Siegfried says customer uncertainty weighs on drug substances sales growth in 2026

In its 2026 outlook, Swiss-headquartered contract development and manufacturing organization Siegfried expects low-single-digit constant currency revenue growth for drug substances, given limited visibility around a pending customer confirmation for a large contract. CEO Marcel Imwinkelried told analysts in Friday’s earnings call that Siegfried has taken a “conservative” approach to its guidance this year due to the uncertainty.

“This is reflecting a prudent uncertainty or assumption regarding one large product for one company,” Imwinkelried said. “It’s one-timer because our customer doesn’t know yet how the demand will evolve further because it’s an in-market product.”

William Blair analysts in a note to investors said that “while the softer-than-expected sales outlook is disappointing and the company was unable to provide much context on the characteristics of the product or when it could have more visibility into demand, management pointed to several reassuring factors” including a “multi-decade-long relationship with the customer and expects this product to continue to contribute meaningfully to sales beyond 2026.”

The analysts said Siegfried’s 2026 low-single-digit growth in local currencies for drug substances stands in contrast to its 6.3% estimate for the segment. The analysts also described the CDMO’s 2026 outlook for the group — low-single-digit growth in local currencies — as “light” compared to their 6.9% estimate.  

Looking ahead, Imwinkelried contends that given Siegfried’s strong commercial momentum and the strategic expansion of its U.S. drug substance network, the CDMO has significantly enhanced capabilities and is well positioned to capture long-term growth opportunities.

Growing its US footprint

As part of Siegfried’s EVOLVE+ strategy, the CDMO is “investing quite heavily” to position it for near-term and mid-term growth, according to Imwinkelried. Last month, Siegfried signed agreements to purchase a Noramco commercial-scale manufacturing site in Wilmington, Delaware and a Purisys clinical active pharmaceutical ingredient (API) development and manufacturing facility in Athens, Georgia.

Imwinkelried told analysts on Friday that there are currently less than 15 large-scale CDMO locations available in the U.S. and Siegfried did “a lot of due diligence” in finally making the decision to buy the Delaware and Georgia sites.

“I was several times in U.S., was watching and look how these sites were recapitalized, but very often, very poor, outdated facilities, and of course, also missing capabilities,” he said. “When I was the first time in the U.S., I found a strong location in Delaware, and the second one then in Georgia.”

He said both sites are former Johnson & Johnson facilities that are “very well maintained” and highly automated with “strong, capable people” and a process in place.

Despite Siegfried’s “weak” drug substance guidance for 2026, William Blair analysts contend that the CDMO’s recently announced acquisition of the two U.S. sites “will help the company capitalize on the current manufacturing regionalization trend.”

The pending acquisition of the two small-molecule drug substance facilities in Delaware and Georgia, slated to close in the second or third quarter of this year, will add much-needed manufacturing capacity in the U.S. — the world’s largest pharmaceutical market.

“I’m constantly in touch with our customers, and they’re telling me since 12 months: ‘Marcel, I need to have a second supply point out of U.S. for U.S.,’” he said. “It’s not predictable for us anymore what will happen. It’s independent of the administration in U.S.”

Over the last three decades, Imwinkelried observed that drug substance and small molecule work was transferred out of the U.S. to China, India, and Europe. However, market conditions are changing, he said.

“Big pharmaceutical companies, they are investing or were looking also for acquisitions in U.S. to get a hub, a location to produce drug substance, small molecules — we did the same,” Imwinkelried told analysts. “If you are looking out at the entire network of Siegfried for drug substance, small molecules, we are complete now. This doesn’t mean that we are not further looking also to expand.”

With about 3,800 employees across 13 sites in seven countries on three continents, Siegfried has grown into one of the world’s leading CDMOs, according to William Blair analysts. Of Siegfried’s global network of 13 sites, eight locations are optimized for drug substances and five facilities are designed for drug products.

Siegfried has three U.S. sites: Grafton, Wisconsin, Irvine, California, and Pennsville, New Jersey. The company plans to expand its “fast-growing exclusive synthesis business” in the U.S. by optimizing controlled substance capacity across the newly acquired Wilmington site — which will add 150 cubic meters of reactor capacity and 185 employees — and the nearby Pennsville facility, a drug substance manufacturing site for the U.S. market that also provides spray drying operations globally.

At the Noramco commercial-scale manufacturing site in Wilmington, Imwinkelried said the company intends to “free up” 80 cubic meters of capacity by transferring products into the existing Siegfried network. “From a project management point of view, this is of course, complex, but also very exciting,” he added.

While revenue growth from the Wilmington site is currently in the low to mid-single digits and below Siegfried’s target rate, William Blair analysts in a note last month said the CDMO expects to “accelerate growth in the two to four years following acquisition close by optimizing capacity between its nearby Pennsville site and pursuing new higher-growth projects, which it expects will ultimately result in an incremental $120 million annual revenue benefit.”