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By Miranda Murray and Ludwig Burger
(Reuters) – Swiss drugmaker Lonza said on Wednesday it would buy one of the world’s biologics production facilities in California from drugmaker Roche for $1. 2 billion.
Lonza plans to spend another 500 million Swiss francs ($562. 3 million) to upgrade the Vacaville plant, which produces monoclonal antibodies from genetically modified living cells, to produce a new generation of drugs, the company said in a statement.
Roche revealed plans to sell the site in May last year, saying it no longer needed the gigantic volumes of antibodies provided through the plant, as it planned to do with drugs targeting smaller patient populations and a diversity of biotech strategies beyond monoclonal antibodies.
Currently, the Vacaville facility has a total bioreactor capacity of about 330,000 liters, making it one of the world’s largest biologics production sites by volume, Lonza said.
“The Vacaville site is a high-value strategic acquisition that will make capacity available to our consumers without delay and unlock long-term expansion for our Biologics division,” Jean-Christophe Hyvert, president of Lonza’s Biologics, said in the statement.
Lonza shares rose 4. 3% at the open of 08:00 GMT.
The transaction is expected to close in the second half of 2024, subject to standard final terms.
Basel-based Lonza also raised its sales expansion target for 2024-2028 to a 12 to 15 percent annual variance, from a previous expansion estimate of 11 to 13 percent.
Medium-term profit margin forecasts remain unchanged, he added.
Lonza’s stock took a hit last year due to uncertainty around long-term orders from drugmakers, but the stock rebounded in January as the company showed its outlook and chairman Albert Baehny announced he would step down in May.
Under the terms of the agreement, the approximately 750 workers at Roche’s Genentech subsidiary at the site will be employed at Lonza and products newly manufactured at the site will continue to be provided through Lonza during a transition period, Roche said.
(Reporting by Reporting by Miranda Murray; editing by Dave Graham, Savio D’Souza and Himani Sarkar)