The Capsules & Health Ingredients division primarily serves the pharmaceutical and nutraceutical markets.
In the pharmaceutical market, we saw growth in the supply of capsules for prescription drugs in 2022. While this area experienced reduced government spending1, this challenge was partially offset by the higher use of over-the-counter (OTC) medications in H1, as part of the ongoing consumer response to the COVID-19 pandemic.
In supporting pharmaceutical development, the small molecule pipeline remained healthy with a stronger focus on solutions to support the delivery of new, more complex formulations and sensitive medications. We also saw increasing interest in our specialty capsules which are particularly valuable to therapies such as live bio-therapeutic products that often require enteric protection and targeted delivery profiles.ts to the market.
In the nutraceutical market, we saw strong demand in both capsules and health ingredients, across all three regions in H1. This was partially driven by the ongoing proactive consumer response to the COVID-19 pandemic. However, in H2, we experienced softer demand in vitamins, minerals and supplements as the impact of the pandemic reduced and recessionary concern, particularly in the Americas, negatively affected consumer spending on over-the-counter proactive health products. A consumer preference for ‘free-from’ products, alongside emerging regulatory requirements, meant that demand for clean-label capsules remained strong.
More widely, we saw continued interest in our innovation collaborations and complete solutions for both markets. These support more complex formulations and the end-to-end concept-to-commercialization delivery of nutraceutical products.
We offer a wide range of animal-based, vegetarian and clean label Capsugel® capsule options with different release profiles and encapsulation technologies to meet a variety of application and patient needs. For our pharmaceutical customers, we provide pre-clinical and clinical solutions and specialized delivery applications. For our nutraceutical customers, we offer multipurpose, clean-label, performance-enhancing options.
Our global capsule manufacturing network is one of the largest in the world and is supported by local and global logistics, R&D, technical and customer service specialists. Customers work with us to customize their end medication or supplement to meet unique product specifications and consumer preferences while complying with regulatory requirements. Through this collaboration, we enable our customers to bring their therapies and health supplements to market safely, effectively and efficiently.
We also provide a scalable portfolio of capsule-filling equipment and supporting technical services to meet our customers’ fill and finish needs.
billion. 2022 Capsules Capacity
Ingredient Patent Families
Capsules and Dosage Form Patent Families
We support customers throughout the product development cycle with a truly collaborative, innovation-driven end-to-end service. In the pharmaceutical market, this can include supporting fast-track approvals and the growing specialty and orphan drug pipeline, which require a unique approach to active ingredient delivery. For the nutraceutical market, we offer “ready to go” formulations and unique liquid fill delivery technologies to rapidly bring novel supplements to market.
Specifically for the nutraceutical market, we provide multiple high-value, research-backed ingredients across a number of growing market platforms. Our offerings target global consumer concerns, including joint health, muscular strength, energy, endurance, weight management and recovery. Our deep technical expertise, extensive global market knowledge and trend-tracking capabilities enable us to support healthy living through improved human and pet nutrition. Our portfolio includes premier brands such as UC-II® for joint health, Carnipure® for energy and a range of other branded products targeting immune health, digestive and emotional health, heart health and blood sugar health.
Our broad range of high-quality capsules and health ingredients are manufactured across our global network, in ten locations spanning three continents. From multiple global innovation centers, with experienced, talented teams and state-of-the-art equipment, we also offer customers a variety of collaboration and innovation opportunities to support their end-to-end product development plans. To deliver a comprehensive service, we provide our customers with both local and international technical, quality and regulatory support.
In 2022, the Capsules & Health Ingredients division’s sales growth was mainly driven by price increases and pharma demand. We continued to serve evolving customer needs through innovation across a broad range of services and modalities. By developing new capsules and dosage delivery capabilities – mainly driven by specialty capsules – we have maintained a highly differentiated offering in our product portfolio and technologies.
More widely, our new Launch with Lonza™ services have been designed to further enhance collaboration with customers interested in our innovative and complete solutions for the pharmaceutical and nutraceutical markets. Our range of services also support more complex formulations and end-to-end delivery, in particular in nutraceuticals.
