Lonza: More pharmas among top customers in 2015; Strong franc could erode Swiss industry

By Gareth Macdonald contact

- Last updated on GMT

Strong Swiss franc hurting industry says Lonza (picture iStock/Gajus)
Strong Swiss franc hurting industry says Lonza (picture iStock/Gajus)

Related tags: Switzerland, Swiss franc

Drug companies were a more important source of revenue for Lonza in 2015 than in previous years with four of its five biggest spending customers coming from the pharmaceutical sector.

Lonza gave details in a full year report today, explaining that while its largest individual customer was a firm supplied by its specialty ingredients segment the next four most important clients in revenue terms were drug companies.

This contrasts with 2014 when Lonza’s first and fourth largest customers were supplied by its specialty ingredients business.

In the report Lonza said its pharma business had “benefited from positive momentum due to favorable market conditions, especially in biologics, and delivered a significantly better operational performance.

It also predicted further growth in pharma and biotech, basing the forecast on deal extensions agreed with customers during the latter half of the year.

New contracts were signed in 2015 on the back of positive developments of various product candidates’ moving forward in clinical trials and for new technologies, driven by a high level of market-driven activities​.”

The shift in customer base towards pharma is in keeping with financial results Lonza published in January, which revealed that its pharma and biotechnology segment saw both revenue and profit increase, up 10.4% to CHF1.59bn ($1.63) and 8.6% to CHF418m, respectively.

Swiss franc

Lonza also discussed the strong Swiss franc in the report, which it said continues to make it hard to compete.

We are still affected by regulatory and economic developments in our country of origin. For this reason we have become more vocal about our apprehension over the increasing burdens being placed on Swiss industry by tightened regulations and laws.

We feel that the industry’s competitive position has additionally been challenged by the strength of the Swiss franc, particularly following the lifting of the EUR/CHF ceiling by the Swiss National Bank (SNB) in mid-January 2015.”

Lonza also warned that: “If Switzerland does not want to further erode its industrial base, we believe that politicians and regulators need to apply prudence and measured approaches.

On January 16 last year the SNB discontinued the​ CHF1.20 per Euro exchange rate it imposed in 2011, citing changes in currency markets since the introduction of the control as the basis for its decision.

The surprise move​ saw Lonza’s share price fall 17.20%. At the time the firm told us that a weaker Euro would “negatively impact the competitiveness” of its manufacturing facility in Visp, Switzerland.

A spokeswoman for the firm reiterated this, telling us today that: "We feel that Switzerland should exercise caution when considering new regulations and governance laws that could adversely affect our ability to be a competitive player in the world, as also the export oriented Swiss industry is already heavily impacted by the strong Swiss franc.​"

The Swiss firm will hold its annual general meeting on April 22.

Related topics: Markets & Regulations, Bio-Outsourcing

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