Merck charts course out of CDMO business with Lonza sale

Merck KGaA has moved to streamline its focus with the sale of its contract development and manufacturing organisation (CDMO) business to Lonza, a top-three player in the category, for "a mid-triple-digit million-euro amount."

The deal includes five US facilities in California, Wisconsin, Missouri, and Indiana and approximately 1,100 employees who provide development and manufacturing services for biopharma companies, including for complex therapeutics. It excludes the BioReliance contract testing services business that serves Merck's life sciences customers.

The move follows the recent trend of consolidation in the CDMO category, with players like Lonza, Thermo Fisher Scientific, and Catalent building scale in both overall capacity and the types of therapeutics they can develop and manufacture for customers.

In a statement, Merck said the deal handover would "sharpen the focus" of its life sciences unit, which provides tools, chemicals, consumables, and lab services for scientific research, while also giving the CDMO business "a strong platform" for the next phase of its development.

It will also free up resources for other areas of its business, including pharmaceuticals – recently bolstered by the $1.3 billion acquisition of Silence Therapeutics – and electronics, according to the German group. Merck is recognised as needing to beef up its R&D pipeline after some major setbacks in late-stage pharma projects, and the CDMO sale could help fund additional bolt-on deals.

"Today's announcement is another important step in advancing our mid- to long-term strategic agenda," said Kai Beckmann, chairman and group chief executive of Merck.

"As announced during our strategy update in May, we continue to focus our portfolio on innovation-driven businesses that build on our core capabilities and strengthen our long-term competitive position."

Switzerland-headquartered Lonza said the acquisition will boost its number of US sites from four to nine sites, swell its US workforce to more than 6,000, and build its capabilities in "attractive growth areas such as antibody-drug conjugates (ADCs) and other bioconjugates, viral vectors for cell and gene therapies, and advanced drug-delivery technologies."

The transaction – which is expected to close in the middle of 2027 – will be paid for in cash and funded with cash at hand and existing credit facilities.

Lonza said adding the Merck business will swell its annual revenues by around $300 million, starting in 2028. It is projecting full-year 2026 sales will be in the region of $9.1 billion.