Editor’s (re)View: Novo Holdings’ $16.5B Catalent buyout is the top pharma manufacturing story of 2024
It was more than 10 months ago that Novo Holdings shocked the biopharma industry with the announcement that it would acquire contract development and manufacturing organization Catalent in a $16.5 billion megadeal. This week, just days after the transaction cleared all regulatory hurdles, the acquisition was completed and the CDMO became a private company.
From the start, Novo Holdings — the controlling shareholder of Danish drugmaker Novo Nordisk — said the buyout aligned with its “strategy of investing in established life science companies with strong long-term potential.” However, it wasn’t only about taking one of the world’s largest CDMOs private to provide contracting services to the biopharma industry.
In a separate but related acquisition also completed this week, Novo Nordisk paid Novo Holdings $11 billion to take over three Catalent fill-finish sites in Belgium, Indiana, and Italy — the crown jewels. Of Catalent’s more than 50 global sites, the three fill-finish sites grabbed all the attention given Novo Nordisk’s fierce GLP-1 competition with rival Eli Lilly. After all, these three sites are much-needed manufacturing assets to bolster production of Novo Nordisk’s blockbuster diabetes drug Ozempic and weight-loss medication Wegovy.
However, during a second-quarter 2024 earnings call in August, Lilly CEO Dave Ricks expressed concerns that his company relies on one of the Catalent sites for GLP-1 and other diabetes production. “It’s more the oddity of your main competitor being also your contract manufacturer and how to resolve that situation,” Ricks told analysts. “We’ve aired those concerns publicly and privately since the proposed transaction was announced.”
Despite Ricks’ claims, Novo Nordisk has repeatedly asserted that Catalent has no role in the manufacturing of Lilly’s GLP-1 drugs. Over the past 10 months, the deal was heavily scrutinized by U.S. and European regulators for potential antitrust and anti-competition concerns, but to no avail.
This week, the GLP-1 race between Lilly and Novo Nordisk — with both drugmakers continuing to invest billions of dollars to ramp up their respective manufacturing capabilities — took on even more significance. The FDA confirmed that Lilly’s Mounjaro for type 2 diabetes and Zepbound for obesity are not in shortage, while Novo Nordisk’s semaglutide — branded as Ozempic and Wegovy — is still classified by the agency as being in shortage.
Clearly, Novo Nordisk needs to make up ground on the manufacturing side, particularly now that Lilly’s Mounjaro and Zepbound are officially deemed no longer in shortage, while Ozempic and Wegovy are — which is why Catalent’s three fill-finish sites are so critical.
Plans for Catalent as CDMO
Putting aside Novo Nordisk’s heated GLP-1 race with Lilly, the question remains: what are Novo Holdings’ plans now that it owns Catalent? The answer is a bit murky.
“We look forward to supporting the Catalent team as they build on their positive momentum and position the company for future growth,” Jonathan Levy, senior partner at Novo Holdings, said in a statement on Wednesday.
However, Catalent’s growth prospects became concealed when its proposed acquisition by Novo Holdings was announced in February. At that time, given its then-pending buyout, the CDMO announced it would no longer provide forward-looking guidance “as is customary during the pendency of such transactions.”
At the same time, Catalent CEO Alessandro Maselli in a statement — anticipating the acquisition would go through — said that “with the benefit of Novo Holdings’ expanded resources,” the CDMO “will be able to accelerate investment in our business and enhance key offerings for current and prospective pharma and biotech customers.”
Later, in October, Maselli in an open letter to customers again tried to reassure them about the acquisition by Novo Holdings, writing that Catalent’s remaining network of 50 global sites will continue to “offer fill and finish services for sterile products for large and small molecules, including gene and cell therapies — areas in which we continue to invest and expand.”
However, Max Smock, an analyst at William Blair, told Pharma Manufacturing this week that when it comes to the “Novo Holdings piece” he “still struggles to see what their plan is there for the remainder of the [Catalent] assets.”
For now, Novo Holdings CEO Kasim Kutay has welcomed Maselli and the Catalent team to the fold. “Catalent plays a key role in driving product development, launch and supply solutions for pharma, biotechnology, and consumer health companies, and its mission is closely aligned with Novo Holdings’ purpose to invest for the benefit of people and the planet,” Kutay said in a statement.
The biopharma industry will have to wait until 2025 to see how things shake out. What’s fair to say is that the Novo-Catalent acquisition is a one-off the likes of which the industry will not see again.
