Biologics

Market Trends

The biopharmaceutical market continued to expand in 2023 and is expected to achieve a compound annual growth rate (CAGR) of around 8% over the next five years¹. Historically, the pipeline has increased 9% annually over the last ten years².

The biologics CDMO market continues to show positive growth, with an expected CAGR between 9 and 11% over the next five years³, as the outsourcing trend continues. The growth in CDMO capacity continues to outpace capacity in customers' own facilities, as large and small players increasingly rely on manufacturing partners to support, complement and de-risk their journey to market. Partnering models help attract customers, enabling capital preservation, direct access to leading expertise, de-risked supply, and regulatory support.

Large pharmaceutical organizations contribute the majority share of CDMO revenues due to commercial manufacturing activity. Small biotech businesses represent a higher proportion of the molecule pipeline, where outsourcing is built into business models to conserve capital resources. While funding has affected this segment in the short term, we expect this to normalize in the medium term.

Strong and continued growth is reflected across all phases of molecules in the biologics pipeline. This is matched by the increased diversity of modalities for the molecules in development, with new biologics drug types and novel indications a key growth factor.

Looking at the market dynamics of the individual modalities:

• In mammalian we expect that manufacturing demand will continue to outpace supply, especially for large-scale manufacturing. We see strong potential for large-volume monoclonal antibody treatments currently in clinical trials. These include high-volume products, such as Alzheimer's treatments and other potential blockbusters.
• The growth potential for bioconjugation is strong, with the global drug sales for antibody-drug conjugates (ADCs) expected to grow by around 20% CAGR over the next five years⁴. There is a lack of available capacity across the industry and a high demand for outsourcing due to the complexity of the supply chain and manufacturing. Customers are looking for CDMOs that cover the entire ADC value chain, across modalities, to help manage complexity and risk. Lonza has a strong position with its end-to-end offering.
• Growth in the microbial market is driven by a promising drug sales outlook with a CAGR of 7% from 2023 to 2028⁵ and a robust molecule pipeline, which is set to rise by around 4% CAGR in this period⁶. Demand for large-scale manufacturing is strong and outstripping CDMO market capacity. Customers look to experienced manufacturing partners adept at designing and running bespoke large-scale plants and managing the complexities of microbial tech transfer and scale-up. In this regard, we are well-positioned to respond to market needs.

Our Offering

We work across the entire spectrum of customers, from small biotech to large pharmaceutical companies. We offer different manufacturing scales and development services and support customers throughout the molecule’s lifecycle from clinical to commercialization.

Lonza has one of the most complete offerings across technologies and scale. It also offers a wide range of services, including regulatory services. We can deliver tailored services that meet customer specific needs. We bring deep and long-standing industrial expertise in commercial delivery, with rigorous standards of quality, safety, efficiency and value providing a unifying thread across all our modalities.

Mammalian

Our largest network and set of capabilities lie in mammalian, which positions us well for the outsourcing trend. In addition, pharmaceutical companies continue to invest in R&D, we see a healthy pipeline of molecules across all phases. The outsourcing trend and the growing molecule pipeline, including commercial stage, will continue to drive demand for large-scale manufacturing. We anticipate that capacity will remain tight for the next five years, as we see the continuing trend towards outsourcing and the sustained commercial demand for manufacturing services.

We are focused on the development of our pipeline to feed commercial demand and de-risk our business model. We take pride in supporting customers early and working with them through the molecule lifecycle. With a strong reputation for commercial capabilities, we are also dedicated to supporting customers through the early stages of drug development. We cover the full scope of mammalian development and manufacturing services for all molecule types and build retention through development services, including licensing of proprietary IP.

In May 2023, we opened a new facility in Cambridge (US) as part of our extended early-stage offering. Located close to the Boston biotech community, the new facility enables customers to de-risk and optimize drug candidates at an early stage. 

In 2024, we will ramp-up our new clinical assets in Portsmouth (US) that will support customers who want to produce in the United States at small scale. It will also enable the consolidation of demand from clinical to launch in one location, Portsmouth (US), and enable the shutdown of Hayward (US).

