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Drug firms replaced as Lonza's biggest buyers in 2013

By Gareth MacDonald+

Last updated on 21-Mar-2014 at 09:12 GMT2014-03-21T09:12:22Z

Drug firms replaced as Lonza's biggest buyers in 2013

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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