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1 Presentation July

2 Closer Than You Think

3 Table of Contents Lonza at a Glance Full-Year Results 2017, Outlook 2018 and Mid-Term Guidance 2022 Deep-Dive into Segments Pharma & Biotech Specialty Ingredients Appendices Additional Full-Year Results 2017 Capsugel Update CORE Results Explanation Disclaimer 2

4 Unfold Lonza Key Figures Increasing in size and scope through organic and inorganic growth

5 Lonza s Locations Capitalizing on our global footprint

6 Lonza s Purpose Statement Serving today s and tomorrow s market needs by bringing biotech and specialty chemical expertise to our customers With more than a century of experience, we have a unique capability to connect biotech expertise with fine chemical know-how, which allows us to provide the best solutions for our customers success. By continuously developing our technologies, we enable our customers to meet some of the world s greatest challenges such as the vital need for disease prevention and treatment, clean water, abundant food, advanced materials, and enhanced hygiene and wellness. Around the world we are driven by our firm commitment to high quality and operational excellence across the regions, functions and markets we serve, every day. Empowerment, trust and integrity govern how we do business and how we interact with each other. As individuals and as teams, we are making this the place to go, stay and grow.

7 Lonza at a Glance Capitalizing on global megatrends and meeting customer needs Key Global Megatrends Growing world population Resulting in the Need for Lonza Offerings Common Key Drivers Aging population in Western countries Movements of growing population into megacities Growing middle classes in BRIC-VISTA 1 countries 1 BRIC - Brazil, Russia, China and India VISTA - Vietnam, Indonesia, South Africa, Turkey, Argentina. Medication Healthy Food Personal Care High-Tech Materials Clean Water Pharma and Biotech Segment Custom Development Custom Manufacturing Delivery Systems Bioscience Solutions Specialty Ingredients Segment Consumer Health Consumer and Resources Protection Water Care More complex demands Ever-increasingly moreregulated environment Permanent need for innovation Uncertain approval times 7

8 Lonza at a Glance Transferring lessons from the patient's world to the consumer s world Patient Healthcare Consumer Preventive Healthcare Biotechnology Fine Chemistry Analytics Regulatory Formulation Consumer s Healthy Environment Biotechnology Fine Chemistry Analytics Regulatory Bioavailability Transferring our know-how from pharma to the healthcare, hygiene and the fast-moving consumer goods environment all the way to the preservation and protection of the world we live in 8

9 Lonza at a Glance Delivering synergies with connected technology platforms and fields of expertise Pharma & Biotech Specialty Ingredients Custom Development Custom Manufacturing Delivery and Bioscience Solutions Consumer Health & Nutrition Consumer Product Ingredients Coatings & Composites Agro Ingredients Water Care PRESCRIPTION PREVENTION PROTECTION PRESERVATION Lonza s Healthcare Continuum Spans All Our Businesses 9

10 New Company Structure Reporting differently to outside stakeholders by H Pharma & Biotech Capsule Delivery Solutions Dosage Forms & Delivery Systems Specialty Ingredients Consumer Health Consumer & Resources Protection Water Care Capsugel integration in Lonza segments Consumer Health & Nutrition 10

11 Table of Contents Lonza at a Glance Full-Year Results 2017, Outlook 2018 and Mid-Term Guidance 2022 Deep-Dive into Segments Pharma & Biotech Specialty Ingredients Appendices Additional Full-Year Results 2017 Capsugel Update CORE Results Explanation Disclaimer 11

12 Lonza Full-Year Results 2017 Overview Reporting record-breaking results Lonza exceeded its full-year 2017 guidance with Lonza standalone sales of CHF 4.6 billion, growing organically by 10.4% versus prior year, and 26.3% organic CORE EBIT growth Lonza including Capsugel reports sales of CHF 5.1 billion, 47.2% CORE EBIT growth and a CORE EBITDA margin of 24.8% Offerings along and beyond the healthcare continuum were growth drivers for both segments Pharma & Biotech and Specialty Ingredients CORE definition: See appendix 12

