Lonza’s (LONN.S) new broom will face even more challenges than its old one. On Monday, the $38 billion manufacturer of drug ingredients said Chief Executive Pierre-Alain Ruffieux will leave the Swiss company and be replaced by Chairman Albert Baehny until a successor is found. A 10% share price slump suggests investors worry that his exit makes it more likely the group’s new targets, due later this year, will disappoint.
Ruffieux’s departure comes after a massive increase in spending, designed to help Lonza tap into growth areas like complex drugs made out of human proteins, and wean itself off the boost from making pandemic vaccines. Since he was appointed CEO in 2020, the Swiss group has increased capital expenditure as a percentage of revenue from 20% to 30% last year. Yet it also faces challenges, such as weaker biotech spending due to U.S. drug pricing controls. Analysts are expecting sales growth of just 9% between 2023 and 2026, according to LSEG data, below the group’s historic target of “low teen” percent growth. Even before Monday’s fall, the stock was trading at 32 times its forward earnings, around the same level as before its pandemic surge. The disruption of another CEO exit, without a clear explanation, means that the hoped-for growth will take even longer to arrive. (By Aimee Donnellan)
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