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1. Company Snapshot

1.a. Company Description

Lonza Group Ltd supplies products and services to the pharmaceutical, biotech, and nutrition markets in Switzerland and internationally.It operates through Biologics, Small Molecules, Cell and Gene, and Capsules and Health Ingredients divisions.The Biologics division engages in the contract development and manufacturing services for biopharmaceuticals.


The Small Molecules division operates as an integrated development and manufacturing service provider for small molecule drug substances and their intermediates.The Cell and Gene division develops technologies and platforms that industrialize the manufacturing processes and production of cell and gene therapies.It also offers contract development and manufacturing services for a range of allogeneic and autologous cell therapies, and exosome-based therapies, as well as viral vector gene therapies.


This segment provides specialty raw materials and enabling technology solutions in cell and gene therapy, injectable drugs, vaccines, and bio-manufacturing markets.The Capsules and Health Ingredients division offers capsules, dosage form solutions, and health ingredients for pharmaceutical and nutraceutical customers.Lonza Group Ltd was founded in 1897 and is headquartered in Basel, Switzerland.

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1.b. Last Insights on LONN

Lonza Group AG's intrinsic value is potentially 26% below its share price, with an estimated fair value of CHF412. The cell and gene therapy manufacturing QC market, where Lonza operates, is projected to expand, but increasing competition from key players like Bio-Techne and Roche may exert pressure. Additionally, the appointment of a new president at GBI Biomanufacturing, a US-based biopharmaceutical CDMO, may intensify competition in the biologics manufacturing space.

1.c. Company Highlights

2. Lonza's Strong 2025 Performance and Promising 2026 Outlook

Lonza's financial performance in 2025 was outstanding, with revenues reaching CHF 6.5 billion, representing a 21.7% constant currency growth, ahead of the upgraded guidance. The company's CORE EBITDA margin expanded to 31.6%, driven by operating leverage, maturing growth projects, and targeted productivity initiatives. However, the actual EPS came out at '8.36', below estimates of '9.21'. The company's strong financial performance was driven by its CDMO business, with the ADS business growing 22% organically, driven by strong contributions from bioconjugates and small molecule assets.

Publication Date: Feb -02

📋 Highlights
  • 2025 Sales Growth:: Achieved 21.7% constant currency growth to CHF 6.5 billion, with Vacaville contributing CHF 600 million in sales.
  • Margin Expansion:: CORE EBITDA margin increased to 31.6%, up 1.4 percentage points, driven by operating leverage and productivity initiatives.
  • 2026 Outlook:: Projects 11–12% sales growth and CORE EBITDA margin above 32%, entering the 32–34% midterm range by 2028.
  • Free Cash Flow:: Generated CHF 545 million in 2025, nearly double 2024, due to inventory and working capital efficiency.
  • CapEx Allocation:: Spent CHF 1.3 billion in 2025 (60% on growth projects), with normalization expected to mid–high teens percentage of sales in 2026.

Revenue Growth and Margin Expansion

The company's revenue growth was driven by its strong performance in the CDMO business, with the Integrated Biologics platform growing 32%, and the Vacaville site contributing CHF 0.6 billion in sales, slightly above the forecasted CHF 0.5 billion. As Philippe Deecke noted, "The organic business, excluding Vacaville, grew at a low teens rate, aligning with the CDMO organic growth model." The company's CORE EBITDA margin reached 31.6%, with three key reasons contributing to the growth: operating leverage, maturing assets, and operational excellence.

Outlook and Valuation

For 2026, the company expects continued high demand, with stronger growth in the first half, and a balanced year in absolute terms. The company expects to expand its CORE EBITDA margin, driven by maturing growth projects, productivity, and cost discipline. With a P/E Ratio of 40.53 and an EV/EBITDA of 22.2, the market is pricing in high expectations for the company's future growth. Analysts estimate next year's revenue growth at 11.5%, which is slightly above the company's guidance of 11-12%.

Cash Flow and Capital Allocation

The company delivered CHF 545 million of free cash flow, almost double the amount in 2024, driven by strong management of inventories and trade working capital. The company's capital allocation framework prioritizes investment in maintenance, infrastructure, and systems, followed by a progressive dividend policy, and then discretionary cash for growth investments. As Wolfgang Wienand stated, "The financial engine is focused on delivering more cash year-over-year through top-line growth, expanding margins, and decreasing CapEx."

ESG Performance

The company's ESG performance has been strong, with a reduction in greenhouse gas emission intensity and waste intensity, and a switch to renewable energy sources. The company has been awarded the EcoVadis Gold rating and named one of the world's most ethical companies, demonstrating its commitment to sustainability and responsible business practices.

3. NewsRoom

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Global Cell and Gene Therapy Manufacturing QC Market Forecast to Achieve USD 2.01 Billion by 2031: Automation and Digitalization Revolutionizing the Landscape

Jan -23

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Lonza Group AG's (VTX:LONN) Intrinsic Value Is Potentially 26% Below Its Share Price

Jan -10

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GBI Biomanufacturing Announces the Appointment of Jesse McCool, Ph.D. as President

Jan -06

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Can Mixed Fundamentals Have A Negative Impact on Lonza Group AG (VTX:LONN) Current Share Price Momentum?

