Lonza sees continued recovery in third quarter
pharmafile | November 1, 2011 | News story | Manufacturing and Production, Sales and Marketing |Â Â Lonza, Q3, manufacturing and productionÂ
Revenue growth at contract manufacturing organisation Lonza in the third quarter was once again undermined by the strength of the Swiss franc and high raw material prices, according to the firm’s latest business update.
Lonza does not provide figures for its first and third-quarter updates, but said the performance in the last three months was buoyed by good levels of capacity utilisation in its custom manufacturing business, particularly for biologics, as well as new product launches in its chemicals division.
The custom manufacturing unit is seeing an increased number of projects coming out of pharmaceutical pipelines, while development services has been putting in a ‘strong performance’, according to Lonza’s chief executive Stefan Borgas.
The message provides additional indications that the underlying operating conditions for the drug sector have improved in recent months, after a protracted period characterised by a low rate of new product approvals, overcapacity in pharma companies’ in-house manufacturing networks and cost-cutting by drugmakers.
Lonza’s new biologics manufacturing facility in Singapore continues to advance and is approaching break-even, and the firm’s recent listing on the Singapore Stock Exchange is giving it access to Asian financial markets which could meet future equity and capital needs, given the ongoing turmoil in Europe.
Life science ingredient continued to be hit by higher raw material prices, increased competition for some product lines such as nicotinates, and the continuing strength of the franc which has cut back margins.
Overall, Borgas said Lonza remains on track to show increases in both revenues and earnings before income and taxes (EBIT) for 2011, helped by the acquisition of the Arch microbial control business for $1.2 billion – which completed last month – as well as expanding operations in Asia and emerging markets.
For example, the company has opened two new facilities in China for L-carnitine and peptide production in the last couple of years, and will open its third nicotinates facility in the country by 2013.
Meanwhile, a new cell therapy plant has been started in Singapore and is due to come online towards the end of 2012, will plans ongoing to set up a monoclonal antibody R&D unit on the island.
Phil Taylor
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