- Lonza Group said it will carve out its specialty ingredients unit, making it a separate business with independent management and "increased control over its operations and costs."
- The Swiss company will continue to fully own the new business, which it expects to separate by the middle of next year.
- As part of the move, Lonza is considering cutting about 130 job, including 50 in Switzerland and 35 in the U.S., according to a June 3 statement. The company said it will try to minimize losses through early retirements and transfers where possible.
The announcement comes after a disappointing first quarter for Lonza's specialty ingredients business. Without giving figures, Lonza said in April that the segment faltered amid raw material shortages and supply-chain disruptions.
Separating the unit, Lonza argues, will allow it to focus on strengths and push toward becoming the "leading global player in microbial control."
"It will enhance our performance levels by improving efficiency, creating synergies and delivering an improved customer value proposition," Sven Abend, chief operating officer for specialty ingredients, said in Lonza's statement.
In April, Lonza said its specialty ingredients business was facing some of the same headwinds affecting the larger chemicals industry, including softening demand for certain industrial applications. China's "blue sky" environmental initiative and a major chemical plant explosion in the country also hurt the unit.
While the specialty ingredients business slowed, Lonza's pharma, biotech and nutrition unit has outperformed and drawn more of the company's focus. Lonza made a handful of investments in manufacturing for biologics in recent years, and sees great demand for drug contract and manufacturing services, according to CEO Marc Funk.
Lonza earlier this year announced a partnership with the Danish bioscience company Chr. Hansen to produce bacteria-based therapies. It's also putting more money into biologics development in the U.S., Europe, China and Singapore.