Operator: Ladies and gentlemen, welcome to the Q1 Review 2020 Conference Call. I'm Alessandro, the Chorus Call operator. I would like to remind you that all participants will be in listen-only mode and the conference is being recorded. The presentation will be followed by a Q&A session. [Operator Instructions].

At this time, it's my pleasure to hand over to Albert Baehny CEO ad interim and Chairman of the Board of Directors also for Lonza Group. Please go ahead, sir.

Albert Baehny: Thank you for the introduction. Good afternoon and welcome to everybody. No doubt, you'll remember that last year Lonza stopped reporting its quarterly results.

This decision was taken for strategic reasons. Quarterly one off effects can cause significant distortions to the quarterly comparison and this can lead to mistaken business trend conclusions. However, in Q1 2020, we find that we are living in exceptional times and we felt it was the right moment to reinstate our quarterly update for this quarter only. The coronavirus pandemic has caused unprecedented economic impacts and changed global business where it is in the space of a few weeks. At this time of uncertainty, we wanted to ensure that our investor community could benefit from an update on our business and performance.

This time of uncertainty means it is unrealistic and counterproductive for us to engage in speculation about the future. Instead, our conference call will focus on past performance and present position. Let's start with an overview of the performance at group level. At a constant exchange rate net sales for the group were up 7.4% compared to the previous year, reaching CHF1.6 billion in the first quarter compared to Q1 2019. In the same period net sales for the LPBN segment increased by 8.3 quarter-on-quarter at a constant exchange rate and reached CHF1.2 billion.

Net sales for the LSI segments were up 3.8% at the constant exchange rate and reached CHF409 million. Inevitably a part of our quarterly performance we've delivered before the impact of the COVID-19 virus was felt at a global level. In this time of uncertainty, businesses are facing unprecedented challenges to their stability and continuity. In this very challenging landscape, Lonza occupies a unique position. Our LPBN segment is working with customers to manufacture medical treatments for vulnerable patients at a time where their need has never been greater.

Meanwhile, our LSI business is delivering disinfection solutions, many of which play a critical role in controlling and containing the spread of the coronavirus. Our role as supplier of essential products, services and solutions has allowed us to maintain operations to a large extent, while taking care to maintain the safety of our employees. During Q1, we can confirm that we'll experience a small number of minor disruptions caused by the coronavirus. First, our smaller Wood Protection sites in Malaysia, South Africa and Oceania have been suspended for a few weeks. This is part of the LSI segments offering in microbial controlled solutions.

Second, we have seen a slowdown of a few days at one capsule production site in Colmar, France. This was a temporary issue and the site is already returning to full production. Third, a few bulk raw material supplies have been disrupted, notably from India. Fourth, and finally, some inbound and outbound logistics delays have occurred. However, these are generally in the order of a few days and weeks, meaning they are so far manageable.

Looking at the business more widely, I am pleased to report that throughout Q1 all LPBN sites globally have been running to targets with very few exceptions. I am also pleased to report that during Q1 we have not experienced delays to any clinical trials programs. Let me now take a moment to provide you with a more detailed review of the performance within each segment over the first quarter. I will start with a review of Q1 performance in the LPBN segments, always keeping in mind the always unavoidable quarterly one off effects. The small molecule business achieved strong momentum, with only modest impacts from COVID-19.

The sales comparison with Q1 2019 was influenced by a particularly strong sales performance in the first quarter of the previous year. Mammalian and Microbial saw ongoing strong momentum with no delays or cancellations to existing clinical programs. The impact of COVID-19 was minimal. And indeed, it could be an opportunity for the business unit. Today, we have received more than 40 inquiries regarding projects relating to COVID-19.

Cell and Gene Therapy delivered very strong sales growth supported by solid continuing demand, especially in viral vector. All signed projects remain on track in Q1, and COVID-19 has already offered some new and important opportunities, which are currently under review. The Biosciences business reported a positive performance in first quarter supported by strong sales. All Bioscience facilities have remained operational. We've seen mixed performance within the Capsules business with the pharma business behind the previous year.

