Small molecules represent the largest single drug class, accounting for more than 40%1 of the global biopharmaceutical market by revenue and more than half of clinical pipelines. Currently, demand is driven by improved global access to medicine, demographic trends, public health initiatives, new drug launches and pricing reviews.
The three therapeutic areas driving revenue growth in Small Molecules are Oncology, Immunology and Antidiabetics. The growth in the Oncology market directly impacts the demand for highly potent active pharmaceutical ingredients (HPAPIs) since they have been associated with inhibiting cancer growth and demonstrated usefulness in cancer treatment, alongside treating diabetes and autoimmune diseases. The growth of the HPAPI market is outpacing the overall API market2, resulting from a wide range of potential uses and benefits for patients, and by the improvements in their precision and bioavailability. Currently, approximately 30% of the small molecules pipeline consist of HPAPIs3.
In the manufacture of HPAPIs, there are multiple potential benefits from collaborating with an established CDMO partner, such as Lonza, that has demonstrated expertise in developing highly-potent products and experience in navigating the challenges of containment. Specifically, we see that oncology therapeutics comprise a higher concentration of molecules requiring containment, and we continue to invest in this area of growing demand.
Small and emerging companies own 84%3 of small molecules clinical pipelines and we see a continuation of the trend for accelerated approvals. We work in partnership with small biotech companies to meet the need for accelerated timelines, while continuing to provide robust and scalable manufacturing solutions.
Small molecules are becoming increasingly complex. As an example, longer synthetic pathways have risen by 75% in the last two decades4. This new development demands expertise in the management of complex supply chains, a breadth of assets and in-depth knowledge of product and process. Drug product formulation is also becoming more complex. Low solubility is exhibited by more than 75% of clinical candidates, and techniques such as Spray Dried Dispersion are often required to enhance bioavailability5.
Evaluate Pharma (Dec 2022)
Citeline and internal Lonza Market Analysis
Internal 2022 MI analysis of 100 FDA approved drugs
Internal 2022 MI analysis of pipeline molecules out of Pharma circle
We offer integrated drug substance to drug product solutions, supporting customers across all aspects of design, development and manufacturing, including particle engineering and drug product packaging. This service offering provides substantial value to our customers across the entire drug development pipeline by simplifying interfaces, reducing costs and accelerating timelines.
Pre-clinical and Clinical Small Molecules1
Commercial Small Molecules1
Including active pharmaceutical ingredients (API), highly potent API (HPAPI), dosage form and delivery systems and particle engineering
With a deep expertise in complex small molecules, our established and differentiated offering serves the complex needs of our customers. We are one of the market leaders in the development of highly potent active pharmaceutical ingredients (HPAPI) and specialized handling, such as containment for bioconjugate payloads.
Our HPAPI offering addresses multiple challenges facing our customers, as we can customize assets to meet the specific needs of their molecules. Taking an integrated approach allows us to progress from clinical to commercial manufacture within a single site.
We currently provide integrated development and manufacturing across monoclonal antibody, payload-linker and conjugation and are continuing to make significant investments in this area. At our Visp (CH) site, we also develop and manufacture payloads for bioconjugates.
We offer particle engineering services across both drug substance and drug product development and manufacturing. It is a key component of our integrated service and is often required to meet drug delivery challenges, such as low levels of bioavailability. Our technologies include particle size reduction, spray drying and melt-spray-congeal technology, all of which address different challenges in drug product formulation.
To support accelerated timelines to clinic and commercialization, we offer phase-appropriate assets alongside our particle engineering technologies. We have also invested to establish dedicated early phase clinical manufacturing centers to complement our fast to clinic offering.
SimpliFiH® Solutions is an integrated offering designed to reduce the timeline from initial idea to first-in-human (FiH) clinical verification. It addresses bioavailability challenges often associated with new and complex molecules and can reduce Phase 1 timelines by three months compared to traditional approaches.
The Small Molecules division offering covers drug substance, particle engineering and drug product development and manufacturing. With a global network of five sites across Europe, the US and China, our geographical footprint remains aligned with the biopharmaceutical industry’s major growth markets. These markets account for more than 60% of overall global pharmaceutical growth1.
IQVIA: Market Prognosis Global 2021-2025
In 2022, existing commercial products and the clinical pipeline drove sustained customer demand in the Small Molecules division. We have a robust order book of future committed business, which provides mid-term visibility and security. It means our assets are highly utilized, which can create longer lead times to onboard new programs and customers. To address this, we have invested to expand our capability to meet ongoing demand for early phase programs.
Our priority is to strengthen our portfolio in the highest value areas of the market. Market and customer segmentation is focused on companies that are most likely to benefit from our specialized service offerings and capabilities in complex and highly potent products. We continue to strengthen our early phase offerings in these areas through innovation and by deploying new agile manufacturing solutions.
In 2022, we consolidated our particle reduction size capabilities with the divestment of our former site in Quakertown (US). Our micronization and milling capabilities are now centralized in our Monteggio (CH) site. This maximizes potential synergies arising from the Monteggio (CH) site’s proximity to our Visp (CH) API manufacturing center.
