Lonza buys its way to a bigger US drug manufacturing network
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Swiss contract drug manufacturer Lonza has agreed to buy 5 US manufacturing sites from Merck KGaA, Darmstadt, Germany, more than doubling its US network from 4 sites to 9.
The deal, announced Nov. 3, covers sites in St. Louis, Missouri; Madison and Verona, Wisconsin; Carlsbad, California; and Indianapolis, Indiana. About 1,100 employees will join Lonza, taking its US workforce to more than 6,000. Closing is expected in mid-2027, subject to customary conditions.
Lonza has not disclosed an exact price. It puts the total enterprise valuation in the low- to mid-triple-digit millions of Swiss francs and will pay in cash, funded from cash on hand and existing credit facilities.
The seller should not be confused with US drugmaker Merck & Co. Merck KGaA is a separate German group.
For manufacturers watching the pharmaceutical sector, the deal shows one way US capacity is being added. Lonza is buying working plants with trained teams rather than waiting for new ones to be built.
Lonza is buying capacity in fast-growing types of medicine
These are not general-purpose drug factories. Each site serves a specialized area of medicine that Lonza sees as a growth market.
St. Louis makes bioconjugates, the category that includes antibody-drug conjugates (ADCs). These cancer treatments attach a potent drug, known as a payload, to an antibody that guides it to tumor cells. The Madison and Verona sites make high-potency payload-linkers, the drug-and-connector components at the center of those therapies. Compounds this potent need specialized containment to be handled safely.
Carlsbad produces viral vectors, the modified viruses used to deliver genetic material in cell and gene therapies. Indianapolis works with lipid nanoparticles, liposomes, and PEGylated proteins, technologies that carry or protect drugs inside the body. Both sites also offer aseptic fill-finish, the sterile final step of putting a drug into its container.
The network supports work from clinical trials through to commercial supply. That gives customers the option of keeping a product inside one US network as it moves from testing to market.
“With high demand for bioconjugates and viral vectors, the acquired sites will strengthen our ability to support customers from innovation to launch and commercial supply,” said Lonza CEO Wolfgang Wienand.
Contract manufacturers stand to gain from the US investment push
The Trump administration has been pressing drugmakers to produce more medicines in the US, and many have announced plans to expand domestic manufacturing. Not every drug developer wants to build and run its own factories, particularly for complex products made in small volumes.
That leaves room for contract development and manufacturing organizations (CDMOs) such as Lonza, which develop and make drugs on behalf of other companies.
Lonza has been building its US position step by step. It is already investing at its site in Vacaville, California, and in September announced a commercial spray-drying facility in Bend, Oregon. The Merck KGaA sites add bioconjugate, payload-linker, and viral vector work to that network.
Speed is part of the appeal. A new sterile pharmaceutical plant has to be designed, built, equipped, and validated before it can make a batch for patients, which can take years. Buying existing sites with experienced staff avoids much of that wait, although the deal itself will not close until mid-2027.
The approach does not pay off immediately. Lonza expects the sites to contribute around CHF 250 million in sales in full-year 2028, at a CORE EBITDA margin below its own and with an insignificant impact on the group. It expects the business to reach peak sales at its future group margin level by the mid-2030s, using existing spare capacity and expansion space at the sites.
The seller is narrowing its focus
The deal also reflects a strategic choice by Merck KGaA.
“A more concentrated Life Science portfolio will allow us to focus our investments on building our scientific leadership and make us an even stronger partner for our customers,” said Kai Beckmann, chairman of the executive board and group CEO of Merck KGaA.
The sale hands the sites to a pure-play CDMO, and Lonza expects them to benefit from that focus once integrated.
Until closing, the businesses will operate independently. Lonza says its first priorities afterward will be continuity for customers, support for employees, and full integration into its global network.
Several questions remain open. Lonza has given no single price for the deal, and it does not expect the sites to reach peak sales until the mid-2030s. Demand for ADCs and gene therapies will shape how quickly the sites fill their spare capacity. With drugmakers and contract manufacturers alike chasing US production, the bigger question is whether buying existing plants becomes the route others follow.
Source:
Lonza
