Investment case reaffirmed
Lonza, one of the world’s leading contract development and manufacturing partners for pharmaceutical and biotechnology companies, reported robust business performance in the first quarter of 2026 across all divisions. Management reaffirmed its full-year targets: 11–12% sales growth at constant exchange rates, alongside improved profitability.
The first half of the year is expected to be significantly stronger than the second, partly because the Vacaville manufacturing facility in the United States will undergo scheduled modernisation work during the second half of the year, resulting in temporary production downtime.
The sector had recently been affected by concerns that pharmaceutical clients might cancel previously reserved manufacturing capacity. Lonza has effectively addressed these concerns. No material order cancellations have been recorded for 2026. Demand remains strong, while long-term contracts continue to provide a high degree of utilisation across its production network.
Following the sale of its Capsules & Health Ingredients division, Lonza will become fully focused on its high-margin core CDMO business, providing contract development and manufacturing services for pharmaceutical products. CHF 500 million of the transaction proceeds will be returned directly to shareholders through share buybacks.
Despite these positive developments, the share price has recently declined and is trading close to its yearly low. For long-term investors seeking exposure to the structurally growing pharmaceutical manufacturing market, current valuation levels present an attractive entry opportunity.
