Lonza strikes $1.2B deal to buy mammoth Roche plant amid CDMO industry upheaval

In a bid to corner contracts on next-generation medicines, production juggernaut Lonza is picking up one of the world’s biggest biologics manufacturing facilities from its Swiss compatriot Roche.

Lonza is laying out $1.2 billion in cash to acquire Genentech’s factory in Vacaville, California, where it already has plans to plug in another 500 million Swiss francs ($561 million) to expand the plant in the coming years, the CDMO said Wednesday.

The deal will help Lonza bulk up large-scale biologics manufacturing capacity for both commercial-scale mammalian contract manufacturing and clinical-stage projects, the company explained in a press release.

The Vacaville facility boasts bioreactor capacity of around 330,000 liters, making it one of the world’s biggest biologics manufacturing sites by volume, Lonza said. As part of the acquisition, Lonza will extend job offers to around 750 Genentech staffers currently employed at Vacaville.

Lonza is already looking to the plant’s future, too. The company plans an expansion project worth around 500 million francs to help “satisfy demand for the next generation of mammalian biologics therapies.”

The CDMO will take over the supply of the products currently manufactured in Vacaville by Roche. Lonza will provide committed volumes over the medium term before phasing out the Roche products as the site transitions to serve the CDMO’s customers.

Lonza and Roche expect the deal for the facility to close in the second half of 2024. Once the acquisition is complete, the Vacaville site will join Lonza’s Biologics division, which operates manufacturing facilities in Switzerland, Singapore, Spain, the United States and the United Kingdom.

Lonza has high hopes for the new facility and is upgrading its mid-term guidance from 2024 through 2028 in turn. The manufacturer now expects sales to grow 12% to 15% over the four-year stretch, up from a previous window of 11% to 13%. 

Lonza is beefing up its manufacturing capacity as the global CDMO landscape faces seismic changes.

Novo Holdings’ proposed $16.5 billion acquisition of Catalent—and the related $11 billion sale of three manufacturing sites to Novo Nordisk—is set to take some major contract manufacturing space off the open market. Eli Lilly CEO David Ricks has questioned the implications of the merger on his company’s relationship with Catalent given Lilly’s competition with Novo in diabetes and obesity treatments.

Other companies are trying to seize the opportunity to expand their own CDMO offerings. Juan López-Belmonte, CEO of Laboratorios Farmacéuticos Rovi, recently described the Novo-Catalent deal a “tremendous opportunity” for the Spanish company to win over injectable CDMO business in the years ahead.

Meanwhile, several U.S. lawmakers are advancing a draft bill targeting several Chinese biotech companies, including the CRO and CDMO giants WuXi AppTec and WuXi Biologics. The bill would forbid “foreign adversary biotech companies of U.S. national security concern” from getting federal contracts or working with companies that seek such contracts.

If enacted, companies that develop drugs offered under the federal Medicare and Medicaid programs would have to choose other contractors.

The two WuXi firms have become major contract manufacturers and R&D partners for many biopharma companies large and small, including Lilly for its Zepbound and Mounjaro. Last year, WuXi AppTec generated 65% of its revenue from its customers in the U.S.

The potential void created by WuXi’s woes and the Novo-Catalent buyout could represent about 20% of global CDMO market share, analysts at Intron Health wrote in a note Tuesday. The team suggests the majority of the open share will be redistributed to other Western CDMOs, and Lonza, as an established CDMO player, is “well placed to benefit," the Intron team said.