CHF 2.3BLonza capsule division enterprise value, sale to Lone Star Funds
77.63%Highest U.S. antidumping margin on hard empty capsules (Brazil)
28.5MBeef cows on July 1, 2026, the smallest July inventory on record
On March 6, 2026, Lonza Group agreed to sell its Capsules & Health Ingredients division to Lone Star Funds at an enterprise value of CHF 2.3 billion (USD 3 billion), and on June 23, 2026 it confirmed that the business would be reported as discontinued operations ahead of a closing then expected in the third quarter of 2026. A private equity buyer paying that price for a business built around gelatin and plant-based hard capsules raises a direct question for investors: is the gelatin capsule market still growing, or is it being repriced as a mature, consolidating asset?
NextMSC's research points to measured but durable growth. According to Next Move Strategy Consulting's Gelatin Capsule Market report, the global gelatin capsule market was valued at USD 5.02 billion in 2025 and is projected to reach USD 10.32 billion by 2035, growing at a CAGR of 7.14% from 2026 to 2035. Growth of that kind is rarely uniform, so this analysis tests the headline against five dated data points from regulators, statistical agencies and listed companies.
The five data points are a CHF 2.3 billion transaction value, United States duty margins that reach 77.63%, a beef cow herd of 28.5 million head, a 26.6% segment margin at a major collagen producer, and a softgel plant where 15 of 36 machines run plant-based product. Each is tied to a named source, so readers can judge how much of the 7.14% trajectory rests on evidence outside NextMSC's own model.
From Lonza's USD 3 Billion Exit to Duty Orders: Five Data Points on Gelatin Capsule Market Growth
01
Data Point 1: CHF 2.3 Billion Places a Price on Capsule Capacity
Lonza Group's announcement of March 6, 2026 sets the terms: an enterprise value of CHF 2.3 billion, upfront cash proceeds of CHF 1.7 billion (USD 2.2 billion), a 40% stake retained by Lonza and a preferential participation in future exit proceeds, with total undiscounted proceeds at full exit expected to be at or above CHF 3 billion. The perimeter matters for this market. Lone Star Funds describes the division as headquartered in Basel and organised in three segments: Hard Empty Capsules, which manufactures gelatin and plant-based capsules for pharmaceutical and nutraceutical customers; Dosage Form Solutions; and Health Ingredients. Lonza added that the division returned to growth in 2025.
“We see significant opportunity for CHI as a standalone business,” said Donald Quintin, Chief Executive Officer of Lone Star Funds, in the firm's March 6, 2026 announcement. Wolfgang Wienand, Chief Executive Officer of Lonza Group, framed the sale from the seller's side: “With the sale of CHI and the three other recent divestments, in less than two years we have reshaped our company,” he said in Lonza's March 6, 2026 release.
The closing timetable has moved between Lonza Group statements, from the second half of 2026 on March 6 to the third quarter in the June 23, 2026 notice, and NextMSC did not locate a completion announcement. NextMSC reads the valuation as evidence of institutional confidence in capsule scale, not proof of rising unit volumes: the buyer is paying for hard capsule capacity and the option to run it independently.
02
Data Point 2: Duty Margins of Up to 77.63% Redraw US Hard Capsule Supply
Margins 10.66% to 77.63% · orders cover Brazil, China, India and Vietnam
The most consequential regulatory fact in the market is the set of antidumping and countervailing duty orders that the U.S. Department of Commerce published in the Federal Register on February 23, 2026, after the U.S. International Trade Commission notified Commerce on February 12, 2026 of final affirmative determinations. The orders cover hard empty capsules from Brazil, China, India and Vietnam, defined as capsules made of at least 80% water-soluble polymer by weight, including gelatin, HPMC and pullulan, regardless of material. Gelatin capsules are therefore inside the scope, because the notice lists gelatin derived from animal collagen among the most common polymers.
The weighted-average dumping margins published in the antidumping orders were 77.63% for ACG do Brasil S.A. and all other Brazilian producers, 18.71% for the China-wide entity, and 47.12% for Suheung Vietnam Co., Ltd. and the Vietnam-wide entity. For India, the margins were 26.69% for the ACG group, 10.66% for HealthCaps India Limited and 18.68% for all other producers. After export subsidy offsets, the Indian cash deposit rates are 19.71%, 3.68% and 11.70% respectively, and the Vietnamese rate is 46.24%.
