-scale ADC (antibody drug conjugate) facility in Visp has launched as scheduled, Ridinger said, noting that the company continues to thrive in terms of safety by successfully passing 34 regulatory inspections and 169 customer audits at its cGMP (current good manufacturing practice) plants.

The company also initiated a new plant for the manufacture of niacinamide in Nansha, China, in the second half of 2014 and have begun manufacturing there, though the company’s Guangzhou, China, plant ceased operation. Manufacturing revenues make up about 40% of the company’s bottom line.

“Profit-wise we did much, much better” in 2014 than 2013 on the biopharma side of the business, Ridinger said.

Market interest and demand in new technologies – particularly for ADCs, cell therapy and viral therapy – continued in 2014, the company said. Demand for viral therapy also remains strong and driven by ongoing high level of investment in viral gene therapies.

In addition, Lonza was able to accommodate manufacturing demand, and also met the demand for additional contracts for commercial and clinical-stage products. But on the research side, Lonza noted a recovery in the European research market, while US, South America and Japan "are lagging."