13 Steady and Continued Improvement Exceeding guidance across all metrics Sales in CHF million 3,741 3,584 3,640 3,803 4,132 4,562 5,105 CORE EBITDA Margin in % excl. Capsugel 2017 incl. Capsugel excl. Capsugel 2017 incl. Capsugel CORE RONOA in % Net Debt / CORE EBITDA x 2.77x 2.70x 2.09x 1.73x 2.65x excl. Capsugel 2017 incl. Capsugel incl. Capsugel CORE definition: See appendix 13

14 Outlook Full-Year 2018 Taking the next step toward achieving Lonza's Mid-Term Guidance 2022 Based on the sound foundation laid in 2017 for the future, and starting from a new baseline, Lonza (incl. Capsugel) is announcing the following outlook for 2018: Mid-single-digit sales growth on a comparable basis in line with Mid-Term Guidance bps improvement in CORE EBITDA margin in line with Mid-Term Guidance 2022 This outlook is based on the current business composition, the present macro-economic environment, current visibility and constant exchange rates for the most important currencies in which Lonza is trading. CORE definition: See appendix 14

15 Lonza Mid-Term Guidance 2022 Sustaining value creation Lonza expects to continue its sustainable growth along and beyond the healthcare continuum, to drive its position as a valued and preferred partner for its existing and new clients, and to grow through innovation Based on that expectation, Lonza (including Capsugel) confirms its Mid-Term Guidance until the end of 2022 on the occasion of Lonza s 125th anniversary Sales CHF 7.5 billion CORE EBITDA Margin 30% Mid-Term Guidance 2022 is in line with target to deleverage to below 2x net debt/core EBITDA level at the end of 2019 Smaller bolt-on acquisitions and revenue-secured CAPEX projects (e.g. Ibex TM Solutions) are fully included CORE RONOA 35% This outlook is based on the current business composition, present macro-economic environment, current visibility and constant exchange rates. CORE definition: See appendix 15

16 Table of Contents Lonza at a Glance Full-Year Results 2017, Outlook 2018 and Mid-Term Guidance 2022 Deep-Dive into Segments Pharma & Biotech Specialty Ingredients Appendices Additional Full-Year Results 2017 Capsugel Update CORE Results Explanation Disclaimer 16

17 Lonza Pharma & Biotech Patient Healthcare Consumer Preventive Healthcare Consumer s Healthy Environment 17

18 Lonza Pharma & Biotech Providing a segment overview Our Vision: Delivering the Medicines of Tomorrow, Today 3 Continents 29 Sites 6 Modalities Research Products Development Manufacturing

19 Lonza Pharma & Biotech Offering development and manufacturing services for an unparalleled breadth of modalities in the CDMO 1 industry Discovery Development Manufacture Distribution basic research disease discovery drug discovery drug development 2 clinical supply 2 commercial supply secondary packaging marketing sales distribution Chemical Technologies (small molecules, including highly potent active pharmaceutical ingredients HPAPIs) Bio-Conjugates (including antibody drug conjugates ADCs) Biologics (including mammalian cell culture (monoclonal antibodies, recombinant proteins), microbial fermentation (recombinant proteins), cell therapy, gene therapy) 1 CDMO Contract Development and Manufacturing Organization 2 Includes drug substance and drug product offerings I July

20 Lonza Pharma & Biotech and complementing our services with an attractive product business Discovery Development Manufacture Distribution basic research disease discovery drug discovery drug development 1 clinical supply 1 commercial supply secondary packaging marketing sales distribution Cell Culture Primary & Stem Cells Transfection Systems & Services Bulk / Custom Media Research & Processing Use QC Testing Solutions & Systems 1 Includes drug substance and drug product offerings I July

21 Lonza Pharma & Biotech Supplying ~230 commercial medicines # of commercial medicines supplied by Lonza including Capsugel in small molecule programs including Capsugel 1 22 large molecule medicines 2 1 includes chemicals, HPAPI, and formulation services and final dosage forms. 2 Includes mammalian and microbially expressed medicines, antibody drug conjugates, cell and viral therapy Source: Lonza

