Lonza divests capsules and health ingredients business for $2.2B in upfront cash

Swiss-headquartered Lonza has taken a major step in becoming a pure-play contract development and manufacturing organization (CDMO). The company on Friday announced it has signed an agreement to divest its Capsules & Health Ingredients (CHI) business to UK-based investment firm Lone Star Funds for $2.2 billion in upfront cash.

Under the deal, expected to close in the second half of 2026 with an enterprise value of $3 billion, Lonza will retain a 40% stake in CHI with “an additional preferential participation in a future exit,” the company said. Total undiscounted proceeds, including upfront and all future proceeds at full exit, are expected to be at or above approximately $4 billion.

In its press release, Lone Star Funds said the CHI business operates in “attractive markets with strong underlying demand growth trends,” including gelatin and plant-based hard empty capsules for pharmaceutical and nutraceutical customers.

However, Lonza CEO Wolfgang Wienand told analysts on Friday’s conference call that the CHI business has “distracted” the company from “focusing on its true core — the CDMO business” which has a different business model, market dynamics, and technologies.

Exiting the CHI business “at the appropriate time” has been Lonza’s goal since December 2024. Divesting the CHI business is part of the company’s “One Lonza” operating model aimed at simplifying and streamlining its organizational structure, which was implemented in 2025 with the company moving from nine underlying units to three platforms — Integrated Biologics, Advanced Synthesis, and Specialized Modalities.

While the CHI divestment is the “most significant step” in Lonza’s portfolio transformation, Wienand said it has also signed agreements to divest its Personalized Medicines cell and gene therapy business including its Cocoon cell therapy platform, the MODA manufacturing and quality software platform, as well as the small molecules micronization site in Monteggio, Switzerland.

“These divestments will enable us to further optimize and exploit the full potential of our CDMO business platform in line with our One Lonza strategy and our future growth ambitions,” according to Wienand. “We need to invest into our systems, maintenance, infrastructure, and inorganic growth.”

Financial terms for these transactions were not disclosed by Lonza which said they are not expected to have a significant financial impact on the company.

In a Monday note to investors, William Blair analysts said that while they “do not view the terms of the CHI deal favorably, it does little to change our positive opinion about Lonza and the strength of its top tier remaining CDMO portfolio or robust growth prospects.”

Leveraging its CDMO capabilities

Lonza’s available U.S. capacity and global footprint are major competitive advantages, William Blair analysts contend. In a January 2026 note to investors, the analysts said Lonza has an “unmatched” CDMO footprint in terms of both technical and global reach that includes six sites in Europe, five in the U.S., and two in Asia.

The company “has added to and fortified its global presence through roughly CHF 10.0 billion of capex since 2020 (including CHF 3.0 billion in U.S. expansions, such as Vacaville), positioning it as the largest mammalian CDMO in the U.S. and a uniquely capable partner for regional supply needs worldwide,” according to the analysts.

Despite increasing customer interest and the signing of a fifth commercial contract, Lonza’s 956,000-square-foot site in Vacaville, California — one of the world’s largest biologics facilities dedicated to late-stage clinical and commercial mammalian manufacturing — will not deliver on its full potential until the next decade.

While Wienand has described Vacaville as a “great fit” for Lonza, he said in a call with analysts in January that the company doesn’t expect the site — which includes 12,000L and 25,000L stainless steel bioreactors for a total capacity of 332,000L — to “fully deliver to its full potential” until the early 2030s.