Lonza buys Arch Chemicals for $1.2 billion
pharmafile | July 12, 2011 | News story | Manufacturing and Production |Â Â Lonza, pharma manufacturing newsÂ
Swiss fine chemical and contract manufacturing company Lonza has agreed to buy Arch Chemicals of the USA for $1.2 billion in a deal that reduces its dependence on the biopharmaceuticals industry.
Arch’s main business is in biocides – chemicals which kill or block the growth of harmful microorganisms in water, wood, industrial applications and personal care products such as antidandruff shampoo.
Biocides represent a $10 billion global market – growing at 5-6% a year – at a time when Lonza’s contract manufacturing growth has been pegged back by a low rate of new product approvals, overcapacity in pharma companies’ in-house manufacturing networks and cost-cutting by drugmakers.
Lonza’s chief executive Stefan Borgas said the acquisition would expand Lonza’s non-pharma life science business and achieve a “well-balanced profile”, reducing its dependence on the volatile biopharmaceutical contract manufacturing market.
All told, Arch’s biocides and performance materials divisions generated more than $1.4 billion in sales last year, and the firm is expecting growth of 6-8% in its biocides division this year.
At Lonza sales were fractionally down last year, while its own small microbial control products unit posted “strong growth”.
Once the deal goes through later this year, Lonza will have the world’s leading microbial control business with a broad range of antimicrobial ingredients and 2010 pro-forma sales of around $1.6 billion.
Critically, acquiring Arch gives allows Lonza to tap into the fastest-growing end of the biocides market, such as water treatment, hygiene, materials protection and personal care, while also expanding its presence in emerging markets such as Brazil, India, China and South Africa.
Arch also has a smaller performance materials business manufacturing products such as coatings, adhesives, sealants and antifreeze, which accounted for around 13% of its turnover and recorded sales of around $200 million in 2010.
Overlap between Lonza and Arch will also provide opportunities for cost-cutting, said the Swiss firm, which is hoping to trim $50 million off its expenses two years after the deal goes through.
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 …
