Lonza Group AG

2025 was a year of strong growth, robust performance and significant progress for Lonza. In the first full year of implementing our One Lonza strategy, we outperformed on our targets, while also achieving strategic milestones to further strengthen our position as the world-leading CDMO. In April we implemented our new target operating model, built around three business platforms that reflect our sharpened focus on our core CDMO business. This new structure is designed to enhance and strengthen collective and individual accountability, elevate operational excellence and ensure we are well set up to meet the needs of our customers and their patients. Turning to our facilities, we are continuing to complete the successful integration of our new Vacaville site by adding people, capacities and capabilities. Here we have already signed a number of large commercial contracts and continue to invest into the site CTMO offering, whilst improving flexibility to unlock its significant growth potential for Lonza and our customers. Within our wider network, we are continuing to fill our pipeline, sign new customer contracts across technology platforms and make measurable progress towards our sustainability goals. Looking to the longer term, our ambitious investment program is designed to continue to outgrow the market and to meet the future needs of our customers and our business. Today we share the details of our financial performance in 2025 with strong results that reflect our strategic focus, our disciplined execution and the early impact of our ongoing One Lonza transformation. Our performance and progress in the last year make one thing clear. Our business is a place of unique opportunity for our customers, our people and our shareholders. This is One Lonza.

Also a warm welcome from my side to all the ladies and gentlemen here in the room, of course also to the ladies and gentlemen joining us online to our full year 2025 conference. And before we actually dive into the presentation, please take a look at our Safe Harbor Statement, take note and feel bound to it. Quickly, we prepared a rich agenda for you today. And Philip, myself, I guess, are very much looking forward to present this strong set of numbers to you and later on in the Q&A discuss with you about what 2025 was to us at OneLauncer and actually what 2026 in the future will bring. So OneLauncer, full year 2025 performance, kind of diving a little bit deeper into the business platforms than the outlook 2026 and Afterwards, you shooting questions at us and us providing useful answers. So my five key messages for you today. First of all, the One Lonsa team delivered strong profitable growth in 2024, top line growth and constant exchange rates of above 21%. and an expanding margin to 31.6% plus 1.4 percentage points ahead of our upgraded CDMO outlook of July 2025. This business, of course, was driven by Vacaville, but not only. The underlying business actually expanded very nicely as well and at low teens, the constant exchange rate Sales and also in line with our city more organic growth model. We successfully launch our new operating model first of April to introduce new ways of working in a new way. How we actually present ourselves to the outside world to our customers and increase elevate the customer experience within one launch across all technologies and all business platforms. We actually saw and continue to see strong underlying business momentum and considering the things that actually happened last year in terms of how the future supply chains in the pharmaceutical industry will look like, we at Lonsa actually are very well positioned to also support our clients on that journey. And I'll speak to that later in much more detail. Then the outlook for 2026, we expect our top line to grow at 11% to 12% in constant exchange rates, and the core UHDA margin to further expand, reaching a level well above 32%. which means actually that we in 2026 will already enter the corridor of 32 to 34% that two years ago was given to you as a mid-term guidance for 2028. Briefly on the CHI business, which developed well as planned and has shown growth again in line with the outlook that we provided to you a year ago and will from now on, considering that we intend to exit that business, be accounted for as a discontinued operation. The exit process is advancing as planned. And with that, briefly, as a reminder for you, our vision, which kind of states our ambition, which is we are the pioneer and the world leader in the CDMO industry with cutting edge science, smart technology, and lean manufacturing. In short, what it says, actually, Lonza is in a position to outgrow the underlying market. create outstanding value. What does it take to create outstanding value? First of all, an attractive underlying market. That is the case in the pharmaceutical industry. It takes a strong business model, the CDMO business model, but in order to outgrow and create superior value, we need something special, which actually is what we introduced to you a year ago, a little bit more than a year ago, in December 2024, our unique one-launcher engine. consisting of five elements, high performance teams, leading scientific, technological, and digital ecosystem, unparalleled customer partnerships, end-to-end execution excellence, and plug-and-play investment and integration capabilities. While these are broad claims, highly abstract, I actually decided and want to share a number of evidence and proof points for our claims. First of all, high performance teams. We continuously try to hold ourselves true in terms of that what is in my mind as a CEO and in the minds of the executive leadership teams actually is in line with reality for which we actually do voice of employee surveys every six months. And among the top 200 leaders of Lonsa, 95% of them strongly support the new mission and purpose of Lonsa. In terms of engagement index, also above 80%, which is