Lonza Group AG: history, ownership, mission, how it works & makes money

A Brief History of Lonza Group AG

Lonza Group AG, founded in 1897, began as a small chemical company in Switzerland, producing products for the textile industry. Over the decades, it evolved significantly, diversifying its offerings to include pharmaceuticals, biotechnology, and specialty chemicals. The company went public in 2000, listing on the SIX Swiss Exchange under the ticker symbol LONN.

Lonza's pivotal moment came in 2015 when it acquired the Intermediates and Advanced Materials segment from the former Merck KGaA for approximately €2.5 billion. This acquisition reinforced its position in the specialty chemicals market.

In 2018, Lonza announced a strategic partnership with Celgene, committing over $1 billion to expand its cell and gene therapy capacity in the United States. This investment underscored its commitment to biotechnology innovation.

By 2020, Lonza achieved a record revenue of CHF 5.2 billion, driven by robust demand for its pharmaceutical manufacturing capabilities. The company's core EBIT margin also improved to 30.0% during this period.

In 2021, Lonza continued to report strong financial performance, with revenues reaching CHF 6.1 billion and core EBITDA at CHF 2.0 billion, reflecting a growth rate of 16% year-on-year. The demand in the biologics sector propelled much of this growth, as companies sought effective solutions for vaccine development and manufacturing amid the COVID-19 pandemic.

As of 2023, Lonza remains a key player in the contract development and manufacturing organization (CDMO) space. The company operates out of multiple facilities worldwide, including sites in the U.S., Switzerland, and Singapore. Lonza's market capitalization is currently approximately CHF 30.4 billion, reflecting its strong growth trajectory in recent years.

Lonza's focus on sustainability and innovation has also been a significant part of its strategy. The company has committed to reducing its carbon footprint by 25% by 2025, emphasizing its dedication to environmentally responsible practices.

Today, Lonza Group AG stands as a leader in the biopharmaceutical contract manufacturing industry, contributing significantly to advancements in therapeutic solutions worldwide. The company continues to explore new markets and technologies, reinforcing its status as a crucial partner in the life sciences sector.

A Who Owns Lonza Group AG

Lonza Group AG, a Swiss multinational, is primarily known for its role in biotech and pharmaceutical development and manufacturing. The ownership structure of Lonza is diverse, with key stakeholders including institutional investors, private shareholders, and company executives.

Major Shareholders

As of the latest data available from September 2023, the following entities hold significant shares in Lonza Group AG:

Stock Performance

Lonza Group AG trades on the Swiss Exchange under the ticker symbol LENN. The stock performance has shown significant growth over the past few years. As of mid-September 2023, the stock price was approximately CHF 525, reflecting a year-to-date increase of around 11%.

Market Capitalization

The market capitalization of Lonza Group AG stands at approximately CHF 50 billion. This figure signifies the company's substantial position in the biotech sector, driven by its robust portfolio of contract development and manufacturing services.

Recent Financial Data

In its most recent earnings report for Q2 2023, Lonza recorded:

• Revenue: CHF 1.35 billion
• Net Income: CHF 325 million
• EBITDA Margin: 30%
• Free Cash Flow: CHF 250 million

The company has consistently achieved strong revenue growth, with a year-over-year increase of 7% in Q2 2023 compared to the same period in 2022.

Ownership Dynamics

Approximately 74% of Lonza's shares are held by institutional investors, while the remaining 26% are distributed among private investors and company insiders. This substantial institutional ownership reflects confidence in the company's strategic direction and growth potential.

In summary, the ownership of Lonza Group AG is characterized by a mix of institutional and individual investors, with significant support from some of the largest asset management firms globally, highlighting the company's prominence in the biotech and pharmaceutical sectors.

Lonza Group AG Mission Statement

Lonza Group AG, a global leader in life sciences, is dedicated to enabling a healthier world through its innovative products and services. Its mission statement emphasizes the commitment to sustainability and improving patient outcomes by leveraging cutting-edge technologies in pharmaceuticals and biotechnology.

According to their corporate website, Lonza focuses on three main areas: Pharmaceutical & Biotech, Specialty Ingredients, and Cell & Gene Therapy. The company aims to provide integrated solutions that address critical challenges faced by their partners in healthcare and specialty chemicals.

As of August 2023, Lonza reported revenue of approximately CHF 5.2 billion, representing a growth of 7.9% year-over-year. This performance was driven by strong demand in their Biologics segment, contributing around 56% to total revenue.

The company’s commitment to sustainability is also reflected in its goals to achieve carbon neutrality by 2025. Lonza is heavily investing in green technologies and circular economy initiatives, aiming for a reduction in greenhouse gas emissions by 30% by 2030.

Lonza’s strategic approach includes significant investments in research and development, allocating around CHF 450 million annually, which constitutes approximately 9% of their total revenue. This investment fuels innovation across its product lines and enhances their position in the rapidly evolving biotech landscape.

Furthermore, the company aims to expand its manufacturing capabilities, with plans to invest CHF 1.5 billion in new facilities by 2024. This expansion includes state-of-the-art facilities for mRNA production, capitalizing on the increasing demand for vaccines and therapeutics.