However, this has been partially offset by stronger performance in the Nutrition business, which has benefited from a strong demand in the US and in Europe for dietary supplements. Now, let me turn from LPBN to the LSI segments. LSI has started the year with a strong first quarter, reporting net sales in constant currency of 3.8%. This was mainly driven by strong sales in Microbial Control Solutions. Let's take a moment to review the Microbial Control Solutions, the larger of the two divisions within the LSI business.

As a general overview demand for Microbial Control Solutions were solid with a differentiated sales development. Professional Hygiene, Home and Personal care saw a very strong performance. Material Protection, Paints and Coatings and Crop Protection also reported a solid performance with positive growth rates. In contrast, we saw softer demand for Wood Protection in almost all regions. Now, let me turn to the Specialty Chemical Services, the other division within the LSI segment.

This business was negatively impacted by a negative cycle in some end markets. We saw weaker demand mainly for transportation, which negatively impacted the Composites business. Custom manufacturing was negatively impacted by a soft demand in Chemical CDMO. However, our Fermentations CDMO was significantly ahead of the same quarter in the previous year. Performance Chemicals and Intermediates were impacted by lower market prices in general.

This was only partially offset by a very solid Vitamin B3 demand. I hope this overview has provided an insight into our operating environment and our business performance. The large proportion of our operations support the pharma and biotech industry. While our LSI segment delivers disinfection solutions, many of which are effective against COVID-19. These services and solutions means that our license to operate currently remains intact in most markets.

We're also fortunate as we have not suffered from any major disruptions to business continuity caused by challenges to supply. This means that we're currently able to continue as planned with our strategic growth projects, and long-term investments, all of which contribute to support our future growth potential. Earlier in my summary, I indicated that we have so far received more than 40 clinical and commercial inquiries regarding projects related to COVID-19. Inevitably we cannot engage and collaborate in all of those projects. Instead, we are focusing our efforts on selected key development projects relating to both vaccines and therapeutic treatments.

Helping to contain the spread of COVID-19 is a moral and ethical duty. We are committed to doing all we can to support and accelerate the development of potential medical solutions to manage the COVID-19 pandemic. Alongside this, I am pleased to report that Lonza is liquid. At year-end 2019 we reported cash of CHF500 million. This cash level was supported by the refinancing and extension of our syndicated terms and revolving bank facilities, which we announce in the autumn of 2019.

Looking to this year, we are in the final stages of refinancing our debt maturities by having launched a three year CHF300 million bond and a seven year EUR 500 million bond earlier this month. Finally, we have no covenants on understanding debts, which leaves us in a strong position of liquidity. Looking at our performance today, we must also remember that the strong Swiss francs will have an impact on our future reported figures. Nonetheless, we have managed to mention a positive performance in the first quarter, which confirms that our novel expertise and assets are needed in the context of the current global challenges. Moreover, with very clear priorities going forward First, maintain and protect the safety of our employees.

Second, focus on business continuity and our 2020 budget. Third, finalize the LSI carve out by mid this year. Fourth, identify and confirm a future CEO. Fifth, successful execution of our major growth investments. Sixth, review alternative options for the LSI segments.

Seventh, maintain our strong balance sheet and eighth, continue to improve operational efficiency through cost containment measures. As I draw to a close, I would share a final reminder that the issues regarding COVID-19 are fast moving and impossible to predict. As such, I am not able to speculate about the future, but I'm pleased to answer questions about the current state of the business, and our performance in Q1. And I thank you for your time and attention and I'm opening the Q&A session.

Operator: We will now begin the question-and-answer session.

[Operator Instructions] The first question comes from KC Arikatla from Goldman Sachs. Please go ahead.

KC Arikatla: Hi, everyone. Thanks for taking my questions. I just had one on the capsules business please.

Can you talk about the drivers behind the softness in the pharma capsules business in this quarter because last year that business was going in the low single digit range? So it would be great to understand whether it's driven by volume or price. And if you can comment about what you expect for the business going forward. Thank you.

