The pharmaceutical market is robust and typically acyclic, with high qualification and registration requirements. Recently, Western markets have experienced an unprecedented post-COVID-19 destocking period, which is expected to ease in 2025. Pharmaceutical companies regularly look to strengthen supply chains of key materials, manage increasingly tight compliance standards, and innovate with dosage form functionality. Here, we support customers by addressing drug development and ingredient formulation challenges, as well as offering partnerships throughout the complex pharmaceutical development process. In particular, the launch of our Innovaform™ development center enables cutting edge capsule-based formulation innovations together with our market-leading customers.
For the nutraceutical market, we anticipate slightly higher growth in hard empty capsules compared with the pharmaceutical market, as the period of post-COVID destocking has come to an end. The market looks set to strengthen in the longer term, driven by consumers’ increasing focus on a proactive approach to health management and longevity. We deliver tailored end-to-end product development and contract manufacturing services through our Dosage Form Solutions (DFS) business. This enables us to bring concepts to reality, in some cases as quickly as a matter of weeks, allowing us to capture the rapid changes in consumer nutrition market trends.
Both the pharmaceutical and nutraceutical markets are projected to grow at around 2 to 3% per year in the next five years1.
Capacity utilization figures from 2019, based on recent Kline & Co (Q4 2022) and Ascendant Mfr (Q2 2023) interviews.
Our Capsules & Health Ingredients (CHI) division1 offers high-quality capsules and encapsulation technologies to the global pharmaceutical and nutraceutical markets. The business is well-placed to increase its presence in both the pharmaceutical and nutraceutical segments, with strong customer service, alongside manufacturing and automation expertise delivered by multi-disciplinary teams that are skilled in delivering customized solutions from discovery and concept to commercialization. We also provide a portfolio of capsule filling equipment and supporting technical services to meet our customers’ fill and finish needs. The division is comprised of three core businesses.
We offer a wide range of gelatin and plant-based Capsugel® capsule options with a variety of release profiles and encapsulation technologies. These are designed to meet evolving technical and regulatory requirements and market demands, such as vegetarian, vegan, organic and clean-label solutions. We have the largest global capsule manufacturing capacity in the world, with the capability to produce billions of capsules per year across our global production network. We supply customers in every major geographical region with standard and customizable capsules. In addition, we provide novel and functional capsules for increasingly complex and sensitive therapeutic requirements.
Our new organizational structure, announced in December 2024, will become operational on 1 April 2025 in Q2 2025 with three integrated business platforms: Integrated Biologics, Advanced Synthesis and Specialized Modalities. Capsules & Health Ingredients, which we plan to exit at the appropriate time, will operate as an independent business platform.
years of capsule manufacturing experience
product offerings
Net Promoter Score1
The Net Promoter Score (NPS) is a metric used to measure customer loyalty and satisfaction with a company’s products or services. In the B2B life sciences industry, benchmarks typically range between 40 and 45 (Source: Medallia).
Our DFS business builds upon our strong capsule expertise and provides our nutraceutical customers with an expert end-to-end contract manufacturing service. We support dosage forms ranging from simple liquid formulations using our proprietary liquid sealing technology, to complex multi-dose and timed-release systems. Our DFS program has been supported by capacity expansions across our network to further improve speed-to-market. Alongside our formulation and encapsulation expertise, we also support our customers by co-creating finished products and providing product branding support.
We provide multiple science-backed health ingredients for the growing active lifestyle market. Our offering includes products that support healthy human nutrition, targeting global consumer trends including joint health, muscular strength, energy, endurance and weight management. Our portfolio includes premium brands such as UC-II® undenatured type II collagen for joint health, Carnipure® L-carnitine for energy, and a range of other branded products targeting immune and digestive health.
To be decommissioned in 2025.
