Lonza boosts profit despite contract manufacturing downturn
pharmafile | July 23, 2010 | News story | Manufacturing and Production |Â Â 2010 financials, Lonza, Q2Â
Switzerland’s Lonza posted a healthy increase in profits in the first half of 2010, topping analysts’ expectations, although sales dipped following a weak period for its contract manufacturing division in the first quarter.
Sales in the six-month period came in at 1.3 billion Swiss francs ($1.25 billion), down 2%, although earnings before interest and taxes rose 6% to 173 million francs thanks to a series of cost-cutting initiatives started towards the end of last year, which have seen headcount at the company reduced by around 2% by the start of the year.
The contract manufacturing business saw a 7% decline in turnover to 658 million francs, which it put down to inventory cutting by its customers and use of internal manufacturing capacity by drugmakers rather than outsourcing partners.
Lonza’s facilities in Portsmouth, UK, and Hopkinton in the US were particularly impacted by low capacity utilisation, said Lonza chief executive Stefan Borgas.
On the plus side, new manufacturing contracts and orders were at a level “considerably higher” than the same time last year, he said, and this should translate into stronger business growth in the latter half of 2010 and into 2011. However, there could also be some pricing pressure as CMOs compete for new projects.
Drilling down within the contract manufacturing division, Lonza said that chemical manufacturing is showing signs of an upturn, with newer facilities such as Lonza’s active pharmaceutical ingredient (API) manufacturing plant in Nansha, China, helping to offset lower overall capacity utilisation.
Closure of Lonza’s plant in Riverside in the US – another part of the firm’s restructuring exercise – is on track to complete by the end of the year, he added.
Meanwhile, Lonza’s biological manufacturing division saw “multiple new production campaigns” in the second quarter, which improved mid- and large-scale capacity utilisation to around 75%, albeit falling short of the boom years of 2006-2008 when capacity use was running at close to 100%.
“Large-scale biopharma utilisation of Lonza’s network has been secured for the next five years by signed commercial products,” said Borgas.
These include Bristol Myers Squib’s Orencia (abatacept), UCB’s Cimzia (certolizumab pegol) and Abbott Laboratories’ arthritis drug Humira (adalimumab), all for arthritis, as well as GlaxoSmithKline’s Arzerra (ofatumumab) for leukaemia and Alexion Pharmaceuticals’ Soliris (eculizumab), used to treat paroxysmal nocturnal hemolysis.
Growth in the biologics unit was driven by stronger order placement and the introduction of new products coming from a solid project pipeline in the industry, said Borgas, although as a whole the contract manufacturing business is still expected to suffer volatility in the coming months.
Phil Taylor
Related Content
Lonza to acquire biologics site in Vacaville, US from Roche for $1.2bn
Lonza has announced that it has signed an agreement to acquire the Genentech large-scale biologics …
Lonza to acquire Synaffix to strengthen ADC development
Global manufacturer for the pharmaceutical, biotech and nutraceutical markets, Lonza has announced that it has …
Moderna submits BLA with FDA for COVID vaccine
Moderna has initiated the rolling submission process with the FDA for a Biologics License Application …