really an outstanding value. So full support of high performing teams. In terms of scientific support to our clients, Lonza and its GS system supported more than 100 commercial products. It is the leading cell line in the industry. Unparalleled customer partnerships with a new technology. As a new operating model and creating an elevated customer experience, we actually have been able, from an already industry-leading level in 2024, to further increase net promoter scores, I mean, twice, 100% for big pharma and 50% for small biotech within just 12 months. Our integrated offering is gaining momentum, significantly increasing in terms of us offering drug substances and drug product services. And last but not least, in terms of our ability to continuously add people, technologies and acquisitions. Cinefix is a great example. Acquired in 2023 and integration already done in the first quarter of 2024. And more notably, the integration of Vacaville mid of 2025. I'll speak to that in much more detail later. So in terms of outgrowing our market, what are the components which in the end lead to our ability, as proven in the past, 2025, and as we expect it to continue over the next year and years to come? First of all, it's the underlying market growth, 6% to 7%, available to everyone. Then there is the increase of outsourcing. So pharmaceutical companies decide not to manufacture everything in-house but rather go to trusted partners like Loncer and have their products developed and manufactured. They are adding 1-2% growth increment. Then there is active market selection. deciding where to play, which are the high growth, high value market segments in the underlying pharmaceutical market, adding another 1% to 2%, leading to an underlying, I mean, selected market growth of 8% to 10%. And then there is the Lonza engine, what makes us special, which is why people come to us, which provides for an additional upside, 2% to 3%. So overall yielding an underlying growth potential for Lonza of low teens, 10% to 13%. So I talked about market and us taking conscious decisions in terms of where to play and where not to play. Let's briefly break it down. The overall underlying pharma market is probably $1.2 trillion in US dollars, growing at 7%. Clinical pipeline. more than 7,000 molecules. Based on the technologies that we have chosen for ourselves, eight, and based on the positioning in the value chain, in the product life cycle from early phase development down to commercial manufacturing, we at Lonsa are able and operate within a 100 billion US dollar market, growing at eight to 10%. And we, in terms of future potential, are able to cover more than 90% of the innovative pharmaceutical pipeline to fuel future growth Quickly on outsourcing because there was a lot of discussion in the last year in terms of I mean will the world change and if so How and what does that change would that change mean for the CDMO business model first of all? And we should never forget that system all business model is a beautiful business model It's a sustainable business model because it adds tangible value and creates efficient and global pharmaceutical supply. This has been true over the last 15 years and will be true in the next 15 years to come as well. But let's be more specific with all the big numbers and the big headlines out there about large pharmaceutical companies investing in the US. We kind of just took from actually historic figures and also Bloomberg consensus forecasts what actually the world and the pharmaceutical companies themselves expect going forward in terms of their own capex behavior. And the outcome actually is in absolute terms, capex of the top 20 large pharma companies between 2015 and 2025 grew at a CAGR of 3%. And it's expected to grow at the same CAGR between 2025 and 2030, so no change. Kind of normalizing it for sales, same outcome. We will not leave the corridor of 4.5%, maybe 5% of revenues, so no real change in terms of the capex behavior of large pharmaceutical companies. What will most likely change, though, is where that capex will be spent. And it's just likely that more of it, which would have otherwise been spent one or two years ago around the world, might rather go to the US to a larger extent. So no change when it comes to large pharmaceutical customers. I mean, for small and mid-sized biotechs, actually there has not been the option anyway. to spend a lot of money into own captive manufacturing. They shouldn't, they can't, and they won't. And those small and mid-sized biotech companies are actually gaining traction. And we shared here for 2015 the share of innovation, so new clinical assets becoming available for small pharma, 60% versus 40% of large pharma, this increasing to 75% in 2025 and 25% for large pharma. So those companies will spend every dollar they have on the true value driver of their business, which is innovation. They will continue to rely on reliable partners like Lonsa to make their products happen, to turn their breakthrough innovation into viable therapies and true products. However, regionalization is most likely to stay with us and to further evolve going forward and here Lonza as the one global CDMO being able and having a track record to build and operate all around the world is very well positioned to support our clients on that journey as well. So, here's some evidence what it specifically means when I speak about the largest global manufacturing network in the whole industry. First of all, demand is kind of distributed one-third, one-third, one-third across the US, Europe, and Asia, rest of world. And we actually have significant presence, significant capacities in all those key regions. In the US, five sites, and in Europe, six sites, two in Asia. Looking back, in terms of how we have built that global manufacturing network from 2020 to 2025, we as Lonsa spent 10 billion Swiss francs in terms of capex, out of which 3 billion Swiss francs went into US