Lonza Expanding U.S. CDMO Footprint with Purchase of Five Merck KGaA Sites

Lonza plans to more than double its U.S. footprint of contract development and manufacturing organization (CDMO) sites by agreeing to acquire five such sites in the U.S. from Merck KGaA, Darmstadt, Germany, in a deal the companies would only say was valued “in the low- to mid-triple-digit millions Swiss francs.”

At between CHF 100 million and CHF 500 million, the transaction would amount to between $121.6 million to $608.2 million.

The deal would expand Lonza’s U.S. CDMO network from four to nine sites and grow the company’s U.S. workforce nearly 25% by adding approximately 1,100 employees, resulting in a combined headcount of more than 6,000 employees.

The expansion would also add end-to-end development and manufacturing capabilities in the U.S., with the aim of supporting customers from clinical through commercial phases in growth areas that include antibody-drug conjugates (ADCs) and other bioconjugates, viral vectors for cell and gene therapies, as well as advanced drug-delivery technologies.

The deal with German Merck marks a continuing expansion by Lonza of its U.S. CDMO operations. In 2024, Lonza acquired for $1.2 billion the large-scale biologics manufacturing site in Vacaville, CA built by the seller’s Genentech subsidiary. More recently in September, Lonza announced plans to construct a large-scale commercial spray-drying facility in Bend, OR, a project intended to establish Lonza as the leading CDMO provider of commercial-scale spray-drying PSD-4 capacity in the U.S.

Lonza topped GEN’s most recent annual A-List of Top 10 Contract Development and Manufacturing Organizations, published in September, based on its 2025 revenues of CHF 6.531 billion ($8.053 billion at the time; $7.944 billion now).

‘Strong fit’

“This acquisition is a strong fit with our One Lonza strategy and reflects our disciplined approach to capital allocation, investing in opportunities that will drive long-term, profitable growth and deliver attractive returns,” Lonza CEO Wolfgang Wienand said in a statement.

“One Lonza” is Lonza’s approach to growth. Using the metaphor of an engine, Lonza has articulated a set of five core competencies designed to work together to generate long-term value. The five consist of high-performance teams; a leading scientific, technological, digital ecosystem; unparalleled customer partnerships; end-to-end execution excellence; and plug-and-play investment and integration capabilities.

“It will significantly expand our U.S. presence, bringing us even closer to our customers, while increasing the resilience of our global manufacturing network. 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,” Wienand added.

Kai Beckmann, Chairman of the Executive Board and Group CEO of Merck KGaA, stated that the transaction with Lonza represented “another important step in advancing our mid- to long-term strategic agenda.”

In May Merck KGaA articulated a four-prong strategy for “creating sustainable value and growth,” based on combining biology, chemistry, physics, with data and artificial intelligence (AI), and enabled by “enhanced company integration for speed and scale”—a challenge given the company’s heritage of businesses with their own distinct brands, such as EMD Serono, MilliporeSigma, and Sigma-Aldrich.

‘Strong foundation’

“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,” Beckmann said. “Our CDMO teams have built a strong foundation through their expertise and commitment. We believe Lonza is well positioned to build on that foundation and support the business’s next phase of growth.”

Merck KGaA reasons that the divestment to Lonza will sharpen the focus of its Life Science business sector while providing the CDMO business with a strong platform for its next phase of development.

The Life Science sector consists of a broad portfolio of consumables, technologies, and services that the company said will continue to serve pharmaceutical, biotechnology and CDMO customers from discovery through manufacturing.  During the first half of 2026, the Life Science sector reported net sales of €4.677 billion ($5.236 billion), up 4.3% from €4.485 billion ($5.022 billion) in January-June 2025. During the second quarter, Life Science racked up €2.412 billion ($2.701 billion), up 6.4% from €2.267 billion ($2.538 billion) in Q2 2025.

Merck KGaA is set to report third-quarter results on November 12—while Lonza last month said Q3 results were in line with its expectations, without quantifying its results. Lonza also reiterated its full-year 2026 outlook, which it upgraded over the summer, of 11–12% constant exchange rate sales growth and a CORE EBITDA margin of 33–34%. The company also reiterated its expectation of a negative foreign exchange impact of approximately 2% to 3% on 2026 sales growth.

Lonza said the U.S. CDMO facilities it has agreed to acquire from Merck KGaA include sites in:

• St. Louis, MO: Bioconjugates
• Madison and Verona, WI: High-potency payload-linkers
• Carlsbad, CA: End-to-end viral vector solutions, including aseptic fill-finish capabilities
• Indianapolis: Lipid nanoparticle, liposome, and PEGylated protein solutions, including aseptic fill-finish capabilities

The four sites are expected, Lonza said, to generate a combined approximately CHF 250 million ($304 million) in sales at a margin of core earnings before interest, taxes, depreciation, and amortization (EBITDA) that is below Lonza’s, with an “insignificant” impact on the group.

Once integrated into Lonza, the buyer said, the four sites are expected to deliver “significant, profitable” growth over time, using existing available capacities and additional expansion space. Lonza expects the sites will benefit from Lonza’s sole or “pure-play” focus on CDMO activity, with further investments in the sites to align with evolving market demand.

Peak sales forecast

“Lonza anticipates the business to reach peak sales at Lonza’s future group margin level by mid-2030s,” the company predicted.

Last month Lonza ramped up its growth projections following completion of its transformation into a pure-play CDMO. The company upgraded its Organic Growth Model, consisting of organic sales growth at constant exchange rates (CER) from the low-teens (10%-13%), and core earnings before interest, taxes, depreciation, and amortization (EBITDA) growth that surpasses sales growth—and articulated an upgraded ambition to:

• Reach core EBITDA margin “in the high thirties in the mid-term”
• Drive return on invested capital (ROIC) up to two to three times weighted average cost of capital as of 2026, and
• Improve free cash flow conversion on average over time

Lonza said it will fund its acquisition of the Merck KGaA U.S. CDMO sites and with cash at hand and its existing credit facilities, maintaining the company’s BBB+ rating.

The deal is expected to close in mid-2027 subject to customary closing conditions. Lonza said the transaction will not affect its previously announced share buyback following its planned divestment of its Capsules & Health Ingredients (CHI) business. Lonza in March announced plans to sell CHI to Lone Star Funds for CHF 2.3 billion ($2.797 billion), in a deal set to close by year’s end.

“I am particularly excited to welcome the highly experienced teams at these sites to One Lonza,” Wienand said. “It takes great people with deep scientific expertise and excellence in development and manufacturing to reliably translate breakthrough innovation into viable therapies for patients. Together, we will build an even stronger offering for our customers.”

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