Lonza reported a solid start to the first half of 2025 on Wednesday, with strong overall performance by its contract development and manufacturing organization (CDMO) business including positive momentum in mammalian, bioconjugates, and small molecules, offsetting lower sales from cell and gene therapy (CGT) and microbial.
“There is continuing customer interest in the Vacaville large-scale mammalian drug substance facility, with multiple customer negotiations ongoing and further signings expected soon,” the company said in its announcement.
While Lonza saw a high level of utilization in its mammalian small-scale assets in the first half of 2025, the company is “closely monitoring the biotech funding environment and regulatory developments in the U.S., which may have an impact specifically on emerging technologies such as CGT.”
CEO Wolfgang Wienand told analysts on Wednesday’s earnings call that Lonza continues to monitor the evolving geopolitical and macroeconomic landscape. For now, the company expects no material financial impact from U.S. trade policies and is confident that it can mitigate the potential impact of tariffs, Wienand said.
Despite the potential market headwinds, Lonza expects for the full-year 2025 continued high utilization of its commercial assets with strong operational delivery and sustained commercial contracting for its CDMO business.
William Blair analyst Max Smock in a note to investors described Wednesday’s first-half earnings announcement as “another solid update” from Lonza, despite the fact the company is “not fully firing on all cylinders.”
“Sales of CHF 3,576 million came in 1.4% above our model and 2.5% above consensus, with stronger-than-expected CDMO revenue more than offsetting softer-than-expected results from the company’s [Capsules & Health Ingredients] business,” Smock wrote.
In its CDMO business, Smock said a key highlight in the first half of 2025 was Lonza’s new long-term strategic contract for integrated supply of antibody-drug conjugate (ADC) drug substance and drug product, which “we believe illustrates the company’s dominant position in this emerging space.”
Despite plans to eventually shed its Capsules & Health Ingredients (CHI) business, Lonza’s 2025 outlook for CHI remains on track for expected recovery with the company “confirming its expectation for low- to mid-single-digit constant-currency sales growth and an improved core EBITDA margin in the mid-twenties,” according to Smock.
While CHI revenue in the first half of 2025 fell short of expectations, Smock noted “order momentum for both nutraceutical and pharma capsules was encouraging, and we expect results in the second half of the year to be aided by preliminary affirmative determinations in recent U.S. countervailing and antidumping filings that should help restore competitive balance in the U.S. capsules market, as well as by increased demand for Lonza’s U.S. capacity due to tariffs.”
Vacaville and Visp sites
Lonza’s $1.2 billion acquisition in 2024 of the Genentech facility in Vacaville, California, one of the world’s largest biologics manufacturing facilities, has positioned the company to benefit as large-scale mammalian capacity remains in high demand.
On Wednesday, Lonza provided an update on the Vacaville site noting “continuing customer interest in the Vacaville large-scale mammalian drug substance facility, with multiple customer negotiations ongoing and further signings expected soon.”
When it comes to the Vacaville update, Smock said he suspects “there may be some disappointment with the lack of new signings in the second quarter, but management stressed that interest in the facility remains high.”
Integration of the Vacaville facility into Lonza’s global manufacturing network is progressing, with the first phase of capital expenditures underway to upgrade the site’s automation and multi-purpose capabilities, according to the company.
Lonza said its large-scale mammalian drug substance facility in Visp, Switzerland, successfully commenced GMP operations at the end of the first half of 2025, while the company’s new highly potent API facility in Visp began operations in the first quarter of 2025 and ramp-up activities are progressing as planned.
“I can confirm that we have started full commercial operations in July,” Wienand told analysts on Wednesday’s earnings call.
