As Lonza CEO departs, Catalent scoops up rival CDMO’s bioscience business head to lead biologics

Mere hours after it surfaced that Lonza’s CEO, Pierre-Alain Ruffieux, will step down, the Swiss CDMO has lost another major executive. And this time, the exec is jumping ship to U.S. contract manufacturing rival Catalent.

Monday, Catalent named Lonza’s David McErlane group president of its biologics segment. McErlane, who most recently served as Lonza’s senior vice president and head of the bioscience business, will take up his post at Catalent on Sept. 25, a source familiar with the matter told Fierce Pharma.

McErlane’s hiring represents one of the first major strategic grabs since Catalent caved in to activist investor Elliott Management last August. The New Jersey CDMO is now working to rejuvenate its business after a difficult stretch of manufacturing snares, executive turnover and dwindling revenues.

Before joining Catalent, McErlane led a Lonza department that provides specialty raw materials and technology solutions for cell and gene therapies, injectable drugs, vaccines and biomanufacturing. The unit’s products and services run the gamut from cell culture and discovery technologies to quality control tests and software for biomanufacturing.

With the new title, McErlane will take on greater responsibilities. He’ll be in charge of Catalent’s entire biologics business and global service offerings including development, biomanufacturing, drug product fill-and-finish, cell and gene therapy and analytical services, the source added.

Prior to his tenure at Lonza, McErlane worked in several leadership posts at MilliporeSigma and BioReliance. He got his start at Zeneca, which merged with Astra in 1999 to become AstraZeneca.

McErlane joins Catalent as the company undergoes a round of overhaul. Under Elliott’s guidance, Catalent last month added four new independent directors to its board of directors, including Pfizer’s former chief financial officer Frank D’Amelio.

More broadly, Catalent shook up its operations last summer under the guidance of new CEO Alessandro Maselli, who took the reins from the manufacturer’s long-time chief executive John Chiminski. Rather than reporting on the performance of four different business segments, the new Maselli-led Catalent said it would focus on two areas—biologics, plus pharmaceuticals and consumer health—which each represented roughly half of the company’s total revenue at the time.

Aside from the strategic pivot, Catalent has recently reshuffled its executive suite, slotting company veterans into roles such as chief financial officer, chief commercial officer and head of transformation and chief administrative officer.

Catalent has been weathering a rough patch in the interim.

Things took a turn in April, when the company cautioned that “productivity issues” and high costs at three major production sites—including two of the CDMO’s largest—were expected to hamper third-quarter earnings and dampen Catalent’s entire outlook for the fiscal year, which ran through the first half of 2023.

When Catalent unveiled its much-delayed annual report in June, the results weren’t as bad as expected. In the end, Catalent made a slight adjustment to its revenue projection for the year. Now, 2023 sales are expected to come in between $4.23 billion and $4.33 billion versus a prior projection of $4.25 billion to $4.35 billion.

Still, the company has continued to run into production glitches. The company had a recent run-in with the FDA, with the agency’s rejection of Regeneron’s high-dose Eylea being linked to cleaning and procedural issues at the CDMO’s site in Bloomington, Indiana.

Meanwhile, Catalent’s poaching maneuver marks a second blow to Lonza this week, after it was revealed early Monday that the CDMO’s CEO Ruffieux would be stepping down at the end of September by “mutual agreement.” Now, Lonza Chairman Albert Baehny is slated to fill the interim CEO position for the second time since 2020.

The “abrupt CEO change” sent Lonza’s share price tumbling, William Blair’s Max Smock told clients Monday, noting the news left him “feeling incrementally worse about the company’s near-term outlook.”

Lonza has said it will present on its medium-term strategy and outlook at an October capital markets day in Visp, Switzerland.