annual report 2006 activity report - ku leuven1).pdfthe annual report of lonza group ltd follows the...

ANNUAL REPORT 2006ACTIVITY REPORT

Essential Figures at a Glance

Lonza Annual Report 2006

Aspergillus niger, enlarged 1400 times; application as reference strain in quality control.

<

Lonzamillion CHF

Sales total– Continuing operations– Discontinued operations

Result from operating activities (EBIT)– Continuing operations – Discontinued operations

Profit before income taxesProfit for the periodCash flow before change in net working capitalInvestments in property, plant and equipment and intangibles (at cost)incl. leasingTotal equity Net debt Net debt-equity ratio

Basic earnings per share CHF– Continuing operations CHF– Discontinued operations CHF

Diluted earnings per share CHF– Continuing operations CHF– Discontinued operations CHF

Book value per share CHFDividend payout ratio %

Number of shares (par value CHF 1.00) Share price (high / low) CHFMarket capitalization (31 December)

Lonza Group Ltd million CHF

Profit for the yearShareholders’ equityShareholders’ equity as a percentage of total assets %Dividends declared after the balance sheet dateDividend per share CHF

2005

2 5211 894

627

297249

48

244188386

(272)1 490

9620.65

3.973.400.57

3.873.330.54

31.4533

50 450 00080.65/63.35

4 056

2005

1591 386

6561

1.30

2006

2 9142 285

629

344301

43

292222429

(371)1 607

9130.57

4.694.200.49

4.303.880.42

33.94 32

50 450 000108.10/78.65

5 312

2006

851 409

6971

1.50

LONZA ANNUAL REPORT 2006ACTIVITY REPORT

3


4

6

11

1213

15182124273235

394042434445464748495051525456575860

62

67

INTRODUCTIONForeword from the Chairman of the Board of Directors and the Chief Executive Officer

STRATEGYLonza – the Leading Supplier to the Life-Science IndustriesInterview with Stefan Borgas, CEO

LONZA TRADEMARKSRegistered Trademarks

VISION, CULTURE, COMPETENCIESVision, Culture, CompetenciesThe Lonza Brand

ORGANIZATION AND ACTIVITIES Exclusive SynthesisMajor Acquisition Boosts Peptides BusinessBiopharmaceuticalsA Successful Track RecordOrganic Fine & Performance ChemicalsLonza’s Presence in the Nutrition MarketPolymer Intermediates / Other; Acquired Bio-businesses

LONZA SITESLonza WorldwideLonza Global MapVisp, SwitzerlandA New Image for Training Opportunities (Visp)Braine-l’Alleud, BelgiumAchieving Results via Effective Integration (Braine-l’Alleud)Kouřim, Czech RepublicThe Basis for Economic Prosperity (Kouřim)Porriño, SpainIntegration Began in a Cordial Atmosphere (Porriño)Slough, United KingdomA Successful Event in Every Sense (Slough)Allendale NJ / Mapleton IL / Williamsport PA, USACohasset MN / Conshohocken PA, USAPortsmouth NH, USACompany of the Year (Portsmouth)China / SingaporeA Milestone in Lonza’s History (China)

ADDRESSES

AGENDA AND CONTACTS

ACTIVITY REPORT CONTENTS

The Lonza Annual Report 2006 consists of the following three parts: Activity Report, Financial Report, Corporate Governance & Social and Environmental Report. These publications are accessible on the Internet at www.lonza.com. The Annual Report is also available in German. The English version prevails.In this report “Lonza” and “the Group” refer to the whole group of Lonza companies, “Lonza Group Ltd” refers to Lonza Holding.The Annual Report of Lonza Group Ltd follows the guidelines issued by the OECD for multinational corporations.

Dear Customers, Shareholders and Friends of Lonza,

It is our pleasure to present you with our Activity Report, a section of the Lonza 2006 Annual

Report. This report provides a summary view of Lonza’s financial accounts, strategies, global

business activities and international sites. It also gives an insight into our culture and vision.

Looking at our achievements in 2006, what makes us the most proud is the continued strength-

ening of the relationships with many of our customers: trust in the people at Lonza contributed

to the deepening of numerous long partnerships and a substantial increase in the number of

joint projects.

In 2006, Lonza continued building on its track record by delivering an 18.1% increase in net in-

come and a 15.8% increase in EBIT compared with the previous year. The primary driver behind

these positive results was the continuing improvement in the performance of our biopharma-

ceuticals activities. The Group’s operating income margin was maintained at 11.8%, while the

return on net operating assets improved to 12.2% (from 10.9%). Net working capital in relation

to sales declined from 31% to 26%.

In addition to the sound financial results, 2006 was a year characterized by transformation.

Based upon our strategy of focusing on the life-science industries, we accelerated our shift into

this sector by rigorous business portfolio realignment. In order to realize this transition, we

divested non-core businesses (LOFO GmbH, Polynt S.p.A.) and acquired complementary busi-

nesses in the life-science sector: Peptides (Belgium), mid-scale mammalian biopharmaceuti-

cals capacity (Spain) and a mid-scale microbial biopharmaceuticals business (USA) as well as a

biotech service business, now called Lonza Bioscience (this acquisition closed in February 2007).

This transformation is expected to increase and sustain our profitability growth over many

years.


INTRODUCTION ACTIVITY REPORT 4

5


ACTIVITY REPORT INTRODUCTION

Lonza’s talented, hard-working and passionate men and women around the world are dedi-

cated to the continuous development and implementation of our strategy. Our growth strategy

is based upon a plan that was created over two years ago. It has been executed systematically

and effectively since its inception and is regularly updated and improved. This strategy encom-

passes several critical areas including: operational, technical and leadership excellence, innova-

tion leadership, distinctive commercial performance and fostering an entrepreneurial spirit.

We implement our strategy by focusing on vigorous internal organic growth and permanently

adjusting our portfolio of chemical and biotechnology businesses. By delivering on the targets

of our well-defined plan, we estimate that we will be able to achieve sales growth of 8% to 12%

and profits in the mid to high teens each year. The visibility of existing contracts and projects,

together with prevailing economic conditions, are the basis for projecting continuous growth

until 2012.

Ultimately, our company is driven by our vision. At Lonza, our passion is to deliver sustainable

value to our customers.

We wish to take this opportunity to express our sincere gratitude to our shareholders and our customers for the trust they have placed in us over the years. We also owe a particular word of thanks to all Lonza employees, old and new, for their outstanding efforts and vital contributions to the successful implementation of our growth strategy.

We thank you for your continued trust and confidence in our team. We are pleased that each of

you is continuing to accompany us on our exciting journey.

Rolf Soiron Stefan Borgas

Chairman of the Board of Directors Chief Executive Officer

Lonza – the Leading Supplier to the Life-Science Industries

Realignment and growth in defined life-science markets are the primary objectives

of the Lonza strategy. The acquisitions, investments and divestures undertaken recently

emphasize this shift towards the life sciences.

Interview with Stefan Borgas, CEO

Besides improving results by over 15%, 2006 saw an accelerated pace of trans-formation at Lonza. What are the main elements of this strategic program?There are two main pillars to the Lonza strategy. One is the strong and highly focused investment program in our own capacity within our core areas. The second pillar is the change in em-phasis of the portfolio towards the life-science markets: healthcare, hygiene, preservation, nutrition, agrochemicals and personal care.

“The newly acquired Mi-

crobial Biopharmaceuticals

business moves us forward

significantly as the world’s

leading custom manufactur-

er for Biopharmaceuticals.”

Lonza expanded its life-science portfo-lio early in 2006 by acquiring UCB’s Bio-products peptides manufacturing divi-sion in Braine-l’Alleud (Belgium). What was the experience you gained from the integration of this site into Lonza’s exist-ing Peptides business and into Lonza as a whole?The Peptides acquisition was meant to boost the high-margin portion of the Exclusive Synthesis business and

complement the existing Lonza Pep-tides business, which was quite a bit smaller than the one we acquired. Our expectations in terms of sales, integra-tion speed and the enthusiasm of the involved people have been more than fulfilled. We still have some work to do in the production performance of the plant and on the improvement of prof-itability.

Do you mean that lessons can be learned for the integration of the new businesses you have recently acquired from Genentech and Cambrex?The integration of Lonza Braine was certainly of great value as a learning

STRATEGY ACTIVITY REPORT


6

7


experience. With regard to systems in-tegration we know that we have to be even more aggressive in terms of tim-ing. A second lesson we have learned is that, despite all the enthusiasm and

energy that have gone into integration, we must not forget to keep the focus on the current business.

However, the Bioscience integration might be a little bit different, because Bioscience will be incorporated as a new division of Lonza, while Lonza Braine was integrated as part of an existing business sector.Yes, that is true. There are some differ-ences, but there are a lot of similari-ties as well. First of all, Bioscience is a bigger business: we have seven sites to integrate, not merely one. From the perspective of the Finance and HR systems, the complexity is exactly the

same. And of course there are a lot of connections between Bioscience and other Lonza businesses in terms of product portfolio, sales channels and production plants. So the integration

of Bioscience will involve a lot of work.

How will this new activity complement Lonza’s existing biotechnology plat-forms?Actually, in a variety of different ways. First, it will give us a new sales and distribution channel, for example with the research labs where we did not have access before. Secondly, Biosci-ence gives us backward integration, especially in the Biopharmaceuticals business. Some products we previous-ly bought from external suppliers can now be sourced internally. The third way this new business gives us a boost is through some of the technologies

and products provided by Bioscience. Potentially, this offers a new platform on which we can continue to grow with exactly the same customer base and very complementary, neighboring technologies.

“The fact that one of the

world’s leading biotech

companies, our customer

Genentech, trusts us to build

a second plant in Singapore

is quite a big compliment.”

You have also acquired the Microbial Biopharmaceuticals part of Cambrex. What is the rationale for this add-on ac-quisition in the context of the existing Microbial Biopharmaceuticals business unit in Visp? The Visp-based Microbial Biopharma-ceuticals business is focused on large-scale production of commercial quan-tities for our customers. There is also a small pilot plant and a small Process De-velopment R&D group. What we were lacking was more muscle on process de-velopment and more mid-scale capacity so that we can better service our cus-tomers’ pre-clinical Phase I, Phase II and Phase III needs. This is now effectively what the newly acquired Microbial Bio-pharmaceuticals business brings us and thus moves us forward significantly as the world’s leading custom manufac-turer for biopharmaceuticals.

ACTIVITY REPORT STRATEGY

8


Through the Biopharmaceuticals plant in Porriño (Spain), which Lonza recently acquired from Genentech, and the sec-ond large-scale biomanufacturing facil-ity Lonza is building in Singapore, the company is accelerating growth in the area of Mammalian Biopharmaceuticals operations. Are these expansion projects to be classified mainly as geographical initiatives or do they rather fit into a wider asset and/or service strategy?The Porriño acquisition resulted from a make-or-buy decision process. Our biggest capacity constraint was in mid-scale mammalian capacities to serve Phase II and Phase III volumes for our customers. With this acquisition we can now fill the gap about three years earlier than we could have done through our own investment, but also at very competitive conditions. This helps us to expand the pipeline for the large-scale expansion we are undertak-ing in different parts of the world. The Singapore side of the agreement with Genentech gives us an opportunity to have engineering income from build-ing a second plant in Singapore for one of the leading biotech companies worldwide, our customer Genentech. The fact that they trust us to do this is quite a big compliment for us.

Beyond the above-mentioned acquisi-tions in the area of Biopharmaceuticals, Lonza is also investing in the expansion of its Exclusive Synthesis business in China. What is the main driving force behind this project?

The Exclusive Synthesis business is, in terms of market size of course, substan-tially bigger than the Biopharmaceuti-cals business. We fully intend to contin-ue to grow above the market average in Exclusive Synthesis and we will do this mainly by setting three priorities. First, we will continue to expand into very attractive market niches such as peptides. Secondly, we will expand into new technologies such as highly ac-tive pharmaceutical ingredients (HAPI). Thirdly, Lonza Exclusive Synthesis is ex-tending its reach into mature products in order to support our customers in managing the life-cycle of their drugs: the processes of products that are a few years away from patent expiration should be redesigned and the produc-tion put on a low-cost basis. This is the purpose of the China platform which has already been well-received by cus-tomers: the first phase of the plant is already almost sold out.

The focus on defined life-science markets also comprises the product line exten-sions in the field of Nutrition. DHA and larch arabinogalactan (LAG) are prod-ucts that have recently been acquired. Is Lonza going to become a multi-ingredi-ent provider?What we want to do is become a pro-vider of scientifically based nutritional ingredients that are specific to certain health indications and based on tech-nologies that Lonza masters particular-ly well. Furthermore, these two smaller acquisitions brought highly-skilled

STRATEGY ACTIVITY REPORT

9


Nutrition experts into our team and thus strengthened our knowledge base. This will further improve the specificity of our Nutrition strategy, which quite frankly, is not yet fully real-ized. Whether we will become a multi-ingredient provider is something that remains to be seen, but it is clear that if we want to defend our Nutrition business the way it is today, we have to do it through product innovation.

The ambitious strategic growth Lonza is aiming for is not only demanding in terms of financial resources, but also requires managerial skills. How are you addressing this important issue?If Lonza faces one risk, it is that of not being able to execute this significant number of projects without delay because of a lack of resources. At the same time, we have to be careful not to overstaff and incur a cost overrun in these projects. Perhaps the most ef-fective way of dealing with this is by identifying talented people as early as possible and giving them responsibil-ity, for example in these projects. That way, we will build up a pool of excellent talents. Furthermore, the new people who join the Lonza family via acquisi-tions will also strengthen our expertise, management and leadership power, once integrated.

