Danish pharmaceutical giant Novo Nordisk’s parent company, Novo Holdings, announced on Monday its plans to acquire drug manufacturer Catalent in a $16.5 billion deal. This strategic move aims to bolster the supply chain for Novo Nordisk’s highly popular weight loss injection Wegovy and diabetes shot Ozempic.
Catalent plays a crucial role as the primary supplier of fill-finish work for Novo Nordisk’s Wegovy, involving the filling and packaging of syringes and injection pens.
As part of the deal, Novo Nordisk will purchase three of Catalent’s manufacturing sites from Novo Holdings for $11 billion. Novo Holdings currently owns nearly 77% of the voting shares in Novo Nordisk.
The acquisition of the manufacturing plants and the broader deal to buy Catalent is expected to be finalized by the end of 2024, according to Novo Nordisk and Novo Holdings.
Novo Nordisk anticipates that this purchase will gradually increase its filling capacity starting in 2026. The company already contracts the three plants, located in Italy, Belgium, and Bloomington, Indiana.
Following the announcement, Catalent shares surged approximately 10% in premarket trading on Monday. The company currently holds a market value of around $10 billion. Meanwhile, Novo Nordisk’s stock rose nearly 2% in premarket trading, with a market value of about $390 billion.
Novo Nordisk experienced a significant 53% surge in its shares last year as Wegovy and Ozempic gained popularity, leading to shortages, for their effectiveness in helping patients lose significant weight over time.
The Catalent deal represents Novo Nordisk’s latest move to enhance manufacturing capacity for its drugs amidst competition from Eli Lilly and other emerging competitors in the weight loss drug market.
In addition to the Catalent acquisition, Novo Nordisk announced plans last year to invest in new production facilities in Denmark and France. The company also revealed last week that it has more than doubled the number of Wegovy starter doses shipped to the U.S., enabling more patients to begin treatment.
Under the terms of the deal, Novo Holdings will acquire Catalent for $63.50 per share in cash, representing a 16.5% premium to Catalent’s closing price on Friday.
The acquisition has received backing from activist investor Elliott Investment Management, which holds a stake in Catalent, according to Novo Holdings.
It is worth noting that some of Catalent’s factories involved in manufacturing Wegovy have faced regulatory issues in the past. A report in July that Catalent’s Brussels factory, which fills Wegovy pens, had repeatedly violated U.S. sterile-safety rules in recent years, with staff failing to perform required quality checks.
(Source: Barron’s | The Guardian | Bloomberg)
