In Simple Terms
Lonza plans to buy several U.S. drug-making sites from Merck, giving it more facilities, employees, and specialized skills. The deal would expand Lonza’s ability to help drug companies develop and manufacture advanced treatments. It is not expected to close until mid-2027, and turning the new sites into a stronger business could take years.
A Bigger U.S. Network and a Larger Workforce
Swiss company Lonza plans to expand its U.S. contract drug development and manufacturing network by acquiring a group of facilities from Germany’s Merck. The deal is about more than buildings and equipment: the sites bring capabilities in areas such as antibody-drug conjugates, viral vectors used in some gene and cell therapies, and drug-delivery technologies. If completed, the acquisition would mark another step in Lonza’s shift toward focusing entirely on development and manufacturing services for pharmaceutical and biotechnology companies.
Under the announced agreement, Lonza’s number of U.S. sites would rise from four to nine—more than doubling its current network. The company expects to take on about 1,100 employees from the facilities, which would increase its U.S. workforce by roughly 25% and bring its total U.S. headcount to more than 6,000.
The expansion matters because contract drug manufacturing is rarely just about producing a single batch. Customers typically need a partner that can support a product from development and clinical testing through commercial production, providing specialized expertise and facilities as the treatment advances toward broader use. Lonza is betting that combining the sites’ teams and industrial infrastructure will bring it closer to customers and strengthen its ability to serve drug development projects at different stages.
The companies place the deal’s value in a range of 100 million to 500 million Swiss francs, equivalent to about 121.6 million to 608.2 million dollars. They have not disclosed a specific final price, instead describing a value in the low-to-mid hundreds of millions of Swiss francs. Lonza plans to fund the purchase with available cash and existing credit facilities, and says it expects to maintain its BBB+ credit rating.
Facilities for Specialized Therapies
The announced operations span U.S. sites with different areas of expertise. St. Louis, Missouri, has capabilities for producing bioconjugates—a category that includes linking therapeutic molecules to biological components to help target or deliver them. Madison and Verona, Wisconsin, bring expertise in manufacturing highly potent drug linkers and payloads, components that require careful control during production and handling.
In Carlsbad, California, the capabilities include end-to-end viral-vector solutions, with sterile filling also available. Viral vectors are used in some cell and gene therapies to deliver genetic material into cells. The Indianapolis site offers solutions involving lipid nanoparticles, liposomes, and polyethylene glycol-linked proteins, as well as sterile filling. These technologies help prepare different systems for carrying therapeutic materials or improving their properties.
There is a counting detail worth noting. The deal announcement describes the acquisition as covering five sites, and the named locations also add up to five when Madison and Verona are counted separately. But elsewhere, the announcement’s revenue estimates and operating forecasts refer to four sites. Both descriptions should be retained; the number of facilities used for financial estimates does not necessarily follow the same geographic counting method as the list of locations.
Lonza estimates that the sites included in its forecast generate about 250 million Swiss francs in sales, or roughly 304 million dollars. Their expected core earnings margin—before interest, taxes, depreciation, and amortization—is below the group’s margin, but the company describes the overall impact on its results as immaterial. The opportunity, however, goes beyond the revenue at the time of acquisition: Lonza believes existing capacity and room to expand could support profitable growth after the sites are integrated and investments are made to meet demand.
Why Lonza Is Expanding
The acquisition is part of Lonza’s continuing U.S. expansion. In 2024, the company bought a large biologics manufacturing facility in Vacaville, California, for 1.2 billion dollars. The facility had been built by Genentech, a subsidiary of the seller. In September, Lonza announced plans to build a commercial-scale spray-drying facility in Bend, Oregon, with the aim of creating major U.S. capacity for this type of commercial manufacturing.
These moves fit Lonza’s strategy of focusing on contract development and manufacturing services rather than spreading its efforts across other businesses. In September, the company also raised its target for organic growth—sales growth from existing operations, excluding the effects of exchange-rate changes—to the low double digits, or 10% to 13%. It also said it was targeting growth in core earnings before interest, taxes, depreciation, and amortization that would outpace sales growth.
For 2026, Lonza maintained the outlook it had raised during the summer: sales growth of 11% to 12% at constant exchange rates and a core earnings margin of 33% to 34%. It also reiterated its expectation that currency fluctuations would reduce sales growth by about 2% to 3% during the year. The previous month, the company had said its third-quarter performance was tracking in line with expectations, without providing detailed figures in that statement.