Do you think that these new people will cover your needs, or will Lonza have to employ additional staff?

Lonza’s staff will grow from about 6 150 colleagues at the end of 2006 to over 8 000 by the end of 2009. Half of the new people are coming to us through the acquisition of the two Cambrex businesses in 2007. The other half comes from external recruiting. We cannot expect growth without adding any people. We have a lot of strong talents inside the company who are capable of executing these projects. But then we will need to backfill their positions from outside.

“The next months within

Lonza will be primarily a

period of implementation.

2007 will be focused on

delivery and making these

growth rates work.”

At first glance, the short-term quan-titative effect of the transformation strategy does not show significant sales growth. What is the step change result-ing from this accelerated shift?If you include the portfolio change and compare like with like, there actu-ally is considerable sales growth. Sales growth will be sustainable between 8 to 12 % per year. The profit growth will be sustainable in the mid to high teens, by our estimates until 2012 at least. This is a considerable change compared to where we saw growth going one year ago. However, we have

to be aware that, due to the number of investment projects and the size of the recent acquisitions, growth rates will very likely not improve further, at least in the short term. The next months within Lonza will be a period of imple-mentation. 2007 will be focused on delivery and on making these growth rates work.

ACTIVITY REPORT STRATEGY

Registered Trademarks

ACRAWAX ALDO ALDOSPERSE AMPHOTERGE AZOLATBARCHLOR BARDAC BARDAP BARLENE BARLOX BARQUAT BIO-GENTLE BIO-SURF BROMCHLORCARBOQUAT CARBOSHIELD CARNICHROME CARNIFEED CARNIKING CARNIPASS CARSOQUAT CATAGARD CELLMATE CERAMIDCLEARTRAC CYTAIR DANTABROM DANTOBROM DANTOCHLOR DANTOCOL DANTOEST DANTOGARD DANTOIN DANTOSERVE DANTOSPERSE EQUINOX ETHOSPERSEFIBERAID FMBGEOGARD GLYCACIL GLYCHLOR GLYCO GLYCOMUL GLYCONOL GLYCOLUBE GLYCOSERVE GLYCOSPERSE GLYCOSTAT GLYCOWAX

A

B

C

D

E

F

G

GLYCOX GLYDANT GLYDANT PLUS GLYTEX GS-SYSTEMHMB HYAMINE ISOCIL ISOPHANLARACARE LARAFEEDLARA-PRINTLAREXL-CARNIPURE LONZA LONZA PRIMASET LONZABAC LONZACURE LONZAINE LONZAMON LONZAPOL LONZASERVE LONZASET LONZA-SOL LONZASTAB LONZESTMETA META SUPER META THE MOLLUSCICIDENATRULON NIAMAXPEGOSPERSE PEPZIN GI POLYALDO PRIMASETQ META QUALITYRESELUTESPECTRADYNETWIN CHAINUNAMINE UNIHIB UNIQUATXL-1000

Registered trademarks as of 31.12.2006

H

I

L

M

N

P

QRSTU

X

Catalyst for gas-phase selective oxidation (fixed-bed technology); enlarged 82 000 times.

<

ACTIVITY REPORT LONZA TRADEMARKS 11


Vision, Culture, Competencies

Each member of Lonza’s global team is

guided by our defined vision giving us col-

lective direction, focus and passion. Our

unwavering commitment is to deliver sus-

tainable value to our customers. All of our

activities are driven by our vision, which

makes us the premier biotechnological

and chemical supplier to the life-science

industries. The realization of our vision is

achievable on the robust foundation of

our Lonza team members’ competencies.

These competencies are the basis of our

culture, which is centered around trust in

each other and our people’s entrepreneur-

ship.

In keeping with our commitment to ethi-

cal, social and environmental responsibil-

ity, all employees are bound by Lonza’s

Code of Conduct.

VISION, CULTURE, COMPETENCIES ACTIVITY REPORT 12


VISION Our passion is to deliver sustainable value

to our customers.

STRATEGY

Strong profitable growth based upon

chemical and biotechnological platforms

for the life-science industries.

CULTUREOur culture is centered around trust in

each other and our people’s entrepreneur-

ship.

COMPETENCIES

Drive, Decide, Develop, Deliver

STRATEGY

VISION

CULTURE

COMPETENCIES

13


ACTIVITY REPORT VISION, CULTURE, COMPETENCIES

In order to support our vision, culture and

long-term strategy, we recognize the ne-

cessity of building leaders for our future.

This year, a major initiative was imple-

mented in order to focus on Lonza’s lead-

ership development in 2006 and beyond.

The newly evolved program is based upon

our core competencies, identified as the

“4 Ds: Drive, Decide, Develop and Deliver”.

The enhanced development programs are

now structured around functional com-

petencies, behavioral competencies and

Lonza’s core values.

By building upon our competency frame-

work, we can ensure that our future is fur-

ther strengthened with talented, focused

and passionate leaders.

Competencies

DRIVE DECIDE

Motivate others Master scope and timing of decisions

Communicate Manage the context

Enthusiastic Customer-focused

Kill bureaucracy Communicate clearly

Understand the vision Monitor the environment

Execute

DEVELOP DELIVER

Coach Direct

Create positive atmosphere Fast

Build and lead teams Agile

Manage talent Manage performance

The Lonza Brand

The Lonza brand expresses our vision,

culture and competencies. The three basic

elements of our brand message are re-

flected in our daily activities: Lonza is driv-

ing innovation, the high level of quality is

non-negotiable for Lonza and our custom-

ers get access to leading-edge technolo-

gies and receive world-class products and

services by partnering with us. These core

elements continuously upgrade the stan-

dards within our entire industry.

Lonza’s competitive advantages are con-

veyed by the following differentiating

characteristics through the Lonza brand:

cutting-edge: Lonza employees are push-ing the boundaries every day. agile: non-bureaucratic decision-making, flexibility and swift implementation.friendly: we are empathic and thrive on wholly understanding our partners’ situations.

–

–

–

15


Exclusive Synthesis

ACTIVITY REPORT ORGANIZATION AND ACTIVITIES

Bacillus subtilis enlarged about 7 600 times; application in biosynthesis and – after genetic modification – in biocatalysis and as a reference strain in quality control.

<

16


Exclusive Synthesis

The Exclusive Synthesis business sector

specializes in chemical synthesis and mi-

crobial fermentation and is the leading

custom manufacturer of active chemi-

cal ingredients for the pharmaceutical

industry.

Lonza’s track record in this area is impres-

sive, with 25 years’ experience in the field

of exclusive chemical synthesis under a

stringent and constantly changing regula-

tory regime. Cost-efficient production, in-

novative development work and complex

project management are the core capa-

bilities with which we help our customers

manage the life-cycles of their active phar-

maceutical ingredients (APIs) efficiently

and safely.

“Most of our customers come

back with new projects or

products after our first collab-

oration,” notes Uwe H. Böhlke,

Head of Exclusive Synthesis.

In important end-product applications, in-

cluding indications such as cardiovascular

diseases, oncology, neurology, endocrinol-

ogy and infectious diseases, we work with

18 of the 20 largest pharmaceutical com-

panies worldwide, as well as many mid-

size and innovative small pharmaceuti-

cal companies. Thanks to our specialists’

achievements in R&D, based on a wide

technology platform and flexible multi-

purpose plants where the performance

of each individual product is continually

improved, we elevate our good market

reputation on a daily basis and further

strengthen the long-standing relation-

ships with our customers.

Teamwork is the core element of our cus-

tom manufacturing concept. We assist our

customers during the whole of the R&D

and production processes. The coopera-

tion may begin at any clinical phase, from

small-scale production for pre-launch

volumes to large-scale manufacture. We

know our customers’ requirements pre-

cisely, enabling us to develop efficient,

tailor-made chemical and biological pro-

cesses for the individual ingredients and

intermediates. This allows our custom-

ers to concentrate on their main tasks of

R&D and marketing new pharmaceuticals,

while benefitting from globally competi-

tive active substance costs.

In the last 20 years, the Exclusive Synthesis

business sector has expanded continuous-

ly. One of the latest significant additions is

in the area of peptides. The expansion is

in response to the increased demand for

peptide APIs worldwide. With its produc-

tion capacity in Visp and the acquisition of

the peptide manufacturing site in Braine-

l’Alleud (Belgium) in early 2006, Lonza is

the world leader in the development and

manufacture of tailor-made peptides.

Peptides consist of two or more amino acids. Lonza is the only leading producer to master all three technologies: microbi-al fermentation and chemical synthesis in liquid- as well as in solid-phase reactions. Peptides are essential for the manufac-ture of a new category of pharmaceuticals prescribed in such indications as diabetes, HIV, cancer, hepatitis, Alzheimer’s disease, osteoporosis, obesity, infections and in-flammations, male and female sexual dysfunction, and even wrinkle and acne treatment.

Additional production capacity for APIs in

Visp became operational in 2006. This in-

vestment was in response to the growing

demand for APIs produced exclusively for

our worldwide customers.

The new R&D center equipped with state-

of-the-art technology in Nansha Guang-

zhou (China) became operational in 2006.

The highly qualified scientific team in

Nansha will concentrate on research and

development for active ingredients and

intermediates in the area of custom syn-

thesis.

ORGANIZATION AND ACTIVITIES ACTIVITY REPORT

17



Results 2006

Exclusive Synthesis & Biopharmaceuticals million CHF

SalesChange in %Change due to volume and pricesCurrency translationScope of consolidationResult from operating activities (EBIT)Change in %Margin in %EBITDAChange in %Margin in %

2005*

803

142

17.7229

28.5

2006

1 07333.6

2067

5719335.918.029528.827.5

With sales of CHF 1 073 million, 33.6% above the previous year, the custom manufacturing activities (Exclusive Syn-thesis & Biopharmaceuticals) achieved an operating income of CHF 193 million, 35.9% higher than in 2005. Operating margin improved from 17.7% to 18.0%. These results are mainly due to the strong development of the Biopharmaceuticals business sector.

Exclusive Synthesis Sales of the Exclusive

Synthesis business sector amounted to

CHF 605 million (CHF 445 million in 2005).

The growth was delivered mainly by a larg-

er volume of active pharmaceutical ingre-

dients (APIs) and regulated intermediates

for cardiovascular and HIV indications, as

well as the contributions of the acquired

Lonza Braine peptides business.

Despite very high asset utilization at all sites, production issues at our site in Visp (Switzerland) very early in the year as well as at our facilities in Braine-l’Alleud (Bel-gium) and Conshohocken, PA (USA) in the second half had a negative impact on the business sector’s performance. After implementation of specifi c corrective ac-tions, operations in Visp have been perfor-ming at or above budget levels. Similarly, aggressive action plans have been develo-ped for Braine and Conshohocken in order to resolve the operational challenges. Pro-cess and portfolio optimization concepts were further expanded in 2006; several

optimization projects were completed in the course of the year, delivering or excee-ding the expected results.

Overall market conditions in the area of chemical custom manufacturing re-mained diffi cult throughout 2006. Few new drug approvals, the patent expiration of mature products, persisting overcapa-city and competitive pressure from Asian producers were the main reasons for this situation. In 2006, a consolidation trend in the CMO (Custom Manufacturing Organi-zations) area became apparent. Gradual restructuring at the major pharmaceuti-cal companies, with shutdown or divesti-ture of their own production, might lead to increased outsourcing. The trend initi-ated by customers to ask for longer-term commitments for production capacity has become evident during the year.

In order to ensure future growth and offer our customers alternative production ca-pabilities, we undertook a series of capital investment projects in 2006. Noteworthy developments include:– Additional capacity at the API plant in

Visp (Switzerland) has become operatio-nal, while a new HAPI line (highly active pharmaceutical ingredients) will come on stream in 2007.

– Construction of the new API facility and the small-scale plant (SSP) in Nansha Guangzhou (China) is progressing ac-cording to schedule.

– In Kouřim (Czech Republic), production modifi cations for the fermentation of high-end enzymes are being implemen-ted.

– Integration of Lonza Braine SA (former-ly UCB Bioproducts), with its peptide activities, was completed in December 2006.

The R&D portfolio pipeline comprises a to-tal of 157 projects. The number has incre-ased thanks to the incorporation of Lonza Braine’s peptide activities and the full staffi ng of the new R&D center in Nansha with 45 skilled scientists.

* See footnote in page 23.

18


Major Acquisition Boosts Peptides Business

A major acquisition completed in 2006 propelled Lonza into a leading position in the

pharmaceutical Peptides manufacturing sector, thus complementing and broadening

the company’s offerings in custom synthesis for the life-science industry.

By Tom Mulligan, Editor, sp2 Magazine, Horsham (UK)

Peptides have been commercially im-

portant compounds since the 1950s,

when both peptide and amino acid

products became available through

the manufacture of short-sequence

molecules using liquid-phase tech-

nology. In the 1960s, the synthesis of

longer sequences became possible

through the application of newly-de-

veloped solid-phase technology. Lonza

has invested in both technologies for

peptide synthesis, thus completing the

company’s range of pharmaceutical

chemical compound types.

“Peptides are a part of the biophar-

maceutical industry that is of interest

to Lonza because of its sustainability:

There are a lot of projects in the pipe-

line,” says Dirk Oehlers, Head of Sales

and Business Development for Lonza’s

Tides business unit. “First, there are

a lot of candidates in the worldwide

market. Second, the pharmaceutical

industry is developing more complex

products, with longer sequences and

more chemical modifications. And

third, the market is growing in terms of

production amounts (volume). Lonza is

a company offering all three technolo-

gies available today, namely: liquid-

phase, solid-phase and recombinant

DNA technology.

