Senator Warren Calls for Scrutiny of Novo Nordisk's $16.5 Billion Deal

By Jody Godoy

NEW YORK (Reuters) – U.S. Senator Elizabeth Warren has requested antitrust regulators to examine a $16.5 billion deal in which Novo Nordisk's controlling shareholder would acquire contract drug manufacturer Catalent. She expressed concerns that the merger may grant Novo Nordisk an unlawful advantage in the obesity drug market.

Novo Holdings, the investment firm with a controlling interest in Novo Nordisk, signed the deal to buy Catalent in February to enhance the supply of Wegovy, Novo's popular GLP-1 injectable weight loss drug.

Warren urged the U.S. Federal Trade Commission (FTC) to file a lawsuit to block the deal if found illegal, potentially delaying its expected completion 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," Warren stated in her letter.

As part of the agreement, Novo Holdings would acquire three of Catalent's fill-finish factories, where injection pens are sterilized and filled, for $11 billion. Following the announcement, Catalent shares showed a slight decline.

Warren has supported FTC Chair Lina Khan, who has faced criticism from some business groups for being overly eager to block deals. Khan has indicated that only a small fraction of reviewed deals are ultimately contested.

Eli Lilly's GLP-1 drugs, Zepbound and Mounjaro, which are approved for weight loss and diabetes respectively, compete with Novo Nordisk's Wegovy and Ozempic. Lilly also relies on Catalent for the production of its GLP-1 and diabetes medications.

Lilly's CEO, David Ricks, criticized the merger, noting the conflict of interest it presents: "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 surged, leading to supply shortages and an increase in compounded versions of the drugs. Both Novo and Lilly have faced shortages of GLP-1 medications over the past two years, with a dose of Wegovy still listed as in shortage by the FDA.

Under President Joe Biden, the FTC has been actively blocking vertical mergers that may hinder competitors' access to supply chains or disclose sensitive competitive data.