EU Probes Novo Holdings’ $16.5 Billion Acquisition of Catalent

European antitrust regulators are scrutinizing Novo Holdings’ proposed $16.5 billion acquisition of U.S.-based Catalent, a major supplier in the pharmaceutical manufacturing industry. According to sources cited by Reuters, EU officials have reached out to pharmaceutical companies and clients for feedback across four key areas of Catalent’s business operations, underscoring the potential market impact of this significant deal.

Novo Holdings, the investment arm controlling Danish drug giant Novo Nordisk, is aiming to expand its production capacity for Novo Nordisk’s successful weight-loss medication, Wegovy. With soaring demand for Wegovy, which has boosted Novo Nordisk’s standing to become Europe’s most valuable company, the acquisition of Catalent could be pivotal in sustaining supply, Reuters notes. However, the European Commission’s recent questionnaire to competitors and industry partners may enable feedback on any perceived risks to competition within the sector.

The questionnaire sent by EU antitrust regulators seeks insights into four primary areas within Catalent’s contract development and manufacturing operations. According to Reuters, the inquiry focuses on potential vertical links in production services for injectables, pre-filled syringes, orally dissolved tablets, and soft gel products. Key players in the pharmaceutical and CDMO (Contract Development and Manufacturing Organization) sectors received the questionnaire as the EU monitors potential impacts on market competition.

The transaction’s timeline indicates that Novo Holdings formally requested EU approval on October 31, launching an initial review period set to conclude by December 6. Per regulatory protocols, Novo Holdings has until November 29 to propose concessions if regulators flag competition issues during this phase. EU regulators have the authority to either greenlight the acquisition—possibly with conditions—or escalate to an in-depth, four-month investigation if serious concerns emerge.

Related: EU Antitrust Decision on Novo Holdings’ Catalent Acquisition Set for December

Announced in February, the acquisition deal also includes a subsequent transaction in which Novo Holdings plans to sell three of Catalent’s “fill-finish” production sites, located in Italy, Belgium, and the United States, directly to Novo Nordisk for $11 billion. This transfer is expected to channel these facilities exclusively toward manufacturing Wegovy injection pens to meet rising global demand for the obesity medication.

The U.S. Federal Trade Commission (FTC) had previously requested additional information regarding the deal in May, as reported by Reuters, though no updates have emerged from the FTC review. Both Novo Holdings and Catalent remain optimistic about securing regulatory approval and have publicly reiterated their expectation to close the deal by the end of the year.

In the high-stakes arena of obesity treatment, Novo Nordisk faces formidable competition, notably from Eli Lilly, whose injectable drug Zepbound is also targeting weight loss and metabolic health. Analysts project that the obesity drug market could skyrocket to a valuation of $150 billion by the early 2030s, signaling intense competition for market share.

While Catalent, headquartered in the United States, was highly profitable during the COVID-19 pandemic due to its partnerships with vaccine manufacturers, the company faced operational and financial challenges as vaccine demand waned. According to Reuters, increased production costs and quality control setbacks led to corrective measures, particularly after regulatory inspections flagged issues across several plants.

Source: Reuters