Albert Baehny: Thank you for the question. There were two main reasons behind the negative development of the capsule business in the pharma business one internal and one external.

I'll start with the external reason. The external one is basically problems the pharmaceutical industry faced with the supply of APIs, mainly coming from Asia. The second reason is internal, we are introducing SAP processes in the capsules business and we face as everybody in the introduction faces some problems, but the main reason is external. It is the lack of supply of APIs to the European and US pharmaceutical industry. Now, when the supply problems coming from India and from China will be resolved? The answer is I don't know.

KC Arikatla: Thank you.

Operator: The next question comes from Patrick Rafaisz from UBS. Please go ahead.

Patrick Rafaisz: Thank you very much. I've three if that's okay.

And the first one will be, you mentioned, there were no cancellations of clinical programs, which is very encouraging. But would you say that that gives you also confidence and for the rest of the semester from – did you notice any change in incoming requests, where we should think about potential phasing impacts here, first and second quarter? The second question would be on LSI and I realize you probably don't want to talk about the second quarter here. But looking at the monthly performance in Q1, January, February, March, March might give us a bit of an indication of what will come in April, May. So if you could shed a bit of light on the monthly developments here in LSI. And then the last is just a quick one, what was your currency impact in the first quarter please? Thank you.

Albert Baehny: Thank you for the question. I mentioned it a few times in my introduction, that we have not been impacted in Q1 with cancellation, with delays on any clinical programs. But of course, we are not blind and it is clear that today the FDA is postponing reviews as well as facility inspections. So we can expect in the industry in general that there will be some delays or maybe suspensions of clinical trials. So far, every bit we have not been affected at all by this situation.

I just want to remember you as well that we generate most of our revenues from manufacturing approved and commercialized products. The next comment I would like to make here is that the demand for new additional projects related to COVID-19 is huge and we cannot – we will not be able to handle most of these requests. To the second question about LSI I suspect is mainly Microbial Control Systems. Yes, of course, we have seen an increase of the volume demand or the sales between January, February and March. And regarding the currency impact, I would like to comment on that only when we'll be publishing the half year results.

I don't want to comment on this today. Thank you for the questions.

Patrick Rafaisz: Thank you.

Operator: The next question comes from Peter Welford from Jefferies. Please go ahead.

Peter Welford: Hi, thanks very much for hosting this. I have three questions, please. Firstly, with regards to the LPBN business, you commented on clinical programs, I wonder if you can comment, has there been any shift at all in commercial batches that have been requested, as have any, I guess the commercial customers requested any changes in the shipping of commercial batches at all? And secondly, then obviously, all of your facilities are operating more or less normally, as to your comments at the start. But can you just comment given obviously, the social distancing that we're all having to live within our current lives and is it possible still to operate the same shift pattern and the same operating facilities the same as normal, or have steps had to be taken fewer employees working in these facilities that reduce I guess the efficiency of turnover time, I guess, within these facilities given your various employee shift patterns. And then thirdly, just on the COVID opportunities, you mentioned there were over 40 opportunities that you've had inquiries on.

You mentioned as part of your comments in the mail even [ph]. Curious, that although there will be opportunities you're looking at, should we be thinking here about vaccines and therapeutics, therapeutics, meaning biologics? Or would you also say some of these inquiries that you're potentially considering and focusing on are also inquiries into small molecule COVID opportunities? Thank you.

Albert Baehny: Thank you for the question. During Q1, we haven't seen any needs and any requests for modifying the schedule of commercial batches in our production sites in Singapore, in Europe and in North America, so business as usual during Q1. Now, of course, to be able to run our plants efficiently, we need the operators and we need all educated operators.

So we take all kind of measures we can take to ensure that they are safe and healthy. And of course there was some modifications we have to take in the way the shifts are organized, but there is no impact on the efficiency or on the capacity utilization of our plants. So I would say my colleagues did an extremely fantastic job here in making sure that the employees are safe and the plant run at capacity. Regarding these more than 40 inquiries, we have received so far links to COVID-19. We are – we will be focusing our efforts and we will be selecting project in both vaccines and therapeutics.

