The unexpected departure of Lonza CEO Pierre-Alain Ruffieux is most likely the Board’s loss of confidence in his execution, according to an analyst.
Swiss contract development and manufacturing organization (CDMO) Lonza announced this morning it is to part ways with Ruffieux by mutual agreement at the end of the month. Ruffieux joined Lonza from Roche, taking the top job in November 2020.
No reason was given but Jefferies’ analyst Peter Welford noted “the decision to seek a new CEO may more likely reflect the Board losing confidence in management executing on the shared vision,” ahead of the firm’s Capital Markets Day next month.
The unexpected nature of the announcement mirrors the departure of previous CEO Mark Funk, who, in 2019, left Lonza after only nine months as CEO.
Chairman of the board Albert Baehny will once again take over as interim CEO until a permanent successor is appointed. “We were impressed in the past by the hands-on manner and detailed knowledge of the business demonstrated by Baehny,” said Welford.
“I am committed to Lonza, our employees and all stakeholders,” Baehny said in a statement. “While recent months have undoubtedly been challenging, the company is a global leader in our industry and has many opportunities for further growth across all our businesses.”
The challenges alluded to may include the post-pandemic ‘normalization’ that has affected much of the industry through a sudden drop in orders and capacity utilization. A low-funding biotech macroenvironment has also affected the CDMO space.
But according to Welford, Lonza is in a good place to recover, though the short-term may be bumpy.
“We envisage a low double-digit (perhaps low-teens in Lonza ‘speak’) sales 2023-26 CAGR target, continuing the aim for the current period, and 33%-35% 2026E EBITDA, also similar to the previous mid-term outlook prior to being cut in July to a lower 31%-33%,” he wrote.
“There is potential for a more optimistic longer-term vision for revenue growth, in our view, as the current period of heightened capex investment delivers additional capacity to accelerate sales.”