Now that they’ve received the go-signal from both U.S. and EU anti-trust regulators, Novo Holdings and Catalent expect to wrap up their deal in the coming days.
Despite stiff contention from industry, lawmakers and public-interest groups, the U.S. Federal Trade Commission on Saturday gave the greenlight to Novo Holdings’ proposed $16.5 billion acquisition of Catalent.
Details regarding the FTC’s clearance are sparse, but according to a press announcement from the CDMO, the companies have satisfied all the “regulatory closing conditions” of the deal, as per the antitrust watchdog. Novo Holdings and Catalent expect to formally close the transaction “in the coming days.”
The FTC’s go-ahead comes just days after the European Commission also granted its unconditional approval of the deal, writing in a press announcement that the acquisition “would not lead to customers lacking sources of supply alternative to Catalent,” and that “there is sufficient share capacity in the market.”
“We see this as a bullish signal for Novo,” analysts at BMO Capital Markets wrote in a weekend note to investors, pointing to “the need for additional manufacturing capacity.” Still, the analysts do not see the Novo-Catalent deal as a “tailwind for 4Q24 or even 2025” because the additional production capabilities from the deal are “expected to come online by 2026.” The companies will mainly focus on technology transfer next year.
“We await clarity as to the nuances of completing and honoring contracts in these facilities,” the BMO analysts added.
As part of the acquisition deal with Catalent, Novo Holdings will sell three fill-finish sites to its pharma sister Novo Nordisk for $11 billion upfront. While the drugmaker has yet to provide specific information regarding the anticipated manufacturing bump, “we note that these are large fill/finish facilities that could meaningfully add to supply,” BMO analysts wrote.
After Novo Holdings first moved to acquire Catalent in February, the transaction quickly garnered strong opposition from all corners. In Eli Lilly’s second-quarter earnings report in August, CEO David Ricks aired competitive concerns with the acquisition, noting the “oddity of your main competitor being also your main contract manufacturer.” Novo and Lilly are the two undisputed frontrunners in the GLP-1 space, particularly in obesity.
Following Ricks is Roche CEO Thomas Schinecker, who in October also spoke out against the transaction. In a media call at the time, Schinecker said that reducing competition in GLP-1 “is not a good idea,” particularly for smaller players.
The same month, Sen. Elizabet Warren (D-Mass.) wrote to FTC Chair Lina Khan, warning her of potential competitive problems with the deal, which could give Novo “unprecedented visibility into and control over its competitor’s production capacity, costs, and business practices.”
Warren also noted that Novo “has a history of trying to restrict competition and maximize profits” on its blockbuster drugs Wegovy and Ozempic.
Days later, a broad coalition of unions and consumer groups also sent a letter to Khan, urging her to challenge the deal and ensure that “competition is protected” in the GLP-1 space in order to maintain patients’ full access to obesity and diabetes therapies.
Editor’s note (Dec. 16): This story has been updated to refer to Novo Holdings’ proposed acquisition of Catalent, instead of a merger between the two companies.
