Lonza, a Swiss chemicals and biotechnology firm whose products feed into the pharmaceutical, healthcare and life sciences industries, built its first Asian plant in China 15 years ago. Since then, the firm’s production and R&D network in the region has grown consistently, says Michael Brown, vice president operations at Lonza Biologics in Singapore. Over the last ten years, Lonza has invested about CHF1bn (US$1.1bn) in Asia. Some 1,400 of its 11,000-strong global workforce are based in the region today. Asia contributes 14% of Lonza’s overall revenues and this is expected to rise to 20% by 2015.
For its chemical manufacturing business, Asia represents “a significant platform of growth for its existing and niche technologies,” Mr Brown says. But in terms of the market for new biologics, aside from Japan—one of the seven biggest markets worldwide—demand in Asia is relatively small. “However, domestic Asian markets, especially China, are future growth opportunities for new medical entities (NMEs), and also biosimilars and generics,” he adds.
Mr Brown says that competition in Asia has increased in the small molecules segment of the custom manufacturing business. “However, the number of new competitors is somewhat limited considering that the products we manufacture are all heavily regulated and require complex manufacturing technologies,” he says. “In areas like peptides, conjugated antibodies, cytotoxics we do not see much competition out of Asia.” Similarly, the firm has few competitors in the biological custom manufacturing space, where Mr Brown believes the Asian competition is “still on a learning curve”. However, Lonza does expect increased competition from Asian competitors in the life science ingredients business, which supports nutraceuticals.
Meanwhile, Mr Brown believes that rising incomes in the region are slowly eroding the labour cost advantages that some Asian competitors currently enjoy. Additionally, Asian governments are also raising their environmental protection and quality standards. This “increasing rigidness coming from regulatory authorities will force Asian competitors to obey strict rules,” he says, hence raising their cost of compliance. He expects Asian competitors to invest heavily to upgrade their facilities, further reducing any price advantages they enjoy.
Over the next five years, Lonza aims to grow its biological development services in Asia by cementing its relationships with traditional pharmaceutical companies and new local companies that are currently expanding in Asia. Mr Brown believes that there are an increasing number of firms developing a clinical footprint across the region, and Lonza aims to support their pipelines with its products and services.