Oct -30

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Lonza confirms "long-term commercial supply agreement" at U.S. biologic drug site

Oct -23

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Is Now An Opportune Moment To Examine Lonza Group AG (VTX:LONN)?

Oct -10

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PHG vs. LZAGY: Which Stock Is the Better Value Option?

Oct -06

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Lonza's Synaffix Collaborates with Qurient Therapeutics to Enable Development of Dual-Payload ADC

Sep -25

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (10.90%)

6. Segments

Biologics

Expected Growth: 12.0%

The biologics segment is expected to grow faster than the global average due to the increasing demand for biologic drugs, driven by their efficacy and the growing prevalence of chronic diseases. Lonza's strong position in this market and its capabilities in biologic drug development and manufacturing will drive growth.

Small Molecules

Expected Growth: 9.0%

The small molecules segment is expected to grow at a slower rate than the global average due to pricing pressure and the commoditization of some small molecule products. However, Lonza's capabilities and customer relationships will help maintain a steady growth trajectory.

Cell & Gene

Expected Growth: 15.0%

The cell & gene segment is expected to be a key growth driver due to the rapidly expanding pipeline of cell and gene therapies and the increasing demand for specialized manufacturing services. Lonza's expertise and investment in this area will enable it to capture a significant share of this growing market.

Capsules & Health Ingredients

Expected Growth: 10.9%

The capsules & health ingredients segment is expected to grow in line with the global average, driven by steady demand from the food and pharmaceutical industries. Lonza's capabilities in manufacturing high-quality capsules and ingredients will support this growth.

Corporate/Eliminations

Expected Growth: 0.0%

As this segment involves eliminations and corporate functions, it is not expected to contribute to revenue growth. The focus is on the operational segments for growth analysis.

7. Detailed Products

Cell and Gene Therapies

Lonza provides a range of cell and gene therapies for the treatment of various diseases, including cancer, genetic disorders, and infectious diseases.

Viral Vectors

Lonza offers a range of viral vectors, including lentiviral, adenoviral, and adeno-associated viral vectors, for gene therapy and vaccine development.

Bioscience Solutions

Lonza provides a range of bioscience solutions, including cell culture media, buffers, and reagents, for life science research and development.

Pharmaceutical Development Services

Lonza offers a range of pharmaceutical development services, including formulation development, analytical testing, and clinical trial manufacturing.

Small Molecule APIs

Lonza provides a range of small molecule active pharmaceutical ingredients (APIs) for the treatment of various diseases.

Biopharmaceutical Development Services

Lonza offers a range of biopharmaceutical development services, including cell line development, process development, and analytical testing.

Contract Manufacturing

Lonza provides contract manufacturing services for pharmaceutical, biotech, and specialty ingredient companies.

8. Lonza Group AG's Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Lonza Group AG is moderate, as there are some alternatives available in the market, but they are not very attractive to customers.

Bargaining Power Of Customers

The bargaining power of customers for Lonza Group AG is low, as the company has a diverse customer base and no single customer accounts for a significant portion of its revenue.

Bargaining Power Of Suppliers

The bargaining power of suppliers for Lonza Group AG is moderate, as the company relies on a few key suppliers for certain raw materials, but it also has some bargaining power due to its large scale of operations.

Threat Of New Entrants

The threat of new entrants for Lonza Group AG is low, as the company operates in a highly regulated industry and has significant barriers to entry, including high capital requirements and complex manufacturing processes.

Intensity Of Rivalry

The intensity of rivalry for Lonza Group AG is high, as the company operates in a highly competitive industry with several large players, and there is a constant need to innovate and differentiate its products and services to stay ahead of the competition.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 23.09%
Debt Cost 3.95%
Equity Weight 76.91%
Equity Cost 7.16%
WACC 6.42%
Leverage 30.01%

11. Quality Control: Lonza Group AG passed 5 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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bioMérieux

A-Score: 5.0/10

Value: 2.1

Growth: 5.3

Quality: 6.6

Yield: 1.2

Momentum: 6.0

Volatility: 8.7

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IQVIA

A-Score: 4.8/10

Value: 3.5

Growth: 6.9

Quality: 5.5

Yield: 0.0

Momentum: 7.0

Volatility: 6.0

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Eurofins Scientific

A-Score: 4.8/10

Value: 3.0

Growth: 6.1

Quality: 4.1

Yield: 1.9

Momentum: 7.5

Volatility: 6.3

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Merck KGaA

A-Score: 4.4/10

Value: 4.2

Growth: 4.9

Quality: 6.5

Yield: 3.1

Momentum: 1.5

Volatility: 6.3

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Lonza

A-Score: 4.3/10

Value: 2.8

Growth: 4.3

Quality: 4.7

Yield: 1.2

Momentum: 5.0

Volatility: 7.7

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ICON

A-Score: 3.5/10

Value: 4.5

Growth: 7.3

Quality: 5.6

Yield: 0.0

Momentum: 1.5

Volatility: 2.0

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

528.6$

Current Price

528.6$

Potential

-0.00%

Expected Cash-Flows