US Senator Warren calls for scrutiny of Novo Holdings' Catalent deal (updated)

Catalent

10/10/2024 16:27

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      Warren urges FTC to block deal if found illegal
    

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      Deal involves selling three Catalent factories to Novo 
    

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      Lilly's CEO criticizes the deal, citing competition
concerns
    

  
 (Adds detail about the deal, share moves in paragraphs 5 and 6)
    By Jody Godoy
       NEW YORK, Oct 10 (Reuters) - U.S. Senator Elizabeth
Warren has asked antitrust regulators to scrutinize a $16.5
billion deal in which Novo Nordisk's  NOVOb.CO  controlling
shareholder would acquire contract drug manufacturer Catalent
 CTLT.N , saying it may give the pharmaceutical company an
unlawful advantage in obesity drugs.
    Novo Holdings, the investment firm that has a controlling
interest in Novo Nordisk, signed a $16.5 billion deal to buy
Catalent in February to boost supply of Wegovy, Novo's
blockbuster GLP-1 injectable weight loss drug.
Warren urged the U.S. Federal Trade Commission to sue to block
the deal if the regulator finds it illegal – which could delay
the deal's expected closing later this year.
    "I am concerned that Novo Nordisk's merger with Catalent
will give Novo Nordisk unprecedented visibility into and control
over its competitor's production capacity, costs, and business
practices, and the ability to preference its own products and
obstruct its competitors' use of Catalent to produce GLP-1
drugs," Warren said in the letter.
        According to the terms of the deal, Novo Holdings would
sell three of Catalent's fill-finish factories, where injection
pens are filled in sterile conditions, in Italy, Belgium and the
United States, onto Novo Nordisk for $11 billion.
  
        Catalent shares edged down after the news.
  
    Warren has been a political ally and supporter of FTC Chair
Lina Khan, who some business groups have criticized, saying she
is over-eager to block deals. Khan has said only a small
fraction of deals the FTC reviews are ultimately challenged.
    Eli Lilly's GLP-1 drugs - Zepbound approved for weight loss
and Mounjaro for diabetes - compete with Novo Nordisk's Wegovy
and Ozempic.
    Lilly also uses Catalent for GLP-1 and diabetes drug
production.
    David Ricks, Lilly's CEO, has criticized the deal. He told
investors in August that while Lilly is building its own sites,
the company is concerned by "the oddity of your main competitor
being also your contract manufacturer and how to resolve that
situation."
    Demand for GLP-1 weight loss drugs in the U.S. has
outstripped supply, leading to shortages and a rise in
compounded versions that are created by combining, mixing, or
altering drug ingredients.
    Both Novo and Lilly GLP-1 drugs have experienced shortages
during the last two years and one dose of Novo's Wegovy remains
on the FDA's shortage list.
    Under President Joe Biden, the FTC has sought to block
vertical mergers it thinks would allow the merged company to
block competitors' access to supply chains or distribution
points, or hand over sensitive competitive data. 

 (Reporting by Jody Godoy in New York; Editing by David
Gregorio)
 ((mailto:Jody.Godoy@thomsonreuters.com;))