The most significant recent develop-

ment in Lonza’s peptides business was

the acquisition completed in March

2006 of UCB’s Bioproducts manufactur-

ing facility in Braine-l’Alleud (Belgium).

This has boosted the company’s activi-

ties in the sector through the addition

of liquid- and solid-phase manufactur-

ing capabilities and expertise.

“UCB Bioproducts started working in

the pharmaceutical discovery and de-

velopment areas and then rapidly

moved into contract manufacturing as

demand for these services grew in the

1970s,” explains Dr Alain Scarso, Head

of R&D at Lonza Braine. “The com-


19


pany’s know-how developed around

the technology and the needs of the

marketplace, that is, the needs of the

customer to develop a drug candidate

using different and complex ways of

manufacturing drugs.”

Oehlers adds: “In 2002, Lonza’s Man-

agement Committee decided that the

company should be committed to R&D,

QA / QC and sales in peptides, but that

the company needed to grow its capa-

bilities by acquiring liquid- and solid-

phase synthesis expertise, increasing

capacity, and expanding its product

portfolio,” explains Oehlers.

The Lonza Braine facility occupies a

6-hectare site with plenty of room for

expanding its development labora-

tory and manufacturing facilities. The

site has both liquid- and solid-phase

manufacturing capabilities in a num-

ber of manufacturing suites with steel

reactors up to 2 500-liter for large-vol-

ume products. Laboratory facilities in-

clude process R&D, in-process control

and analytical suites, and a dedicated

technology development laboratory,

all fully equipped with state-of-the-

art equipment as well as high-perfor-

mance analytical tools.

“Lonza has a lot to offer as a ‘one-stop-

shop’ for peptide manufacture with its

expertise in route scouting, process de-

velopment, process optimization, scale-

up, validation and with its regulatory

expertise such as the Chemistry and

Manufacturing Controls section, all

Drug Master Files and the filing of dos-

siers supporting clinical developments

in a large number of territories world-

wide, not to mention its expertise

in legal aspects such as patents etc.,”

says Oehlers. “Offering a broad service

makes people comfortable. People feel

they are in good hands with Lonza.”

“Lonza now has the capability of more

complex peptide synthesis and at an

increased scale of manufacture,” says

Scarso. “We need to maintain our lead-

ership through technology investment.

There are technologies already exist-

ing within Lonza for molecules other

than peptides that can be adapted

to peptides production at industrial

scale. The emphasis is on cost-cutting

through both process and productivity

improvement.”

Oehlers adds: “In a life-science orient-

ed company playing in a certain league,

there are synergies across the board.

That’s the beauty of it – we’re focused

on life sciences, and it was a conscious

strategic decision by the management

to have this focus.

“Ten years ago there weren’t many

peptide manufacturing companies but

nowadays CMOs (Custom Manufac-

turing Organizations) are looking at

peptides as a potentially lucrative area.

Some of these are large companies and

some are small, and it’s possible that

some of the world’s largest chemical

manufacturing companies may enter

the marketplace. Indian and Chinese

companies may also enter with generic

products. However, our customers are

very aware of the complexity of pep-

tide manufacture, the very high capital

investment required and the expertise

needed. Therefore, even though there

will be competition in the marketplace,

we are highly confident that Lonza will

continue to be successful in peptides

because of the company’s history in

technology development, its manufac-

turing expertise, its flexibility and its

reputation in custom manufacturing,”

Oehlers states.

Pictures from left to right< Flask freeze-dryer < Metrological controls monitoring in LPPS

facility< Quality Control Laboratory


21


Biopharmaceuticals


CHO (Chinese Hamster Ovary) Cells, used for the manufacture of biopharmaceuticals; enlarged about 16 000 times.

<

22


The Biopharmaceuticals business sector

specializes in microbial fermentation and

mammalian cell culture, starting from

strain or cell line construction, through

process development, to manufacture for

clinical or commercial supply.

This business sector is expected to deliver

strong growth in the years to come thanks

to the increasing number of biopharma-

ceuticals being launched, the constantly

increasing project pipeline and Lonza’s

leading position in this market. The busi-

ness sector’s strategy is to grow in close

alignment with its customers by balanc-

ing its portfolio between process develop-

ment, early-stage and commercial prod-

ucts, as well as Biopharma Services.

“To be our customer’s partner

from product concept through

to commercial manufacture.”

That’s how Stephan Kutzer,

Head of Biopharmaceuticals,

characterizes the business

sector’s mission.

At our production site in Portsmouth, NH

(USA), we now operate four 20 000-liter

stirred bioreactors. Driven by strong cus-

tomer demand we have also initiated the

conversion of a mothballed 2 000-liter into

a 5 000-liter production line. The expan-

sion of the facility in Portsmouth and the

acquisition of Genentech’s 4 x 10 000-liter

mid-scale mammalian facility in Porriño

(Spain) will provide Lonza with immedi-

ate access to further mid-scale biomanu-

facturing capacity three years earlier than

planned. In addition to our 80 000-liter

mammalian large-scale facility in Singa-

pore we will build an identical second fa-

cility for Genentech.

Biopharmaceuticals

Lonza has also strengthened our position

in the microbial area. Supported by the

partnership with UCB, Lonza has started

to manufacture bulk actives based on PEG-

ylated antibody fragments. Together we

have built a commercial-scale biophar-

maceutical manufacturing facility in Visp.

Based on our growing pipeline, additional

large-scale expansion in Visp (Switzerland)

is in an advanced stage of preparation.

Our core competencies are process de-

velopment, fast-track plant design and

construction, regulatory support and mid-

/large-scale commercial manufacturing.

For over 20 years, Lonza has been a dedi-

cated custom manufacturer of biophar-

maceuticals, successfully meeting the

needs of its customers. The setup and per-

formance of project teams, with experts

from Lonza and from customers working

across company borders, is unmatched in

the industry.

Our clients are the leading pharmaceutical

and biotechnological companies. Lonza is

developing biopharmaceuticals for appli-

cation areas such as oncology and auto-

immune diseases. Our facilities in Slough

(UK) and Portsmouth have been licensed to

produce five commercial products, includ-

ing Genentech’s Rituxan®, Bristol-Myers

Squibb’s Orencia® and Eli Lilly’s Xigris®.

As the leading contract manufacturer of

therapeutic monoclonal antibodies and

recombinant proteins derived from mam-

malian cell culture, Lonza has developed

a highly efficient mammalian expression

system – the GS Gene Expression Sys-

tem™ (GS: glutamine synthetase) which

is characterized by speed, safety and cost-

efficiency. The GS-System® technology is

being upgraded on a continuous basis and

delivers exceptional, cutting-edge results.


23



Results 2006

With sales of CHF 1 073 million, 33.6% above the previous year, the custom manufacturing activities (Exclusive Syn-thesis & Biopharmaceuticals) achieved an operating income of CHF 193 million, 35.9% higher than in 2005. Operating margin improved from 17.7% to 18.0%. These results are mainly due to the strong development of the Biopharmaceuticals business sector.

Biopharmaceuticals The Biopharmaceuticals

business sector generated sales of CHF 468

million in 2006 (CHF 358 million in 2005).

The Biopharmaceuticals business includ-

ing Mammalian Operations, Microbial Op-

erations and Biopharma Services delivered

a significant performance improvement.

High capacity utilization (small-, medium-

and large-scale bioreactors), further im-

proved batch success rates and the strong-

ly increasing demand for our R&D services

were the main drivers behind this positive

development.

A major achievement during 2006 was the licensing by the US Food and Drug Admi-nistration (FDA), the European Medicines Agency (EMEA) and the Japanese Pharma-copoeia of the Portsmouth, NH (USA) lar-ge-scale mammalian cell culture facility for the production of Bristol-Myers Squibb’s Orencia® and Genentech’s Rituxan®.

Growing demand and a strong project pipeline supported a number of expansion projects and related transactions. The mi-lestones reached in 2006 include:– The fourth 20 000-liter bioreactor in

Portsmouth, NH (US) was started ahead of schedule in May 2006.

– The fi rst (of two) 15 000-liter microbial bioreactor was started on schedule in Visp, in cooperation with UCB.

– Expansion of the laboratory space and development capacity in Slough (UK) was completed.

– Construction of a large-scale mammali-an manufacturing facility was initiated in Singapore, a pioneering project in the south-east Asia region. Genentech has an exclusive option to buy this plant.

– Lonza will build a second 80 000-liter mammalian cell culture manufacturing facility in Singapore.

– Acquisition of Genentech’s 4 x 10 000-liter

mammalian cell culture facility in Porriño (Spain), which is dedicated in the short term to the production of Genentech’s Avastin® (bevacizumab) bulk drug substance, was completed.

– The acquisition of Cambrex’s Microbial Biopharmaceuticals business was an-nounced; this will further strengthen our microbial small-/mid-scale production capabilities and the project development pipeline. We anticipate closing during the fi rst quarter of 2007.

Exclusive Synthesis & Biopharmaceuticals million CHF


2005*

803

142

17.7229

28.5

2006

1 07333.6

2067

5719335.918.029528.827.5

* The prior year was restated due to reclassifi cation of the

agrochemicals business from the “Exclusive Synthesis &

Biopharmaceutical” segment to the “Organic Fine & Per-

formance Chemicals” segment as a result of the change

in management structure.

24


A Successful Track Record

In developing and manufacturing mammalian biopharmaceuticals, Lonza is able to start

working with customers at a number of stages. The scientific and customer project

management teams based in Lonza’s R&D center in Slough (UK) work closely together with

customers to design work programs that meet each customer’s requirements. This coopera-

tion ensures that the customers are kept up to date with what is happening at all stages of

the project and enables them to make informed decisions.

By Robert Winder, Industry Journalist, London (UK)

Lonza continued to enhance its mam-malian biopharmaceutical manufac-turing capabilities through acquisition and expansion in 2006. In addition, the research and development center in Slough (UK), which is key to maintaining a strong manufacturing pipeline, enjoys high demand and ongoing expansion.

When a drug discovery company is looking for a manufacturer for its prod-uct, it faces a number of issues such as whether mammalian or microbial fer-mentation will be used for manufac-turing, whether the starting point is a DNA sequence, or a partially developed process, and the scale of capacity that

will be required.

According to Allison Vernon, Head of Mammalian R&D Services, there are three key reasons why a customer should choose Lonza as their manu-facturing partner: flexibility, teamwork and the process. “Lonza can provide customers with all the tools required to get their product made, whatever options are required,” she says.

Lonza has a successful track record in process development and manufac-turing of biopharmaceuticals using mammalian cell culture. “We have taken products – both antibodies and

recombinant proteins – from R&D to the market,” says Vernon. “The cus-tomer can reduce their risk by working with an experienced company, such as Lonza.” Lonza’s customers range from almost virtual biotech companies to major pharmaceutical companies.

Lonza has developed a standard pro-cess pathway to deliver high-titer GMP production so that the customer is able to move through toxicology stud-ies and into clinical trials as quickly as possible. “The process is not a simple handle-turning exercise,” says Vernon,

“it is tailored to the specific needs of each project for each customer.”


25


For Lonza, the key to maintaining a strong pipeline of projects is commu-nication with its customers. A multidis-ciplinary customer-facing project team coordinates each project. “We have an interactive communication process with the customer to ensure they un-derstand what is happening at all stag-es of the project and to allow them to make informed decisions,” says Vernon. The project manager is the key to the relationship with the customer and is supported by a team made up of scien-tific, quality, regulatory and manufac-

turing representatives based in Slough. “It is important to manage the com-munication so the relevant experts at Lonza talk to the right people at the customer’s end,” adds Vernon.

In parallel with cell line development, Lonza also creates product assays, to ensure the development and manufac-turing processes can be monitored and the final product analyzed. In addition, the purification process is developed to ensure that the product will meet the exact purity standards required for therapeutic applications.

“Ultimately, when the process is handed

to the pilot plant, they have all the in-formation about what to expect from a process in terms of fermentation, purification and assays,” says Vernon. The pilot plant is used to scale up the process for GMP manufacture. Product from the pilot plant is often used by customers in toxicology studies, which are on the critical drug development pathway.

Lonza’s standard process is built around its Glutamine Synthetase (GS) Gene Ex-pression System™ and its suspension

variant Chinese hamster ovary (CHO) cell line (CHOK1SV), which is adapted for use in a protein-free suspension culture system. Both the expression system and the cell line are widely used in the biopharmaceutical sector and are familiar to the regulatory authori-ties. “We also see many conference presentations that use the GS Gene Expression System™, which is a strong scientific endorsement of the technol-ogy,” says Vernon.

To stay ahead of the game Lonza is working to further enhance the GS Gene Expression System™ by improv-ing product titers and reducing the

time taken for cell line creation, and improving the reproducibility and ro-bustness of processes. There has been considerable success in improving ti-ters in recent years and monoclonal antibody titers of 2 to 5 grams per liter are commonly seen.

The GS Gene Expression System™ is at the center of a whole family of services and products offered by Lonza so that customers have the tools to bring their products to the market. Lonza contin-ues to innovate in all areas to support

GS fermentation processes, to enhance services, to develop new services and to develop technologies that are new licensing opportunities. However, be-yond the GS Gene Expression System™, Lonza has the flexibility, expertise and capabilities to work with customer’s own processes.

