Over the past two years, CEO Wolfgang Wienand has led Lonza’s strategic transformation into a pure‑play contract development and manufacturing organization (CDMO), including the divestment of the company’s Capsules & Health Ingredients business. As a former Olympic fencer, Wienand showed his competitive streak this week during Lonza’s Capital Markets Day, laying out a strategy for differentiating Lonza from its competitors.

Wienand contends that Lonza has a significant advantage over competitors due to its overall breadth of capabilities, providing mammalian, microbial, bioconjugates, highly potent small molecules, cell and gene therapies, and drug products at global facilities.

William Blair analysts in a Thursday note to investors described Lonza’s “comprehensive suite of services” spanning eight modalities and technologies as offering customers a “virtual one-stop-shop for most drugs, reducing complexity and risk associated with handoffs, which has resulted in 70% of the company’s new molecules signed year-to-date utilizing integrated offerings.”

Lonza is building a global network to serve customer needs across scales, regions, and the entire lifecycle. The success of Lonza’s Integrated Biologics division is driven by winning molecules from pre-clinical through commercial — with Phase III and commercial accounting for approximately 80% of revenues, according to the company.

“In order for us to be able to capture the many market opportunities coming our way, we actually need to build a resilient and competitive global infrastructure to — in the end — manufacture the products,” Wienand told analysts and investors at Wednesday’s event. “We need to continuously add new capacities, new technologies.”

Currently, Lonza is managing 25 large growth projects valued at eight billion Swiss francs (nearly $9.7 billion). Wienand said 90% of that investment is “going into commercial and mixed assets for the high-return activities in our overall portfolio.”

Pharmaceutical manufacturing companies currently average approximately 33% Return on Invested Capital (ROIC), one of the highest in major industries, reflecting strong capital efficiency and high-margin operations, according to NYU Stern School of Business sector data. When it comes to ROIC, Lonza has set a high bar as a metric for success as it targets short- and mid-term growth across modalities.

“What you can expect going forward from this portfolio of growth projects, as soon as they have reached peak sales, is a ROIC return on invested capital at peak of 30% to 40%, which will then actually push forward the average ROIC of Lonza as a whole,” according to Wienand.

Growth projects ramp up

Lonza’s recently added growth projects include plans to build a large-scale commercial spray-drying facility at its Bend, Oregon site to expand manufacturing capacity for spray-dried dispersions used to improve drug bioavailability. The facility will include two PSD-4 spray-drying units along with infrastructure for solvent handling and storage.

Lonza is also expanding its commercial-scale aseptic antibody-drug conjugate (ADC) drug product capacity in Switzerland at the CDMO’s Stein facility. The company is building a second commercial aseptic ADC filling line. The latest capital expenditure in Stein is supported by a long-term collaboration agreement with a “major” undisclosed pharmaceutical company for clinical and commercial ADC supply.

“We are expanding our footprint in the value chain by not only being leading in the drug substances space but also adding aseptic fill-finish drug product capabilities, and it’s paying off,” Wienand said. “Customers appreciate our ability to offer even broader services with actually Phase II, Phase III integrated biologics program up by 35% and 70% — 70% of our new molecules signed into Lonza now being integrated offerings.”

The CDMO continues to increase its investment in infrastructure to support the complex, multi-step production process required to make ADCs. Lonza’s campus in Visp, Switzerland is designed as an integrated end-to-end ADC manufacturing center to better serve customers with connected capabilities across multiple platforms, including monoclonal antibody (mAb), payload, linker, and bioconjugation.

“The ADC toolbox that we are currently building — our advance into this business is market-leading as well — and comprises everything that it takes to develop and manufacture” ADCs, according to Wienand. “It’s about payload, it’s about linkers, it’s about the mAb, it’s about drug product and the bioconjugation of all of it.”

Lonza’s Visp site is making progress in ramping up and commencing commercial operations at its highly potent active pharmaceutical ingredient (HPAPI) plant and the company’s new large-scale mammalian drug substance facility. Visp is meant to consolidate demand across stages at a single Lonza site, from clinical development to launch and scale-up, with 1,000L, 2,000L and 20,000L bioreactors.

‘Not in a capacity race’

Lonza claims it operates the largest biologics CDMO network in the U.S. with its Vacaville, California facility — acquired from Roche for $1.2 billion in 2024 and one of the world’s largest biomanufacturing sites — which is dedicated to late-stage clinical and commercial mammalian manufacturing with a total bioreactor capacity of 332,000L.

The CDMO’s total U.S. mammalian capacity is 484,000L, European sites (including Visp) have a combined 219,000L, and a Singapore site provides 90,000L in total capacity.

“The scale in our facilities from lab to large scale, all supported by a leading quality management system and all this happening all around the world in the U.S., in Europe and in the rest of the world — this is unique, you don’t find it anywhere else,” Wienand said.

At the same time, however, Wienand said Lonza is not in a capacity race.

“We will build the capacity that we need to support the growth trajectory that we see ahead of us, but we are not racing against anyone or another company to build capacity faster as long as we can add the capacity that we need to support our innovation to launch go-to-market approach,” he emphasized.

Despite major capital expenditure (CAPEX) investments announced by Big Pharma, Wienand downplayed the potential for overcapacity in the U.S., arguing that Lonza is the only CDMO with available large-scale domestic mammalian capacity and that the “lion’s share” of the $600 billion in announcements “will not go into manufacturing.”

Lonza’s available U.S. capacity and global footprint are major competitive advantages, according to William Blair analysts.

“We think management’s data-backed framing of mammalian drug substance demand growth outpacing long-term supply should go a long way toward easing some investor concerns about potential midterm overcapacity on the back of announced U.S. large pharma CAPEX investments and competitor builds,” the analysts wrote.

Lonza is looking to de-bottlenecking, reducing downtime and cycle times, and optimizing product mix to improve profitability with limited incremental capital, according to the analysts. The company pointed to opportunities for approximately 20% improvement in batch throughput, and 15% incremental labor productivity through automation and waste elimination.

“We believe these initiatives provide a compelling margin expansion path as recently commissioned capacity ramps up, although we expect the pace of improvement will depend heavily on asset utilization and Vacaville in particular, which is not expected to meaningfully contribute to incremental growth until 2028,” the analysts said.