Pressure has been mounting for the Federal Trade Commission to take action, with Senator Elizabeth Warren last week urging FTC Chair Lina Khan to block the merger if it violates antitrust laws.
A coalition of unions, consumer groups and public interest organizations on Thursday expressed their concerns over Novo Holdings’ proposed $16.5 billion acquisition of CDMO giant Catalent, citing the growing vertical integration in the healthcare industry and its potential negative effects on patient access to affordable treatments.
In their letter, the groups urged FTC Chair Lina Khan to “challenge this transaction” and take the appropriate steps necessary to ensure that “competition is protected and that consumers will have full access to treatments,” particularly for obesity and diabetes.
More than 10 organizations signed the letter, including the American Federation of State, County and Municipal Employees, Doctors for America and Beta Cell Action.
“We believe this transaction, if consummated, would be harmful to competition across various therapeutic areas and ultimately reduce patients’ access to these vital treatments,” the letter states. If allowed to proceed, Novo Holdings will then sell three Catalent factories to Novo Nordisk in a related $11 billion deal giving the Danish drugmaker “the ability and incentive to engage in a broad range of anticompetitive conduct,” according to the groups’ letter.
“In our view, there is no adequate remedy that resolves the competition concerns raised by this transaction,” the letter alleges.
Thursday’s letter comes after Sen. Elizabeth Warren (D-Mass.) wrote to FTC Chair Lina Khan, encouraging her to “carefully scrutinize” the buyout, and to “block this merger” if it turns out to be illegal under antitrust laws.
The FTC is continuing to review the acquisition. In April 2024, Novo Nordisk Foundation, parent company of Novo Holdings, voluntarily withdrew and refiled its compulsory forms with the FTC and Department of Justice, giving both agencies more time to review the application. In May 2024, the FTC requested more information regarding the acquisition, further delaying its review process.
Novo Holdings first moved to acquire Catalent in February 2024, a deal that the CDMO’s board has unanimously endorsed.
However, analysts and other pharma companies—including Novo’s rival Eli Lilly—have raised concerns about the buy.
Lilly CEO David Ricks said in a Q2 earnings call in August that the company remains concerned about the Novo-Catalent deal.
“We do rely 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, and we’re waiting to see what happens.”
Some industry experts have also pointed out that the deal may be short-sighted for Novo Holdings, which will have to contend with Catalent’s struggling business. The CDMO sustained $539 million in losses in 2023.
