Lonza confirms full-year 2025 outlook for CDMO business amid geopolitical uncertainty

Despite an uncertain geopolitical and macroeconomic environment, Lonza reported strong performance in the third quarter of 2025 by its contract development and manufacturing organization (CDMO) business, while the company’s Capsules & Health Ingredients (CHI) business returned to growth.

Lonza expects no material financial impact from the currently announced U.S. trade policies from the Trump administration, but continues to closely monitor the situation.

The company said it “remains confident that its well-diversified global manufacturing footprint, which includes a strong presence with large capacities in the U.S., will enable it to support its customers’ global manufacturing requirements.”

In Q3, Lonza saw “strong momentum” in Integrated Biologics based on “continuing robust demand for large-scale mammalian assets.” At the same time, the company reported Advanced Synthesis “continued to experience strong commercial demand for its Bioconjugates and Small Molecules offerings.”

Lonza expects low-teens percentage organic constant exchange rate (CER) sales growth and margin improvement in its CDMO business, which the company said is “well on track to deliver higher sales in H2 than in H1 and a healthy progression of the CORE EBITDA in line with the 2025 outlook.”

At the same time, Lonza reported CHI returned to positive CER growth in Q3 supported by higher volumes in its pharmaceutical capsules business. “CHI’s strong manufacturing presence in the U.S. is continuing to support customers in navigating the evolving U.S. tariff environment,” according to the announcement.

While Lonza plans to eventually sell its CHI business, the company said in Q3 it made “good progress with the necessary internal carve-out measures” needed to prepare for the divestiture at the “appropriate” time, while noting that the “positive development of the business over the last months remained unaffected by the exit preparations.” 

With CHI’s return to growth, Lonza’s full-year 2025 outlook for the business remains on track confirming its expectation for low- to mid-single-digit percentage CER sales growth and an improved CORE EBITDA margin in the mid-twenties.

Large-scale mammalian sites

Lonza’s $1.2 billion acquisition in 2024 of a 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.

“We have a 12,000L asset and a 25,000L asset,” CFO Philippe Deecke told analysts in Thursday’s earnings call. “There were certainly question marks around the market still requiring such large reactors like the 25,000L we have. We’re very pleased to say that, yes, indeed, there is big demand for such large reactors. We see contracting for both our 12,000L reactor and our 25,000L reactor.”

The Vacaville site experienced sustained high customer interest, including the signing of a significant long-term commercial supply agreement with further signings expected in coming months, according to Lonza.

“One year after closing the Vacaville acquisition, the site’s integration into Lonza’s global network is progressing fully in line with plan,” the company said. “The site shows strong and consistent operational execution, maintaining its excellent quality track record while advancing preparations for new product introductions.”

With the first phase of capital expenditure progressing as planned, Lonza said additional investments will follow in the next two to three years to upgrade the Vacaville site’s automation system and multi-purpose capabilities.

On Thursday, Lonza also provided an update on its site in Visp, Switzerland. The company said ramp-up activities at the highly potent active pharmaceutical ingredient (HPAPI) plant are progressing well, following the start of full commercial operations in July 2025.

“The newly constructed large-scale mammalian drug substance facility, also located in Visp, showed good progress in ramp-up activities in line with plan, with GMP operations underway and commercial production set to ramp up gradually from 2026 onwards,” according to Lonza.

In a note to investors earlier this month, William Blair analysts wrote that Lonza remains the “most compelling opportunity” in the pharma outsourcing and services sector due to strong commercial demand and interest in U.S. manufacturing capacity.

The analysts contend Lonza is well positioned to capitalize on the onshoring efforts “thanks to its scale and leadership position in high-growth segments of the market such as mammalian drug substance and antibody-drug conjugates (ADCs).”

In a Thursday note to investors, William Blair analyst Max Smock said Lonza’s strong presence in the U.S. is a “key asset in the current environment as biopharma companies look for quality manufacturing partners to help them re-shore.”