Lonza’s mission also emphasizes collaboration with partners, aiming to foster innovation through partnerships. In 2022, they established over 50 new collaborations globally, enhancing their product offerings and reinforcing their position in the supply chain for biopharmaceutical products.

In conclusion, Lonza Group AG's mission statement reflects a robust commitment to innovation, sustainability, and collaboration, making a significant impact in the global healthcare landscape.

How Lonza Group AG Works

Lonza Group AG, based in Basel, Switzerland, operates as a leading global supplier to the pharmaceutical, biotech, and specialty ingredients markets. The company focuses on the development and manufacturing of active pharmaceutical ingredients (APIs) and provides contract development and manufacturing services (CDMO).

Business Segments

Lonza's operations are structured into two main segments:

• Pharma & Biotech
• Specialty Ingredients

The Pharma & Biotech segment includes the custom development and manufacturing of biologics and pharmaceuticals. The Specialty Ingredients sector focuses on delivering innovative solutions in consumer products, nutrition, and agriculture.

Financial Performance

For the fiscal year ended December 31, 2022, Lonza reported a revenue of CHF 5.1 billion, representing a year-over-year increase of 7%. The net income reached CHF 1.24 billion, with an EBITDA margin of 34%.

Market Position

Lonza is recognized as a key player in the CDMO space, particularly for biologics manufacturing. The company is involved with over 800 clients and has partnerships with large pharmaceutical firms such as Novartis, Roche, and Johnson & Johnson. The growth in demand for biologic drugs has positioned Lonza favorably within the market.

Operational Highlights

The company operates multiple manufacturing sites across Europe, North America, and Asia. Notably, the new facility in Portsmouth, New Hampshire, specifically dedicated to the production of cell and gene therapies, is expected to enhance Lonza’s capabilities significantly.

Research and Development

Lonza invests approximately 7% of its annual revenues into Research and Development (R&D). This is essential for maintaining its competitive edge, especially with the rapid advancements in biopharmaceutical technologies.

Stock Performance

As of October 2023, Lonza Group AG trades on the Swiss Exchange under the ticker symbol LONN. The stock price has shown volatility, with a year-to-date increase of 15% and a market capitalization of approximately CHF 32 billion.

Conclusion

Lonza Group AG exemplifies strong operational and financial performance, driven by robust demand for its services in the pharmaceutical and specialty ingredients sectors. With a solid market presence, ongoing investment in R&D, and strategic partnerships, the company is well-positioned for future growth.

How Lonza Group AG Makes Money

Lonza Group AG is a global leader in manufacturing and supplying pharmaceuticals, biotechnology, and specialty ingredients. The company generates revenue primarily through two segments: the Pharmaceuticals & Biotech segment and the Specialty Ingredients segment. As of 2022, Lonza reported revenues of approximately CHF 5.4 billion, reflecting a growth of 9.3% from the previous year.

Pharmaceuticals & Biotech Segment

This segment is the cornerstone of Lonza’s business model, contributing around 76% of total revenues in 2022, equivalent to about CHF 4.1 billion. It focuses on contract development and manufacturing services (CDMO) for the pharmaceutical and biotech industries.

• Cell and Gene Therapy: Lonza supports various clients in developing and manufacturing cell and gene therapies, with a market for these products projected to reach CHF 31 billion by 2025.
• Biologics: Lonza's biologics manufacturing services, including monoclonal antibodies, are crucial, generating approximately CHF 2.7 billion in revenue.

Specialty Ingredients Segment

Contributing approximately 24% of total revenues, this segment recorded about CHF 1.3 billion in 2022. It encompasses a diverse range of products across multiple industries, including personal care, hygiene, and nutrition.

• Personal Care: This sub-segment includes performance ingredients and actives, generating around CHF 600 million in revenue.
• Nutrition: Lonza provides microbial and nutritional solutions, contributing approximately CHF 400 million

Geographical Revenue Breakdown

Lonza’s operations are geographically diversified, with significant revenue contributions from different regions. In 2022, the revenue distribution was as follows:

Recent Financial Performance

In the full year 2022, Lonza reported an EBITDA margin of 36% and a net profit margin of 23%. The company’s investments in R&D amounted to approximately CHF 359 million, representing about 6.6% of total revenues, highlighting its commitment to innovation and development.

As of the first half of 2023, Lonza saw a revenue increase of 7% year-on-year, driven by robust demand in the pharmaceuticals sector, particularly in biologics and cell & gene therapy manufacturing.

Strategic Partnerships and Contracts

Lonza’s business model is reinforced by strategic partnerships with major pharmaceutical companies. For instance, in 2022, Lonza secured a long-term supply agreement with a leading biotech firm for the manufacturing of a blockbuster therapy, which is expected to generate approximately CHF 1 billion in revenue over the contract's lifespan.

With its diverse range of products and services, Lonza Group AG effectively monetizes its expertise in life sciences, making it a pivotal player in the pharmaceutical and specialty ingredient sectors.