Pictures from left to right< Separation of DNA on agarose gel< Removal of stack of cryopreserved cell lines

from liquid nitrogen dewar< Plasmid purification


27


Organic Fine & Performance Chemicals


Acetoacetanilide – here enlarged 2 700 times – is an intermedi-ate for the manufacture of organic pigments and dyestuffs.

<

28


Organic Fine & Performance Chemicals of-

fers a broad range of products for applica-

tions in nutrition, hygiene, personal care,

water treatment and wood preservation,

and selected industrial markets. Its pro-

duction plants are located in Switzerland,

the USA and China. Backward integration

to an in-house naphtha cracker provides

fundamental starting materials. Ongo-

ing process optimization, the switch to

new raw materials and application of in-

novative technologies lead to continuous

expansion of our product portfolio. With

production based on naturally derived al-

cohols, Lonza is one of a small number of

leading suppliers of biocides. A process of

continuous innovation in the chemistry

underlying these materials enables the

development of new intermediates and

active substances, also increasingly in

Asia.

“Besides our credo of ‘value

for money’, we are focusing

strongly on novel application

and product development.

We offer our customers first-

class products and application

solutions as well as reliable

service,” explains Lukas Utiger,

Head of Organic Fine & Per-

formance Chemicals.

Nutrition Lonza’s main nutrition products

are nicotinates, L-Carnipure®, Carniking®,

DHA (docosahexaenoic acid), LAG (larch

arabinogalactan) and advanced interme-

diates for the production of essential vita-

mins.

L-Carnipure® is a special grade of L-car-

nitine, manufactured for food and phar-

maceutical applications. L-Carnipure® is

of vital importance in supplying energy

to, and ensuring the functioning of many


organs in the body. Lonza developed and

patented the biological L-Carnipure® pro-

duction process for 100% pure L-carnitine.

Carniking® is recommended for the manu-

facture of dry-feed formulations, premixes

and base mixes. The Organic Fine & Per-

formance Chemicals division sells L-Car-

nipure® and Carniking®. These L-carnitine

products are fermented under contract by

Lonza Exclusive Synthesis in Kouřim (Czech

Republic) based on raw materials manu-

factured in organic chemical plants.

Lonza is the leading producer of niacin and

niacinamide. Apart from its pharmaceuti-

cal applications, this B3 vitamin is added

to a large number of foods and used to en-

rich feedstuffs for production animals and

pets as well as in aquaculture.

The DHA (docosahexaenoic acid) prod-

uct, one of the most important omega-3

polyunsaturated fatty acids, is an ideal fit

with our Niacin USP and L-Carnipure®. The

main areas of application are in functional

food and dietary supplements as well as in

the pharmaceutical industry.

The latest product in our nutrition portfo-

lio is larch arabinogalactan (LAG). LAG is a

natural, soluble fiber. It offers many signif-

icant benefits, the most important ones

being in the fields of immune enhance-

ment and digestive health.

Meta® Metaldehyde is a specific anti-slug

active ingredient that works in all weather

conditions.

Hygiene / Personal Care / Preservation Our

Hygiene product offering includes raw ma-

terials for antimicrobial active ingredients,

specialty surfactants and preservatives,

which are used to formulate disinfectant

and sanitizer products, as well as institu-

tional and household cleaning products.

In the area of Personal Care, we provide a

wide range of preservative and specialty

additive technologies for applications

such as skin and hair care or sun protec-


29



tion. Lonza’s newly introduced proprietary

technology, Natrulon® HT (hydrothera-

py), protects the skin from drying effects.

In recreational water treatment, we offer a

proprietary bromine disinfection technol-

ogy, along with quaternary algaecides for

pools and spas. In industrial and paper ap-

plications, we have developed proprietary

microbiocides for the prevention and con-

trol of microorganisms. Our quaternary

biocides are also used in oil-field applica-

tions to prevent microbiological contami-

nation of water injection wells for second-

ary oil recovery.

Our Wood Protection business provides

chemical solutions to preserve and im-

prove dimensional lumber and engineered

wood products. Carboquat®, a chloride-

free, non-corrosive biocide, is Lonza’s latest

patented and EPA-registered wood preser-

vative (EPA: US Environmental Protection

Agency).

Industrial Specialties HCN intermediates

are used for the manufacture of agro-

chemicals, dyestuffs, optical brighteners,

adhesives, cosmetics and pharmaceuti-

cals. One example is our malononitrile

(MDN). It is extensively used as a building

block for various syntheses. Our chlorosul-

fonyl isocyanate (CSI) is another example

of an important building block in the field

of antibiotics.

Diketene derivatives are utilized in vita-

mins, fragrances, agrochemicals, pigments

and pharmaceuticals.

Lonza’s high-performance materials are

used in the electronics, space, aerospace

and automotive industries as well as in

coatings. They provide outstanding per-

formance characteristics such as high

glass temperatures, low dielectric proper-

ties, easy processing, low weight in com-

posites, high crosslink density and can be

tailored to the customer’s needs.

CarboShield®, a novel and very effective

corrosion inhibitor for a broad range of in-

dustrial metals was successfully launched

in 2006.

Especially in the area of agrochemical ac-

tive substances, Organic Fine & Perfor-

mance Chemicals is concentrating on new

complex advanced exclusive products. A

clear understanding of the needs of our

customers, an excellent contamination

prevention system, the ability to scale up

new processes very quickly and our excel-

lent track record with our customers are

some of our key differentiating factors.


has highly flexible ISO-regulated produc-

tion facilities where we manufacture in-

termediates and active substances for the

agrochemical and other industries.

30



The division’s sales reached CHF 1 075 million (CHF 973 million in 2005) and ex-ceeded the previous year’s sales fi gure by 10.5%. This increase mainly refl ects price adjustments in response to high raw ma-terial and energy costs. Operating income remained at CHF 130 million, while the operating margin fell to 12.1% (13.4% in 2005). The time lag between the increas-es in raw material and sales prices had a negative impact on the division’s margin development.

Nutrition The demand for nicotinates

(vitamin B3) for food and pharmaceutical

applications remained strong throughout

the year, sustained by the positive price

development. Sales volumes of feed grade

nicotinates exceeded last year’s levels,

with improvements in product prices.

The L-carnitine product lines enjoyed a good year. L-Carnipure® (food/pharma-ceutical grade L-carnitine) sales improved, mainly due to sizeable demand in the USA. Carniking® (feed grade L-carnitine) perfor-med well, especially in the pet food seg-ment.

The DHA (docosahexaenoic acid) business, acquired at the end of 2005, was fully in-tegrated into the Nutrition business unit. Market development in the USA was ham-pered by intellectual property issues.

Larch arabinogalactan (LAG) sales for food and dietary supplements were slightly above expectations due to volume incre-ases.

Sales of Meta® Metaldehyde, a specifi c anti-slug active ingredient, exceeded last year’s levels despite growing competiti-on from China and alternative biological products. Development continued on new liquid formulations, mainly for the Asian market, with product registration appro-vals still pending.

Hygiene / Personal Care / Preservation De-mand for our hygiene product range, in-cluding raw materials for antimicrobial ac-tive ingredients, specialty surfactants and preservatives, was satisfactory. However, margins did not meet expectations due to delayed price increases and intense com-petition, mainly in Europe.

In the personal care area, lower sales vo-lumes were offset by higher margins.

In the water protection segment, stron-ger sales of patented technologies such as Equinox®, combined with the impact of reduced sales of some older products, resulted in an overall increase in profi ta-bility. Strong competition from Chinese halohydantoin producers led to decreased volumes.

The wood protection business saw mode-rate performance from Carboquat®, a pro-duct for pressure treatment of wood.

Industrial Specialties Diketene deriva-

tives faced strong competition from

Chinese manufacturers, coupled with

lower demand. Production capacity was

Results 2006

Organic Fine & Performance Chemicals million CHF


2005*

973

130

13.4189

19.4

2006

1 07510.5

10020

1300.0

12.11974.2

18.3

* The prior year was restated due to reclassifi cation of the

agrochemicals business from the “Exclusive Synthesis &

Biopharmaceuticals” segment to the “Organic Fine & Per-

formance Chemicals” segment as a result of the change

in management structure.

31



well-utilized overall. However, margins

came under pressure as raw material

prices for a series of products increased.

Demand for vitamin intermediates was at

expected levels.

In the HCN derivatives business, product deliveries to new customers ensured good sales volumes; but here too, compe-tition from China had a negative impact on margins.

Sales in the agrochemicals niche market developed well.

In the high-performance materials busi-ness, volume increases and an improved portfolio mix led to higher profi tability. The growth was driven particularly by de-mand from the electronics industry, whe-

reas sales to the aerospace sector develo-ped more slowly than expected. Several promising new products in the pipeline will contribute to the rejuvenation of the portfolio.

Research & Development There are cur-

rently 34 projects in the R&D pipeline in

Organic Fine & Performance Chemicals.

These include chemicals for pharmaceuti-

cals, agrochemicals applications, polymers,

nutrition, wood/water protection, hygiene

and personal care. In order to strengthen

the R&D pipeline, new chemical R&D

laboratories were installed at the Nansha

Guangzhou site (China). Recruitment has

started and later in 2007 a dedicated team

of up to 25 scientists will commence work

on selected projects.

32


Lonza’s Presence in the Nutrition Market

Lonza has been present in nutrition for many years. Recently, Lonza has acquired

Nutrinova’s docosahexaenoic acid (DHA) business and the larch arabinogalactan (LAG)

business of Larex.

By Dr Andrew Warmington, Editor, Speciality Chemicals Magazine, Redhill (UK)

As the developed world’s age pyra-

mid grows increasingly top heavy and

healthcare costs escalate, people in

many countries are becoming ever

more health-conscious. Put simply,

they want to prevent rather than just

treat medical conditions. And the sci-

entific evidence to support the ben-

eficial effects of certain health ingre-

dients is making its way into public

consciousness. Trends like this make

the nutrition market an increasingly

attractive one.

Lonza, of course, has been strongly

present in nutrition for many years and

intends to stay there. “Growing the Nu-

trition business and further strength-

ening our global position as a supplier

of evidence-based, high-margin health

ingredients is one of the essential ele-

ments of the Organic Fine & Perfor-

mance Chemicals division’s growth

strategy,” says Dr Thomas Kiy, Global

Head of Strategic Business Develop-

ment for the business unit Nutrition,

headed by Roman Quinter. There are

two parallel approaches, both of which

have been exemplified in the compa-

ny’s recent activity: further developing

the existing businesses (mainly by ex-

panding into new geographical mar-

kets and/or applications) and making

acquisitions.

Lonza is by far the world’s largest man-

ufacturer of Vitamin B3 in the form of

niacin and niacinamide. These vita-

mins are used in dietary supplements,

food fortification and animal nutrition.

Lonza is also the leading provider of

the pharmaceutical-grade quality of

niacin used in prescription remedies to

maintain healthy cholesterol levels.

Under the L-Carnipure® brand, Lonza

is also the world’s largest supplier of

L-carnitine, an important nutrient that

helps the body to metabolize fat and

produce energy, thus ensuring that

its most important organs function

properly. As such, L-carnitine is vital to


33


maintaining our health and fitness.

In December 2005, Lonza acquired

Nutrinova’s docosahexaenoic acid

(DHA) business. DHA is produced by

fermentation from microalgae; thus,

as well as its positive health effects

for the heart and brain, it has superior

sensory properties to the fish oils from

which this important omega-3 PUFA is

normally sourced and has the bonus of

being vegetarian in source.

Then in June 2006, Lonza also ac-

quired the larch arabinogalactan

(LAG) business of Larex in the USA.

LAG is a natural prebiotic fiber that is

extracted from larch trees via an eco-

friendly, solvent-free process. Market-

ed under the brand name FiberAid®, it

promotes gastrointestinal health at

low dosages. Both acquisitions were

highly synergistic with the existing

product range.

Deals like this benefit Lonza in two

key ways, Kiy observes. Firstly, they

have diversified the company’s posi-

tion in the food and beverage market

by adding new health ingredients for

functional foods to the portfolio – the

nicotinates and L-carnitine, by contrast,

are mainly used in dietary supplements.

Secondly, they follow Lonza’s strategy

of addressing top areas of health con-

cern in the general population, notably

heart health, intestinal disorders, the

immune system, mental health and

weight management. Finally, as cus-

tomers come increasingly under pres-

sure from discount labels, so they look

to Lonza for innovations that will make

their brand stand out.

Kiy observes: “Lonza’s aim is to be the

technology leader for speciality prod-

ucts like these. This brings us into a po-

sition not just to control costs and en-

joy cost leadership but also to supply

unique quality grades to customers.”

The group Kiy heads was created in

early 2006 in response to demand

from the nutrition market and other

markets for more support. “In former

times, it was enough just to supply

them with the ingredients. Now cus-

tomers want help with regulatory

matters, labelling issues, health claims,

intellectual property, application and

formulation support, too,” he says. The

group offers these services internally,

but also to external customers in this

market and others. “This creates val-

ue for customers, giving them added

value to differentiate their market

positions. Thus, it both intensifies our

dialogue with existing customers and

supports us in gaining new ones,” adds

Kiy. Lonza works increasingly closely

with customers to support their prod-

uct development.

Lonza regards the Nutrition business

as absolutely core. Much of the com-

pany’s accumulated expertise in key

areas of biotechnology such as fer-

mentation and biotransformation are

applied here.

“All of the Nutrition products are pro-

duced by biological or chemical pro-

cesses and go into promoting health

in people or animals. We are a life-sci-

ence company and this is 100% the

definition of what the life sciences are,”

says Kiy.

