Across our four divisions, we offer a broad range of products and services that drive progress towards our group vision to bring any therapy to life.
Our business is underpinned by five strategic priorities which sit at the heart of our customer strategy: service, scope, sustainability, solutions and speed.
While remaining steadfast in executing against these key priorities, we continued to monitor and respond to evolving external dynamics throughout 2023. By pursuing a focused strategy while remaining flexible to change, we will continue to deliver on our long-term ambitions and ensure long-term value creation for our shareholders, customers and society.
We prioritize operational excellence to deliver quality, value and right-first-time.
Outstanding customer service is key to building long-term relationships and differentiating our business. We understand that customer trust is earned over time through our approach to operational excellence and our track record on quality, value and right-first-time.
In this context, we continued to strengthen our focus on continuous improvement and operational excellence across the business in 2023. We embedded Lean operating principles across all sites and major assets and integrated these principles into our development framework for leaders. In addition, approximately half of our global colleagues have now undertaken our Lean training program to guide their continuous improvement activities and support excellent customer service.
We ran our Lonza Promoter Score (LPS) survey for the fourth consecutive year in 2023, and gathered more than 1,500 responses. The survey provides a quantifiable and consistent measure of customer engagement across Lonza. Aligned with previous results, the 2023 LPS survey found that our customers continue to value our highly skilled employee community. In addition, the quality of our services and products was also widely acknowledged. This feedback was consistent across our customer base.
We have an unparalleled breadth of offerings across services and modalities.
Our breadth of offerings was strengthened by our growth project portfolio in 2023. We continued to progress with more than 20 large growth projects in 2023 – each representing investments of more than CHF 50 million – of which seven are already completed. We invested CHF 1.7 billion in growth and maintenance CAPEX to support our increase in both capacity and capability. Our investments were driven by a clear governance structure to deliver projects on time and on budget with defined minimum levels of Internal Rates of Return (IRR) and Return on Invested Capital (ROIC). See the Group Operations section for more detail.
The execution of our growth strategy is illustrated by the development of our Drug Product Services offering. In January 2023, we celebrated the groundbreaking of a large-scale commercial drug product (DP) facility in Stein (CH). This was followed in March 2023 by the completion of a new cGMP clinical and commercial DP manufacturing line in Visp (CH). The completion of these projects supports our ambition to provide an integrated, end-to-end offering from drug substance to drug product.
Our ambitious growth program is complemented by strategic acquisitions, which are designed to build capability in areas of high market growth and demand. In June 2023, we announced the acquisition of Synaffix, an innovative biotech company with a clinical-stage technology platform for antibody-drug conjugates (ADCs). The acquisition underlined the strategic importance of bioconjugates in our portfolio, expanded our offering in a fast-growing market and continues to enhance our value proposition for clinical stage ADC customers.
We strive to create long-term value – environmentally, socially and economically.
We attained multiple sustainability milestones in 2023 to help fulfil our purpose of enabling a healthier world. At a group level, we devised a comprehensive climate plan to reduce Scope 1 and 2 emissions1 by more than 40% by the end of 2030. The plan combines elements including green electricity, efficiency projects, low-carbon assets, and enhanced training to build expertise. We also signed a letter of commitment and submitted our targets to the Science Based Targets initiative (SBTi).
We made progress in moving to green electricity in 2023 by signing two power purchase agreements. In Europe, we signed a ten-year Virtual Power Purchase Agreement (VPPA) that will provide solar energy equal to Lonza’s electricity needs across Switzerland and the European Union. In China, we secured a three-year multi-party renewable power agreement which will decarbonise 100% of our Scope 2 electricity emissions in China.
We also strengthened our Responsible Supply Chain initiative by updating our Supplier Code of Conduct, undertaking assessments on child labor and conflict minerals in the supply chain, and launching a supplier decarbonization program to reduce Scope 3 emissions2.
Alongside group level initiatives, we also pursued focused sustainability efforts within our divisions. In Small Molecules, our updated customer proposal format gives visibility on raw material, CO2 footprint and water intensity for each process step. It also incorporates potential process improvements to enable informed decision making and promote sustainable production methods.
We have the scientific, regulatory and manufacturing expertise to solve our customers’ challenges.
By delivering end-to-end services, supported by scientific, regulatory and manufacturing expertise, we build strong and lasting customer relationships. Three out of four customers of our Biologics division, for example, go on to purchase further services after entering an initial relationship with Lonza.
We continue to support customers with integrated and cross-divisional capabilities. We are able to manufacture all components of bioconjugates between our Small Molecules and Biologics divisions, and this end-to-end offering simplifies the drug development supply chain for our customers. Two customer programs announced in 2023 – a dedicated ADC filling line and a dedicated ADC commercial manufacturing suite – illustrate the value of our integrated bioconjugates offering.
In Small Molecules, we continue to address the increasing complexity of the pipeline with upgraded solutions and specialist offerings. In January 2023, we announced the completion of our Solid Form Services expansion in Bend (US), which is helping us to meet accelerated timelines for increasingly complex molecules. Further, we continued to strengthen our drug substance capabilities in highly potent API (HPAPI) commercial manufacturing and containment to capture sustained customer demand in this area.
In Cell & Gene, our Bioscience business launched several new innovative solutions for our customers, including two new cell culture media products (TheraPEAK® T-Vivo® and TheraPRO® CHO) to optimize CAR T-cell manufacturing. The new media products are free from animal components, and provide customers with increased process control.
We also continued to build upon our innovative capsule solutions in Capsules & Health Ingredients. Our Enprotect® enteric capsule, launched in 2022, enables targeted intestinal delivery of live bio-therapeutic therapies. By considering additional applications for this technology, we are now exploring over 200 unique customer opportunities.
We enable our customers to accelerate the path to commercialization.
We are accelerating the path to commercialization with flexible partnership models. In Cell & Gene, we announced plans in June to collaborate with Vertex on a dedicated manufacturing facility for the commercial manufacture of Vertex’s Type 1 Diabetes (T1D) cell therapy portfolio, which is currently in clinical trials. We celebrated the groundbreaking ceremony of the new facility at our Portsmouth (US) site in August 2023.
We also continued to harness technology and innovation to accelerate the path to market. In 2023, our Capsules & Health Ingredients division commenced the roll out of next-generation capsule manufacturing technology at our Bornem (BE) site, which is expected to increase individual line output by approximately 15%, reduce our carbon footprint and set a new product quality standard.
We also continued the roll-out of automated visual inspection systems that further improve quality to ensure consistently reliable capsule filling performance for our customers.
Scope 1 includes direct GHG emissions from sources owned or controlled by Lonza. Scope 2 encompasses GHG emissions from purchased electricity and steam
Scope 3 includes GHG emissions from purchased goods and services, business travel, upstream and downstream transportation, waste disposal, employee commuting, etc
