Life Sciences business review

Performance in 2025

Full year sales in Life Sciences were increased 5.5% to £532.2m (2024: £504.3m) or by 7.7% at constant currency. Pharma sales grew by 4% at constant currency, with the regulatory environment in the USA creating uncertainty for our customers and impacting sales, particularly for vaccine adjuvants. The fourth quarter was Pharma’s strongest quarter of 2025, driven by higher excipient sales for both small molecule and biologic applications. Lipid sales for drug research also improved in Q4. Full year sales in Crop Protection were up 14% at constant currency driven by the recovery in demand from larger crop science customers following an extended period of destocking, aided by our proactive actions. Although momentum in Crop continued into the fourth quarter, demand in 2026 is not expected to benefit from the customer inventory rebuild that positively impacted our performance in 2025. Seed Enhancement grew sales by 8% at constant currency, with its predominantly services business model continuing to deliver consistent sales growth.

Adjusted operating profit increased by 12.0% to £116.5m (2024: £104.0m) or by 15.6% at constant currency. Although the adjusted operating margin of 21.9% (2024: 20.6%) remains significantly below its medium-term potential, margin improved compared with both the prior year and H125 driven by the recovery in Crop volumes despite the associated negative impact on business mix. IFRS operating profit was £16.3m (2024: £85.5m).

Strategic priorities and progress

To take full advantage of opportunities in key Life Sciences markets we are rebalancing Pharma and driving differentiation in our Agriculture businesses. Across the Life Sciences portfolio we are refocusing innovation, improving customer experience and maximising returns from investments in line with Group priorities. Reflecting the progress we have made in improving customer experience, the customer Net Promoter Score (NPS) for Life Sciences increased to +49 (2024: +41).

Rebalancing Pharma

Pharma has a ~15% share of a $2bn advanced excipients, adjuvants and delivery systems market and a top three supplier in niches growing at least 5% CAGR. We are rebalancing Pharma, allocating resources to accelerate sales of longer-standing ingredients for consumer health and small molecule APIs, as well as our advanced solutions for the delivery of novel biologic drugs and gene therapies which have been our principal focus in recent years. This rebalancing, augmented by the relaunch of our flagship ingredients in core markets, contributed to sales growth in 2025. It also recognises that each sub-segment has the potential for at least mid-single digit percentage sales growth at margins that are accretive to Group return on sales.

Improving customer experience

In a market that is growing but also becoming more complex, we are improving customer experience by evolving our Pharma business into two portfolio-led focus areas. These are:

1. Pharma Ingredients, representing over two thirds of total Pharma sales, and providing core consumer health ingredients and advanced excipients principally for established drugs. This is now organised on a regional basis, leveraging long-standing customer relationships and Croda’s regional model.
2. Pharma Solutions, with just under one third of Pharma sales, providing lipid technologies and vaccine adjuvants. This is now organised as a specialised global business working closely with customers and partners principally on new drugs in development.

Refocusing innovation

We are refocusing innovation, optimising our approach for each of the different sub-segments:

• In Core Ingredients, we are leveraging Croda’s broader skin care expertise for topical applications
• To strengthen our leadership in Advanced Ingredients, we are creating new high-purity excipients for injectables and new bioprocessing aids. For example, our recently commissioned super refining process at our site in Leek, UK has supported the launch of Super Refined Poloxamer 188, used as both an aid to cell growth during upstream bioprocessing as well as an excipient.
• In lipid technologies, we are expanding our range of more than 2,000 lipids for drug research, for example through a recent partnership with Certest, and targeting further markets for lipids, for example in the generics segment.
• To accelerate development of sustainable vaccine adjuvants, we are working with external partners with recent portfolio additions including sustainable squalene which has demonstrated extended stability compared with competitors’ shark-based alternatives.

Maximising returns for recent investments

Capital has been allocated to Pharma during the recent period of heightened investment through both focused capex and M&A. Acquisitions during this period were:

• Avanti Research, in 2020. Sales of lipids for drug research have grown double-digit percentage CAGR over the last three years.
• Phospholipids, acquired with Solus Biotech in South Korea in 2023, which are used as delivery systems and for intravenous nutrition. The clarification of the go-to-market model for Pharma Ingredients will help maximise the value of the phospholipids as we globalise sales through our regional sales network.

Capital expenditure has been focused on full-scale lipids production at multi-purpose cGMP sites in Lamar, Pennsylvania, and Leek, UK, as well on a smaller scale at the Avanti site in Alabama (our global centre for lipid development) and our site in Korea where we produce phospholipids. The total cost to Croda of the programme is ~£150m over the last five years, below previous estimates as we have revised the scope, of which ~£140m had been spent to end of 2025. The scale-up capacity at Lamar was mainly funded by the US Government under its pandemic preparedness programme to support vaccine production in the event of a future pandemic.

The Leek expansion also received similar UK Government support. The investment has provided us with a significant competitive advantage for future break-out growth and assets in all major regions (in the USA, UK, and the site in Korea where we produce phospholipids). With drug development timescales having reverted to their pre-pandemic norms and clinical programmes taking longer to commercialise, our assessment is that whilst demand for lipids for drug research will continue to grow, large-scale production capacity outstrips current needs. We have therefore decided to put the new Lamar plant on standby to address overcapacity and minimise costs.

Driving differentiation in our Agriculture businesses

Our Agriculture businesses have a ~9% share of a $4bn addressable market with a top three position in niches growing at least 1.5x market growth (2.6% CAGR). As regulations tighten and crop care formulations become more complex, Agriculture customers have significant development needs providing us with opportunities to innovate. This is reflected in strong demand for the highly differentiated ingredients at the top end of our portfolio, which have grown at ~10% CAGR since 2019. We are therefore driving further differentiation in Crop Protection and Seed Enhancement. our two Agriculture businesses.

Refocusing innovation

In Crop Protection, we are focused on enhancing portfolio differentiation, by developing new adjuvant effects that meet unmet needs (for example for rain-fastness), expanding our portfolio through technology partnerships, and enhancing supporting data to prove performance. The lower carbon footprint is also an important point of differentiation, particularly at the lower end of the portfolio. In Seed Enhancement, innovation is focused on adding to our range of seed coatings that are free from micro-plastics, strengthening our position ahead of the European ban on microplastics in seeds in 2028, as well as countering abiotic stress in seeds due to extreme heat, drought and high soil salinity. We are also applying AI modelling techniques to accelerate the development of new priming, pelleting and X-ray processes, meaning we can derive commercial benefits from innovation during the same planting season.

Improving customer experience

The customer environment in Agriculture has been changing with multinational customers (MNCs) focusing on their core activities, the rise of generic manufacturers, particularly in China, and ongoing consolidation of smaller biopesticide specialists. We are responding to this dynamic customer environment through comprehensive customer segmentation and the continued regionalisation of our R&D and formulation expertise.

Aided by inventory rebuild by our larger customers following an extended period of destocking, sales to MNCs grew by 14% at constant currency in 2025, with a 36% increase in sales ‘tier 2’ customers. Local and Regional customers now represent 56% of sales, in line with the prior year, and up from 44% in 2019.

Maximising returns from recent investment

Our Agriculture businesses have limited capital requirements but the new production centre in Dahej, India will support Crop Protection growth in Asia.

Future sales growth

Assuming current economic conditions continue, we are targeting an organic increase in sales in Life Sciences of 4-7% CAGR 2026-28.