U.S. Weighted-Average Dumping Margins on Hard Empty Capsules
Percent · antidumping duty orders of February 23, 2026
Brazil (ACG do Brasil and all others)
77.63%
Vietnam (Suheung and Vietnam-wide)
47.12%
India (ACG group)
26.69%
China-wide entity
18.71%
India (all other producers)
18.68%
India (HealthCaps India Limited)
10.66%
The U.S. Department of Commerce published these weighted-average dumping margins in its antidumping duty orders of February 23, 2026. Brazil carries the highest margin, at 77.63%, followed by Vietnam at 47.12%, while HealthCaps India Limited carries the lowest listed margin, at 10.66%. Brazil's margin covers ACG do Brasil S.A. and all other producers, Vietnam's covers Suheung Vietnam Co., Ltd. and the Vietnam-wide entity, and China's 18.71% applies to all listed producers except the excluded Shanxi JC Biological Technology Co., Ltd.
Source: U.S. Department of Commerce, antidumping duty orders on hard empty capsules, February 23, 2026
The U.S. International Trade Commission's Publication 5696, issued in February 2026, shows how concentrated the domestic side is: two U.S. producers accounted for all known U.S. production in 2024, and 16 firms accounted for essentially all U.S. imports. NextMSC's reading is that a market with two domestic producers and a short list of import channels is highly sensitive to a change in landed cost, which is exactly what the orders deliver.
The commercial response is already visible. Natural Capsules Limited, an Indian manufacturer, stated in its August 2026 results release for the quarter ended June 30, 2026 that U.S. demand was erratic and duty structures remained uncertain, that it had no material U.S. export volumes in the quarter, and that it had converted one HPMC line to a gelatine line, with a second conversion expected in the following month. The company added that its gelatine capsule business delivered healthy margins, which it expects to sustain this year, and that input cost increases were passed through to customers.
03
Data Point 3: A 28.5 Million Head Beef Cow Herd Tightens Bovine Feedstock
Beef cows 28.5M head (−1%) · calf crop 32.5M head (−2%)
On July 24, 2026, the National Agricultural Statistics Service of the U.S. Department of Agriculture reported in its release titled United States Cattle Inventory Up Slightly that all cattle and calves stood at 94.2 million head on July 1, 2026, with beef cows at 28.5 million head, down 1%, and the 2026 calf crop at 32.5 million head, down 2%. Bernt Nelson, Economist at the American Farm Bureau Federation, noted on July 27, 2026 that this is the smallest July beef cow inventory on record in a series that begins in 1973, that the calf crop is the smallest on record after a ninth straight annual decline, and that beef replacement heifers rose 3% to 3.8 million head, the first meaningful sign of heifer retention in nearly a decade.
This matters because bovine gelatin is extracted from collagen-rich co-products of beef processing, and NextMSC's research sizes bovine gelatin as the largest source segment, at 46% of the 2025 market, or USD 2.31 billion. Heifer retention withholds animals from slaughter, so a rebuilding herd narrows the pool of hides and bones at the moment capsule makers need more feedstock. The federal and Farm Bureau data do not quantify gelatin raw material, so the inference is NextMSC's own. Pig skin and marine sources offer alternatives, and marine gelatin is the fastest-growing source segment in NextMSC's analysis, at a 13.6% CAGR.
04
Data Point 4: Darling Ingredients' Food Segment Margin Climbs to 26.6%
Darling Ingredients reported second quarter 2026 results on July 30, 2026. Its Food Ingredients segment recorded net sales of USD 408.5 million, up 5.8% from USD 386.1 million a year earlier, while segment adjusted EBITDA rose 55.1% to USD 108.5 million from USD 69.9 million. On those reported figures, NextMSC calculates an adjusted EBITDA margin of 26.6%, against 18.1% in the second quarter of 2025. For the six months ended July 4, 2026, segment adjusted EBITDA was USD 189.3 million, compared with USD 140.9 million a year earlier.
Darling states that it produces about 30% of the world's collagen, covering both gelatin and hydrolyzed collagen, so the segment is a useful reference for producer economics. The release reports the segment as a whole and does not isolate gelatin volumes or prices, and it lists a decline in collagen finished product prices, including gelatin, among the risk factors that could affect results. “Momentum continues to build across our business,” said Randall C. Stuewe, Chairman and Chief Executive Officer of Darling Ingredients, in the July 30, 2026 release. NextMSC's interpretation is that the feedstock constraint under Data Point 3 has not yet compressed processor economics, which leaves cost pressure with downstream capsule makers.
05
Data Point 5: 36 Softgel Machines, 15 of Them Plant-Based, Show Where Demand Is Moving
15 of 36 flagship softgel machines dedicated to veggie softgels
On May 22, 2026, Robinson Pharma, a California contract manufacturer founded in 1989, announced new equipment to meet growing demand for vegetarian supplements. Its 138,000 square foot flagship facility runs 36 softgel encapsulation machines, 15 of which are dedicated to veggie softgels, and its newest Santa Ana facility of 183,000 square feet has 20 manufacturing lines engineered to enhance veggie softgel capability. The company operates nine cGMP-certified facilities with more than 1,000,000 square feet of production space. The release does not state what the remaining 21 flagship machines produce.
