Lonza to buy large biologics site from Roche in US for $1.2 billion

By Miranda Murray and Ludwig Burger

(Reuters) -Swiss contract drug manufacturer Lonza said on Wednesday it would buy one of the world's largest manufacturing sites for biologic drugs in California from drugmaker Roche for $1.2 billion.

Lonza plans to spend another 500 million Swiss francs ($562.3 million) to upgrade the facility in Vacaville, which makes monoclonal antibodies from genetically modified living cells, to produce a new generation of drugs, the company said in a statement.

Roche unveiled plans to sell the site in May last year, saying it no longer needs the very large antibody volumes the plant provides, as it plans to focus on drugs targeting smaller patient populations and a range of biotechnology methods beyond monoclonal antibodies.

The Vacaville facility currently has a total bioreactor capacity of around 330,000 liters, making it one of the largest biologics manufacturing sites worldwide by volume, Lonza said.

"The Vacaville site is a highly valuable strategic acquisition that will make capacity immediately available for our customers and unlock future growth for our Biologics division," Jean-Christophe Hyvert, president of Biologics at Lonza, said in the statement.

Lonza shares jumped 4.3% at the 0800 GMT open.

The transaction is expected to close in the second half of 2024, subject to customary closing conditions.

Basel-based Lonza also raised its 2024-2028 sales growth target to a range of 12%-15% per year, from its 11-13% growth estimate previously.

The mid-term profit margin guidance remains unchanged, it added.

Lonza shares were battered last year amid uncertainty over its longer-term orders from drugmakers, but the stock bounced back in January when the company confirmed its outlook and Chairman Albert Baehny announced he would step down in May.

Under the deal, the about 750 employees of Roche subsidiary Genentech at the facility will be offered employment by Lonza and the products currently produced at the site will continue to be supplied by Lonza for a transition period, Roche said.

(Reporting by Miranda Murray; Editing by Dave Graham, Savio D'Souza and Himani Sarkar)