In 2024, we will also execute the ramp-down of our activities in Guangzhou (CN) and consolidate demand in other locations. 

Bioconjugates

We provide robust expertise and experience in drug conjugation. This modality can be applied to different products, such as antibody-drug conjugates (ADCs). ADCs consist of an antibody that can identify and locate a target cancer cell, a cytotoxic payload to kill the cell, and a chemical linker to bind these two components together. ADCs are revolutionizing the cancer treatment landscape. The production process is highly complex and integrated. It requires deep technical expertise, leading technology, and well-controlled facilities to ensure safety, quality, and efficacy. 

We develop and produce all ADC components, drawing on expertise across divisions. Today, we manufacture the majority of commercially available ADCs, and we see significant further growth potential. In 2023, we delivered more than 300 batches across 32 programs, which represents a fourfold increase compared to five years ago. Batch sizes also increase as more products reach commercialization.

The ADC platform is a great example of Lonza investing early in new modalities and capabilities. In addition, we are committed to investing in R&D and innovation to meet future demand alongside market needs for more diverse and complex ADCs. In 2023, we acquired Synaffix, a company with strong proprietary conjugation technology, to keep on offering the best possible platforms to our customers.

Our integrated offering supports customers in accelerating timelines and reducing complexity on the journey to commercialization. 

Microbial

With licenses to manufacture eight commercial products and a track record in large-scale complex protein and vaccine production, our microbial business unit is a leader in late-phase and commercial supply for customers looking for reliability and quality of supply. Our expertise is drawn from over 30 years’ experience and more than 70 GMP technology transfers into Lonza. With our proprietary XS Technologies^® expression systems, state-of-the-art development labs, and GMP manufacturing scales spanning 70 liters to 15,000 liters, including a new mid-scale production facility, our facility in Visp (CH) enables us to offer services that meet our customers’ needs across the entire product lifecycle.

mRNA

We pioneered the large-scale commercial manufacturing of mRNA medicines during the COVID-19 pandemic, in record time. It is a testament to our adoption of new technology and the strength of our development and manufacturing know-how that we can deploy to new offerings. Since then, mRNA technology has advanced in multiple therapeutic areas, with many projects now in early development. 

To support these projects, we have opened a new integrated mRNA/lipid nanoparticles (LNP) manufacturing complex at our cell and gene therapy site in Geleen (NL), leveraging local expertise and providing development opportunities for our employees. The expansion includes IND-enabling, clinical and small-scale commercial manufacturing services. It also includes areas for process and analytical development, cGMP manufacturing and Quality Control for mRNA and LNP necessary for formulating mRNA-based medicines.

Licensing

Our licensing business unit manages access to our Intellectual Property (IP) to allow companies to develop new therapeutics to incorporate proven technologies to help speed-up their development. Our differentiated licensing offering is particularly suited for pharmaceutical, biotechnology companies and research institutions conducting early research. Built on more than 35 years of continuous innovation, our GS^® gene expression system is a core component of a more comprehensive set of expression technology solutions that span diverse therapeutic modalities. 

We serve more than 500 active licensing customers and more than 200 prospective licensees under Research Evaluation Agreements. More than 80 approved therapeutics reach millions of patients each year, helping us to achieve our purpose of enabling a healthier world.

Ibex^® Solutions

Ibex^® Solutions comprises a series of advanced manufacturing facilities that combine to form an extensive biopark in Visp (CH). The facilities are supported by a flexible and responsive business model with three innovative offerings: Ibex^® Design, Ibex^® Develop and Ibex^® Dedicate. These offerings span the complete product lifecycle of a biopharmaceutical from pre-clinical to commercial stages, from drug substance to drug product. Our Ibex^® customers benefit from a comprehensive and tailored portfolio of services under a single framework. Ibex^® Solutions enable our customers to bring their new medicines and vaccines to their patients at pace, while providing the flexibility to actively manage supply constraints, drug development uncertainty and evolution in market demand.

