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Hopkinton phasedown hits Lonza's 2013 sales

23-Jan-2014

Higher earnings and improved margins did not impress investors in Lonza, which saw its share price tumble today after revealing that sales to the drug sector fell in 2013.

Lonza saw EBIT climb 11.2% to CHF436m ($482m) and margins increase to 12% from 10% in the previous year according to full year financials released earlier today. Despite this, the Swiss firm’s share price fell 5.8 percent to 87.55 Swiss francs, which is the biggest drop since July 25 last year.

Most reports speculated that Lonza investors had been unimpressed by the firm’s earnings figures, which were short of analysts’ consensus estimates.

What is more certain is that Lonza’s full year 2013 revenues were lower than in 2012. The firm said this was due in part to weaker first half pharma and biotech sales and the phasedown of operations at the firm’s active pharmaceutical ingredient (API) site in Hopkinton , Massachusetts site.

According to Lonza: “Revenues were lower, influenced by product portfolio optimizations and the initiation of some major projects to prepare the ground for future growth” citing the transfer of projects from Hopkinton to its facility in Visp as one of the factors.

The first quarter saw a scheduled production stop for the build-out at our antibody drug conjugates (ADC) plant in Visp (CH). Our large-scale mammalian cell culture facility in Singapore implemented multiple plant adaptations; and we began the phasedown of our Hopkinton, MA (USA) microbial biologics plant, which is progressing as planned.”

Some positives

Lonza combined its custom manufacturing, development and bioscience solutions units into its Pharma & Biotech segment last year and – while sales revenues may have fallen – some part of the business did see growth.

The firm said its viral therapeutics services customer base had expanded thanks to Big Pharma investments.

It also said that its GS Xceed gene expression system business – which is part of its custom development operations - had grown 25% with increasing demand from customer in Asia being a key driver.

Lonza also saw gains in bioscience services in 2012 with “double digit growth in emerging markets” offsetting sluggish demand in North America and Europe.

Similarly, Lonza said its culture media collaboration with Sartorius is “fully on track and providing first benefits.” 

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