Lonza says contract manufacturing business is recovering
pharmafile | November 2, 2010 | News story | Manufacturing and Production | API, Lonza, contract manufacturing, pharma manufacturing
Lonza said its contract manufacturing business seems to be enjoying a return to form in the third quarter, despite continued volatility due to more stringent oversight of the drug approval process by regulatory authorities.
The Swiss firm does not divulge third-quarter sales revenues but said capacity utilisation and the number of projects in the manufacturing pipeline continue to increase, confirming “an intact trend toward outsourcing”.
Chief executive Stefan Borgas said new contracts in the third-quarter were at the same “encouraging level” as the first half of 2010, indicating that demand is firming after a tough period in 2009.
Highlights for the chemical side of the manufacturing business included the signing of multi-year supply contracts for two active pharmaceutical ingredients (APIs) in late-stage development and an increased demand for manufacturing and R&D services in early-phase projects, particularly for peptide drugs, said Borgas.
The number of projects in Lonza’s chemical manufacturing portfolio is now a little under 300, up from around 220 at the end of 2009, with capacity utilisation running at around 75%.
Meanwhile, for the biologics manufacturing division, encouraging signals have come from the signing of multiple new contracts for microbial culture-based manufacturing with “several USA-based pharmaceutical companies”, and the further development of strategic-level partnerships with the likes of GlaxoSmithKline and Human Genome Sciences, said Borgas.
There are almost 250 projects ongoing in the biological manufacturing and development services, up from around 210 at the end of 2009, with capacity utilisation improving from approximately 60% to 75% over the intervening period.
Despite the positive trends, Borgas warned that a stronger Swiss franc was having an impact on the company’s results and could reduce operating profit by 25 million Swiss francs this year to around 380 million francs (276 million euros).
“The translation effects from exchange rates have started to increasingly impact overall sales figures,” said Borgas, although he believes Lonza will be able to compensate for this in 2010 through improved business development in the custom manufacturing division.
Meanwhile, Lonza is in the throes of a cost-cutting exercise which is on track to provide 70-80 million francs in savings by the end of the first-quarter of 2011. The bulk of these savings (some 50-55 million francs) will come from personnel, but staffing is remaining fairly constant with new hires in the company’s Asian operations balancing net staff reductions in North America and Europe.
Phil Taylor
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