April 22, 2010 / 5:52 AM / 10 years ago

UPDATE 1-Lonza says 2010 outlook unchanged

* Lonza says Q1 mkt demand at last year’s level

* Expects savings of Sfr 70-80 mln by end Q1 2011

* Better visibility in life sciences, bioscience

ZURICH, April 22 (Reuters) - Drugs industry supplier Lonza Group Ltd LONN.VX said its outlook for 2010 remained unchanged after first-quarter market demand stayed at last year’s level, indicating pharma clients were still keen to rein in costs.

The Swiss group, which has been hit by drugmakers cutting inventories, on Thursday said it expected to save 70-80 million Swiss francs ($65.60 million) by the end of the first-quarter of 2011.

“Although the environment remains volatile and we are not yet trusting the stronger demand to represent true and full economic recovery, the progress in the first quarter is encouraging,” Stefan Borgas, chief executive, said.

Lonza said there had been strong performance in the first quarter in life science ingredients, which along with the bioscience division was experiencing better visibility.

It said the pipeline in custom manufacturing, which is the largest division in terms of sales, remained strong.

Lonza has moved away from specialty chemicals to focus on higher-margin pharmaceutical ingredients.

But some drugmakers, faced with tougher paths to get their medicines to market, are becoming increasingly cost conscious and prefer to keep some manufacturing in-house rather than using companies like Lonza.

The company said in January business would remain unstable and customers were increasingly cost conscious. Its net profit dropped 62 percent in 2009. [ID:nLDE60Q0LX]

Lonza trades at about 13 times forecast 2011 earnings, at a premium to drugmakers Roche ROG.VX and Novartis NOVN.VX. (Editing by Mike Nesbit) ($1=1.067 Swiss Franc)

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