Comparison vs. Prior Year
CORE EBITDA (CHF)
CORE EBITDA Margin
Sales growth is at constant exchange rate (CER)
In line with our sustained focus on growth investments to meet customer demand, we continued to expand our manufacturing assets and development services in 2022. Our expansions in Nansha (CN), Tampa (US) and Bend (US) were successfully executed and came online in 2022. In Nansha (CN), we have extended the capacity and capabilities of our development and kilogram-scale cGMP manufacturing laboratories for the clinical supply of HPAPI. The laboratories are part of a previous announcement in 2021 to expand the mid-scale manufacturing capacity at the Nansha (CN) site and add additional capabilities in our global HPAPI manufacturing network.
We also announced plans to expand inhalation capabilities at our Tampa (US) site. The investment will include additional inhalation testing capacity, specialized in development, clinical and commercial manufacturing of small molecule-based therapies targeting respiratory diseases and disorders. The expansion will also establish additional capacity for dry powder inhaler (DPI) product development services.
In addition, we completed a dedicated early phase clinical manufacturing facility in Bend (US) to expedite product delivery, a crucial step in the journey towards clinical trials. The new facility provides additional capacity for solutions to address complex bioavailability challenges in clinical projects, as well as additional capabilities for development and clinical manufacture.
To enhance our ability to meet accelerated timelines for increasingly complex molecules, we have increased capacity for the manufacturing of antibody-drug conjugates (ADC) payloads at our Visp (CH) site. This expansion underlines the strategic position of ADCs in our portfolio and reflects our continued focus and momentum in this area. We develop and produce all components of these increasingly important therapies, including cytotoxic payloads, antibodies and the required linkers. The additional capacity for ADC payloads supports the entire development and manufacturing pipeline, from feasibility studies to commercial supply.
President, Small Molecules Division
2022 was a year characterized by organic growth and new collaborations. Our expansions in Nansha (CN) and Bend (US) are both now complete and operational for early-phase clinical manufacturing programs. We maintained a strong pipeline of committed business throughout 2022 and entered a new clinical portfolio deal with a large pharmaceutical company.
Across the network, our manufacturing assets are well utilized. Whilst this is reflective of sustained demand, we continue to balance utilization levels with the necessary lead times to successfully onboard new customer programs. While adding new capacity, we will also focus on driving operational excellence across our global network. We look forward to new facilities coming online in Visp (CH) to further build our manufacturing capacity in the years ahead.
In 2023, we will focus on successfully executing our order pipeline and realizing our committed investment projects. As we expect sustained demand for our services, we aim to further expand our capacity and drive operational excellence to unlock future growth potential across our portfolio.
We support customer development pipelines with a comprehensive set of capabilities, from drug substance through to drug product development and manufacturing. As an example, we are collaborating with Vivesto to supply clinical material for its investigational drug candidate, Cantrixil.
We have also announced the extension of our collaboration with Forbion, a venture capital firm and BioGeneration Ventures (BGV), its joint venture partner. This partnership will now include the development and manufacturing of small molecules. The extended collaboration will provide services relating to small molecules for both Forbion and BGV portfolio companies that are active in the biopharmaceutical space.
Looking to the future, strong ongoing clinical pipelines continue to drive demand for our Small Molecules offering. We recognize signs of a potential slowdown, with biopharma investment across the industry reduced to 2019 levels following a temporary peak during the pandemic1. In addition, the number of clinical
trials underway for non-COVID therapies is yet to return to pre-pandemic levels and a 25% reduction in USFDA approvals was observed in 20222. Whilst we are actively monitoring the impact of these global trends on our business, we nonetheless continue to expect strong demand for our services, supported by a robust order book of future committed business from our existing customer base.
Dry powder inhalers for inhalation drugs provide a non-invasive and easy-to-use delivery method for patients with respiratory diseases. Inhalation delivery includes both pulmonary (lung) and intranasal delivery, using a wide range of APIs including small molecules, prodrugs, peptides, oligonucleotides, proteins and antibodies.
For both pulmonary and intranasal delivery, particle engineering is critical to achieving a drug’s target product profile in the body. Our particle engineering expertise includes spray drying (for intranasal and pulmonary delivery) and micronization (for pulmonary small molecules delivery). Recent innovations by the R&D and product development teams at the Bend (US) site focus on improving spray drying particle engineering and formulation for our customers.
A simultaneous spray drying process was introduced in 2022. Here, innovative combined formulations of small molecules and biotherapeutics for pulmonary delivery can be manufactured in a single process step. Building on a successful program in 2021, new processes and analytical equipment are being onboarded to enable clinical manufacturing of inhaled biotherapeutic APIs in early 2023. Finally, bespoke atomization and collection technology were also implemented into our inhalation spray drying processes to improve throughput, reduce nitrogen consumption and improve product yields. Together, these innovations will enable new therapies with faster timelines to improve the lives of patients with respiratory diseases.