Lonza has brought in a new exec to oversee cost reduction and efficiency efforts at its largest custom API manufacturing plant in what CEO Richard Ridinger calls the Visp challenge.
Beat In-Albon was appointed COO of Lonza’s life science ingredients sector two months ago, rejoining the Swiss firm’s ranks after time as head of SGS’ organic fine and performance chemicals unit, but his role at Visp was first announced during the firm’s H1 call.
Speaking last week Ridinger stressed the complexity of the challenge, which combines the need to cut costs and increase competitiveness at the facility while maintaining high levels of capacity utilisation and investment activity.
“So you have a quite mixed picture and I found the situation that I needed a top manager to take over with full responsibility to make this site more profitable and lead it into the future and I am happy that we could win Beat In-Albon.”
Cost cutting strategy
The primary challenge Lonza faces at Visp is the strength of the Swiss franc compared with export currencies according to spokeswoman Melanie Disa, who told Outsourcing-pharma.com how the Dr In-Albon and his team intend to cut costs at the site.
“The focus will be on process production process optimization as well as the introduction of higher margin, new technology products. Attention will be given to customer and market needs and improving our cost base in order to attract more projects.”
She added that: “The target is set for productivity increases to contribute CHF 100m ($102m) over three years. We will know we are successful when we have reached the target.”
Global manufacturing footprint
The focus on cost cutting at Visp fits with the wider theme of Ridinger’s Q3 presentation, particularly in terms the firm’s plans to grow earning through improved efficiency rather than acquisitions.
“We have done a lot of M&A activity in recent years and this is definitely not on the agenda for the near future,” he said, adding that “what we are going to do is stabilise the operations and… focus on getting more productivity.”
He explained that this will involve Lonza’s global manufacturing footprint, but did not say whether this is likely to involve facility divestitures or reductions in headcount.
The Swiss firm’s need to reduce costs was also reflected in its financials for the first half of the year. Profit for the six months to June 30 was CHF94m, down from CHF97m in the comparable period last year despite sales increasing to CHF1.96bn from CHF1.19bn in the first six months of 2011.