.

Small Molecules

Market Trends

Small Molecules are a key driver for biopharmaceutical sales and account for approximately 60% of global market revenue.1 Demand is driven by improved global access to medicine, demographic trends, public health initiatives and pricing reviews2, as well as new drug launches.

The small molecules market is fragmented and growing at different rates, with an overall average increase of around 5%.3 One of the fastest growing areas is highly potent active pharmaceutical ingredients (HPAPI), which is currently showing 8-10% growth.3,4

Oncology continues to be the therapeutic area with the largest number of active compounds in development at 37.5% of all drugs in the clinic.5 This strong oncology pipeline is helping the growth in HPAPI to outgrow the wider market.6 Many small molecule oncology therapies require specific manufacturing technologies, such as containment for bioconjugate payloads and bioavailability enhancement for poorly soluble compounds.

About 80%7 of the clinical pipeline in small molecules comes from small and emerging companies. Their business models tend to focus on fast time to market to secure a competitive edge. Our small molecules offerings are designed to meet the need for accelerated timelines so that our small biotech partners can rely on rapid early-stage clinical supplies to gain this advantage.

There is also a trend towards increasing levels of complexity in small molecules. This is seen with longer synthetic pathways, demanding expertise in the management of complex supply chains. Complexity is also seen in drug product formulation, with low solubility exhibited by 70% of clinical candidates, requiring techniques for bioavailability enhancement.7

  1. 2020 revenues for small molecule chemistry by Evaluate Pharma

  2. IQVIA Market Prognosis Global 2021-2025

  3. Source: Lonza internal analysis based on IQVIA, EvaluatePharma, Citeline and other third-party data

  4. 2020-2026 CAGR in USD

  5. Informa; Pharma R&D Annual Review 2021

  6. RBC Capital Markets; Equity Research Report 2021

  7. Source: Lonza internal analysis based on PharmaCircle and other third-party data

Our Offerings

We support our customers across all aspects of design, development and manufacturing by offering integrated drug substance to drug product solutions, including particle engineering and drug product packaging. We have an established and differentiated offering, and particular expertise with complex small molecules. Our integrated service offering provides substantial value to our customers as it simplifies interfaces, reduces costs and accelerates timelines across the entire drug development pipeline.

> 

Pre-clinical and Clinical Small Molecules 1

> 

Commercial Small Molecules1

  1. Including active pharmaceutical ingredients (API), highly potent API (HPAPI), dosage form and delivery systems and particle engineering

We are well established in the area of HPAPI. Our current offering provides advantages by addressing multiple challenges for customers who are working in this space. Our customers also benefit from our ability to customize our assets to meet the specific needs of their molecules. This is complemented by our integrated approach, which allows us to progress from clinical to commercial manufacture within a single site.

We also develop and manufacture payloads for bioconjugates at our Visp (CH) location and provide integrated development and manufacturing across antibodies, payloads, linkers and conjugations and sterile fill-finish. Since 2019, we have manufactured more than 30 HPAPI and approximately ten different bioconjugate payloads at our Visp site.

A key component of our integrated services is particle engineering across drug substance and drug product development and manufacturing. It is often required to meet today’s drug delivery challenges, particularly poor bioavailability. Our particle engineering technologies include particle size reduction, spray drying, hot melt extrusion and melt-spray-congealing, all of which may be used for addressing a range of formulation challenges. Phase-appropriate assets are in place for our particle engineering technologies to support accelerated timelines to clinic and commercialization.

We are an established partner in early development programs and we continue to strengthen our early phase services. The SimpliFiH® Solutions is an integrated offering designed to reduce the timeline from initial idea to first-in-human (FiH) clinical verification. It addresses the bioavailability challenges that can be associated with new and complex molecules and can reduce Phase 1 timelines by three months compared to traditional approaches.

Our Integrated Service Offering

This has images

Our Global Development and Manufacturing Footprint

Currently we have a global network of six sites across Europe, USA and China covering drug substance, particle engineering and drug product development and manufacturing. This footprint allows us to remain geographically aligned with the major growth markets in the biopharmaceutical industry. These key markets account for more than 60% of overall global pharmaceutical growth.