In 2024, our Capsules & Health Ingredients division continued to maintain its leading position in Hard Empty Capsules (HEC), Dosage Form Solutions, and Health Ingredients in a challenging market environment. The HEC market has recovered at a slower than expected pace, while the pharmaceutical HEC market correction has been deeper and longer than anticipated. As a result, over the past couple of years, we have focused on optimizing our cost position in the short term through operational excellence in manufacturing, which has led to improved efficiencies, and cost-saving initiatives across all functions and regions. These efforts have partially offset the margin pressures caused by lower industry utilization.
In this context, we have taken further measures to optimize our production network, including the planned decommissioning of the Jakarta (ID) site in mid-2025, the closure of production lines at our capsule plants in Western markets, and targeted capital investments to expand production capacity with additional lines in China and India. Furthermore, in 2024, we invested significantly into the long-term competitiveness of our business. We saw a positive early impact of our newly-introduced superior proprietary D90 capsule manufacturing technology.
Leveraging our in-house design, technical, and engineering teams, we advanced the development of our next-generation proprietary hard empty capsule manufacturing technology. The first full production line became operational in Q1 2024. This new technology has increased individual line capacity by 15% while concurrently reducing weight and dimensional variability. It is also reducing our net carbon footprint and establishing a new product quality standard. Following the successful installation of the first line, we have initiated the roll out of this new technology across our manufacturing network, which will take several years.
Comparison vs. Prior Year
Sales (CHF)
CORE EBITDA (CHF)
CORE EBITDA Margin
Sales growth is at constant exchange rate (CER).
Our commitment to product innovation was recognized by The Medicine Maker's 2023 Innovation Award. Our next-generation enteric capsule, Enprotect®, was the recipient of this award, highlighting its cutting-edge design aimed at enhancing drug delivery for acid-sensitive active pharmaceutical ingredients.
Building on this innovative technology, we have introduced the Capsugel® Enprotect® size 9 capsule, aimed at accelerating the pre-clinical development of acid-sensitive APIs. This smaller capsule format supports rodent studies and expedites the drug development process by enabling earlier, more accurate pre-clinical testing. The technology eliminates the need for additional coating and helps to ensure consistent API release in the small intestine while simplifying formulation and manufacturing. This innovation is expected to improve drug testing efficiency and enhance first-in-human timelines.
President, Capsules & Health Ingredients (CHI) Division
During 2024, we remained committed to delivering customer value while strengthening our overall cost competitiveness. In the short term, we implemented rigorous cost management across all sites and functions. For the long term, we advanced the deployment of our new proprietary hard empty capsule manufacturing D90 technology, delivering a significant improvement in quality standards, productivity and carbon footprint.
This year marks the launch of the Innovaform™ Accelerator center at our Colmar (FR) site, designed to co-innovate with pharmaceutical customers on formulation and encapsulation solutions. This new facility serves as a Center of Excellence to support the development of innovative drug delivery for oral and pulmonary administration, addressing challenges such as solubility and bioavailability in active pharmaceutical ingredients (APIs). It provides expertise and technology platforms for small molecules, peptide proteins, and nucleic acid-based therapies. This initiative aims to accelerate drug development timelines for our customers and reduce scale-up and manufacturing costs.
Furthermore, we expanded our service offering for orally delivered biologic therapies to support the unique development and manufacturing needs of smart capsules companies. The service offering leverages customized Capsugel® Enprotect® capsules using bi-layer manufacturing technology and it will be offered exclusively from the recently launched Innovaform™ Accelerator in Colmar (FR).
Patients continue to favor oral administration of active pharmaceutical ingredients (APIs), but formulating such products is hindered by challenges related to the solubility and bioavailability of new APIs entering the development pipeline. We have been working on addressing these challenges by advancing innovative capsule delivery solutions.
In 2024, we launched the Innovaform™ Accelerator, a new offering targeting dosage form and delivery challenges of small molecules, oral peptides, proteins, monoclonal antibodies and nucleic acid-based therapeutics. By co-innovating with developers, we aim to optimize the effectiveness of their APIs and improve manufacturing efficiency. The offering provides services for adapting formulation, capsules and encapsulation strategies to create the ideal delivery vehicle for each API.
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