capacities. With Vacaville and all those investments in the past, we have created the largest mammalian CDMO business in the US, very well positioned like no one else to actually help our clients for US supply, for US demand. And all that leads to an active business portfolio of more than 1,000 molecules at a given point in time. Approximately 10% of our revenue is related to early phase business, so preclinical phase 1, 20% phase 2, and the remaining 70% for phase 3 on commercial assets, which leads to strong revenue visibility, we have very low concentration terms of risk and us being exposed to individual products and we have a high level of diversification by technology, indication and company type. And with that, I actually continue with sharing what we believe have been the business highlights in 2025. Three topics. First of all, a robust sales momentum across all our key modalities, technology, so mammalian, small molecule, bioconjugates, drug product, and also the bioscience technology platform. had significant growth again in 2025, driven by mammalian small-scale assets and maturing growth projects across different technologies. We actually saw sustained high commercial contracting again across technologies and sites altogether. well above 10 billion Swiss Francs signed in 2025, of course, materializing over the years to come, including a fifth significant long-term contract for Vacaville, with further contracts for Vacaville being in late-stage negotiations. So thirdly, on CHI, we saw as planned, as predicted, the recovery of the business returning back to growth almost 4% and the margin expanding as planned. The exit process is also advancing as planned and as said before, we will actually report CHI as a discontinued operations as we should for business that we will not keep within our portfolio. So this is actually what we are currently doing to not only deliver the business as promised today, but to also prepare the company for future growth. Currently, the teams are managing 23 CapEx growth projects around the world. Again, no other CDMO actually can do it, has proven to be able to do it. Lancer can do it. Currently, 23 large CapEx growth projects worth $7 billion. 90% of it for commercial and mixed assets, so highly profitable, and 100% in Europe and the US. A few examples to point at. In FISP, a large-scale mammalian started GMP production in 2025 and will be ramped up with a tilt towards the second half 2026, going forward a large important project for Lonsa and for our clients. Commercial bioconjugation, it's a medium-sized CAPEX project, will actually start stepwise from 2029 and then reach peak sales in the mid-2030s, a large-scale fill finish in Stein, ongoing, start expected for 2027, peak sales also in the early 2030s. Type 1 diabetes cell therapy, cool technology science, CRISPR-Cas, together with Vertex in Portsmouth, start expected in 2027 and peak sales around 2030. And Vacaville. I mean, I thought about the headline, make it as crisp and as clear as possible. A great fit to Lonza coming at a great point in time, creating the largest CDMO mammalian network in the US in one go. So remember, we paid in 2024 1.1 billion for that asset. Closing was 1st of October and we expect the site to fully deliver to its full potential in the early 2030s. Some evidence why we are so happy and so confident and so optimistic for what we will be doing with that site and already start to do with that site. First of all, A very stable and strong team. I've been there after JP Morgan, doing town halls, taking investors there, and also talking to people. We have a retention rate of 99 point something, so essentially 100%. Great people willing to work for us and embracing the opportunity that Lonza actually gives to them. It's a high quality asset, as you can expect from Roche, and the investment that we started to do of up to 500 million is into the flexibility of the site so that we can even further increase operational efficiency. Customer interest is very high, remains high as evidenced by now altogether five large commercial contracts for the site, which will, by the way, be able to already now kind of substitute the Roche volumes going out by 2028 and will make the site deliver at the stable level that we have seen today plus minus. So very good outcome also in terms of the commercial development and the selling of that capacity. Also important, the first US FDA inspection under the new ownership in Q4 last year was very strong outcome, only minor observations which could be resolved almost immediately. for a successful tech transfer. So a side which actually didn't receive so many products over the past years had to prove that. And we have been able to execute that tech transfer in a seamless way. And the team actually lived up to the challenge of now operating within a CDMO business model. And I actually included a quote of the responsible external manufacturing head of that large pharmaceutical company, a truly seamless tech transfer into Vacaville. Execution at a level I have rarely experienced in my career. And I can tell you, this gentleman is not 21 years old. He has seen a lot. Last but not least, post-merger integration finalized successfully mid of 2025. So what we can actually say now and announce to you today is that this site is now a regular part of our global manufacturing network and will be managed as such and will start to contribute and continue to contribute over the next years. As a heads up and now that we actually can tell you that already with those five contracts in our business portfolio, we can actually substitute the Roche business and deliver a stable revenue plus minus at the current level until 2028. We will not further comment and report on individual contracts for that side as we don't do it for any other side in our overall manufacturing network. And with that, I hand over to Philipp, who will take you through our financial figures for 2025.