22 Lonza Pharma & Biotech Supporting ~600 clinical development programs # of clinical programs supported by Lonza including Capsugel in 2017 ~315 small molecule programs including Capsugel 1 ~290 large molecule programs 2 1 Iincludes chemicals, HPAPI, and formulation services and final dosage forms. 2 Includes mammalian and microbially expressed medicines, antibody drug conjugates, cell and viral therapy Source: Lonza

23 Lonza Pharma & Biotech Offering 29 main manufacturing sites on three continents Bend, USA Dosage forms and delivery systems Tallinn, Estonia Bioscience solutions Greenwood, USA Capsule delivery solutions Portsmouth, USA Mammalian production site Verviers, Belgium Bioscience solutions Bornem, Belgium Capsule delivery solutions Quakertown, USA Dosage forms and delivery systems Walkersville, USA Cell & gene therapy Development and production site Colmar, France Capsule delivery solutions Ploermel, France Dosage forms and delivery systems Durham, USA Bioscience solutions Cologne, Germany Bioscience solutions Hayward, USA Mammalian development and production site Maastricht, Netherlands Cell therapy Development and production site Houston, USA Gene therapy Virus production site Tampa, USA Dosage forms and delivery systems Puebla, Mexico Capsule delivery solutions Slough, UK Mammalian development site Livingston, UK Dosage forms and delivery systems Basel Stücki, Switzerland Lonza Pharma & Biotech headquarter Drug product services Visp, Switzerland Ibex, Expansion capability Lifecycle management facility Microbial development and production Antibody Drug Conjugates (ADCs) Development and Production Site Monteggio, Switzerland Dosage forms and delivery systems Haryana, India Capsule delivery solutions Jakarta, Indonesia Capsule delivery solutions Tuas, Singapore Mammalian production and development site Porriño, Spain Mammalian production site Sagamihara, Japan Capsule delivery solutions Nansha, China API manufacturing Suzhou, China Capsule delivery solutions 23

24 Table of Contents Lonza at a Glance Full-Year Results 2017, Outlook 2018 and Mid-Term Guidance 2022 Deep-Dive into Segments Pharma & Biotech Specialty Ingredients Appendices Additional Full-Year Results 2017 Capsugel Update CORE Results Explanation Disclaimer 24

25 Lonza Specialty Ingredients Patient Healthcare Consumer Preventive Healthcare Consumer s Healthy Environment 25

26 We Take Health a Step Further Moving from the patient s world to the consumer and the consumer s environment Our Vision: Smart Solutions for Healthy Consumers and Our Planet Prescription Prevention Protection Preservation 26

27 Lonza Specialty Ingredients Market Focus Adding value to consumers and resources around us Prevention Protection Preservation Consumer Health & Nutrition Consumer Product Ingredients Coatings & Composites Agro Ingredients Water Care Building a unique solution power house by leveraging recent portfolio extensions Strengthening our leading position through focus and business-model innovation 27

28 Lonza Specialty Ingredients Leading Positions and Strengths Building our transformational path on distinct core competencies Prevention Protection Preservation Science-Based Health & Well-Being Ingredients Microbial Control Solutions A fully integrated solution provider for consumer-driven dosage forms: Cutting-edge delivery solutions for science-backed specialty ingredients Powerful new combination of function and form creating unique and innovative solutions Market leader in anti-dandruff and scalp health technologies Leading white biotech provider for the consumer care industry One of the most-trusted industry partners in regulated anti-microbial applications around the globe: Addressing increasing challenges in microbial control From single ingredient to turnkey solutions One of the most comprehensive technology portfolio across all relevant markets Market leader in: Institutional and household disinfection Consumer products preservation Anti-fouling surface modification Continuous investments to address unmet customer needs 28

29 Lonza Specialty Ingredients Patient Healthcare Consumer Preventive Healthcare Consumer s Healthy Environment 29

30 Preventive Healthcare, Well-Being and Nutrition Are Growing Trends Combining Lonza s powerful technology platforms and know-how to provide innovative solutions for these markets A strong spectrum of science-backed nutritional ingredients supplemented with integrated formulated solutions Cutting-edge delivery solutions through Capsugel A widely approved and registered portfolio of actives and bioactives for home and personal care applications 30

