Lonza Group (LONN) Investor update (Q&A) summary

Transaction highlights and strategic transformation

• Completed divestment of 60% of Capsules & Health Ingredients (CHI) business to Lone Star Funds, marking the final major step in the transformation to a pure-play CDMO, with four divestments executed since December 2024.

• CHI divestment valued at CHF 2.3 billion, with CHF 1.7 billion upfront cash proceeds and a retained 40% stake, plus mechanisms for total expected proceeds at or above CHF 3 billion at full exit.

• Additional divestments include Personalized Medicines (Cocoon® Platform), MODA® software, and the Monteggio micronization site, further streamlining the portfolio.

• Transaction structured to provide significant immediate liquidity and future value creation potential, with preferential participation in value creation at exit if certain return thresholds are met.

• Estimated CHF 1.3 billion non-cash impairment to be booked in FY2025, allocated to discontinued operations and not impacting CORE EBITDA.

Capital allocation and growth strategy

• Proceeds to fund organic growth, bolt-on M&A, and a CHF 500 million share buyback within a year of closing, supporting the One Lonza Strategy.

• Capital allocation will prioritize high-growth markets, maintaining a BBB+ credit rating, and investments that deliver returns above cost of capital.

• Plan to invest over CHF 7 billion in organic growth by 2030, targeting capacity, technology, and portfolio expansion, especially in the U.S.

• Strategic priorities include expanding integrated biologics, advanced synthesis, and specialized modalities.

• Recent M&A includes successful integration of a large US biologics manufacturing site and technology platforms.

Market positioning and outlook

• Now operates solely in fast-growing pharmaceutical market segments as a pure-play CDMO, with three integrated business platforms powered by the Lonza Engine®.

• Addressable CDMO market estimated at USD 100 billion, growing at 8%-10% CAGR through 2030, with access to 7,400 clinical pipeline molecules.

• Over 90% of the innovative clinical pipeline is accessible via current technology platforms.

• 2026 outlook projects CER sales growth of 11%-12% and CORE EBITDA margin above 32%, with Lonza Engine expected to add 2%-3% incremental growth above market rates.

• CDMO organic growth model targets low teens CER sales growth and CORE EBITDA growth ahead of sales.