Good afternoon and good morning to people joining from the US, also from my side. Before I start, let me just give you one or two disclaimers. All numbers that I will present are for the Lonza continuing business, which means that they all exclude our CHI business. The CHI business, as was mentioned by Wolfgang, is now reported at discontinued operation according to the definition in IFRS 5. Further, as usual, our sales growth rates are in constant currencies. All other growth rates are in actual currencies. With that, let me go to the key financials. I need to click myself. So first of all, the Lonsa business delivered 6.5 billion Swiss francs in 2025. This is 1 billion more sales than we did back in 2024. So 1 billion growth, 21.7% of constant currency growth. This is ahead of the upgraded guidance of 20% to 21% that we communicated back in July last year. This includes roughly 0.6 billion of sales from our Vacaville site, so slightly at the upper end of the half billion that we had forecasted. We're very pleased, obviously, operationally. Wolfgang mentioned that we're very pleased with the site operationally. We are also very pleased financially with the contribution of Vacaville. Organically, the organic business, excluding Vacaville, contributed or grow at low teens, which is fully aligned with our CDMO organic growth model. Going to the margin, we delivered a margin of 31.6%, up 1.4 percentage points. Also very pleased about that. And this, as well, is ahead of the guided range of 30% to 31%. Three main contributors to the margin. One is, of course, operating leverage. When you grow the top line at that rate, of course, we are not growing our cost at the same rate. So administration costs, sales and marketing costs, research costs are growing at a much lower rate, providing leverage. Second, the maturing of our growth projects. Some of our projects are now getting close to higher utilization, therefore increasing their margin. And number three, several targeted productivity initiatives across the organization. One word on FX. You see that we had an FX impact of roughly 2.5 points on both the top line and the bottom line. This is coming mainly from the weakening of the US dollar back in the early part of 2025. Luckily, we have a very strong natural hedge. We are selling and having cost in roughly the same currencies. We're helping that as well with an additional financial hedging program to protect our margins. With that, let's go to the sales evolution. As you can see on this page, we had good performance from two of our large platforms. Let me start with the exceptional performance of our ADS business, Advanced Synthesis, with very strong contribution from both bioconjugates as well as small molecule assets, the platform growing 22% organically. We had several assets in both platforms growing and ramping up simultaneously and growing at a fast pace. On the INB, in integrated biologics, you see a growth of 32%, a large chunk of that obviously coming from the Wackerville site, but also the other organic assets ramping up nicely. Going to specialized modalities, this was probably or is the soft point of our performance in 2025. We had discussed that in the first half last year and in Q3. We saw soft operational performance from the cell engine business that actually continued during the year, but we're looking forward to a much better year in 2026. And then on the microbial side, where we experienced a phasing towards the end of 2025 into 2026, also here a better 26 is expected, the platform ended up with a small decline of minus 3%. Moving on to our core EBITDA performance. Here again, very pleased with the progress, reaching 31.6%, close to the 32%, but we'll do that in 2026 and beyond. So the three key reasons why we grew our margin, I mentioned that before, maybe a little bit more detail. Again, operating leverage. where we have very strong cost discipline across the organization now both at headquarters level but as well in the different sites. We have several maturing assets especially in mammalian, bioconjugates and small molecules that are allowing us to offset the dilution from the newer assets. And last but not least, operational excellence and high utilization in our commercial sites allow us to offset a slightly negative mix versus 2024. Maybe a few words to the platforms. We'll start with ADS, again, an exceptional margin improvement of five points, reaching margins of 42%. This is even slightly above the margins that we delivered in the first half of 2025. So here as well, again, very pleased. However, this is an exceptional year, and we will probably look at the normalization into 26. Looking at integrated biologics, a slight margin decline here of 0.9%, mainly due to unfavorable product mix and as well some new assets that have been coming online and growing in 2025. And then this is also the platform where we have the highest US dollar exposure. And so while we have hedging, there is some impact from the weaker dollar. On SPM, I think very pleased that the platform could almost hold their margin at 17%, only down 0.5% despite the lower performance. This is due to some profitable mix and as well some very high cost discipline across the platform. Moving over to our CapEx details, you see here that we spend roughly 1.3 billion in our CDMO business. Again, CapEx is a key enabler for Lonza's future growth and also a key focus for the organization now and going forward. The 1.3 billion was spent, most of it, on growth assets. 