31 Lonza Specialty Ingredients Consumer Health Offering solutions across our core markets Consumer Health & Nutrition Consumer Product Ingredients Geogard Preservatives Next-generation consumer product protection Building a unique solutions powerhouse by leveraging recent portfolio extensions 31

32 Lonza Specialty Ingredients Patient Healthcare Consumer Preventive Healthcare Consumer s Healthy Environment 32

33 Lonza Specialty Ingredients Consumer & Resources Protection Offering solutions across our core markets Coatings and Composites Agro Ingredients Strengthening our leading position through focus and business-model innovation Strengthening our leading position in consumer & resource protection through focus and businessmodel innovation 33

34 Lonza Specialty Ingredients Water Care Offering solutions across our core markets Water Care B2B/B2C NST - the slow-dissolving CalHypo sanitizer that lasts for up to a week without adding CYA TM is a ConnectedYard trademark Strengthening our strong position through focus and business-model innovation Strengthening our leading position in consumer & resource protection through focus and businessmodel innovation Smart water care for pools and spas Improving the in-store and online experience with the latest in digital marketing 34

35 Table of Contents Lonza at a Glance Full-Year Results 2017, Outlook 2018 and Mid-Term Guidance 2022 Deep-Dive into Segments Pharma & Biotech Specialty Ingredients Appendices Additional Full-Year Results 2017 Capsugel Update CORE Results Explanation Disclaimer 35

36 Full-Year 2017 Financial Highlights Presenting Full-Year 2017 results Lonza (including Capsugel) CHF million Change YoY Sales 5, % CORE EBITDA 1, % CORE EBITDA Margin 24.8% 22.2% CORE EBIT % CORE EBIT Margin 18.8% 15.8% EBITDA 1, % EBITDA Margin 22.6% 20.5% EBIT % EBIT Margin 14.2% 11.8% Financing Costs (142) (112) Tax Rate (25.3)% 19.3% Profit for the Period % EPS (CHF) Basic % EPS (CHF) Basic CORE % Operational Free Cash Flow (before acquisition) (3.0)% Operational Free Cash Flow (2,691) 408 (759.6)% Change in Net Working Capital (41) 78 Capital Expenditures (451) (366) 23.2% CORE RONOA 29.1% 21.5% 35.3% Net Debt 3,762 1, % Number of Employees 14,618 10, % 1 As a consequence of the capital increase of 10 May 2017, the calculation of the earnings per share and the diluted earnings per share have been adjusted by the factor resulting from the rights offering. CORE definition: See appendix 36

37 Pharma & Biotech Delivering record results Pharma & Biotech s performance (Lonza standalone) hit an all-time high with: CHF million % YoY Sales 18.9% up to CHF 2,1 billion and CORE EBIT 31.8% up to 530 million compared with the same period last year Commercial excellence, strong operational execution and business model innovation were key performance drivers Pharma & Biotech saw high demand across all businesses with especially strong development in Commercial Mammalian and in Chemical Manufacturing, as well as in Clinical Development services Sales 2,124 1, CORE EBITDA Margin 31.0% 29.5% CORE EBIT Margin 25.0% 22.5% Pharma & Biotech expects to continue to grow in 2018 CORE definition: See appendix 1 Restated to reflect divestiture of peptides business (Sales CHF -32 million, favorable impacts on CORE EBIT CHF 12 million and CORE EBITDA CHF 6 million) and the transfer of a business from Pharma & Biotech to Specialty Ingredients (Sales CHF -30 million, unfavorable impacts on CORE EBIT CHF 11 million and CORE EBITDA CHF 11 million). 37

