Lonza Plans to Keep Investment High Amid Covid-19 Vaccine Demand

(Bloomberg) --

Swiss drug-ingredient maker Lonza Group AG said it plans to keep investment at high levels over the coming years to keep up with demand to manufacture products such as Moderna Inc.’s Covid-19 vaccine.

Capital expenditure will be 25% of total revenue this year and remain at such elevated levels for the next few years, the company said Tuesday. Lonza also forecast currency-adjusted sales growth in the low teens.

Lonza is a contract drug manufacturer helping to produce the billions of vaccine doses needed to immunize the world against Covid. Its capacity to mass-produce medicines is in high demand from numerous biotechnology companies that need manufacturing partners to get their vaccines and therapies to the public.

The company, holding an investor day Tuesday, said its 2024 mid-term goal is a core margin of 33% to 35% for earnings before interest, taxes, depreciation and amortization. Lonza also said it will consider acquisitions to add short-term capacity and expand geographically, as well as adding therapies and technologies. 

Lonza expects capex will return to a high-teens level in 2025.

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