Letter from the Chairman

Dear Stakeholders

For Lonza, 2022 was a year characterized by sustained growth momentum supported by a focus on stable business performance and corporate sustainability. The Board has worked closely with the executive management to ensure the company strategy remained focused on serving the most pressing and complex needs of our customers while delivering long-term value back to our business.

Macroeconomic Context

In 2022, we saw the COVID-19 lockdown restrictions lifted in various western markets, meaning many of our colleagues were able to return to our offices. However, the year also brought challenges, including inflationary pressures, exacerbated by the prospect of energy supply shortages and increasing macroeconomic uncertainty. All these issues carried impacts for the global corporate community.

Through this time, I have been impressed by the focus and commitment of our global employee network. The focus and dedication of our people have helped us to navigate uncertainties while maintaining performance and continuity for our customers.

Investing for Long-Term Success

In 2022, the Board has coordinated with the Executive Committee (EC) to ensure that our investment strategy continues to focus on areas of sustained customer demand and market growth. Following these guiding principles, we have approved significant investments across all our divisions to serve our customers’ complex needs across the value chain, from development to commercialization.

Specifically, the Board approved a major investment to build a new large-scale, commercial drug product facility in Stein (CH). The CHF 500 million investment will enable our business to further support customers across the product life cycle, by including commercial drug product manufacturing for large-scale market supply. Scheduled to come online in 2026, this facility consolidates our strong reputation for a broad range of offerings across services and modalities.

Looking more widely at our investment strategy, we have committed more than CHF 4 billion in CAPEX programs over the last three years to support our long-term success. While we maintain our growth momentum, we are proposing a shareholder dividend of CHF 3.50 per share, representing a year-on-year increase of 17% or CHF 0.50.

Furthermore, our strong balance sheet and positive outlook enable us to initiate a share buyback program of up to CHF 2 billion. This will enable us to return excess capital to shareholders at a time when our stock valuation is attractive for purchase. We remain committed to maintaining our strong investment grade rating. The share buyback does not impact our capability to invest in organic growth and bolt-on M&A.

Corporate Responsibility

We understand that sustainable value creation is an ethical, social and commercial imperative for our business, and aligns with our company’s purpose of enabling a healthier world. This commitment to corporate responsibility is shared by our stakeholders, leadership team and global colleague community.

In 2022, we have consolidated our commitment to responsible business by embedding sustainability into our global business practices. The Board previously worked with the Executive Committee to agree on the seven United Nations’ Sustainable Development Goals (SDGs) that are most relevant to our business. In 2022, targets were placed against each of the seven selected SDGs and an Executive Committee member was assigned to ensure the company delivered on its commitments.

2022 was the first year in which company performance against our sustainability targets was integrated into our global remuneration and reward programs. This has been designed to ensure that our people integrate sustainability considerations into their working practices. It will help us to create a culture of contribution, where our success is defined by how much we give back, as well as how much we achieve.

Looking to the Past, Present and Future

2022 represented a landmark moment as Lonza celebrated the 125th anniversary of its foundation. Such significant milestones present rare opportunities for reflection. Our company has undergone repeated transformations since it was founded in 1897 by the Swiss banker and philanthropist Alfons Ehinger. A contemporary Swiss newspaper report described Alfons as a leader of “tireless diligence and unshakable calm”. Buried in our distant past, these characteristics still remain relevant and valuable to our business today, and act as a guide to manage the challenges and opportunities ahead.

Like the River Lonza, our business continues to move forward, and the Board continues to ensure our Group strategy remains agile and flexible to a changing world context. As we move into 2023, we will remain focused on serving our customers, maintaining stability and pursuing our purpose to enable a healthier world.

Thanks to our stakeholders

Lonza’s success depends on the skills of our people, the loyalty of our customers, the confidence of our investors and the cooperation of our business partners. On behalf of the Board of Directors, I would like to close by extending my sincere thanks to all our stakeholders for their support and contribution to our business over the course of the year. I look forward to continuing our work and building further on our success in the year to come.

Albert M. Baehny

Chairman of the Board of Directors