Swiss contract development and manufacturing organisation Lonza has agreed to acquire five US pharmaceutical manufacturing sites from Merck KGaA, Darmstadt, Germany, expanding its American production network into additional specialist biologics and advanced drug-delivery technologies. The transaction would bring approximately 1,100 employees into Lonza and increase its US contract development and manufacturing organisation (CDMO) site count from four to nine, subject to completion expected in mid-2027.
The transaction has an enterprise valuation in the low- to mid-triple-digit millions of Swiss francs. Lonza will pay in cash using existing resources and credit facilities, and says the arrangement is consistent with maintaining its BBB+ credit rating. Until closing, the manufacturing businesses will continue to operate independently. The agreement therefore transfers neither operational control nor the workforce immediately; regulatory and other customary closing conditions remain to be met.
The five sites cover connected but distinct manufacturing disciplines. St. Louis, Missouri, provides bioconjugation capabilities, while Madison and Verona in Wisconsin specialise in high-potency payload-linkers. Carlsbad, California, undertakes end-to-end viral vector development and manufacture, including aseptic fill-finish. Indianapolis, Indiana, supports lipid nanoparticles, liposomes and PEGylated proteins, also with aseptic fill-finish. Each operation serves different parts of the route from clinical development to commercial medicine supply, and the proposed acquisition would add those capabilities to Lonza’s existing network.
Bioconjugation joins biological molecules to other functional components under controlled manufacturing conditions. An antibody-drug conjugate, for example, combines a targeting antibody with a potent medicinal payload through a linker. Manufacturing controls must establish the identity, purity and loading of the finished conjugate, while ensuring that residual reagents and impurities remain within the specifications for the particular product. This helps explain the connection between the St. Louis bioconjugation operation and the Wisconsin payload-linker plants, although each remains a separate production capability with its own processes.
Highly potent payload production requires stringent containment to limit operator exposure and prevent the transfer of active material between production campaigns. Equipment design, closed processing where appropriate, cleaning validation and analytical testing become particularly important when small quantities of a substance are biologically active. The acquisition could bring Lonza closer to offering related manufacturing steps within one commercial network, but individual customer programmes will still require their own technical transfer, product qualification and regulatory controls.
Viral vector operations have different upstream, downstream and final-product requirements. Vectors used in gene therapies are produced in biological systems, then processed to isolate, purify and formulate the required material. Aseptic fill-finish adds controlled steps for placing that material into its final container without introducing microbial contamination. Lonza identifies Carlsbad as a source of end-to-end vector services; its addition would broaden the manufacturing routes available to customers whose therapies require specialised production rather than conventional chemical synthesis.
At Indianapolis, the proposed acquisition would add lipid nanoparticle, liposome and PEGylated protein manufacturing capabilities. Lipid nanoparticles can carry therapeutic materials, while liposomes and PEGylation use different formulation or molecular-modification processes to influence a medicine’s distribution and persistence. Production controls depend on particle characteristics, composition, stability and the requirements of the active ingredient. Analytical testing, batch consistency and aseptic processing are central to the products for which those capabilities are intended.
After closing, Lonza expects to employ more than 6,000 people across its US operations. The acquired facilities would complement existing investment in CDMO readiness at Vacaville, California, and the expansion of commercial spray drying in Bend, Oregon. Their established manufacturing processes and experienced teams could broaden the range of customer programmes supported without constructing each capability from scratch. Integration will nevertheless require the companies to maintain validated processes, manufacturing records and established supply arrangements throughout the ownership transition.
Lonza expects the acquired businesses to generate about CHF 250m in sales in full-year 2028, initially at a core EBITDA margin below its group level. Available capacity and additional expansion space could support subsequent growth, with further capital spending dependent on customer demand. Management forecasts that the operations will reach peak sales and margins aligned with Lonza’s future group level by the middle of the 2030s. Those figures concern commercial projections, not a verified commitment to higher physical production volumes at each site.
Merck KGaA is selling these contract manufacturing operations as it concentrates investment on other parts of its life sciences portfolio. Its BioReliance contract testing services are excluded from the transaction and will remain with Merck. Customers of the divested businesses will continue to require validated production methods, traceable materials, quality agreements and release procedures during the transition. Lonza says continuity for customers and support for employees will be priorities once the purchase closes; until then, Merck retains responsibility for running the operations.
The transaction remains subject to customary closing conditions, with completion expected around mid-2027. Lonza has retained its 2026 financial outlook and says the purchase does not change the previously announced share buyback associated with the expected divestment of its Capsules & Health Ingredients business. Preparations will focus on transferring the five operations and their customer programmes without disrupting established manufacturing requirements. Additional capacity investment and utilisation decisions will follow the integration and the demand for individual therapeutic products.