And on the therapeutic it will be mainly biologics or large molecules.

Peter Welford: Thank you.

Albert Baehny: Welcome.

Operator: The next question comes from Falko Friedrichs from Deutsche Bank. Please go ahead.

Falko Friedrichs: Good afternoon. Thanks for taking my questions. I would have three please. Firstly, can you speak a bit about your competitive positioning when it comes to producing vaccines? And are you starting to ramp up capacity for possible COVID-19 vaccine that might come in early 2021? And secondly, are you currently capacity constraint in your disinfectant business? And if yes, are you ramping this up currently to meet the high demand? And then thirdly, could you give an overview of where you source your raw materials from and how flexible your global set up is?

Albert Baehny: Thank you for the questions. We are not the traditional vaccine producer.

Let's be fair, this is not our expertise. Nevertheless, what can we offer to a partner who would like to work with us on vaccine? We can offer the clean rooms. We have our own clear rooms. We understand from a manufacturing point of view, most of the individual step in the manufacturing, we have an educated labor force. And we have the overall manufacturing expertise.

But I repeat it, we are not an expert on vaccines, but we're an expert on manufacturing on process development and are scaling up manufacturing processes. Of course, the Microbial Control System business is running it high capacity. And the only way for us to produce much more will be to increase the capacities. But this does not happen overnight. It takes time to do that.

But at the current time, that's what I can say that we're running close to full capacity. Now, the overview on the raw material, this is – I mean, honestly, I don't want to engage into the discussion because then I have to go key raw material by key raw material, what I can say and I repeat what I said in the introduction, we have faced some delays in having access to some raw materials. But at the end, we have been able to manage all that correctly. And we're not expecting, assuming the world is not dramatically changing, we are assuming that we will be able to source correctly our key raw materials in the future. For your general answer, no, but I don't want to enter into individual key raw materials because it is also a confidential type of information.

Thank you for your understanding.

Falko Friedrichs: Thanks very much.

Operator: The next question comes from Markus Gola - MainFirst. Please go ahead.

Markus Gola: Hi, thank you for taking my questions.

So my first one would be on your growth projects in LPBN, roughly speaking, how much of the future growth do you expect will come from large pharma and how much is related to small and mid-sized biotech in your current planning? And related to this, could you shed some light, how you see biotech funding situation at the moment given that Lonza's involved in some of the venture capital funds in the space? And my second question is on the directionality in LSI. But here, more on the chemicals part, if you've seen a significant slowdown or maybe year-on-year contraction of sales in the cyclical part of the portfolio? And then lastly, on your LSI and strategic options, do you still believe that we will see decision taken in 2020? Thank you.

Albert Baehny: Okay, thank you for the question. I move back to the question. I'll start with the last question, LSI strategic options.

We at the board level of Lonza, we are still analyzing, reviewing, debating about the various options for the future of LSI and we have not yet decided in which direction we want to move finally. This decision should be – could be taken end of H1 or during Q3. This was the first question. On LSI the chemical pass, yes, we are not immune to the cyclicality of some segments electronics, automotive, transportation, chemical industry. So it's why in our Q1 results with an excellent performance with Microbial Control Systems, and on the cyclical part of the business, the government is a bit more difficult and we have not been able to generate the growth rates.

We generally didn't miss and so yes, we are affected by the cyclicality of some end markets like electronics, transportation and others. I am not an expert on biotech fundings to be honest. I would like to give you an answer. What I am sensing is that there will be enough money available for the key projects for top projects and top organizations. I don't think the money will disappear.

Maybe in the future, the fund manager will become more selective. But when you see how the pharmaceutical industry and the biotech industry are performing in this environment, this is certainly an area where I would invest long-term in the future rather than other industries. So I'm not scared about the fundings may be more and more selective. Now, the growth projects, the growth project with LPBN, certainly that in the medium and long term, most of the growth rates will come from large pharma and will come also from small startups in the preclinical clinical phases, but the bulk of the business as today will come from large pharma. And interestingly enough, I mean we – remember a few months ago, I was facing already debate between large scale operators and lower scale operators with 1K and 2K.

