Lonza Continues Strong Momentum in Businesses Along the Healthcare Continuum in Q3 2018 and Confirms Positive Outlook for the Full Year

October 25,2018
  • Businesses in Pharma & Biotech and in Consumer Health – including capsule and combined ingredient and dosage form offerings – continued to drive growth
  • Announcement of Ibex™ Solutions expansion with new, innovative offerings from preclinical to commercial including fill & finish services was well received
  • A challenging environment for cyclical businesses in mature parts of the portfolio continued to have an impact on Consumer & Resources Protection; specialty composites portfolio sustained robust performance
  • Outlook for the full year, which was upgraded with Half-Year 2018 results, is confirmed
  • Capital Markets Day in September provided strategy update for continued growth toward achieving Lonza’s Mid-Term Guidance 2022 and beyond

Basel, Switzerland, 25 October 2018 – As already indicated in the public announcements at its Capital Markets Day, Lonza today reported ongoing strong momentum for its businesses along the healthcare continuum in the third quarter of 2018.

"A highlight of the last quarter was clearly our Capital Markets Day in September, where we had the chance to discuss our growth trajectory toward and beyond 2022. We emphasized that we are focusing our investments and initiatives on our core markets along the healthcare continuum," said Richard Ridinger, CEO of Lonza. "We are capitalizing on attractive organic growth opportunities, like the recently announced expansion of our Ibex™ Solutions offerings in Visp (CH) that provide clinical development and manufacturing services along the whole value chain and now include fill and finish."

Pharma & Biotech's performance was especially driven by Clinical Development and Manufacturing and Commercial Manufacturing in its biologics businesses. Commercial and operational excellence programs across all technologies are ongoing and are having a positive impact on sustaining the current Pharma & Biotech performance.

Within Lonza's Specialty Ingredients segment, Consumer Health benefited from synergistic potential of combined nutritional ingredients and dosage form offerings, as well as from good market demand for consumer and professional hygiene.

A challenging environment for cyclical businesses in mature parts of the portfolio like basic materials and intermediates continued to have an impact on Consumer & Resources Protection. However, the specialty portfolios within the division, especially in composites and material protection, reported ongoing demand and performed robustly as expected.

The Water Care business gained good momentum based on the successful implementation of commercial initiatives and supported by a favorable pool season in North America and Europe.

The strategic review of the Water Care business is ongoing as communicated at Lonza's Capital Markets Day at the end of September.

The 2018 outlook, which was upgraded with the Half-Year 2018 results, is confirmed; and Lonza is confident it will achieve the attractive targets already communicated externally while the company prepares for further investments and ongoing operational improvements in 2019.

Pharma & Biotech

Both Commercial Mammalian & Microbial Manufacturing and Clinical Development and Manufacturing are experiencing strong demand. Announced expansions and ongoing operational excellence projects are progressing as planned. The small-molecule businesses further extended their offerings for development and manufacturing of highly potent active pharmaceutical ingredients (HPAPIs). Pharma hard capsules and dosage form and delivery systems continue to perform above expectations due to buoyant customer interest and capturing of cross-selling synergies.

Lonza announced in September the expansion of Ibex™ Solutions with two new, innovative packages – Ibex™ Design and Ibex™ Develop to meet the evolving needs of biotech companies with antibody therapies, from the preclinical stage through to commercialization – that now also include cGMP fill and finish within Lonza’s network. The packages offer drug substance development and drug substance and drug product manufacturing from gene-to-vial and are intended to accelerate the path to clinic and market. The innovative offerings received positive feedback in the market; construction at the Visp (CH) site is well underway, and it will become operational from 2020.

All other expansion programs in Portsmouth, NH (USA), Singapore (SG), Houston, TX (USA), Hayward, CA (USA) and Visp have been progressing as planned and are experiencing high customer interest, too.

Specialty Ingredients – Consumer Health

Lonza's Consumer Health businesses experienced ongoing momentum for Lonza’s offerings in nutritional ingredients and functional food supplements. The hard capsule demand continues to be strong across all regions with specialty polymers and innovative offerings driving growth, e.g. Lonza’s delayed-release capsules (DRcapsTM) for specialty applications.

Lonza broke ground for the expanded capabilities at its manufacturing site in Greenwood, SC (USA) in September as part of an ongoing program to enhance production of Lonza’s nutritional ingredients and dosage-form technologies.

The businesses in professional and consumer hygiene are performing well, driven by a tighter regulatory landscape and demand across all regions for modern hygiene solutions and effective prevention against pathogenic micro-organisms.

Specialty Ingredients – Consumer & Resources Protection

Cyclical parts of the product portfolio, like basic materials and intermediates, and a challenging supply chain and raw-material price situation continue to have a negative impact on Consumer & Resources Protection in Q3 2018. Innovative solutions in agricultural crop protection and agro specialties have further gained momentum, but results are influenced by the ongoing downward cycle for basic feed ingredients, especially for vitamin B3. Specialty solutions in composites and material protection demonstrated a robust performance driven by ongoing demand from electronics and industrial markets.

The businesses have implemented operational and commercial counter-measures, and initiatives for repurposing of assets are underway as announced at Lonza's Capital Markets Day.

Specialty Ingredients – Water Care

The Water Care business gained good momentum in Q3 2018 based on the successful implementation of restructuring, brand re-staging and e-commerce initiatives and supported by a favorable pool season in North America and Europe with increased market demand for residential water treatment offerings. The industrial, commercial, municipal and surface water treatment solutions (ICMS) business also caught up in Q3 2018 and saw firm interest in all regions. Operational and commercial initiatives are ongoing and expected to have further positive impacts from 2019 onward.

The strategic review of the Water Care business, which was first announced in May this year and confirmed at Lonza's Capital Markets Day, is ongoing.

Outlook 2018 and Mid-Term Guidance 2022

From 24-26 September 2018, Lonza held a successful Capital Markets Day with more than 120 participants from sell- and buy-side in Zurich (CH) and Visp. The Lonza management team provided a strategy update for continuing growth along the healthcare continuum toward achieving Lonza’s Mid-Term Guidance 2022 and then growing beyond. All presentations can be downloaded here.

Lonza confirmed its outlook for Full-Year 2018, which was already upgraded with H1 2018 results, and its Mid-Term Guidance 2022.

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