38 Specialty Ingredients Delivering strong results Specialty Ingredients (Lonza standalone) delivered strong results with growth drivers along and beyond the healthcare continuum with: Sales 5.2% up to CHF 2,4 billion and CORE EBIT 10.2% up to 367 million compared with the same period last year Good progress driven not only by Consumer Care businesses, but also by further value creation achieved in the Coatings and Composites business, which includes Wood Protection, and in the Agro Ingredients business CHF million % YoY Sales 2,400 2, CORE EBITDA Margin 19.4% 18.7% CORE EBIT Margin 15.3% 14.6% Operational and commercial excellence, portfolio optimization and innovation in niche businesses remain cornerstones going forward CORE definition: See appendix 1 Restated to reflect the transfer of a business from Pharma & Biotech to Specialty Ingredients (Sales CHF +30 million, favorable impacts on CORE EBIT CHF 11 million and CORE EBITDA CHF 11 million). 38

39 Update on Capsugel Integration Confirming positive outlook for Capsugel After the successful closing of the acquisition of Capsugel on 5 July 2017, the post-deal integration began immediately On 1 January 2018, business and functional integration was completed with Capsugel being fully integrated into the Lonza segments Specialty Ingredients Pharma& Biotech Commercial integration is also progressing with first jointproduct offerings in consumer health and nutrition and positive customer response to the combined Lonza-Capsugel value proposition The focus is now on bringing in expected commercial synergies in both segments with CHF ~100 million p.a. topline synergies to be achieved by year five as already communicated Consumer Health & Nutrition Part of Specialty Ingredients Lonza s businesses along the healthcare continuum approx. 66% 39

40 Lonza Offers Customers an Integrated Approach Expanding value-chain offerings and innovating in pharma and consumer health and nutrition markets Within Pharma & Biotech the integration of Capsugel has further strengthened the depth and breadth of Lonza s offerings for small molecules Lonza strives to become the partner of choice with an integrated approach along the entire value chain of drug product design, development and manufacturing Within Specialty Ingredients the integration of Lonza's nutritional ingredients and Capsugel's formulation and encapsulation capabilities combines expertise in high-quality, science-backed ingredients with formulation know-how and industry-leading capsule and encapsulation technologies Lonza creates innovative solutions for fast-growing preventive healthcare and nutrition markets In 2017 Capsugel performed in line with expectations with strong results in Consumer Health and Nutrition 40

41 CORE Results as Defined by Lonza Lonza believes that disclosing CORE results of the Group s performance enhances the financial markets understanding of the company because the CORE results enable better comparison across years. Therefore, the CORE results exclude exceptional expenses and income related to e.g. restructuring, environmental-remediation, acquisitions and divestitures, impairments and amortization of acquisition-related intangible assets, which can differ significantly from year to year. For this same reason, Lonza uses these CORE results in addition to IFRS as important factors in internally assessing the Group s performance. On pages of Lonza s 2017 Full-Year Results Report, the reconciliation of IFRS to CORE results provides further details on the adjustments. 41

42 Additional Information and Disclaimer Lonza Group Ltd has its headquarters in Basel, Switzerland, and is listed on the SIX Swiss Exchange. It has a secondary listing on the Singapore Exchange Securities Trading Limited ( SGX-ST ). Lonza Group Ltd is not subject to the SGX-ST s continuing listing requirements but remains subject to Rules 217 and 751 of the SGX-ST Listing Manual. 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. Any statements contained herein that are not statements of historical fact (including statements containing the words outlook, believes, plans, anticipates, expects, estimates and similar expressions) should be considered to be forward-looking statements. Investors are therefore cautioned that all forward-looking statements involve risks and uncertainty. a number of important factors that could cause actual results or events to differ materially from those indicated by such forward-looking statements, including 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; difficulty to maintain relationships with employees, customers and other business partners; 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. In particular, the assumptions underlying Outlook 2018 and Mid-Term Guidance 2022 herein may not prove to be correct. The statements in Outlook 2018 and Mid-Term Guidance 2022 constitute forward-looking statements and are not guarantees of future financial performance. Lonza s actual results of operations could deviate materially from those set forth in Outlook 2018 and Mid-Term Guidance 2022 as a result of the factors described above or other factors. Investors should not place undue reliance on the statements in Outlook 2018 and Mid-Term Guidance Except as otherwise required by law, Lonza disclaims any intention or obligation to update any forward-looking statements as a result of developments occurring after this report was made. 42