Bachem Holding: The Nvidia of Peptides

Bachem has just switched on Building K, one of the world's most advanced peptide factories, at its Bubendorf site in Switzerland. Most of the new capacity is already booked under long-term contracts signed years in advance. Customers can't easily swap suppliers: a drug's regulatory approval is often tied to the exact factory that makes it, so qualifying a new supplier can take years. Management expects sales to grow 35–45% this year in local currencies, largely thanks to this one factory. Because most of the cost of running a plant like this doesn't change with volume, extra output should mostly turn into profit rather than expenses. The underlying profit margin was 30.2% in 2025 (stripping out one-off gains), and management expects that to climb into the "low thirties" in 2026.

For years, thousands of unlicensed pharmacies and online clinics sold cheaper copies of popular weight-loss drugs, filling a gap left by genuine shortages of the real thing. Those shortages are now over, and US regulators are moving to shut the loophole down: the FDA has sent out dozens of warning letters to these unlicensed sellers and has proposed banning the practice outright. The proposal isn't law yet. A public comment period only closed in June 2026, but it shows where the agency is heading. Separately, new US rules are pushing drugmakers to buy less from Chinese suppliers and more from Western ones. Both trends push business toward a small group of licensed, Western manufacturers, and Bachem is one of the biggest.

Bachem's balance sheet is in good shape. At the end of 2025, the company owed only CHF 26.4 million (Swiss francs) more than it had in cash: a tiny amount for a business this size, and less than a seventh of one year's profit. Customers have also paid CHF 368.7 million upfront for medicine they haven't received yet, up sharply from the year before, which gives Bachem cash in hand before it even ships the product. The business itself is throwing off much more cash too: money generated from operations more than doubled last year, to CHF 271.6 million, covering most of what the company spent building new factories without needing to borrow heavily or ask shareholders for more money. Spending on construction is expected to peak in 2026 and then start falling, just as the new plants begin earning revenue instead of costing money. If that plays out as planned, Bachem should move from a period of heavy spending into one where it generates real spare cash.

• Building K fills up: First lines are ramping through 2026, feeding this year's 35–45% growth guidance.

• Compounding rule finalised: If the FDA's proposed ban on bulk compounding is confirmed, more patients should shift back to licensed, branded supply.

• Margin climbs toward the mid-30s: As the factory fills and currency drag fades, margins should keep climbing from the low thirties.

• Sisslerfeld anchor deal: Bachem has banked a CHF 13.8m milestone payment for the site, though no anchor customer is signed yet. A deal would extend growth well beyond Building K.

• Oral peptides multiply demand: More peptide pills need far more raw ingredient per dose than injections, so demand should keep rising for years.

• Western reshoring accelerates: As new US rules limit Chinese biotech sourcing, more contracts should shift to established Western manufacturers.

Bachem doesn't disclose customer concentration directly, but its own numbers hint at it. In 2025, revenue invoiced through Ireland nearly doubled to CHF 100.3 million, while revenue invoiced through Denmark fell 17% to CHF 93.6 million: a sizeable swing that points to how much Bachem's growth rides on the invoicing entities of a handful of very large pharmaceutical customers. If one of those relationships shifted, say through a lost contract or a failed trial, the impact on Bachem's numbers could be significant, and outside investors have little visibility into exactly how exposed the company is.

Chairman Kuno Sommer has been direct about this in Bachem's own annual report: "there is always a certain amount of risk involved in production, as things can go wrong in complex production processes." A 35–45% growth range is unusually wide for a company that rarely misses guidance, and that width reflects genuine uncertainty about ramping a brand-new, highly automated factory to full commercial output. Building K only cleared its regulatory inspection at the end of 2025. Delays or manufacturing hiccups, whether in yield or quality, could push back the profit inflection investors are counting on.

Asked directly what he saw as Bachem's biggest risk, Chairman Kuno Sommer pointed to the drug class itself: "One major risk is certainly that GLP-1 therapies may not work as expected or that late side effects may emerge." Bachem also makes ingredients for cancer, brain disease and rare disease treatments, but its newest capacity is overwhelmingly geared toward the metabolic boom. On top of that, the strong Swiss franc has been a real drag: it contributed to a net financial loss of CHF 10.9 million in 2025 (versus a small gain in 2024), driven mainly by a CHF 10.7 million foreign exchange loss, and management has flagged a further meaningful currency headwind for 2026.