Pictures from left to right< Niacinamide < L-carnitine crystals< Arabinogalactan< Microalgae ulkenia


35


Polymer Intermediates / Other

Acquired Bio-businesses


Resins with fiber glass which are applied for end use in composites for the electrical and transportation industries; enlarged 677 times.

<

36


Polymer Intermediates 1 / Other


Polymer Intermediates million CHF

SalesResult from operating activities (EBIT)Margin in %EBITDAMargin in %

2005*

627487.777

12.3

2006**

629436.868

10.8

For the fi rst ten months of the year,ending in October 2006, the Polymer In-termediates division – Polynt S.p.A. – re-corded sales of CHF 629 million, an im-provement on the same period last year. Operating income reached CHF 43 milli-on, while the operating margin equaled 6.8%. These results were achieved due to higher selling prices and an improved product mix.

Sales of phthalic anhydride and general-purpose plasticizers for PVC applications increased due to the recovery of the cons-truction and automotive end-market seg-ments in southern Europe.

Demand for maleic anhydride and deri-vatives, sold to the unsaturated polyester sector in Europe, met expectations. Ex-ports to the USA and the Far East were adversely affected by the strength of the euro versus the US dollar.

The catalyst business achieved record re-sults thanks to the new catalysts for fi xed-bed, butane-based maleic anhydride.

Trimellitic anhydride volumes were in line with expectations. However, exports to US and Asian markets failed to recover due to currency effects. Special plasticizers de-veloped well in Europe, in terms of both sales volume and margin, confi rming ex-pectations.

Resins performed well overall as a result of volume increases and stable margins. Sales of compounds were boosted by brisk demand from the electrical and trans-portation industries.

Research & Development New catalysts

for both phthalic and maleic anhydride

plants were added to the development

pipeline. Other new developments includ-

ed resin formulations for applications in

the coating industry and new maleic de-

rivatives for use in wind turbines. Time-to-

market for new plasticizers was reduced

to 60 days, offering greater competitive

advantages to customers.

Results 2006

* The prior year was restated due to reclassifi cation of

Singapore Pte Ltd from the “Polymer Intermediates” seg-

ment to the “Other” segment as a result of the change in

management structure.

** Results from January until 30 October 2006

1 The majority of the Polymer Intermediates business was

divested on 30 October 2006 via the Polynt S.p.A. IPO on

the STAR segment of the Mercato Telematico Azionario

(Electronic Stock Market) of the Borsa Italiana S.p.A.. At

the end of the reporting year 2006, Lonza held 31% of the

shares. Polymer Intermediates sales are refl ected in fi nan-

cial fi gures for 10 months of the fi scal year 2006 in profi t

and loss statement. Lonza retains the Singapore purifi ed

isophthalic acid plant that was previously incorporated in

the Polymer Intermediates business.

Other million CHF

Sales Change in %Change due toVolume and pricesCurrency translationScope of consolidationResult from operating activities (EBIT)Margin in % EBITDA Margin in %

2005*

118

(23)(19.5)

(11)(9.3)

2006

13716.1

1810

(22)(16.1)

(8)(5.8)

37




On 24 October 2006 Lonza announced an

agreement with the Cambrex Corpora-

tion to purchase its Research Bioproducts

(now called Bioscience) business and its

Microbial Biopharmaceuticals business for

a cash consideration of USD 460 million.

The close of this acquisition occurred on 6

February 2007. The strategic purpose for

these acquisitions is to accelerate delivery

of Lonza’s strategic shift to the life-science

sector, while increasing our life-science

portfolio from 60 % to nearly 90 % of total

sales.

Bioscience acquisition is an excellent stra-

tegic fit and a natural development in our

core focus area.

This business provides access to new high-

growth, complementary segments of the

life-science market. The organization is a

top player in the biomaterials market with

a number of world-leading niche busi-

nesses including cell-based research, en-

dotoxin detection and cell therapy manu-

facturing. The Bioscience division brings

with it a strong position in media and sera,

which complements Lonza’s Biopharma-

ceutical business.

The new Bioscience division also adds new

capabilities to the Lonza organization, in-

cluding distribution channels to the Lonza

client base and license sales opportunities

for Lonza’s GS Gene Expression System™.

Leading product areas:

– Cell therapy products and scale-up pro-

cesses

– Rapid microbial detection

– Key brands – Clonetics®, Poietics™, Bio-

Whittaker®, FlashGel®, Pyrogent® Pyro-

SenseTM, MycoAlert®

Biopharma acquisition plays directly to

our strengths. This business is an estab-

lished provider of process development

and mid-scale biologics manufacturing

services to the fast-growing biopharma-

ceutical industry. The organization is highly

complementary to Lonza’s own microbial

large-scale biopharmaceuticals business.

Lonza’s large-scale capabilities and exist-

ing pipeline are expected to strengthen

the current Biopharma customer base.

We anticipate that it will facilitate early

stage project uptake within the existing

Biopharma portfolio and help accelerate

further large-scale expansion plans.

The transformed Lonza business portfolio:

Organic Fine & Perfor-

mance Chemicals

Exclusive Synthesis & Biopharmaceuticals Bioscience

Nutrition

Hygiene / Personal Care / Preservation

Industrial Specialties

Small Molecules

Peptides

Biotransformation

Mammalian Operations

Biopharma Services

Microbial Operations

Media and Sera

Rapid Microbial Detection

Cell Therapy

Research Products

Pharma Sales and Marketing

39


Lonza Worldwide

Headquartered in Basel (Switzerland),

Lonza operates production and R&D sites

around the world.

In the reporting year, Lonza acquired three

production sites in Braine-l’Alleud (Bel-

gium), Cohasset (Minnesota, USA) and

Porriño (Spain). The inauguration of Lonza

Guangzhou Nansha Ltd, the completion of

the Lonza Guangzhou R&D Center Ltd and

the 10th Anniversary of Lonza Guangzhou

Ltd were important milestones in 2006.

Lonza is a global organization, able to

serve other international companies. Our

production facilities are based in Europe,

North America and Asia. We are where our

customers are located, so that we can best

serve their individual needs. Lonza knows

the operational requirements of large,

mid-size and small regional firms.

Furthermore, Lonza has a global network

of sales offices. Our representatives are

close to our customers, speak their lan-

guage and understand their needs.

Lonza is committed to providing custom-

ers with products and services that fulfill

their needs and expectations. The highest

priority is placed on the integrity of our

products, their safe manufacture and dis-

tribution, and compliance with all relevant

regulations.

To achieve these goals, Lonza operates lo-

cal quality management systems that

comply with internal policies as well as

with national and international stan-

dards and regulations. The fundamental

elements of these systems are subject to

continual improvement. At our sites, we

have procedures in place to measure per-

formance in the areas of health, safety

and environmental protection. We use a

range of indicators that are generally ac-

cepted and applied by the global chemi-

cal and biotechnological industries. The

performance indicators are defined and

uniformly implemented throughout all

manufacturing sites.

Not only do we bring Lonza’s international

expertise to the local sites, but we also

offer employment opportunities to the

respective local communities. In keeping

with its commitment to responsible citi-

zenship, Lonza is also deeply involved in

community work. Some examples of this

commitment are presented in the follow-

ing pages.

ACTIVITY REPORT LONZA SITES

Streptomyces hydrogenans enlarged 17 000 times; application in biocatalysis (stereoselective reduction).

<

North America

USA

Lonza Biologics IncPortsmouth

Lonza IncAllendale

Lonza IncMapleton

Lonza Inc, RiversideConshohocken

Lonza IncWilliamsport

Lonza IncCohasset

South America

Brazil

Lonza do Brasil Especialidades Químicas LtdaSão Paulo

Europe

Belgium

Lonza Braine SABraine-l’Alleud

Czech Republic

Lonza Biotec sroKouřim

France

Lonza France SàrlLevallois-Perret Cedex

Germany

Lonza GmbHWuppertal

Hungary

Lonza Ltd Representation OfficeBudapest

Netherlands

Lonza Benelux BVAL Breda

LONZA SITES ACTIVITY REPORT 40


Research & DevelopmentProduction SiteSales Office


North America

USA

Lonza Rockland, Inc

Lonza Walkersville, Inc

Lonza Baltimore, Inc

Lonza Hopkinton, Inc

South America

Brazil

Genolife do Brazil

Europe

Belgium

Lonza Verviers SPRL

Denmark

Lonza Copenhagen ApS

France

Lonza Saint Beauzire SAS

Italy

Lonza Milano S.r.l.

Spain

Lonza Barcelona S.L.

United Kingdom

Lonza Nottingham Ltd

Lonza Wokingham Ltd

Asia

India

Lonza Mumbai Private Limited

Asia

China

Lonza Guangzhou LtdGuangzhou

Lonza Guangzhou Nansha LtdGuangzhou

Lonza Guangzhou Research and Development Center LtdGuangzhou

Lonza Liyang Chemical Co LtdLiyang

India

Lonza Ltd India Liaison OfficeMumbai

Japan

Lonza Japan LtdTokyo

Singapore

Lonza Performance Chemicals Pte LtdSingapore

Lonza Singapore Pte LtdSingapore

Lonza Biologics Tuas Pte LtdSingapore


41 ACTIVITY REPORT LONZA SITES

Poland

Lonza Ltd Representation OfficeWarsaw

Switzerland

Lonza Group Ltd Global headquarters, Basel

Lonza Sales LtdBasel

Lonza LtdBasel

Lonza LtdVisp

Spain

Lonza Ibérica SA (Unipersonal)Barcelona

Lonza Biologics Porriño, S.L.Porriño

United Kingdom

Lonza Biologics plcSlough

Lonza Biologics plcTewkesbury

Research & DevelopmentProduction SiteSales Office

Research and DevelopmentProduction SiteSales Office

Exclusive SynthesisBiopharmaceuticalsOrganic Fine & Performance Chemicals

Visp, Switzerland

Visp is Lonza’s largest and longest estab-

lished R&D and production site, with

more than one hundred production lines.

The entire Visp site is ISO 9001 certified.

Our Chemical Launch Plant and Fine

Chemi cal Complex work under cGMP-

and FDA-inspected conditions and have

successfully passed hundreds of compli-

ance audits.

Lonza’s Visp operations have the lowest

staff turnover in the industry. Experience,

team spirit and flexibility, enhanced by

continuous training programs, have put

the Visp site in a league of its own. Lonza’s

2700 experts, including research chem-

ists, biologists, operators, process engi-

neers and laboratory assistants, are highly

motivated and dedicated to continuous

improvement.

The company initiated its integrated total

waste management program at a very

early stage. Systematic risk analyses, in-

spection of operations by internal and ex-

ternal experts and ongoing refinement of

safety and environmental protection con-

cepts are part of our daily business. We

require and support responsible behavior

from our employees.

Visp’s Research & Development Center

houses 420 employees who are passion-

ately committed to developing new pro-

cesses, improving existing ones and iden-

tifying promising new products. Lonza’s

R&D group in Visp includes 90 laborato-

ries, one small-scale and one pilot plant

with several multi-purpose lines, and is

active in the fields of Organic Fine Chemi-

cals, Exclusive Synthesis and Biophar-

maceuticals. Lonza’s global research and

development capacity, close cooperation

between the plants on the Visp site and

Lonza’s global operations enable us to

satisfy the most demanding customer re-

quirements.

Lonza Ltd, Visp

Area: 90 ha

Employees: 2700

Plants:

Naphtha cracker

Dedicated and multi-purpose plants

Bioreactors for microbially derived

biopharmaceuticals – from 450 L

to 15 000 L

Fully integrated waste management

facilities

Research and Development:

Application laboratories

Automated laboratories

Biotransformations

Chemometrics

Computer-aided process simulation

Chromatographic purifications

Enzymatic reactions

Heterogeneous and homogeneous

catalysis

Membrane technologies

Microreactor technology

On-line and in-process analytics

Organic synthesis

Safe handling of hazardous materials

Solid materials handling

Solid-phase reactions

Unit operation miniplants

Products:

– Active pharmaceutical ingredients

– Biopharmaceuticals

– Chemical intermediates

– Diketene derivatives

– High-performance materials

– Hydrocyanic acid derivatives

– Meta® Metaldehyde

– Niacin/nicotinic acid (vitamin B3)

– Peptides and oligonucleotides

– Plant protection agents

– Pyridine derivatives

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

42


LONZA SITES ACTIVITY REPORT

43


A New Image for Training Opportunities

Attracting talented young people is

critical for our future. The new bro-

chure corresponds to our idea of con-

temporary design. It uses fresh colors

and is packed with facts about Lonza

and the vocational opportunities for

trainees. The copy is framed by attrac-

tive visuals. Rather than staged scenes

with models, the pictures show some

of the current crop of more than 150

apprentices in typical workday situa-

tions.

The new website www.berufslehre-

lonza.com is another plentiful source of

information. For example, an overview

of available apprenticeships and the

dates of open days (so-called “taster

days”). The site also offers candidates

the opportunity to apply online for a

place on an apprenticeship scheme

and to enter into contact with tutors.

These presentations give potential

candidates an insight into how an ap-

prenticeship with Lonza offers an excit-

ing future and a broad basic education

that goes beyond the purely technical,

vocational training. The courses also

teach social skills and self-confidence,

which will help apprentices, on com-

pletion of their courses, to focus on the

right career priorities and to take their

personal and professional develop-

Picture< Chemical assistant apprentice (third-year)

puts a sample in a cuvette for photometric measuring.

ment into their own hands. To our way

of thinking, resources committed to

training and continuing education are

investments in the future.