I can tell you today that the market is looking after, is requesting large scale operators 10K and plus and not 1 or 2 K's. So it's why I can say there's quite a level of confidence that in the future the bulk of the business will still be with large pharma. Thank you for the questions.

Operator: The next question comes from Thomas Wrigglesworth from Citi. Please go ahead.

Thomas Wrigglesworth: Thank you for my opportunity to ask a few questions, two rely on Ibex. I was wondering as we think about the ramp up of that facility over the coming quarters and years is there a bias in the early phase revenue between manufacturing versus no clinical trials? And secondly, notwithstanding the kind of human challenge here is the picture that you're getting from the market today, one that would actually encourage you to accelerate Ibex or you're happy – it's too early to tell. Thank you.

Albert Baehny: I didn't get the first question, but I move back again. If I look today at what we are experiencing in terms of requests, linked to COVID-19, then I would be tempted to accelerate Ibex clearly.

The human challenge is a clear challenge, but I am surprised – positively surprised to say that so far, we have been able to attract the talents we need not only the quality, but the quantity of the talents we need linked to Ibex in Visp in Switzerland. And no, I didn't get the first question about the ramp up of Ibex, sorry.

Thomas Wrigglesworth: Sorry, I just – in regards to the business opportunities in the early phases of Ibex's ramp, are evenly distributed i.e. there's no bias towards more clinical type of sales versus maybe more traditional CDMO type of business?

Albert Baehny: No, the Ibex has basically three legs, this design and develop and now I'm missing dedicate. So I said it based on what I see today.

I am convinced that the basic idea of Ibex is good and will accelerate certainly on dedicate to add more capacities with large scale operations. And on the design and develop it is rather – the trend is on rather clinical phases one, two and three. So I feel comfortable that the Ibex concept is well balanced. And we will be filling in these capacities on both sides dedicate and developing on design and developing those on dedicate.

Thomas Wrigglesworth: Thank you.

Could I just ask a quick follow up, sorry? We talked about the full year results, a bit of pricing pressure in the capsules business through the second half of '19. Can I take from your comments earlier that that actually that's the basic now and it's kind of – given it's an API supply issue that's impacting your comments on capsules?

Albert Baehny: I repeat what I said. There was a very strong demand for capsules in nutrition in Europe and in USA, with less pressure on prices. There was also a solid demand for capsules on pharma, but there was certainly a delay because of lack of APIs coming out of Asia, in Europe and in North America. So maybe the volume is just delayed by a few months.

This is a hypothesis.

Thomas Wrigglesworth: Excellent, thank you very much, very helpful.

Albert Baehny: Thank you.

Operator: The next question comes from Daniel Jelovcan from Mirabaud. Please go ahead.

Daniel Jelovcan: Yeah, good afternoon, two questions, please. The first is the CEO successorship. In February, you said you're quite developed advanced and the interest is good, of course, to run a company like Lonza. So can you give us an update? The shortlist is becoming even shorter now and where you stand? And the second question is it fair to assume that LPBN would have grown double digit excluding the external capsules from the sourcing. I think that's – those are the two questions.

Thanks.

Albert Baehny: And the CEO shortlist is down to one candidate. As of next week we will be starting discussing and proposing, negotiating the terms of the contract. So assuming we can find – we find the solutions by mid May latest we will be able to announce who will be my successor. This is where we are.

So we will be respecting the deadline we indicated already in December last year saying that by the end of May latest, we will be able to no mean to inform you about my successor. So we are in good shape and as I said the shortlist is down to one person. We still need to discuss, negotiate and finalize the term of the contract before we can announce it officially. Now, your speculation on LPBN double digit without capsule, I mean, you can make the mathematics almost yourself. You know the size of the business, it's on an annual basis capsules basis is 1 billion.

