Drug firms replaced as Lonza's biggest buyers in 2013

By Gareth Macdonald contact

- Last updated on GMT

Drug firms replaced as Lonza's biggest buyers in 2013

Related tags: Pharmacology

Drugmakers were replaced by buyers of cosmetics, hygiene and material protection ingredients as Lonza’s biggest customers in 2013 according to a report released by the Swiss CMO today.

The switch – which saw customers for Lonza's specialty chemicals business change places with those of its pharmaceutical and biopharmaceutical unit that used to be its first and third biggest buyers – fits with the firm’s description of the latter market as “volatile and demanding​” in 2013.

The customer reordering is also reflected in financials detailed in the annual report​.

Revenue from dealings with the drug industry was CHF1.4bn ($1.6bn) - down 7.9% on the prior year - while earnings before interest and taxes​ (EBIT) fell 7.6% and margins remained at 14.5%.

Lonza’s Specialty ingredients unit, in contrast, saw EBIT increase 29.6% to CHF254m, despite a 1.3% drop in sales, due to improved margins.

The Swiss ingredients firm – which restructured its operations to establish the two business units last year​ – also described pharmaceutical and biopharmaceutical market as "challenging."

Cuts to continue?

Lonza also hinted that the cost reduction initiatives it has implemented over the past few years – which included cuts to its manufacturing infrastructure​ and a refocusing of operations at its Visp, Switzerland facility​ - are likely to continue in 2014.

The firm said: “To generate sustainable, long-term shareholder value, we are now engaged in consolidating our resources, improving our operations and sharpening our market focus​,” adding that “our goal is to grow and transform Lonza into a top-tier company in terms of key profitability measures by the end of 2015​.”

Lonza said it also plans to use its pharma knowhow to develop products for its ingredients segment, explaining that doing so has already benefited its “nutrition, personal care & preservation and agro ingredients​” businesses. 

The Swiss firm will hold its annual general meeting on April 16.

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