By Andrea Figueras


Lonza said it will focus on its core business including drug development, with restructuring and a divestment planned to boost growth.

As part of the review, the Swiss life-science company said it will exit the capsules and health-ingredients business and outline next steps in the coming year.

It will keep its CDMO division providing drug development and manufacturing to other pharmaceutical companies, but simplify its setup. The new structure is set to be operational from the second quarter of next year, it said Thursday.

The exit of the capsules business in due course will remove a drag on the group's growth and strengthen the balance sheet, RBC Capital Markets analyst Charles Weston said in a research note.

It will also provide firepower for a more dynamic mergers-and-acquisitions strategy, he said. The reorganization shows that the new Chief Executive Wolfgang Wienand is stamping his mark on the group, the analyst said.

The update sent shares 6.6% higher at 557 Swiss francs in European morning trading.

The company reiterated its projections for 2024, noting that a strong performance of CDMO should offset softness in the capsules and health-ingredients market. Lonza continues to anticipate flat sales growth at constant currency, and a core earnings before interest, taxes, depreciation and amortization margin in the high-20s percentage range.

For next year, Lonza expects sales growth at constant currency to approach 20% excluding the capsules and health-ingredients business. This includes a contribution of around 500 million Swiss francs ($565.5 million) from the Vacaville site acquisition, and low-teens organic sales growth. The core Ebitda margin is expected to near 30%.

Beyond 2025 and including only CDMO, the group aims for growth ahead of the market. On average, it targets sales to rise in the low-teens percentage range at constant currency over time and core Ebitda to grow faster than sales. This outlook is consistent with the previous guidance for 2028.

The confirmed guidance for the current year minimizes near-term financial risks, while the new 2025 outlook helps set expectations, Weston said.

The company confirmed its dividend policy pay-out ratio at between 35% and 45%, and plans to maintain or increase the payout per share on year.


Write to Andrea Figueras at andrea.figueras@wsj.com


(END) Dow Jones Newswires

12-12-24 0426ET