At the end of 2016 Lonza entered into an agreement to acquire Capsugel for $5.5B in cash, including refinancing of $2B of existing Capsugel debt. The acquisition is expected to accelerate Lonza’s growth and ability to deliver value along their ‘healthcare continuum’ and will enhance Lonza’s status as a fully integrated solutions provider in oral delivery technologies and active ingredients to the consumer healthcare and nutrition markets. The Capsugel integration will commence in Q2 2017, and the combined portfolio will position Lonza as the development, formulation, delivery technology and manufacturing partner of choice for the Pharma industry.
The Acquisition will support Lonza’s strategic ambition of getting closer to the patient or end consumer, opening up new market opportunities in the pharmaceutical, consumer healthcare and nutrition industries. In addition to this, the deal will provide additional value by offering an integrated portfolio of industry-leading technologies, from active pharmaceutical ingredients (APIs) through excipients to dosage forms and delivery technologies.
Capsugel has three business segments: Oral Solids, Inhaled/Nasal and Development Services. The company has a strong global presence, with 3600 employees, 13 manufacturing facilities and 3 R&D centers in 9 countries across 3 continents. In 2015 Capsugel had an annual turnover of $1B and >170 patent families. Lonza is expected to ensure a seamless integration into their existing structure, enabling the Capsugel business to continue its strong growth trajectory.
Dr. Jason Beckwith, CEO of Evolution Global, notes that “whilst it is too early to forecast a headcount realignment as a result of this acquisition, the focus of this transaction is to gain benefits from positive top-line and innovation synergies, and the increased service portfolio and cross-selling opportunities are likely to generate an increased headcount.”
How Will This Decision Benefit Lonza’s Customers?
With the Capsugel acquisition, Lonza will cement its status as the partner of choice for its pharma customers along the entire value chain. The combined technologies and offerings will provide customers with innovative solutions in both large and small molecules, ultimately solidifying Lonza’s position as the partner best able to support the pharma industry by bringing new, differentiated medicines to market rapidly and efficiently.
The acquisition is expected to strengthen Lonza’s position in consumer healthcare and nutrition as it becomes a fully integrated and innovative service provider of active ingredients, oral dosage forms, development services and delivery technologies. The combined business plan will leverage Lonza’s bioavailability technologies to create a new dietary ingredient-ready offering, as well as capitalize on its formulation expertise to develop new ingredients and to market new combination products. Customers will gain from the simplicity and efficiency of working with one company that can provide world-leading support from APIs to excipients and dosage forms. Both Lonza and Capsugel enjoy a strong quality and regulatory track record.
It is likely that the two Capsugel business units (Biopharmaceutical, Consumer Health & Nutrition) will be integrated into the existing Lonza segments “Pharma & Biotech” and “Specialty Ingredients.” Synergies include an improved value proposition for the customer, which will allow Lonza to further leverage its current product and service offerings. In addition, allowance of cross-selling of existing products, combination of manufacturing solutions and services and the creation of an integrated value offering that merges Lonza’s ingredients with Capsugel’s dosage forms.
The strategic and commercial synergies that will result from Lonza’s acquisition of Capsugel are an effective demonstration of intelligent M&A activity within the healthcare & pharmaceutical industries. With this acquisition, Lonza has positioned itself as end-to-end service providers along the “healthcare continuum,” thereby streamlining and enhancing existing customer relationships whilst opening up significant new market opportunities.
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