Our Global Development and Manufacturing Footprint

The Biologics division comprises a full-service CDMO, providing development and manufacturing services to pharma and biotech companies across a wide range of biologic modalities, including mammalian, microbial, bioconjugates, mRNA, and drug product services. In addition, it offers licensing services to technologies used in the development of drugs.

We offer innovative development and manufacturing services and technologies, from drug discovery to market supply, and from drug substance to drug product, across various molecule types. Our end-to-end offering ensures customers benefit from high levels of expertise, along with the speed and ease of doing business with a single strategic partner. Through our global network we are close to our customers and support supply chain resilience.

2023 Highlights

Over the course of the year, we have continued to experience strong sales of 17.6% CER. This was driven by new projects coming online, alongside base business expansion. Our investments have focused on supporting the clinical pipeline and building world-class infrastructure at critical sites including Visp (CH).

Looking ahead to 2024 and beyond, we anticipate that core sales growth, excluding Moderna, will outpace market growth, driven by large commercial contracts and future commercial expansion. We will continue to invest further to consolidate our position as a CDMO partner of choice.

Enhancing our Technological Edge through Targeted Innovation 

Innovation plays a crucial role in helping us to maintain our market advantage. We can now support certain customers moving from gene to IND filing in approximately 11 months or less for standard monoclonal antibodies and approximately 13 months for more complex proteins¹ or customers who want a specific approach. This speed and efficiency attracts customers who wish to accelerate clinical development and want a flexible approach.

Our focus on continuous bioprocessing and process intensification aims to improve productivity and reduce the cost of goods sold.

We are integrating digital technologies into the drug development and manufacturing journey to help improve speed, flexibility and efficiency while managing costs.

New Ibex^® Solutions Customer Collaborations

We have signed an Ibex^® Dedicate program with our customer, Vaxcyte, to support their journey to commercialization for the global manufacturing of broad-spectrum pneumococcal conjugate vaccines (PCVs). This agreement extends a long-term relationship that provides Vaxcyte with a custom-built manufacturing suite in Visp (CH). Equipment installation is expected to begin in 2024.

In addition, two new bioconjugation suites for the commercial supply of ADCs will be added as part of an extension of a long-term collaboration with a major global biopharmaceutical partner. The extension builds on an existing partnership for end-to-end ADC manufacturing, including payload, monoclonal antibody (mAb) manufacturing, and bioconjugation. The agreement will increase the current dedicated bioconjugation capacity fourfold and is expected to generate around 180 new jobs upon completion, with operations expected to commence in 2026.

New Facilities to Meet Demand

Early in 2023, we completed the expansion of our bioconjugation facility in Visp (CH) to enhance our capability for clinical and commercial supply across development and manufacturing, including drug product. We completed a new cGMP clinical and commercial drug product line, marking a significant milestone in the growth of our Drug Product Service offering. These continued investments in Visp (CH) are designed to provide a flexible solution for customers of all sizes in one location.

Following the groundbreaking of the new commercial drug product facility in Stein (CH) in January 2023, we secured our first additional dedicated line for the commercial cGMP filling line at the site in October 2023. The extended agreement with a major biopharmaceutical partner will enable the aseptic filling of highly potent ADCs and lyophilization under containment. With operations starting in 2027, these additional filling capabilities further strengthen our capacity and flexibility in supporting both the clinical and commercial supply of bioconjugates.

Strengthening our Bioconjugates Offering

We announced the acquisition of Synaffix B.V. to further strengthen our bioconjugates offering. The Synaffix technology platform, which includes payload and site-specific linker technologies, will enhance our integrated ADC services, including our early-phase offering. Combining our development and manufacturing capabilities with the Synaffix platform will provide customers and licensees with a comprehensive service to rapidly discover, develop, scale-up and commercialize novel and differentiated ADCs.

Microbial

Our new mid-scale 4,000 liters microbial facility is operational, with the first batches manufactured in 2023. Final regulatory authority approval and ramp-up of the asset is underway. To complement this increase in manufacturing capacity, our new purpose-built development services labs were established and have been fully operational since early 2023, with our customers benefiting from a new state-of-the-art automation room and pilot facility.