Every year, Lonza’s Visp center offers up to 50 apprenticeships in ten different occupations.

The brochure presenting these training opportunities has had a makeover. Potential appli-

cants can also get information via a new website.

43



44




Braine-l’Alleud, Belgium

Lonza Braine SA was incorporated as a

subsidiary of the Group in March 2006,

following the acquisition of UCB’s Bio-

products division by Lonza.

The site, which is manufacturing accord-

ing to cGMP standards and has been suc-

cessfully audited by the FDA several times,

is conveniently located 25 km south of

Brussels. Lonza Braine consists of a multi-

purpose manufacturing facility and labo-

ratories dedicated to peptide production.

With more than 25 years of experience in

peptide chemistry, the Braine plant is a

pioneer in servicing the biopharmaceuti-

cal market with evolving peptide-related

technologies and has produced almost

400 peptides for preclinical and clinical

development needs, including the latest

commercial peptide new chemical entities

(NCEs) for which Lonza has clear market

leadership. Some generic peptide drugs

such as somatostatin, desmopressin and

calcitonin are also produced in Braine.

Lonza Braine is offering a full range of ser-

vices that also includes regulatory support

for filing the CMC (chemistry manufactur-

ing control) part of registration files with

the health authorities. It has experience in

supporting a large number of submissions

in USA for INDs (investigational new drug),

NDAs (new drug applications), s-NDAs

(supplemental NDA), ANDAs (abridged

NDAs for generics) as well as equivalent

submissions to the EMEA (European Medi-

cines Agency) in Europe. Lonza Braine has

also registered European certificates for

generic peptides at the European Pharma-

copoeia.

To further position Lonza as a leader in the

offering of peptide contract manufactur-

ing services, the Braine organization also

has a dedicated Peptide Technology Devel-

opment team.

Lonza Braine SA

Braine-l’Alleud

Area : 5.7 ha

Employees: 340

Plants / Processes:

– Liquid-phase peptide synthesis (LPPS)

– Solid-phase peptide synthesis (SPPS)

– Several HPLC (high-performance liquid

chromatograhy) system thin film

evaporators

– Freeze-dryers up to 200 kg ice condenser

– Small-scale SPPS synthesizers with

proprietary technology

– Preparative HPLC systems for R&D

– Laboratories for LPPS scale-up

– QC and analytical development labo-

ratories with dedicated peptide analytical

devices, spectroscopic technologies and

analytical chromatographic methods.

Products and technologies:

– Synthetic peptides with sequences up to

above 40 amino acids.

– Pseudo-peptides: containing unnatural

amino acids or modified peptide bonds

– Peptides derivatization: pegylated , glyco-

sylated and fatty-acids containing pep-

tides, cyclic and multi chains peptides

– SPPS, LPPS and peptide fragments

combination

– HPLC, ion-exchange , molecular sieve

chromatographies

– Membrane filtration

– Near-infrared reaction monitoring

– Barrier-isolation technologies

– Freeze-drying, spray-drying

– Scales from few grams up to

hundreds of kilos

– Enzymatic reactions

44



45


Achieving Results via Effective Integration

In order to ensure a swift and smooth

integration Lonza developed a post

deal integration (PDI) master plan and

set up a PDI steering committee. This

committee’s tasks include guiding the

progress of a PDI management com-

mittee which was composed of some

new Lonza Braine colleagues as well as

colleagues from Lonza Visp and Lonza

Basel.

The integration started with an aptly

named “Day One Braine Event” which

took place on 1 March 2006, the first

day after the acquisition of this new

site was completed. The Braine site

received several representatives from

Lonza worldwide and enjoyed the mo-

ment of cultural exchange in a friendly

and collaborative atmosphere.

The PDI was executed in three phases:

Phase I was devoted to securing the

business, and lasted for three months,

during which time almost 60 projects

were handled, covering all functional

aspects of the organization. All were

completed or reached Phase II of the

PDI plan: the alignment phase. At the

same time, the new business model

was defined in accordance with Lonza’s

expectations.

During this second phase, the PDI con-

centrated on the most critical projects.

At the end of 2006, most of these proj-

ects were successfully concluded, with

the exception of a few outstanding

tasks. Some important achievements

were successfully recorded.

The integration of the former UCB Bioproducts business represented a significant challenge

for the newly created company, Lonza Braine SA. The expeditious results were obtained

through the commitment of the whole staff and numerous Lonza collaborators outside

Braine.


Picture< Dirk Oehlers, Head of Sales and Business

Development Tides business unit and Alain Scarso, Head of R&D Lonza Braine

46


Kouřim, Czech Republic

Lonza’s plant in Kouřim is part of the Ex-

clusive Synthesis business sector. Lonza

Biotec sro, located about 40km east of

Prague, is focused on microbial fermenta-

tion and manufacturing services for the

pharmaceutical, biotechnology and nutri-

tion industries.

Lonza Biotec sro, Kouřim, an FDA-regis-

tered facility, again proved its significant

expertise in quality systems in 2006, with

all processes being inspected according

to ISO 9001:2000 standards. In addition,

the ISO certification was newly granted

to the high-potency, 15m³ fermentation

plant. The quality standard FAMI-QS, im-

plemented in 2005, was successfully au-

dited. In addition to regular HACCP system

inspection, the plant was twice inspected

by the representative of the Jewish Ortho-

dox Union.

In 2006, Lonza was granted long-term

manufacturing rights for ALTU-135 drug

substances for Altus Pharmaceuticals Inc.

The scope of this manufacturing agree-

ment includes microbial fermentation,

process optimization and technical and

regulatory support. In conjunction with

the project, additional skilled employees

were hired and investments made in the

technology platforms.



Lonza Biotec sro

Kouřim

Area: 6.7 ha

Employees: 355

Plants / Capacities:

– 15m3, 50m3, 75m3 fermenters

– Fermenter volume 475 m3

Technology / Products:

– Custom manufacturing projects

– Biotransformation

– Classic fermentation

– Secondary metabolites

– Recombinant proteins

– Technical enzymes

– L-carnitine (L-Carnipure®

and Carniking®)


47


The Basis for Economic Prosperity

Mutual cooperation with the town

of Kouřim focuses on the areas Lonza

considers most beneficial to the local

community. In 2006, we aimed at sup-

porting local schools, cultural activi-

ties and health services.

Significant support was provided in

the form of project documentation for

the improvement of the traffic situ-

ation in Kouřim. This project, which

will be realized by the town of Kouřim

with grant from the regional author-

ity, should increase the safety of pe-

destrians and automobile transport in

the surrounding area.

Lonza Biotec sro, Kouřim also pays

great attention to minimizing our

impact on the environment. The ac-

tivities of the noise elimination team

formed in 2004 were successfully

completed in 2006. The team iden-

tified the sources of noise and sug-

gested effective technical measures

to eliminate them. Our specialists are

also working on the elimination of

some objectionable odors.

Just as important as technical mea-

sures is to ensure open and regular

communication with our neighbors. Pictures from left to right< Microscopy observation < GC autosampler

In order to cultivate cooperative and

mutually beneficial relationships, Lon-

za Biotec initiated the foundation of

a Neighborhood Development Fund.

Last year, the number of neighbors

who joined the Fund increased to 21.

Lonza’s support is highly appreciated

by Kouřim’s citizens and by the local

town hall.

The connection between the former royal town Kouřim established in the 13th century

and the high tech technology of Lonza is for Czech or foreign visitors usually very impres-

sive. The Kouřim production site has become in the past 14 years the integral part of the

town and the base for economic prosperity.


48


Porriño, Spain




Lonza Biologics Porriño, S.L.

Area: 3.6 ha

Employees: 320

Plants / Processes:

– Processes based on mammalian cell

culture

– Cell bank storage facility

– Ampoule thaw and expansion suites

– Fermentation suite

– Seed bioreactors – 25 L to 8 000 L

– Production bioreactors – 4 x 10 000 L

Lonza operates a site at Porriño, 15 km from Vigo in Spain and 110 km from Porto in Portugal.

The Porriño site specializes in custom man-ufacturing of recombinant proteins – am-poule thaw to frozen bulk drug substances in a medium-scale cGMP manufacturing process. The plant is approved by the US FDA and the AEMyPS (Spanish Medicines Agency) and has a strong quality assur-ance and regulatory record, great experi-ence in cGMP production and SHE analyti-cal support, quality control expertise and fully integrated program management.

49


Integration Began in a Cordial Atmosphere

Probably, the town of Porriño (situated in Galicia, Spain) is not identified as a reference region on the map of Europe. Nevertheless, it is becoming a highly productive area of Spain, mainly driv-en by the automotive sector, the gran-ite industry and the pharmaceutical sector.

Located in this industrial environment, Lonza Biologics Porriño has recently joined Lonza’s production network. The plant, previously owned by Genentech, is currently dedicated to the produc-tion of Genentech’s Avastin® (bevaci-zumab) bulk drug substance. Within Lonza, the Porriño plant will continue

to produce Avastin® for Genentech for an agreed period of time. Further-more, the facilities are being adapted to turn the plant into a multi-product manufacturing facility, to be approved worldwide. And this can be considered the main challenge for Lonza Biologics Porriño in the near future.

As a starting point for Porriño’s incor-poration into the Lonza Group, all the employees of the plant were invited to a welcome party held on 13 Decem-ber 2006 at the Hotel Balneario (Spa) Mondariz – a charming spot where a warm atmosphere and an enthusiasm about facing the new challenges pre-

Pictures from left to right< Buffers hold tank (initial purification) < Chrome skid (initial purification)

vailed among the workers.

Stefan Borgas, CEO of Lonza Group, officially welcomed the 320 new em-ployees to Lonza Group. The dinner be-gan with an address from Jesús Mota, General Manager of Lonza Biologics Porriño.

The biopharmaceuticals production plant in Porriño is Lonza’s most recent acquisition.

A festive welcome party for the 320 employees in Spain was the starting point for the

integration of the Porriño site into Lonza Group.


50


Lonza’s Slough site is part of the Lonza

Biopharmaceuticals business sector. It has

significant expertise in the fields of mam-

malian cell culture and cGMP operations.

A dedicated unit in the manufacturing fa-

cility is used to create master and working

cell banks for subsequent manufacturing

use. For safety, Lonza offers dual-site cell

bank storage at both the Slough and the

Portsmouth site.

Additionally, a full range of analytical ser-

vices are available for both internal and

external use. These services include prod-

uct characterization, process impurity as-

says, stability testing, product-specific as-

say development and validation.

In the past five years, the facility in Slough

had three successful inspections conduct-

ed by the US FDA (Food and Drug Admin-

istration) and the EMEA (European Medi-

cines Agency).

The GS Gene Expression System™, which

is owned and licensed by Lonza, is used

for the production of therapeutic recombi-

nant proteins and monoclonal antibodies.

Over 80 biotechnology and pharmaceuti-

cal companies and over 70 academic labo-

ratories worldwide have successfully used

the GS Gene Expression System™ which

has established itself as the industry stan-

dard. This system is characterized by its

speed and ease of use. In addition, the

higher yielding cell lines provide cost-effi-

cient production of therapeutic proteins.

Slough, United Kingdom




Lonza Biologics plc

Slough, Berkshire

Area: 2.44 ha

Employees: 431

Plants / Processes:

– Research and development

– Fermentation, purification

and analytical development

and process optimization

– GS Gene Expression System™, developed

by Lonza, for the creation of high-yielding

mammalian cell lines

– Two 2 000 L trains, two 200 L trains, one

500 L train

Products:

– Custom manufacturing of recombinant

therapeutic proteins and monoclonal

antibodies

51


A Successful Event in Every Sense

The purpose of the Investor Relations

(IR) Event, which took place on the 27th

and 28th of September 2006 in Slough,

was to demonstrate the core element

of Lonza’s overall strategy: Innovation.

The topics presented in this event in-

cluded Lonza’s Biopharma R&D Ser-

vices as well as the R&D activities in

Exclusive Synthesis and Organic Fine &

Performance Chemicals. Moreover, in-

novative solutions for human resourc-

es challenges were discussed, along

with a case study. The speeches were

accompanied by a tour of the labora-

tories and plant at Lonza’s Mammalian

Biopharmaceuticals facility in Slough.

Approximately 30 guests were wel-

comed, representing Lonza’s important

investors, as well as major banks with

their key analysts in attendance. The

Lonza participants included virtually the

entire Management Committee and

representatives of top management.

The dinner took place in Lonza’s ware-

house in Slough, which had been ar-

ranged and decorated especially for this

evening. The attendees expressed their

appreciation of the conference and the

relaxing atmosphere at the evening

event. During this event, mutually ben-

eficial understanding between Lonza

and the guests was enhanced.

Picture< Allison Vernon, Head of Mammalian R&D

Services (on the left), Toralf Haag, CFO (sec-ond from the right) and analysts toured the laboratory facilities.

The participants gained a better un-

derstanding of Lonza’s strategy and ac-

tivities and incorporated these impres-

sions in their subsequent reports.

Lonza organized its Investor Relations Event 2006 at the company’s Biopharmaceuticals

facility in Slough. The attendees appreciated the speeches and the lab and plant tour.

They also enjoyed the dinner in the warmly decorated warehouse.


52


Lonza Inc

Allendale NJ

Allendale is the worldwide headquarters

of Lonza’s Performance Chemicals, along

with its Research and Development cen-

ter, Marketing and Sales offices for Or-

ganic Fine & Performance Chemicals, Ex-

clusive Synthesis and Biopharmaceuticals.