We had negative growth rates in the first quarter of this year, low single digit, but nevertheless impacting the whole of LPBN. So I don't want to comment on this one, but you can make the calculation yourself and come to the results.

Daniel Jelovcan: Okay, yeah, I didn't know that it was low single digit decline, but now I have two ingredients to help probably [ph]. Thank you so much.

Albert Baehny: Yes, welcome.

Operator: The next question comes from Patrick Wood from Bank of America. Please go ahead.

Patrick Wood: Perfect. Thank you very much. I've got two left please.

The first is you guys are obviously having a lot of discussions with your pharma partners on supply chain management. I'm just curious as to how those discussions are going. What are you hearing? Do you think there's a sense for some decentralization over time? Have those discussions with former partners, I guess, changed the appetite for in house versus CDMO, so that's question one. Question two, nitpicky, but just kind of want to clarify because you mentioned your priorities that are focusing on the budget and that side of things, does that mean that we can still stand by the guidance for this year for Lonza or is that something that we should be putting on the side? Thank you.

Albert Baehny: Thank you for the questions.

I would like to come back to your second question and to return the question. If you can tell me how the world would look like in Q2, in Q3 and Q4. If you would be able to tell me how you see the main end segments for gathering maybe for Lonza. Maybe I could give you some guidance, but I was expecting of course, that somebody would try to ask the question about the guidance. I said only this comment and no additional comments on guidance on outlook.

Assuming that the business environment in Q2, Q3 and Q4 is not deteriorating, which means we have access to the key raw materials. We are not obliged and forced to close any plants, the pharmaceuticals who is very strong, I feel confident to say we can confirm the outlook for this year assuming the business environment is not deteriorating versus what we saw in Q1 and there is no collapse and we are not obliged to close to shut down key plants. So this is my last comment on outlook. Now regarding the decentralization, the role of CDMO versus the big pharma, this is not a new topic. It is – we can say in general that yeah, the pharmaceutical industry is trending to be focused more and more on the two extremes of the value chain, on one side discovery and the other side commercialization, marketing and in between the clinical trials.

So in this context, the role of a CDMO player is become more and more important as we believe at Lonza over time. The big pharma will delegate more and more than manufacturing responsibilities to CDMO players. This is our view. And I'm not saying I'm right, this is our view based on current discussions.

Patrick Wood: It's helpful, thank you.

Operator: The next question comes from Laura Lopez from Baader Helvea. Please go ahead.

Laura Lopez: Sorry, good afternoon and thanks for taking my question. I have one left, again coming on capsules for the nutrition business. So don't you think that maybe the environment improved a little bit because the competition from China was limited in the first quarter because of the COVID outbreak there and that maybe now this pricing pressure or let's say this entire supply will come back in the second quarter now that plants are also starting to ramp up in Asia, specifically in China.

Albert Baehny: But it's a good remark. I would be tempted again yes and no, what does it mean? Clearly in the nutrition area, the demand was significantly higher I repeat it. Basically, I suspect people wanted to take some pills to improve basically the – to take more vitamins than in normal cases because of the virus. At the same time, yes, we have been a little bit benefiting from supply logistic problem from both China's and Indian players. This is correct.

Laura Lopez: I'm sorry, maybe one more to add on LSI. So you did mention some pricing pressure on performance chemicals and intermediates, but maybe can you give us a guidance on the margin? So also raw materials or oil prices have come down massively. So is it fair to assume that actually your margins have held a pretty strong or that they're stable despite the lower growth because of pricing?

Albert Baehny: The margins topic will be presented, discussed with H1 results, so I don't comment today. But on chemicals as you know, as you said it yourself. Some raw material prices came down because of the oil price coming down and, in some contract, you have again formula price, if raw material prices come down your price come down.

But I don't want to comment on the margins today this will be for half year results, sorry.

Laura Lopez: Thank you very much.

Albert Baehny: Thank you. Now, the operator forgot to say that this call will take 45 minutes. So I take the next few questions.