Two readings fit the data. The first is that the supplement channel is expanding capacity, which supports NextMSC's finding that nutraceuticals are the fastest-growing application, at a 10.8% CAGR, and soft gelatin capsules the fastest-growing capsule type, at 9.6%. The second is that part of the new capacity serves plant-based shells, which compete with gelatin for the same fill volumes. NextMSC treats this as substitution risk concentrated in the nutraceutical channel, where growth is also highest, and not as a threat to hard gelatin capsules (62% of the 2025 market) or to pharmaceuticals (56% by application).
Growth Is Real, but Its Source Is Shifting
Taken together, the five data points support the direction of NextMSC's 7.14% CAGR and qualify its composition. Capital is flowing into capsule assets (Data Point 1), trade policy is relocating capacity and has led at least one Indian producer to convert HPMC lines to gelatin (Data Point 2), feedstock is the binding constraint (Data Point 3), producer margins are healthy (Data Point 4), and growth is concentrated in softgels and nutraceuticals, where plant-based competition is also strongest (Data Point 5).
NextMSC's analysis implies that the market must add USD 5.30 billion of annual revenue between 2025 and 2035. Hard gelatin capsules and pharmaceutical applications supply the base, while soft gelatin capsules (9.6% CAGR), nutraceuticals (10.8%), marine gelatin (13.6%), modified-release products (10.8%) and CDMO end users (12.9%) supply the acceleration. North America holds the largest regional share, at 32% of 2025 revenue (USD 1.61 billion), while NextMSC identifies Asia-Pacific as the fastest-growing region and India as the fastest-growing country.
The practical conclusion for investors is that the market is growing, but exposure is not equal across the chain. Shell makers with secure gelatin sourcing, softgel specialists and CDMOs carry the growth case, while producers dependent on a single export route carry regulatory risk.
Section Summary
Key Takeaways
The five data points answer the title question with a qualified yes. Valuation, producer margins and new capacity confirm demand, while duty orders and a shrinking beef herd determine who captures it.
Lonza Group's CHF 2.3 billion sale confirms private capital sees durable value in capsule scale.
U.S. antidumping margins of 10.66% to 77.63% make country of origin a pricing variable.
The smallest July beef cow herd on record keeps bovine gelatin feedstock tight.
Plant-based softgel capacity is growing alongside gelatin demand in the nutraceutical channel.
Regulation, Feedstock and Ownership
Regulation
Regulation is the first-order force. The February 2026 orders carry a wide rate spread: among the named Indian and Vietnamese producers, cash deposit rates run from 3.68% for HealthCaps India Limited to 46.24% for Suheung Vietnam Co., Ltd., a gap of 42.56 percentage points. A validated capsule source is expensive to change for a pharmaceutical or nutraceutical buyer, so the rate gap forces procurement teams to weigh duty exposure against requalification cost.
Feedstock
Feedstock is the second force. The USDA data show a beef cow herd of 28.5 million head and a calf crop of 32.5 million head, both at record lows for their series, while heifer retention has begun. Natural Capsules Limited has already reported passing input cost increases through to customers. Because bovine gelatin accounts for 46% of NextMSC's 2025 market value, a sustained rise in raw material cost reaches a large share of capsule volume and favours producers with diversified sources.
Ownership
Ownership is the third force. Lonza Group is exiting capsules to concentrate on its contract development and manufacturing business, and Lone Star Funds will operate the division as a standalone company in which Lonza Group retains 40%. A standalone owner with a dedicated mandate can fund capacity and acquisitions that a diversified parent deprioritised, which makes Hard Empty Capsules a likely consolidation platform among the 17 key players NextMSC profiles.
Section Summary
Key Takeaways
Regulation, feedstock and ownership are changing the competitive map faster than demand is. Supplier selection, sourcing resilience and capital allocation now matter as much as volume growth.
Duty-rate dispersion converts supplier origin into a procurement decision.
Gelatin-source diversification protects margin when bovine supply tightens.
A standalone capsule platform under Lone Star Funds can accelerate consolidation.
Pros and Cons of Recent Market Developments
The table compares the supportive and restrictive effects of the developments covered above, with each entry tied to a dated, named source.
Pros
Lonza Group's CHF 2.3 billion enterprise value sets a transparent valuation benchmark for capsule assets.
The U.S. orders cover every polymer, so gelatin faces the same duty basis as HPMC and pullulan.