Additional corporate functions of Lonza

Inc, including Legal, Human Resources,

Communications and Finance/Treasury

are also located at the Allendale site.

The close proximity of the New Ventures

group and the Regulatory Services to the

R&D and Sales and Marketing teams in

2006 facilitated the development of a

more streamlined and consistent New

Product Development Process that fur-

ther leverages our capabilities across the

Performance Chemicals organization.

Lonza Inc

Mapleton IL

The Mapleton, IL, facility is located in a

valley along the Illinois River. Because this

site is situated next to a small communi-

ty, it has brought substantial interaction

with local citizens. Lonza Mapleton has

established a Community Advisory Panel

(CAP) enabling the site to be proactive in

dealing with a variety of safety, environ-

mental and community concerns. The site

also supports a robust safety program,

which incorporates systematic risk analy-

sis and risk reduction. This affirmative

safety program has resulted in a record

incident rate only one-third of the organic

chemical industry average.

As a result of this commitment from

the Mapleton staff, this facility has been

able to increase total output by over

65%. Over the last three years, there

have been no significant safety, pro-

cess or environmental issues, even with

this dramatic increase in production.

Allendale NJ / Mapleton IL / Williamsport PA, USA




Lonza Inc

Allendale NJ

Area: 0.5 ha

Employees: 155

Lonza Inc

Mapleton IL

Area: 39.4 ha

Employees: 80

Plants / Products:

– Quaternary ammonium compounds,

tertiary amines / chlorides

Biocides

Wood preservatives

– Amine oxides

Surfactants

– Organic phosphonates

Water treatment

Lonza Inc

Williamsport PA

Area: 12.1 ha

Employees: 160

Plants / Products:

– Hydantoins

Water treatment

Preservatives

– Fatty esters

Food additives

– Acrawax® Ethylene Bis-Stearamide

Plastic lubricants

– Surfactants

Personal care

Household and industrial cleaners

Research and Development:

– Pilot plant

– Plastic and powder metal test equipment

–

–

–

–

–

–

–

–

–

–

53


Much of this growth is due to the intro-

duction of Carboquat®, a quaternary am-

monium compound used for wood treat-

ment and preservation. The remaining

growth is derived from the production

of other biocidal quats, alkyl chlorides,

amine oxides and organic phosphonates.

In 2006, major emphasis was placed on

continued progress in overall plant safe-

ty through employee commitment and

awareness. Specialized safety awareness

training for all employees resulted in an

increased appreciation of the importance

of safety procedures. Plant process safety

was enhanced by the implementation of

the corporate risk analysis system.

Lonza Inc

Williamsport PA

Lonza’s Williamsport, Pennsylvania facil-

ity is located along the West Branch of the

Susquehanna River. This Williamsport site

is ISO 9001:2000 certified. Our kosher food

manufacturing facility works under GMP

guidelines and is audited semi-annually

by the American Institute of Baking.

In the spring of 2006, Lonza acquired the

larch arabinogalactan business from Lar-

ex, Inc. Williamsport now has the operat-

ing responsibility for the larch arabino-

galactan manufacturing site in Cohasset,

Minnesota.

Williamsport has established a Safety,

Health and Environmental presence with-

in the plant and the surrounding com-

munity. The site works closely with local

fire, emergency management and envi-

ronmental resource departments to pro-

vide for the safety of our plant employees,

neighbors and the environment. The plant

safety committee consists of plant opera-

tors who develop the program strategy

and ensures full involvement by all plant

employees.


In 2006, the safety committee initiated a

holistic process to achieve 100% safe em-

ployee behavior in and away from work.

The Community Advisory Panel, consist-

ing of a cross-section of plant neighbors,

introduced Lonza personnel to the newly

organized Newberry Community Partner-

ship, formed to enhance the quality of life

of those living in the surrounding neigh-

borhood. Two cooperative projects have

been initiated to improve communication

within the community.

The experience and flexibility of the op-

erating staff have resulted in numerous

process improvement projects within our

four principal product lines in which more

than 350 active products are manufac-

tured.

54




Lonza Inc

Cohasset, MN

– Area: 0.05 ha

– Employees: 13

– Product:

– Larch arabinogalactan

Lonza Inc, Riverside

Conshohocken PA

Area: 11.5 ha

Employees: 170

Plants / Processes:

– Multipurpose plants

– DEA (US Drug Enforcement Administration)

license for controlled substances

– Manufacturing scale to support from

launch (pilot) to full-scale commercial

production

– Fully integrated and dedicated waste

treatment and liquid-waste incineration

facility on premises

– One of two active liquid-waste incine-

rators in the State of Pennsylvania

– Process development laboratories

– Computer-aided process simulation

– Solid materials handling

– Safe handling of hazardous materials

Products:

– Custom manufacturing of active

pharmaceutical ingredients and advanced

intermediates.


Lonza Inc

Cohasset, MN

Lonza’s Cohasset, Minnesota, facility is located at the head waters of the Missis-sippi River. The site is approximately three hours north of Minneapolis. The plant has been fully integrated into Lonza’s opera-ting system since June 2006. Adapting to the Lonza Business Culture has been well received by the experienced and flexible operating staff.

The plant operation uses a large-scale pa-tented extraction process to isolate arabi-nogalactan from larch trees. The patented process uses water, steam and pressure, and is completely free of solvents, chemi-cals, or fermentation processes. Arabino-galactan is a naturally occurring water-so-luble polymer found in high concentration in larch trees. Larch trees are a renewable resource in the state of Minnesota.

Cohasset MN / Conshohocken PA, USA

55


Lonza Inc, Riverside

Conshohocken PA

Our manufacturing site in Conshohocken,

near Philadelphia, is located in the heart

of the North American pharmaceutical

industry, which allows for close collabo-

ration with our customers and industry

influencers. The site represents Lonza’s

US Custom Manufacturing operations

for small molecules. The plant has twelve

multi-purpose production lines dedicated

to supporting customer demands. Special-

izing in technology transfer, this site sup-

ports traditional pilot-to-launch demands

as well as direct transfers from customers.

Lonza’s Riverside plant is compliant with

cGMP, is ISO 9000:2000 certified and has

been successfully audited several times by

the US FDA. This site works in conjunction

with our fine chemicals facilities in Visp

(Switzerland).

As a result of Lonza’s employee safety

training and awareness, the Riverside plant

reached 1,000 days without a lost-time

working day on 2 October, 2006. This out-

standing achievement was an employee

morale booster and reinforced the sense

of pride Lonza employees feel everyday.


56


Our Portsmouth site is part of the Lonza

Biopharmaceuticals business sector. It

manufactures according to cGMP guide-

lines and has significant expertise in the

field of mammalian cell culture.

Over the past five years, the facility has

had 18 successful regulatory inspections

conducted by the US FDA (Food and Drug

Administration), the EMEA (European

Medicines Agency), the Canadian Bu-

reau of Biologics, the Mexican Ministry

of Health and the Japanese PDMA (Phar-

maceutical and Medical Devices Agency).

The site is currently licensed to supply the

market with five different biopharmaceu-

tical products from all three of its manu-

facturing suites.

Lonza’s Portsmouth plant is the first full-

scale facility designed to use 20 000-liter

bioreactors and, as such, is the largest-

scale mammalian cell culture plant com-

missioned to date. An additional 20 000-

liter bioreactor came on stream in May

2006, which increased the total suite ca-

pacity to 80 000 liters. During 2006, this

suite received FDA, EMEA and PMDA ap-

proval, making it a commercially licensed

facility for product supply to the US, Eu-

rope and Japan.

Portsmouth is looking forward to contin-

ued expansion in 2007. Design and engi-

neering is under way for the building of a

multi purpose shell as well as the reacti-

vation and expansion of an existing biore-

actor, which will have a capacity of 5 000

liters. This reactor is expected to come on

stream in mid-2008.

Portsmouth NH, USA




Lonza Biologics IncPortsmouth, NH

Area: 6.1 ha

Employees: 614

Plants / Processes:

– Processes base on mammalian

cell culture

– Four 20 000 L stirred tank bioreactors

– Two 5 000 L airlift bioreactors (with a

third scheduled to be online in 2008)

– Two 1 500 L stirred perfusion trains

Products:

– Custom manufacturing of

recombinant therapeutic proteins and

monoclonal antibodies

57


Company of the Year

The “Commissioner’s Company of the

Year Award,” which was presented to

Lonza in December 2006, recognizes

businesses for their achievements

in the areas of innovation, growth,

employee development, community

outreach and impact on the overall

business community. This award

was presented by New Hampshire’s

Governor John Lynch at an annual

economic development summit.

“These winners represent the ‘best

and brightest’ in terms of creating a

state of economic opportunity for all

New Hampshire citizens,” said Com-

missioner George Bald from New

Hampshire Department of Resourc-

es and Economic Development, who

gave the award.

Stephan Kutzer, Head of Lonza Bio-

pharmaceuticals commented on

the award with the following words:

“We at Lonza Biologics in Portsmouth

are obviously very excited about the

recognition of our employees’ excel-

lent work and achievements over the

past years by receiving this award.

Even more so as this award supports

Lonza’s good employment reputa-

tion in New Hampshire and will help

us to attract and retain talents in the

very competitive New England bio-

Picture from left to right< John Lynch, Governor of New Hampshire,

John Machulski, Senior Director Capital Projects at Lonza in Portsmouth, and George Bald, President Pease Development Board

tech employment market. As recent-

ly communicated, Lonza will expand

its Portsmouth facility over the next

couple of years and will add a signifi-

cant number of new jobs.”

Lonza Biologics Inc, Portsmouth was presented with the “Commissioner’s Company of the

Year Award” for Lonza’s “role as the acknowledged global leader in the production and sup-

port of pharmaceutical active ingredients both chemically as well as biotechnologically.”


58




China / Singapore

Lonza is the leading producer of Niaci-

namide (vitamin B3). Our regional pro-

duction plants are located in Guangzhou

and Nansha. In Liyang, we operate a plant

which produces pyromellitic acid and

pyromellitic dianhydride.

Furthermore, Lonza has built a new Re-

search & Development Center in China.

The decision to reinforce R&D in China is

based on the significance of this emerging

market and the enhancement of Lonza’s

global R&D network.

Lonza Guangzhou Ltd

Guangzhou

Lonza Guangzhou Ltd’s site provides a

significant portion of the global market de-

mand. Niacinamide is a nutrient additive

and is essential for the growth of humans

and animals. It is utilized in pharmaceuti-

cals, food, feedstuffs and cosmetic prod-

ucts. Lonza’s niacinamide meets national

and international quality standards such

as USP, BP, Ph. Eur, CHP and JP.

The plant in Guangzhou is ISO 9001:2000

certified and has also obtained GMP, ISO

14001, OHSAS 18001 and HACCP certifi-

cates.

Lonza Guangzhou Nansha Ltd

Nansha Development Zone

Guangzhou

The products manufactured in Guangzhou

are niacinamide (vitamin B3), active phar-

maceutical ingredients (API), chemical

intermediates and other relevant prod-

ucts. A line for the manufacturing of nia-

cinamide started production in June 2005.

Lonza Guangzhou Nansha Ltd is one of the

biggest global niacinamide suppliers. The

product is mainly exported to European

countries, the American continent, Japan,

Australia and is also supplied to the Chi-

nese market.

Lonza Guangzhou Ltd

Guangzhou

Area: 3.5 ha

Employees: 130

Plant:

Ammoxidation technology

Products:

– Niacinamide 5500 t / year

Lonza Guangzhou Nansha Ltd


Guangzhou

Area: 15 ha

Employees: 130

Plant:

– Ammoxidation technology

Product:

– Niacinamide 6000 t / year, with

– Potential for expansion to 9000 t / year

Lonza Guangzhou Research and

Development Center Ltd


Guangzhou

Construction Area: 520 m2

Total Office and Lab Area: 1640 m2

Employees: 60

Lonza Liyang Chemical Co Ltd

Liyang, Jiangsu

Area: 1.9 ha

Employees: 120

Plants / Products:

– Pyromellitic acid

– Pyromellitic dianhydride

–

58



59


The company’s niacinamide project passed

ISO9001 and FAMI-QS (Code of Practice for

Feed Additive and Premixture Operations)

audits in 2005, and ISO14001 and OH-

SAS18001 audits in 2006.

Lonza Guangzhou Research and

Development Center Ltd


Guangzhou

The R&D Center participates in develop-

mental activities for intermediates and

active ingredients. Lonza’s R&D efforts are

focused on the pharmaceutical and fine

chemical industries. A full range of labo-

ratory activities, including small-scale ac-

tivities in our pilot facilities, use advanced

synthetic methods in organic synthesis

and biochemistry. The laboratories are

equipped with state-of-the-art analytical

instruments. This R&D center is an exten-

sion of the existing research centers in

Switzerland, Great Britain and the US.

Lonza Liyang Chemical Co Ltd

Liyang, Jiangsu

Pyromellitic dianhydride (PMDA) and pyro-

mellitic acid (PMA) are used for heat-

resistant polymers, polyamide acid resins,

polyamide film, heat-resistant electrical

insulating paint, heat-resistant coating,

specialty plasticizers for high-temperature

applications, epoxy curing agents, syn-

thetic lubricants, lubricating oil additives,

polyester formulation, alkyd resins, etc.

Lonza Liyang Chemical Co. Ltd is

ISO 9001:2000 certified.