Comparison vs. Prior Year
CORE EBITDA (CHF)
CORE EBITDA Margin
Sales growth is at constant exchange rate (CER)
We delivered against our ambitious expansion plans at many manufacturing sites globally and our overall capacity has increased to around 260 billion capsules per year. The introduction of several operational and quality improvements has delivered positive results and focused actions have been implemented to improve customer experience and global supply reliability.
Leveraging our extensive in-house design, technical and engineering teams, we continued to develop our next-generation proprietary capsule manufacturing line, which will significantly improve output and reduce product variability.
In response to the European Union Commission’s decision to ban the use of titanium dioxide (TiO2) in food supplement products from mid-2022, we launched TiO2-free white opaque hard gelatin capsules. These offer our nutraceutical customers the same whiteness and masking functionality as gelatin capsules containing TiO2 whilst meeting the new TiO2-free requirements.
In addition, our pharmaceutical customers are also proactively evaluating this capsule in response to potential future TiO2 regulatory changes within their industry. We are delighted this new capsule was recognized with a Regulatory and Compliance Award at the Convention on Pharmaceutical Ingredients (CPhI) in November 2022.
Our new Enprotect™ enteric capsules, launched in H2, have been designed to withstand degradation during stomach transit, releasing their contents in the intestine. In 2023, we will leverage this manufacturing technology for other applications, including an Enprotect™ capsule for anaerobic live biotherapeutic products.
President, Capsules & Health Ingredients (CHI) Division
Whilst our pharmaceutical market has remained robust, changing consumer preferences negatively impacted the nutraceutical market in 2022. We are addressing this more competitive environment through innovation, expanded end-to-end services and improved manufacturing agility.
As part of our innovation agenda, we launched our new gelatin titanium dioxide (TiO2)-free capsule and our enteric Enprotect™ capsule. Both capsules provide new platforms for more innovation going forward and I was particularly pleased to see our TiO2-free capsule recognized at CPhI with a Regulatory and Compliance Excellence Award.
Complementing our approach to product innovation, we have expanded our end-to-end services with our Launch with Lonza™ program. Working closely with our customers, we have created value by optimizing product delivery and launch effectiveness.
Our customer offering has been further supported by capacity expansion across our network to improve delivery lead times, while maintaining quality and safety. We also continue to adopt lean operating principles across our existing assets to improve manufacturing efficiency and agility.
Looking forward, we will maintain our strong customer focus, by improving our services in line with their needs. By focusing on product and process innovation, digital capabilities, manufacturing automation and our sustainability credentials, we will consolidate our position as a preferred strategic partner to the capsules and health ingredients markets.
Since joining in July 2022, I have been impressed by the strong customer relationships and the high levels of expertise and engagement shared across our colleague community. I would like to thank our customers for their partnership and our people for their contributions this year.
A commercial scale melt spray congealing technology platform was installed in Greenwood (US), enabling the manufacture of high-quality, cost-effective lipid multi-particulates at a commercial scale. This proprietary solution helps to maximize ingredient functionality and expands application versatility for nutraceutical customers.
A new randomized, double-blind, placebo-controlled study found our UC-II® undenatured type II collagen supplement plays a role in delivering joint health benefits. The study was featured in two research publications:
Next-generation enteric capsule for delivering acid-sensitive products into the intestine
Building on our extensive experience in generating novel and innovative solutions for oral solid dosage forms, we have developed a unique technique to build a bi-layer capsule that supports targeted intestinal delivery. The new Enprotect™ enteric capsule, launched at the end of 2022, has been designed to release its contents in the intestine. This is achieved by preventing degradation during stomach transit, which is normally caused by the presence of acids and enzymes.
The innovative capsule solution meets a pressing market need by offering a simple targeted delivery method without a need for additional coatings. This scalable and customizable solution can aid in delivering novel therapies to the distal small intestine, such as small peptides, RNA-based therapeutics, or live biotherapeutic products. The ready-to-use capsule will save pharmaceutical and nutraceutical customers time in the development and manufacturing stages, enabling them to bring new therapies to market faster.
Looking to 2023, we will leverage the first-of-its-kind Enprotect™ manufacturing technology for other applications. These will include a next-generation Enprotect™ capsule specifically for anaerobic live biotherapeutic products and other novel targeted-release capsule formulations.