Operator: We will take two more questions now.

Albert Baehny: Okay.

Operator: The next question comes from Chouhan Naresh from Intron. Please go ahead.

Naresh Chouhan: Hi, there it's Naresh Chouhan from Intron Health.

Thanks for taking my calls – my question sorry. Three, please. One on Cell and Gene Therapy, how do you progress towards your 5% of sales target? There's obviously, so is the right [indiscernible] space.

Albert Baehny: Can you repeat – can you repeat this question? Sorry, I'm not with you. You're in Cell and Gene?

Naresh Chouhan: Yeah.

The target of Cell and Gene Therapy being 5% of group sales, how have you progressed towards that target? And could the Cocoon platform start to contribute to sales from 2021 or just a much longer term program? And then on vaccines, you talked briefly about vaccines, and in large it was quite clear that we have a shortage of vaccine capacity globally. Would you consider expanding into vaccines over the medium term? And thirdly, are you seeing a shift in customers desire to use Asian CDMO players? And are you seeing more inquiries from people where you might be able to gain some share? Thank you.

Albert Baehny: Thank you for the questions. Cell and Gene, 5% of group Sales, to be to be honest, this is not my – this is certainly not my target. The target for me with Cell and Gene is to outperform the market with higher growth rates top line and to improve the margin of this business.

If it is 5% of group sales, if it is 4% or 8%, if we outperform the market with the top line and we improve significant the margin I will be very happy. On Cocoon don't expect revenues in 2021. This is a long-term project. It's not generating sales, it's generating margin of course, but in 2021, you can't expect Cocoon being a participant on the top line growth of the Lonza's Group. It will take more years.

Vaccines, yeah, we are prepared and willing to consider expanding. We have capacity which is available with clean rooms and not a lot available for vaccines. And assuming we have access to the right partners, the right collaboration, we would be happy and willing to invest and expand on this business. And I don't want to comment on the agency demo players if pharma company look at these players to work with them. I don't know, to be honest.

So I can't comment.

Operator: The last question comes from [indiscernible]. Please go ahead.

Unidentified Analyst: Hello, thank you for taking my questions. Also, the three if you allow and if the time permits.

The growth in LPBN of 8.3 seems to be lower or rather at the lower end of your guidance and certainly lower than first half of last year. Do you see this as a normal fluctuation or is it a slowdown – an actual slowdown? And then LSI if this is sustainable growth? Or did you see some holding going on in the industry in the face of the crisis eventually? And then what can we expect for eventual additional costs for COVID measures like protection gear for your employees and alike.

Albert Baehny: But first of all on the LPBN growth rate, I mean, 8.3% is this bigger amount. I think it's an excellent result. We are certainly not losing market share.

We are growing with the market. I would even say in excess and don't forget that in these 8.3 there is a negative growth rate of the capsule business. If you exclude that, I said it before you make the mathematics and you will see that LPB without capsule will be generating high growth rates of course. Second remark on this one, it is a quarterly result, it is not an annual result and as I said at the very beginning be careful with the interpretation of course of the results because of one time effects, it gives the wrong – it can give the wrong indication about the future trend. Is LSI sustainable? I suspect in this environment the Microbial Control business will be solid – will stay solid, the demand is strong.

For the more cyclical part of the business, we are not immune and we will be affected either positively or negatively by the changes in transportation, in electronics and in other industrial applications. Now, regarding the additional costs regarding COVID-19, we're not expecting any significant additional cost in the coming weeks and months.

Unidentified Analyst: Thanks a lot for the answers.

Albert Baehny: Thank you for the questions and for your interest. So I think the last one, if there is another question and then the sorry, I have to move on.

And if there are no questions anymore, then I would like to thank you for your time, for your participation, for your interest. I wish you all a nice weekend and of course more importantly stay safe and healthy. And thank you for your interest in the Lonza Group. Wish you all the best. Thank you very much and goodbye.

Operator: Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call. And thank you for participating in the conference. You may now disconnect your lines. Goodbye.