Novo Catalent deal clears regulatory hurdles

2024 was earmarked with what was dubbed by many as the “biggest transaction of cell and gene capacity ever,” causing ripples across the industry. In February, Novo Holdings – the holding and investment company responsible for managing Novo Nordisk – announced that it would take New-Jersey-based contract development and manufacturing organization (CDMO) Catalent private.  

Much of the deal was driven around securing capacity for Wegovy (semaglutide), Novo Nordisk’s blockbuster weight loss drug. Thus, the acquisition included an $11 billion divestment of three of Catalent’s fill/finish facilities, set to be incorporated into Novo Nordisk’s glucagon-like peptide-1 (GLP-1) in-house production network.

The industry was shaken by the acquisition as the CDMO had several partnerships with firms like Novartis, Sarepta, and Eli Lilly. Catalent has been described by Novo’s weight loss rival, Eli Lilly, “as an integral manufacturer [...] especially in diabetes and obesity.” 

Thus, the deal raised questions about potential disruptions to existing collaborations and a shortage of viral vector capacity. Industry concerns were heightened further as Novo Holdings signaled a willingness to restructure. Anthony Davies, CEO, cell and gene therapy (CGT)-focused consultancy firm Dark Horse Consulting, told BioProcess Insider, “What was bought can be sold!” 

In May, the deal was approved by Catalent’s stockholders at $63.50 per share in cash. However, the deal was lobbied against, and in October, twelve organizations, including major labor unions and consumer groups urged the FTC to block the acquisition. In a letter signed by groups including Services Employees International Union and the United States Public Interest Research Group, the signees warn that the merger could prioritize Novo's own production needs, disadvantaging rivals and raising costs, while limiting manufacturing capacity for competing CGT products.  

However, the transaction was approved by the European Commission (EC) followed by the FTC, and is now on the verge of closing.  

According to the announcement, Novo expects to finalize the acquisition soon, resulting in a low to mid-single-digit negative impact on operating profit growth in 2024 and 2025, and a reduction in free cash flow due to the $11.7 billion price. The deal will be primarily debt-financed, affecting net financial items, and no new share buyback program is planned for 2025.