Beef replacement heifers rose 3% to 3.8 million head, a first sign of herd rebuilding.
Darling Ingredients lifted Food Ingredients adjusted EBITDA by 55.1%, evidence of healthy producer economics.
Robinson Pharma runs 36 flagship softgel machines and 20 Santa Ana lines for supplement demand.
Cons
Closing guidance moved from the second half to the third quarter of 2026, and no completion notice was located.
Antidumping margins reach 77.63% for Brazil and 47.12% for Vietnam, raising landed cost for U.S. buyers.
Beef cows fell to 28.5 million head, the smallest July inventory on record.
Darling lists lower gelatin and collagen prices as a risk factor and does not isolate gelatin results.
Fifteen of the 36 flagship machines are dedicated to veggie softgels.
Key Data and Statistics
Dated External Developments Referenced
Date
Development
Reported Figure
Feb 23, 2026
Duty orders on hard empty capsules
Margins 10.66% to 77.63%
Mar 6, 2026
Capsules division sale to Lone Star Funds
CHF 2.3 billion value
May 22, 2026
New softgel equipment
15 of 36 machines veggie
Jun 23, 2026
Division reported as discontinued
Closing expected Q3 2026
Jul 24, 2026
July 1 cattle inventory
28.5 million beef cows
Jul 30, 2026
Q2 Food Ingredients results
Adjusted EBITDA USD 108.5 million
Aug 2026
Q1 FY27 results
One HPMC line converted
FUTURE OUTLOOK & FORECAST
The Gelatin Capsule Market to 2035
NextMSC's forecast is a market of USD 10.32 billion by 2035, up from USD 5.02 billion in 2025, at a 7.14% CAGR. The five data points suggest that the path will be set by four observable variables rather than by volume alone.
NMSC forecast: USD 10.32 billion global market by 2035
The first is the Lone Star Funds closing and the strategy of the standalone capsule company that results, including any capacity or acquisition announcements. The second is the administrative review cycle that U.S. trade law applies to antidumping and countervailing duty orders, which can revise the margins described under Data Point 2. The third is the USDA's next January cattle inventory report, where a further rise in beef replacement heifers would confirm herd rebuilding and a tighter hide and bone supply. The fourth is the share of new softgel lines built for plant-based shells, which Robinson Pharma has put at 15 of 36 machines at its flagship facility.
NextMSC expects soft gelatin capsules, nutraceutical applications and modified-release formats, growing at 9.6% to 10.8%, to lift the blended rate above what pharmaceutical hard capsules deliver alone. The principal downside case is a prolonged feedstock squeeze combined with accelerated plant-based substitution, and the principal upside case is a standalone capsule platform that funds capacity ahead of demand.
Section Summary
Key Takeaways
The forecast remains intact, with its composition tilting toward softgels, nutraceuticals and Asia-Pacific. Trade orders, cattle supply and plant-based substitution are the variables most likely to move the path.
NextMSC projects USD 10.32 billion by 2035 at a 7.14% CAGR.
Four indicators to track: the Lone Star Funds closing, duty reviews, USDA heifer data and plant-based softgel capacity.
Asia-Pacific and India remain the fastest-growing region and country in NextMSC's analysis.
Next Steps for Stakeholders
The evidence supports specific actions for each stakeholder group, and NextMSC recommends sequencing them over the next two quarters.
Capsule Manufacturers
Map each product line to its country of origin and duty rate, and cost the move between gelatin and HPMC lines, as Natural Capsules Limited has begun to do.
Procurement Leaders
Audit second-source capsule suppliers by origin, and negotiate gelatin pass-through clauses tied to a published index.
Investors
Use the Lonza Group transaction as a valuation benchmark, track its closing, and stress-test capsule holdings against feedstock-cost and plant-based substitution scenarios.
Gelatin Producers
Secure pig skin and marine gelatin as hedges to bovine supply, and disclose gelatin results separately.
Need this modeled for a different segment or region?
The gelatin capsule market is growing: NextMSC projects USD 10.32 billion by 2035 at a 7.14% CAGR, and the five data points show capital, producer margins and new capacity moving in the same direction. What has changed is the shape of that growth. Duty orders on four exporting countries, a beef herd at its smallest July level on record and the rise of plant-based softgel lines mean that the gelatin capsule market now rewards sourcing security, regulatory readiness and exposure to nutraceuticals more than headline volume.
Source: Next Move Strategy Consulting, Gelatin Capsule Market report (2025 base year, 2035 forecast); Lonza Group and Lone Star Funds announcements; U.S. Department of Commerce and U.S. International Trade Commission; USDA National Agricultural Statistics Service; Darling Ingredients; Robinson Pharma; Natural Capsules Limited; 2026.
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