Lonza lifts margin target, repeats latter half of 2026 to be slower

By Bartosz Dabrowski and Kira Britten

July 22 (Reuters) - Lonza, the world's largest contract drug manufacturer, raised its margin goal but stuck with the earlier revenue target on Wednesday, as it reiterated that growth and profitability would moderate in the second half of 2026.

The Swiss firm now targets an annual core profit margin of 33% to 34%, versus over 32% previously, alongside sales growth of 11% to 12% at constant exchange rates.

Its shares fell around 4% by 1045 GMT, with analysts suggesting profit taking and some disappointment with the implied second-half slowdown.

However, RBC analyst Charles Weston said the market had broadly expected the strong first half, as Lonza had been clear about the year's phasing in its earlier commentary.

"Some shorter-term investors may have been positioning themselves long into the numbers, so the unwind of these may be exacerbating the share price reaction," he told Reuters in an email.

Lonza expects the first-half performance to support another solid full-year result, even as the timing of business activities, particularly in its advanced synthesis unit, and tougher year-ago comparisons weigh on the latter half of 2026.

Its main contract drug manufacturing business saw its half-year core earnings before interest, taxes, depreciation and amortisation grow 27.4% in constant currency to 1.17 billion Swiss francs ($1.44 billion). Analysts polled by Vara had expected EBITDA of 1.13 billion francs for the core business.

Lonza is aiming to focus solely on contract manufacturing, having agreed to sell its capsule and health ingredients business to Lone Star Funds in May.

Chief Financial Officer Philippe Deecke said sales at Vacaville, Lonza's key biologics manufacturing site acquired from Roche in 2024, were expected to remain broadly flat through 2028, with more meaningful growth coming after that.

"You will see the growth post-2028," Deecke told a press call, adding that the site's utilization stood at 30%.

($1 = 0.8128 Swiss francs)

(Reporting by Bartosz Dabrowski and Kira Britten, editing by Milla Nissi-Prussak)