Lonza’s medium-term ambitions include reaching a core earnings margin in the high thirties and improving return on invested capital to two to three times its weighted average cost of capital from 2026 onward. The company also aims to convert a greater share of earnings into free cash flow over time. Against these goals, the acquisition looks like a way to add new areas of production that could diversify growth—not simply increase the number of sites.
The Buyer’s and Seller’s Rationale
Lonza presents the deal as part of its “One Lonza” approach, a plan to bring the company’s capabilities together in a connected operating and growth model. The vision rests on five elements: high-performing teams; an advanced scientific, technological, and digital environment; strong customer partnerships; integrated execution from start to finish; and the ability to bring new investments into the business and combine them with existing operations. Lonza is counting on integrating the sites’ teams and expertise to help it provide development and manufacturing services in a more connected way.
Merck, meanwhile, says the sale of its contract manufacturing business will allow it to focus investment on its Life Science business and strengthen its scientific position, while the sites move to a company it considers well placed to grow them. Merck said its teams had built a strong foundation of expertise and commitment, and that Lonza could develop that foundation in the years ahead. In May, Merck had outlined a broader strategy for creating value and sustainable growth by combining biology, chemistry, physics, data, and artificial intelligence, while improving integration across the company to accelerate and scale its work.
Merck’s Life Science business is a broad operation supplying consumables, technologies, and services to pharmaceutical and biotechnology companies and contract manufacturers, from discovery through production. In the first half of 2026, the business generated sales of 4.677 billion euros, or 5.236 billion dollars, up 4.3% from 4.485 billion euros, or 5.022 billion dollars, in the same period of 2025. In the second quarter alone, sales reached 2.412 billion euros, or 2.701 billion dollars, compared with 2.267 billion euros, or 2.538 billion dollars, in the second quarter of 2025—an increase of 6.4%.
Returns Expected to Take Years
Lonza does not expect the acquired facilities to match the group’s profitability immediately. Instead, it has laid out a scenario extending into the mid-2030s, when it expects sales to peak as the sites reach the future group’s margin. Achieving that outcome will depend on several factors: how quickly demand grows, how successfully the teams and operations are integrated, how much additional investment the sites require, and whether customers can move their programs from development into commercial manufacturing.
The company says the sites will benefit from its specialized focus on contract manufacturing, and that it will consider further investment as market needs evolve. At the same time, their current margins are below Lonza’s average, so integration alone will not deliver the financial goals. The business will also need to grow, improve efficiency over time, and make better use of available capacity. “Profitable growth,” therefore, describes a long-term plan, not a guaranteed result when the deal closes.
The agreement is expected to close in mid-2027, once customary closing conditions have been met. Lonza says the acquisition will not change its announced plan to buy back shares following the sale of its capsules and health ingredients unit. In March, the company announced plans to sell that unit to Lone Star for 2.3 billion Swiss francs, or about 2.797 billion dollars, with the sale expected to close before year-end. Lonza has also said the acquisition of Merck’s sites will not affect its planned buyback program.
These details place the deal within a broader reshaping of Lonza’s portfolio: selling one business, expanding another, and directing capital toward facilities the company believes can serve growing demand for specialized technologies. In September, Lonza topped GEN’s annual list of the 10 leading contract development and manufacturing companies, based on 2025 revenue of 6.531 billion Swiss francs. That amount equaled 8.053 billion dollars using the exchange rate applied at the time, or 7.944 billion dollars using the more recent rate cited in the report.
Merck was scheduled to report third-quarter results on November 12. Those dates and financial results help put the deal in context for both companies, but they do not change its basic purpose: Lonza is expanding its U.S. manufacturing capabilities, while Merck is refocusing its portfolio. Specialized facilities are changing hands, with a new owner planning to develop them. The practical test will be whether bringing these capabilities together can deliver lasting growth and reliable supplies for customers.
The Bottom Line
The Lonza–Merck deal would expand Lonza’s U.S. network from four sites to nine and add about 1,100 employees, along with capabilities in bioconjugates, viral vectors, and drug-delivery systems. The sites are estimated to generate about 250 million Swiss francs in sales, while the announced deal value ranges from 100 million to 500 million Swiss francs. But the agreement is not expected to close before mid-2027, and reaching the targeted level of profitability will require years of integration, investment, and demand growth. The acquisition is a long-term bet that closer customer relationships and broader specialized capabilities can strengthen Lonza’s role in manufacturing advanced treatments.