Lonza offloads specialty ingredients unit in $4.7B sale to Bain Capital, Cinven in consolidation around biopharma
With the biopharma CDMO market on a yearslong upswing, giant Lonza has looked to rework the game plan to keep its golden goose productive. After tinkering with its capsule offerings, the Swiss manufacturer will now offload an ingredients unit that was once one of its business pillars.
Lonza will sell its specialty ingredients business to Bain Capital and UK private equity firm Cinven for $4.67 billion as the contract manufacturer continues to consolidate its business around biopharma work and capsules, the company said Monday.
Bain and Cinven will take over Lonza’s 17 ingredients sites around the world comprising 2,800 workers, Lonza said. The unit business produces microbial control solutions for hygiene and personal care products as well as specialty chemicals and composites for the electronics, aerospace, food and agrochemical industries.
The sale is expected to close in the second half, and Lonza said in a statement it was happy to work with Bain and Cinven given their “strong experience in the industrials sector and an established track record of successful investments in portfolio companies.”
Offloading one of two pillars of its central business comes amid Lonza’s growing offerings in the CDMO space for biopharma and follows a reworking of the firm’s capsule business.
In January, Lonza offloaded two lipid capsule production sites in Ploërmel, France, and Edinburgh, UK, as part of a plan to exit the pharmaceutical capsules space while maintaining its market foothold in consumer health and nutrition. Lonza said it would cease production of softgels and liquid-filled hard capsules in the pharma market altogether with the sales — with the exception of holding on to capacity for feasibility studies.
The company plans to continue churning out Licaps-based products, or lipid capsules, out of facilities in Colmar, France; Greenwood, South Carolina; and Sagamihara, Japan, exclusively for consumer health and nutrition.
However, capsules in consumer health and nutrition are very much still in the picture. Lonza recently invested $95.8 million to expand its capsule production capacity by 30 billion annually across eight of its sites.
But ultimately, CDMO work will become an even greater focal point for Lonza’s growth plan as Covid-19 outsourcing projects, in particular, keep driving new revenue streams. In December, Lonza touted its plan to increase production capacity by 30% by the first half of 2022, focusing on bioconjugation — a process that can develop more complex protein therapeutics.
It will add a roughly 16,100-square-foot expansion to its facility in Visp, Switzerland, for both clinical and commercial supply, and will build a 53,800-square-foot support building to increase storage and other supporting infrastructure. The CDMO also has a co-manufacturing deal on the table with Moderna for its mRNA-based Covid-19 shot, one of two vaccines approved for emergency use in the US.