Lonza Singapore Pte Ltd

Singapore

Area: 2.5 ha

Employees: 90

Plants / Products:

Purified isophthalic acid

Meta-xylene

Lonza Biologics Tuas Pte Ltd

Singapore

Building area: 4.2 ha

Plants / Products:

Mammalian

Biopharmaceuticals

–

–

–

60


A Milestone in Lonza’s History

Lonza’s Niacinamide plant in Nansha

was built with state-of-the-art tech-

nology in an amazingly short time. The

guests at the ceremony were deeply

impressed by the modern architecture.

Among the guests was Chen Mingde,

Vice-Mayor of Guangzhou city.

Stefan Borgas, CEO of Lonza Group,

said in his speech: “In the year 1995,

Lonza Group selected Guangzhou city

to be our investment front in China.

(…) In the 10 years of operations, Lon-

za, with its plants in Guangzhou and

now in Nansha, has become the main

global supplier of niacinamide. In the

next few years, we plan to invest 200

million US dollars in this site, build-

ing a multi-purpose API plant com-

plex both for large quantities as well

as for pilot materials. It will create

more business potential for the fu-

ture, servicing the global pharma-

ceutical industry. (…) The completion

of Lonza Guangzhou’s R&D Center is

a necessary prerequisite for this next

big phase here in Nansha.”

The speeches given by Stefan Borgas,

CEO of Lonza Group, John Po, Gen-

eral Manager of Lonza China, Werner

Nievergelt, Swiss Consul General in

Guangzhou and Luo Zhaoci, Gov-

ernor of the Nansha District, were

Picture< John Po, General Manager of Lonza China, deliv-

ered a speech at the ceremony on 29 March 2006

followed by a traditional Chinese lion

dance performance, which signifies

good luck and good fortune. The red

ribbon was cut to complete the cele-

bration on the site. The red color means

happiness in the Chinese culture.

The 29th of March 2006 was an important day for Lonza in China, because three ceremo-

nies took place on that day: the inauguration of Lonza Guangzhou Nansha Ltd, the comple-

tion of Lonza Guangzhou R&D Center Ltd and the 10th anniversary of Lonza Guangzhou Ltd.


61



62


Global headquarters

Lonza Group LtdMuenchensteinerstrasse 38CH-4002 Basel, SwitzerlandTel +41 61 316 81 11Fax +41 61 316 91 [email protected]

Europe

Belgium

Lonza Braine SAChaussée de Tubize 297B-1420 Braine-l‘AlleudTel +32 2 386 29 09Fax +32 2 386 29 [email protected]

Czech Republic

Lonza Biotec sroOkruzní 134CZ-281 61 KouřimTel +42 0321 738 654Fax +42 0321 738 [email protected]

France

Lonza France Sàrl55, rue Aristide BriandFR-92309 Levallois-Perret CedexTel +33 1 40 89 99 00Fax +33 1 40 89 99 [email protected]

Germany

Lonza GmbHMorianstrasse 32DE-42103 WuppertalTel +49 202 245 38 0Fax +49 202 245 38 [email protected]

Hungary

Lonza Ltd Representation OfficeDunaház III. lépcsöház II. em 2Boráros tér 7HU-1095 Budapest IXTel +36 1 215 94 19Fax +36 1 215 09 [email protected]

Netherlands

Lonza Benelux BVAluminiumstraat 1NL-4823 AL BredaTel +31 76 542 51 00Fax +31 76 542 40 [email protected]

Poland

Lonza Ltd Representation Officeul. Smolenskiego 4 m 15PL-01-698 WarsawTel +48 22 833 87 45Fax +48 22 833 12 [email protected]

Research & Development

Production Site

Sales Office

ADDRESSES ACTIVITY REPORT

63


Spain

Lonza Ibérica SA (Unipersonal)Vía Augusta, n° 18, 2a Pta, izdaES-08006 BarcelonaTel +34 93 238 54 60Fax +34 93 416 02 [email protected]

Lonza Biologics Porriño, S.L.C/ La Relba s/nES-36410 Porriño (Pontevedra)Tel +34 986 34 40 60Fax +34 986 33 92 [email protected]

Switzerland

Lonza LtdMuenchensteinerstrasse 38CH-4002 BaselTel +41 61 316 81 11Fax +41 61 316 91 [email protected]

Lonza Sales LtdMuenchensteinerstrasse 38CH-4002 BaselTel +41 61 316 81 11Fax +41 61 316 91 [email protected]

Lonza LtdBadenerstrasse 40CH-4002 BaselTel +41 61 316 81 11Fax +41 61 316 91 [email protected]

Lonza LtdCH-3930 VispTel +41 27 948 51 11Fax +41 27 947 51 [email protected]

United Kingdom

Lonza Biologics plc228 Bath RoadGB-Slough, Berkshire SL1 4DXTel +44 1753 777 000Fax +44 1753 777 [email protected]

Lonza Biologics plcSuite 3, Building AThe CourtyardSevern DriveTewkesbury Business ParkGB-Tewkesbury GL20 8GDTel +44 1684 292 728Fax +44 1684 850 [email protected]

North America

USA

Lonza Biologics Inc101 International DrivePortsmouth, NH 03801Tel +1 603 610 4500Fax +1 603 610 [email protected]

Lonza Inc90 Boroline RoadAllendale, NJ 07401Tel +1 201 316 9200Fax +1 201 785 [email protected]

Lonza Inc, Cohasset 1101 NW 3rd StreetPO Box 336Cohasset, MN 55721, USA Tel +1 218 328 5870 Fax +1 218 328 5882

Lonza Inc8316 West Route 24Mapleton, IL 61547-0105Tel +1 309 697 7200Fax +1 309 697 [email protected]

Lonza Inc, Riverside900 River RoadConshohocken, PA 19428Tel +1 610 292 4300Fax +1 610 292 [email protected]

Lonza Inc3500 Trenton AvenueWilliamsport, PA 17701Tel +1 570 321 3900Fax +1 570 321 [email protected]

South America

Brazil

Lonza do Brasil Especialidades Químicas LtdaRua Carmo do Rio Verde 241 - 5 andarConjunto 51 Santo AmaroBR-04729-010 São PauloTel +55 11 5641 6766Fax +55 11 5641 [email protected]


Production Site

Sales Office

ACTIVITY REPORT ADDRESSES

64


Asia

China

Lonza Guangzhou Ltd39, Jinhui RoadHaizhu DistrictCN-Guangzhou 510288Tel +86 20 8433 8998Fax +86 20 8433 [email protected]

Lonza Guangzhou Nansha LtdThe Middle of Xiaohu IslandNansha Development ZoneCN-Guangzhou 511455Tel +86 20 3497 3888Fax +86 20 3497 [email protected]

Lonza Guangzhou Research and Development Center LtdThe Middle of Xiaohu IslandNansha Development ZoneCN-Guangzhou 511455Tel +86 20 3497 3888Fax +86 20 3497 [email protected]

Lonza Liyang Chemical Co Ltd49, East Ping Ling RoadCN-Liyang, Jiangsu 213300Tel +86 519 720 33 60Fax +86 519 720 33 [email protected]

India

Lonza Ltd India Liaison OfficeDelta, 401-C, 4th FloorTechnology StreetHiranandani GardensIN-Powai, Mumbai, 400 076Tel +91 22 2570 8869 / 3143Fax +91 22 2570 [email protected]

Japan

Lonza Japan LtdKyowa Shinkawa Bldg 8F2-20-8, Shinkawa, Chuo-kuJP-Tokyo 104-0033Tel +81 3 5566 0612Fax +81 3 5566 [email protected]

Lonza Japan LtdToyohei Bldg 1F2-24-2 Shinkawa, Chuo-kuJP-Tokyo 104-0033Tel +81 3 3555 3237Fax +81 3 3555 [email protected]

Singapore

Lonza Performance Chemicals Pte Ltd12, Sakra RoadJurong IslandSG-Singapore 627892Tel +65 686 78120Fax +65 626 [email protected]

Lonza Singapore Pte Ltd12, Sakra RoadJurong IslandSG-Singapore 627892Tel +65 6867 0201Fax +65 6867 [email protected]


Production Site

Sales Office

ADDRESSES ACTIVITY REPORT

65


Europe

Belgium

Lonza Verviers SPRL Parc Industriel de Petit-RechainBE-4800 VerviersTel +32 8732 1611Fax +32 8735 [email protected]

Denmark

Lonza Copenhagen ApS Risingvej 1DK-2665 VallensbaekstrandTel +45 4356 7400Fax +45 4356 [email protected]

France

Lonza Saint Beauzire SAS Biopole Clermont LimagneFR-63360 Saint BeauzireTel +33 4 7364 4334Fax +33 4 5035 [email protected]

Italy

Lonza Milano S.r.l. Via Galileo GalileiIT-24043 CaravaggioTel +39 03 6335 1470Fax +39 03 6335 [email protected]

Spain

Lonza Barcelona S.L. Calle de llorero, 42 E1ES-08029‚ BarcelonaTel +34 902 531 366Fax +34 902 531 [email protected]

United Kingdom

Lonza Nottingham Ltd Pennyfoot StreetGB-NG1 1GF Tel +44 115 912 4340Fax +44 115 912 [email protected]

Lonza Wokingham Ltd 1 Ashville WayGB-Wokingham, Berkshire RG41 2PLTel +44 1189 795 234Fax +44 1189 795 [email protected]

North America

USA

Lonza Baltimore, Inc 5901 E. Lombard StreetBaltimore, MD 21224 Tel +1 410 563 9200Fax +1 410 563 [email protected]

Lonza Hopkinton, Inc97 South StreetHopkinton, MA 01748 Tel +1 508 497 0700Fax +1 508 497 [email protected]

Lonza Rockland, Inc 191 Thomaston StreetRockland, ME 04841-2994Tel +1 207 594 3400Fax +1 207 594 3491 [email protected]

Lonza Walkersville, Inc 8830 Biggs Ford RoadWalkersville, MD 21793Tel +1 301 898 7025Fax +1 301 845 [email protected]

South America

Brazil

Genolife do Brazil Rua Dom Lucas Obes 348BR-Ipiranga, Sao Paulo / SPTel +55 11 6169 8800Fax +55 11 2274 [email protected]

Asia

India

Lonza Mumbai Private Limited 652, Solitaire Corporate ParkChakala, Andheri (East)IN-Maharashtra, Mumbai, 400 093Tel +91 22 6697 2883Fax +91 22 6697 [email protected]


Production Site

Sales Office

ACTIVITY REPORT ACTIVITY REPORT


ACTIVITY REPORT AGENDA AND CONTACTS

ImprintProduction Corporate Communications, Lonza Group Ltd, Basel, Switzerland | All rights reserved | Editorial completion: February 2007 |Design zahnzimmermannfankhauser creative projects ltd, Zurich, Switzerland | Photography Tim Lüdin, Timage, Sissach, Switzerland | Thomas Andermatten, Brig, Switzerland | Arsène Saheurs, Zurich, Switzerland | SEM pictures Eye of science, o. meckes, n. ottawa, Reutlingen, Germany | Martin Oeggerli & Daniel Mathys, Basel, Switzerland | The microbiological culture for the scanning electron microscope pictures in the Annual Report – with the exception of the picture on page 20 – was provided by Lonza‘s reference stocks in Visp | Lithography & Print Birkhäuser+GBC Ltd, Reinach, Switzerland

Legal domicileBasel, Switzerland

Global headquartersLonza Group LtdMuenchensteinerstrasse 38CH-4002 Basel, SwitzerlandTel +41 61 316 81 11Fax +41 61 316 91 11www.lonza.com

Anticipated Key Reporting Dates

Annual General Meeting for the financial year 200628 March 2007, 10.00 amConvention Center, MCH Swiss Exhibition (Basel) Ltd, Basel

Half-year Report 200726 July 2007

Full-year Report 200723 January 2008

Annual General Meeting for the financial year 200726 March 2008, 10.00 amConvention Center, MCH Swiss Exhibition (Basel) Ltd, Basel

Dividend transfer to banksAs a rule, Lonza Group Ltd pays the dividendto its shareholders on the fourth businessday following the Annual General Meeting.

Listing and Security Information

Stock exchange listingSWX Swiss Exchange

Stock exchange tradingvirt-x

Common stock symbolsBloomberg LONN VXReuters LONZn.VXTelekurs LONN

Security numberValor 001384101ISIN CH0013841017

Forward-looking Statements

Forward-looking statements contained herein are qualified in their entirety as there are certain factors that could cause results to differ materially from those anticipated. Investors are cautioned that all forward-looking statements involve risks and uncertainty. In addition to the factors discussed above, among the factors that could cause actual results to differ materially are the following: the timing and strength of new product offerings; pricing strategies of competitors; the company’s ability to continue to receive adequate products from its vendors on acceptable terms, or at all, and to continue to obtain sufficient financing to meet its liquidity needs; and changes in the political, social and regulatory framework in which the company operates or in economic or technological trends or conditions, including currency fluctuations, inflation and consumer confidence, on a global, regional or national basis.

Contacts

For publications and further information please contact:

Lonza Group LtdMuenchensteinerstrasse 38CH-4002 Basel, [email protected]

Investor RelationsTel +41 61 316 85 66Fax +41 61 316 95 [email protected]

Media / Corporate CommunicationsTel +41 61 316 87 98Fax +41 61 316 97 [email protected]

Share Registerc/o Nimbus LtdP.O. BoxCH-8866 Ziegelbruecke, SwitzerlandTel +41 55 617 37 29Fax +41 55 617 37 [email protected]

67


annual report 2006 activity report - ku leuven1).pdfthe annual report of lonza group ltd follows the...

Documents