2024-02-05 18:08:00
Pharmaceutical giant Novo Nordisk NOVO NORDISK A/S +3.54% Close:0 Open:116.39 High:118.32 Low:116.27 Turnover:– Page Quote News Graphs Company profile Recommendations Additional articles on the subject: reports that its parent company, Novo Holdings, will purchase Catalent company for 11.5 billion dollars. Catalent serves as a major manufacturing contractor for the weight loss drug Vigobi, which is expected to help Novo Nordisk increase production of the popular drug.
Kasim Kotai, who serves as the CEO of Novo Holdings, said that the transaction is an important step in the company’s strategy to support Novo Nordisk and allow the pharmaceutical manufacturer to increase its production capacity in order to meet the rising demand. Novo Holdings, which serves as the investment arm of Novo’s controlling owner, the Novo Nordisk Foundation, will purchase Catalent’s shares for $11.5 billion, with the value of the transaction estimated to include approximately $16.5 billion in debt. After the merger is completed, Novo Holdings is expected to sell three sites used to fill and package Catalent’s drugs – in Italy, Belgium and the United States to Novo Nordisk for $11 billion .
“We sold very important filling and packaging plants to Novo Nordisk as part of this transaction,” Cotai said. “This ability is a key strategic consideration for Novo Nordisk, especially when thinking about the patients and making sure there will be a wider launch for Vigobi and Ozpic.”
The purchase comes at a time when Novo is facing increasing competition from the Zepbound vaccine of American competitor Eli Lilly & Company +4.49% Close:0 Open:692.19 High:711.88 Low:682.53 Turnover:– Page Quote News Graphs Company Profile Recommendations More Articles Subject: In the rapidly growing market of slimming drugs. According to Wall Street estimates, the weight loss drug market could reach a value of $100 billion by the end of the decade. Rising demand for the weight-loss drugs has boosted Novo and Lilly’s profits and share prices, but the significant challenge for the companies remains increasing production of the drugs. The bottleneck in the case of Novo was the need to expand the capacity in a process called – fill-finish – a process in which the drugs are put into the final container in which they will be delivered to customers and actually packaged. The process requires extremely sterile conditions.
The Catalent company serves as the main supplier of the fill-finish process for Novo, where the deal will allow Novo to increase capacity by adding the plant in Italy as a fill-finish site and the other two sites as exclusive production sites for Novo. The move will help the pharmaceutical manufacturer to increase the production of Vigobi drug faster than expected. Novo stated that the company’s filling capabilities following the transaction are expected to increase starting in 2026.
The acquisition of Catalent’s three sites is expected to have a low single-digit percentage negative impact on operating profit growth in both 2024 and 2025, Novo Nordisk said. Novo Holdings will purchase all existing shares of Catalent for $63.50 per share in cash, which is a 16.5% premium to the stock’s closing price on its last trading day. Novo began working to acquire Catalent as early as August last year, when the manufacturer was a takeover target for private equity firms and strategic buyers for months.
The defects found in the plant of the main competitor
Eli Lilly may face big problems soon – following the inspection carried out by the FDA at the company’s plant in New Jersey in July, in which certain defects were found, the American health organization decided to deepen its inspection, and recently found even more serious defects. Among the deficiencies found are the lack of monitoring of the manufacturing process of the drugs, deficiencies in quality tests, lack of coordination between the various machines along the production line, and difficulty for the workers to operate the machines themselves. The published report does not include names of employees or specific medications to which the deficiencies concern.
The latest inspection by the FDA came shortly after the company itself summoned it, and this in order to obtain approval for the production of its drug for the treatment of migraine in additional bands so that it can meet the demands. The health organization agreed, and the aforementioned deficiencies it found were, according to him, “deficiencies that were already under inspection or those that would have been discovered at the very least.” Eli Lilly stated that the report does not affect the quality, safety or supply of any of the company’s drugs.
Eli Lilly became one of the largest pharmaceutical companies in the world, when in 2023 its stock increased by 59% to a value of 597 billion dollars, an increase that is mainly attributed to the success of its diabetes drug, Mongero, a drug that was also found to be beneficial against obesity by suppressing Appetite for fattening products. The drug’s success as an anti-obesity drug was so great that Eli Lilly decided to remarket it below under a new name, Zepbound. The company noted that the active ingredient in Mongero and Zepbound is not manufactured at the New Jersey plant.
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