This entails the two companies working together on all aspects of the development, scale up and manufacture of Novartis' biological pipeline.
Novartis is hoping the collaboration will enable it to dramatically increase the pace of progress of its biologics, as it tries to make up for lost time in entering the sector.
Mark Levick, global head of Novartis Biologics, said: "The strategic partnership provides a win-win for both companies.
"It gives Novartis access to the most advanced technology and processes available to develop new biological medicines faster for the benefit of patients. At the same time, it allows Novartis to delay investments into manufacturing."
Analysts at Dresdner Kleinwort said the agreement was "a positive move to strengthen biologics development from lab to market."
This last point suggests that beyond the $700m Singapore facility currently under construction Novartis will not be adding to its six biopharmaceutical plants in the near future.
Instead the company has opted to utilise Lonza to obtain additional capacity. This is a flexible manufacturing solution for Novartis, with the company also benefiting from the additional resources in technical development the deal gives.
Upon successful development of a product Novartis can choose to shift production in-house or continue to use Lonza's facilities.
Financial details of the deal have not been disclosed but it represents a significant coup for Lonza, which through the agreement is branching out beyond its typical contract manufacturing work to a joint development project.
Commenting on the deal, Dr Stephan Kutzer, head of Lonza Biopharmaceuticals, said: "It focuses on a real collaborative approach to development and manufacturing asset planning to ensure our customers can bring their pipeline of products to the market in an efficient and timely manner."
Speedel acquisition pumps up pipeline
The number of biologics Lonza will be involved in the co-development of has been swelled Novartis' acquisition of Swiss biotech Speedel for $880m.
Novartis already had a 9.7 per cent stake in Speedel and the companies had worked together on the development of high blood pressure treatment Tekturna (aliskiren).
Through the acquisition Novartis will ensure it receives all the proceeds from Tekturna sales, as well as bolstering its biotech pipeline.
Biologics now make up around 25 per cent of the drug candidates in Novartis' pipeline, with the company putting a strategic focus on their development.