This has images This has images This has images

Highlights and Initiatives

The Small Molecules business saw a significant number of new programs signed and the successful ramp-up of large assets in 2021. We continued to meet high levels of demand by approving new capacity expansions, which are all on track.

In 2021, we introduced an improved level of focus into the Small Molecules business by completing the strategic divestment of our Ploermel (FR) and Edinburgh (UK) sites. These divestments marked our exit from both soft gels and liquid-filled hard capsules for the pharma market.

Our business priorities are focused on strengthening our portfolio in the highest value areas of the market. We continue to work on expanding our capabilities in complex and highly potent products, strengthening our early phase offerings, deploying new agile manufacturing solutions and finding new ways to innovate.

Financial Performance in Full-Year 2021

Comparison vs. Prior Year

 m+11.6%1

Sales (CHF)

 m+12.0%

CORE EBITDA (CHF)

 %+0.3ppts

CORE EBITDA Margin

  1. Sales growth, expressed as a percentage (%), is at constant exchange rate (CER)

Drug Substance Development and Manufacturing

In response to customer demand, we continued to invest in our offering by expanding manufacturing assets and development services.

In April 2021, we announced our plans to build a new small molecule manufacturing facility in Visp (CH). The new complex will include a customer dedicated manufacturing line for antibody–drug conjugate (ADC) payload molecules. The CHF 200 million investment is supported by a capital contribution and long-term collaboration with a major biopharmaceutical partner.

Taking inspiration from our Ibex® Solutions offering in Biologics, the new facility will also include a pre-built shell, allowing for optimal flexibility. The design will allow us to provide customized assets to meet customer needs and the pre-built modules will support a flexible approach and accelerate timelines to commencing operations. These advantages are important in a dynamic market and we are confident that it will be an attractive option for many customers. The facility will offer several opportunities for future small molecule expansions, including drug substance, particle engineering technologies such as spray drying dispersion and drug product.

Looking to the future, we also plan to grow our capacity across our three other existing production bases in Nansha (CN), Bend (US) and Tampa (US). In 2021 we announced new investments in good manufacturing practice (GMP) HPAPI laboratories and mid-scale manufacturing assets at our API manufacturing center in Nansha. These are expected to come online by Q3 2022. The investment of more than CHF 20 million will support our clinical-phase pipeline and allow us to provide a smoother transition from small-scale to large-scale manufacturing. With these expanded capabilities at our Nansha site, we continue to support the next generation of innovative and life-saving treatments with our customers around the world.

To enhance our capabilities in meeting accelerated timelines for increasingly complex molecules, we have expanded our solid form selection services based at our Bend site. The increased service capabilities and dedicated team complement our previously established SimpliFiH® Solutions first-in-human services, consisting of phase-appropriate drug substance and drug product development and manufacture. Our expanded solid form selection services offering is designed to meet the early-stage molecule development needs of biopharma players.

We are also on track with constructing new suites for the development and clinical manufacture of drug product intermediates and drug products utilizing spray-drying, hot-melt extrusion and melt-spray-congeal processing. These are due to be completed during Q2 2022.

Personal Perspectives

Gordon Bates

President, Small Molecules Division

During 2021 our Small Molecules team was proud to have played a key role in the supply of five innovator drugs approved by the US Food and Drug Administration (FDA) that will benefit patients across multiple therapeutic areas.

Discover More

Integrated Service Offering

Our comprehensive set of capabilities from drug substance through to drug product development and manufacturing enable us to support our customers with their development pipelines. As an example, we are collaborating with Allarity Therapeutics to provide an integrated solution for process development and manufacturing of drug substance and drug product for the clinical development of their oncology drug dovitinib. The collaboration will leverage our global network, utilizing our Visp (CH) and Bend (US) sites.

Innovation Spotlight

Spray Drying Process Innovations for Bioavailability Enhancement

The majority (>70%) of new drug molecules in today’s pharmaceutical pipeline are often limited in their oral bioavailability and new methods are essential in delivering these drugs to the body.

Discover More