60% of the spend was for growth. This includes a diversified portfolio of the 23 projects that Wolfgang mentioned earlier. You see as well that the peak of CapEx is behind us. This was in the past year. You see in the middle of the page that we are on a slope to actually normalize our CapEx spend. In 2025, we reached 19.6% of capex, slightly below the guided range of low 20s, mainly due to some higher sales and some more discipline in maintenance spend. We're looking at high teens for 2026, and then over the midterm, normalizing in what we call our CDMO organic growth model for capex in the mid to high teens. The normalizing capex also allow us to do great progress on our free cash flow. You see for this year that for our continuing business, we delivered half a billion of free cash flow, 545, almost double the amount we delivered back in 2024. One of the key reasons, obviously, capex, which has been stable while the business has been growing, but also actually very strong management of inventories and trade working capital in general. You see that our trade working capital grew 200 million. This is much less than what obviously our business has been growing in 25. And so you see that our trade working capital in percent of sales has actually declined by almost five points. Our inventory coverage is also declining almost by a week. And this is something that we will focus a lot more to continuously drive down inventories to the right amount for our business. Moving from cash to our capital allocation framework, this is not new. We have not changed anything on that slide. This is more of a reminder for you, obviously, because a lot of people are asking us the questions about, what will we do with the CHI proceeds? Well, first of all, it's not sure that there will be CHI proceeds, depending on the exit route that will actually happen. But let me take you through our priorities in terms of capital allocation. Priority number one is the investment into maintenance, infrastructure and systems. Why? Because we need to make sure that our base assets and our growing base assets are future proof and are well maintained and will contribute to the future growth of the company. Priority number two, our progressive dividend policy, very important to us as well, and I'll get to that on the next page, which leads us to our discretionary cash. This is the cash that is available for investment into growth. This discretionary cash may be increased by proceeds from a CHI exit, should it be leading to proceeds. These proceeds as well will flow into what we call discretionary cash, will be invested into organic or inorganic bolt-on M&A investments. Now rest assured that we will be very disciplined in the way we allocate this capital. You know that for internal organic CapEx projects, we use very strict financial thresholds, 15% of internal rate of return and a ROIC at peak of 30%. This is for the organic investments. For bolt-on and M&A, it's not that easy to put a formal threshold. But we will remain very disciplined and basically look at two things. One, attractive returns. And second, is there a strategic fit with our Lanza engine? And if you look back at the last two acquisitions, being Cinefix and Vacaville that Wolfgang also shared with you, you can see that these were very disciplined and very attractive acquisitions. Looking at our dividend, as you can see, this dividend policy is fully in line with our capital allocation framework. The board of Lonza is actually proposing to increase the dividend by 25% to an amount of 5 Swiss francs per share. This reflects, obviously, the strong earnings performance and will let shareholders benefit directly from our growth of earnings. Our progressive dividend, just to be very clear, means that we will maintain or grow our dividend per share on a year-by-year basis. And you can see on the chart that we have proven this over the last 10 years. Now let me finish with a quick update on our ESG performance before handing back to Wolfgang. We've made strong progress in 2025 on our ESG agenda. I'd like to drive your attention to the top two pie charts. One is the greenhouse gas emission intensity, and on the right, the waste intensity. Both of these targets have actually been met in 2025, five years ahead of schedule. We are planning to halve the intensity by 2030, and we have achieved that already in 2025. We are therefore deciding to rebase and to now look at cutting by 50% the 2021 base, which is aligned with the signed base target initiative. So great progress on greenhouse gas and on waste intensity. Also great progress on actually renewable energy. As of January 2026, all our electricity in the US, in Europe and in China will be renewable sources. Our progress is also well-recognized externally, and we've been, for the first time, awarded the ECOVADIS Gold Rating and have been named, again, by Etisphere as one of the world's most ethical companies. So again, great internal progress and great external progress. And with that, I'd like to hand back to Wolfgang, who will take you through the business platform performance and our outlook for 2026. Thank you very much.