Demand for Western medicines in Asia is soaring thanks to the adoption of Western habits as well as an ageing and growing population and Lonza has already begun to position itself to take advantage, as its recent secondary listing in Singapore highlights.

Meanwhile, pressure from debt-laden governments in Europe to cut medication prices, part of their efforts to get a grip on public spending, is weighing on big pharmaceutical companies: Novartis recently blamed the price pressures for 2,000 job cuts.

That trend is spurring Western drug firms to expand their presence in Asia too, and analysts say Lonza is well positioned to capitalise on these developments.

Lonza makes the active ingredients found in drugs for pharmaceutical groups, supplying top names like GlaxoSmithKline , Abbott and Novartis. ZKB analyst Martin Schreiber described the group as the "first address" in outsourcing.

Lonza, the leader in a fragmented market, competes with companies like Dutch group Royal DSM and Switzerland's Siegfried, with around 70 percent of group sales coming from Europe and the United States. The company posted sales of 2.7 billion Swiss francs in 2010.

"Lonza has a strong track record with customers and regulators, which really helps a lot. They also have the infrastructure ready (and) leading technology. All these assets really help to give Lonza the edge," Helvea analyst Martin Flueckiger said.

He added that he expected Lonza to win custom from 80-90 percent of the top large- and mid-sized global pharma companies in the longer term in Asia as they too bulk up there.

"But Lonza is also likely to win business from companies in the region; we have recently learnt that Japan's Eisai is a customer," Flueckiger said.

The 114-year-old group, which made its debut on the Singapore Exchange in October, expects rising demand for medicines in China to boost growth in Asia, and is eyeing sales growth in the region in the "mid-teens" over the next five years.

"Lonza wants to have a foot in the door there and be ready to participate in the above-average growth rates as quickly as possible," ZKB's Schreiber said.

The company has bolstered its presence in Asia in recent years by adding a plant in Nansha in China for its custom manufacturing business, while its new Singapore plant came into operation earlier this year.

"With Singapore we have a site that is an ideal foothold for breaking into the bio-pharmaceuticals, cell therapies and development services in Asia," Stephan Kutzer, head of Lonza's custom manufacturing unit, told Reuters.

The group is also using its Nansha plant in China to make high-value products for the Chinese market, Kutzer said.

"Local companies will be open to outsourcing to Lonza if Lonza can offer a value proposition in terms of cost saving and expertise," Kim Eng Research analyst Yeak Chee Keong said.

Jefferies analyst Peter Welford cautioned however that it could be tough for Lonza to win contracts from local pharma companies as one requirement for tenders can be production sites in the individual countries.

Lonza makes not only small molecules, which can usually be made into drugs that can be taken as pills, but also the more complex large molecules used in treatments for diseases like cancer, which must be given by injection, and this expertise helps to put it ahead of local rivals.

"The European players have better educational systems that allow them to build up and keep more know-how within companies, putting them in a better position to make more complex products," ZKB's Schreiber said.

"There are good Indian and Chinese players, but their education systems are not yet as good, so this clearly gives the well-established European players an advantage as molecules get more complex," he said.

Lonza has already proven itself in this area by teaming up with a number of companies, including GSK to make medicines, such as monoclonal antibodies, used to treat inflammatory and autoimmune diseases, and antibody drug conjugates, often used for cancer.

It is now working with Israel's Teva to develop and manufacture biosimilars, copies of biological drugs, and trials are ongoing for their version of Roche's cancer and arthritis drug MabThera, known as Rituxan in the US.

Increasing affluence in Asia means people there are becoming more concerned about health issues, while higher quality standards are also becoming much more important in countries like China, which is trying to improve access to medicines.

China's government has repeatedly promised to tighten the regulatory system after safety scandals involving items as diverse as fish, drugs, toys, toothpaste, tyres and pet food.

In 2008, at least six children died in China and nearly 300,000 fell ill from drinking powdered milk laced with melamine, an industrial compound added to fool inspectors by giving misleadingly high results in protein tests.

Lonza's solid safety record puts the group in a top position to benefit from this push for quality.

"In the wake of the milk scandal, there is definitely political pressure to improve the safety of food ingredients and pharmaceuticals," Sarasin analyst David Kaegi said.