Lonza would add drug delivery tech through Catalent merger, analyst

By Dan Stanton

- Last updated on GMT

Related tags Chemical industry Dsm

Image: iStock
Image: iStock
Lonza acquiring Catalent would make “strategic sense,” according to an analyst as rumours circulate about a CMO megamerger.

Swiss contract manufacturing organisation (CMO) Lonza has put in a bid to buy fellow manufacturer and delivery tech firm Catalent, Reuters wrote yesterday​ citing people familiar with the matter.

A spokesman from Lonza told this publication it does “not comment on market speculations,”​ while a spokesman from Catalent sent us a similar statement

William Blair analyst John Kreger said: “This sort of combination would make strategic sense.”​  

He wrote in a note that “Catalent is a market leader in a number of advanced drug delivery technologies—particularly for small molecules,”​ and has expanded its offerings over the past few years through its own growth and M&A strategy.

The firm, for example, acquired particle size engineering tech firm Micron Technologies​ and bioconjugation experts Redwood Bioscience​ in 2014, and has been growing its oral dosage network through various deals​ and expansions​.

Meanwhile, Kreger noted, “Lonza, in contrast, is a leader contract biologic manufacturing,” ​and while Catalent has a single-use biologics facility in Madison, Wisconsin – acquired from GE Healthcare in 2011​ – “the company has relatively little exposure to biologics, and this has been noted as a key M&A target.”

If a deal was to be made, it would be the latest example of consolidation in a sector currently deemed ripe for consolidation​, and likely to be larger than the $2.65bn merger​ of rival Patheon with Royal DSM’s pharmaceutical products business in 2014.

Kreger believes $35 would be a reasonable per share take-out price, which would value the company at close to $1.5bn.

According to Reuters, the firms have failed to agree on a price, and Lonza may decide to pursue other targets.

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