Chemicals group Croda expects boost from BioNTech/Pfizer vaccine contract

British chemicals group Croda is set to benefit from a contract supplying lipid components for the BioNTech/Pfizer Covid-19 vaccine, helping to offset a drop in demand for its beauty products.

Croda supplies Pfizer with four ingredients that help to carry genetic instructions into the recipient’s cells and are manufactured across two sites in Alabama and the UK.

The company previously estimated that its contract with BioNTech and Pfizer would generate about $100m of sales in 2021 based on the delivery of 1.3bn doses worldwide. But it said it now expected to receive a minimum of $125m this year given Pfizer has increased the number of doses it hoped to deliver to about 2bn.

Croda, which is involved in more than 60 projects to deliver Covid-19 vaccines and therapeutic drugs, said drug delivery “offers our strongest global opportunity for growth”.

It bought Avanti Polar Lipids, a specialist in lipid nanoparticle technologies that act as a delivery mechanism for the Pfizer vaccine’s active mRNA ingredient, in a $185m deal in August.

Croda said the acquisition would help to support “not only Covid-19 projects but a wide variety of future mRNA and gene therapy drug and vaccine applications”.

Chief executive Steve Foots said the company would invest £40m in 2021 to expand capacity in lipid technology for Covid-19 and other products. 

Other segments of Croda’s business fared less well. The pandemic hit its personal care and fragrance business as consumers stayed at home.

Foots expected the market to recover as lockdowns were lifted. He announced on Tuesday that Croda had agreed to acquire French cosmetics company Alban Muller for €25m.

“There is pent up demand that we haven’t seen for many decades in the beauty sector,” said Foots, who forecast widespread partying “reminiscent of the postwar years” once the threat from coronavirus had subsided.

The Alban Muller deal followed on from the acquisition last year of Spain’s Iberchem for €820m, which Croda hoped would allow it to tap into burgeoning demand for fragrant personal care and home products in emerging markets.

Overall, pre-tax profit fell 10.9 per cent to £269m in 2020 despite strong growth at the life sciences division, which focuses on crop protection and seed enhancement products, as well as drug development projects. Total sales at the FTSE 100 listed group increased less than 1 per cent to £1.39bn.

Croda’s shares were flat on Tuesday but have jumped 35 per cent over the past 12 months. The full year dividend payment was increased by 1.1 per cent to 91p per share in 2020.