The group of like-named companies that include Novo Holdings and Novo Nordisk—the two tied to a multibillion-dollar buyout of Catalent currently under FTC review—ultimately send proceeds to the Novo Nordisk Foundation, one of the world’s largest charitable foundations.
Earlier this month, we were asked to change the headline of an editorial from News Editor Greg Slabodkin: Pressure Mounts on Novo Nordisk’s $16.5B Catalent Buy Amid FTC Review.
The story focused on a letter to the Federal Trade Commission from Sen. Elizabeth Warren (D-Mass.), who expressed concerns about “a proposed merger between Novo Nordisk and contract development and manufacturing organization Catalent.” Technically, this isn’t an accurate way to describe the deal. As we stated clearly in the story, Novo Nordisk’s parent company, Novo Holdings, will be doing the buying at that sum, and Novo Nordisk will then spend $11 billion to purchase three of the former Catalent sites from Novo Holdings.
Novo Nordisk will primarily use the sites to produce its blockbuster GLP-1 drugs Wegovy and Ozempic, and Warren’s concern is that the deal will give Novo an edge on Eli Lilly and other competitors as its GLP-1s Zepbound and Mounjaro quickly gain ground on Novo’s market dominance. I won’t address the validity of Sen. Warren’s concerns here but rather focus on the language. She—and BioSpace—were wrong to state that Novo Nordisk itself is buying Catalent for $16.5 billion. As journalists, we value accuracy above all else, and we promptly corrected the record. The headline now reads: Pressure Mounts on Novo’s $16.5B Catalent Buy Amid FTC Review.
This is of course ambiguous given the conglomerate of like-named entities, which includes not only Novo Nordisk and Novo Holdings but also another biopharma company called Novonesis and the nonprofit Novo Nordisk Foundation, which sits atop them all. Sure enough, the Catalent representative that first reached out to us said as much, asking us to use “Novo Holdings” in the headline.
But after much discussion we feel that this ambiguity is warranted. While taking care to explain the details with precision in the story, “Novo” can be appropriate shorthand when we discuss the transaction in broad strokes. Here’s why.
How Are Novo Nordisk and Novo Holdings Related?
The Danish collection of organizations prides itself on its unique, if a little confusing, structure. In his recent testimony to the Senate health committee, Novo Nordisk CEO Lars Fruergaard Jørgensen said that the work of his company’s employees “illustrates the power of our unique ownership structure, which is unlike any other major pharmaceutical company in the world.”
Novo Nordisk is owned in part by Novo Holdings, which is owned in full by the Novo Nordisk Foundation, a major philanthropic organization that has donated more than $5.5 billion to scientific, social and humanitarian causes since 2018. The foundation has partnered with the Bill & Melinda Gates Foundation on initiatives such as antivirals for pandemic preparedness.
The Novo Nordisk Foundation ultimately receives proceeds from the three companies in the Novo Group (itself not an official legal entity): Novo Holdings, Novo Nordisk and Novonesis. Novo Holdings is a fully owned subsidiary of the Novo Nordisk Foundation that manages the foundation’s investment activities and serves as the holding company for Novo Nordisk and Novonesis—sister companies that Novo Holdings (and thus the foundation) owns a controlling stake in. In other words, Novo Holdings casts a majority of votes at Novo Nordisk’s general meetings.
Revenue the biopharma brings in—currently skyrocketing thanks to blockbuster sales of Novo Nordisk’s GLP-1s—filters up to the foundation. Specifically, proceeds both from Novo Holdings’ investments and its role as a holding company for the foundation’s ownership interests in Novo Nordisk and Novonesis “are ultimately funneled to the Novo Nordisk Foundation,” the press team at Novo Holdings wrote in an email to BioSpace.
Simply put, the Novo entities may operate independently, but they are very much related. And like any good family members, they have seats at one another’s tables and are always looking out for one another’s interests.
As Novo Holdings CEO Kasim Kutay told Fierce Biotech last year, the company does “avoid playing in the same sandpit” as Novo Nordisk when making investment decisions. “If we’re uncertain, we just pick up the phone and say, ‘Look, does this conflict with what you’re doing in any way?’” continued Kutay, who holds a board seat at Novo Nordisk and at Novonesis. “If the answer is no, then we proceed.”
The Catalent Deal
In February 2024, Novo Holdings announced the $16.5 billion acquisition of Catalent, a deal that would ultimately see Novo Nordisk taking manufacturing sites for $11 billion to bolster production of Wegovy and sister diabetes medicine Ozempic.
In the process of proposing the deal with Catalent, teams at Novo Holdings and Novo Nordisk “took active steps to respect each organization’s independence, and to ensure fairness,” Novo Holdings’ press team explained to BioSpace. While Novo Nordisk gets three sites for GLP-1 production, Novo Holdings will still have nearly 50 Catalent sites leftover to derive value from, she continued. “Neither entity would have pursued this transaction if it did not align with each organization’s goals independently, and this is evidenced by their retention of separate legal advisors and months of negotiations between the two parties.”
The FTC is still scrutinizing the buyout, having twice extended its review amid growing opposition, the second time requesting more information. In addition to Senator Warren’s objection, unions, consumer groups and public interest organizations last week wrote a letter to the agency expressing concern that the Novo-Catalent deal would be harmful to competition.
Eli Lilly itself has raised concerns, noting that the company relies on a Catalent site for GLP-1 production, with CEO David Ricks commenting in a Q2 earnings call that it’s an “oddity” that Lilly’s “main competitor” could become the company’s contract manufacturer. “We’ve aired those concerns publicly and privately since the proposed transaction was announced, and we’re waiting to see what happens.”
This week, Catalent defended the deal, with CEO Alessandro Maselli assuring customers in an open letter that the CDMO would continue to operate independently and prioritize their interests. Stephens analyst Jacob Johnson told BioSpace that Catalent’s decision to respond publicly to the critics was “interesting,” saying, “from my perspective some of the rhetoric from opponents to the deal wasn’t necessarily based on fundamental evidence.” Counter to arguments that the Novo deal might squash competition, “in some ways I think this Catalent deal has actually created opportunities,” he told BioSpace.
The FTC is expected to render a decision by the end of the year.
Back to the discussion of the language we use to discuss the ongoing developments, one could question if the FTC might view the deal differently if Novo Nordisk were itself purchasing Catalent instead of acquiring Catalent sites only indirectly through the deal first orchestrated by Novo Holdings. But experts who spoke with BioSpace didn’t suspect this would be the case.
“I don’t see the reason for the FTC to view the deal differently if the acquirer was the pharma company vs the holding company,” analyst Zhiqiang Shu of Laurion Capital Management said.
Patricia Danzon, an expert of healthcare economics at the University of Pennsylvania, agreed. “Given the close relationship between Novo [Nordisk] and Novo Holdings, I can’t see that it should make a difference for merger analysis,” she wrote to BioSpace in an email. “But there may be details of which I am unaware.”
Given that, is it important to specify Novo Holdings instead of the more ambiguous (but also more accessible) “Novo”? As I’ve already stated, we landed on the side of no.
Perhaps the latest letter writers walked this line the best. The unions, consumer groups and public interest organizations titled their letter to the FTC, “Novo Nordisk’s Acquisition of Catalent Consumers.” This is an accurate way to describe the deal while naming the secondary but more relevant beneficiary of the FTC’s review, Novo Nordisk. The letter writers are then precise and accurate in the body of the letter when they provide the nuance: “Today, we write to express our opposition to Novo Holdings’ proposed acquisition of Catalent Inc.” Well done, friends. Well done.
