EU Antitrust Regulators Review Novo Holdings' $16.5 Billion Takeover of Catalent

By Foo Yun Chee and Maggie Fick
BRUSSELS/LONDON (Reuters) – EU antitrust regulators have solicited feedback from competitors and customers regarding Novo Holdings' proposed $16.5 billion acquisition of Catalent (NYSE:CTLT), according to sources familiar with the situation.

Novo Holdings, the primary shareholder of Danish pharmaceutical company Novo Nordisk (NYSE:NVO), has enjoyed substantial profits from its popular weight-loss medication Wegovy, making it Europe's most valuable company by market capitalization.

The European Commission's questionnaire indicates a review of market dynamics and potential anti-competitive issues stemming from the merger. It focuses on vertical relationships within specific sectors of the contract development and manufacturing organization (CDMO) industry, including injectables, pre-filled syringes, orally-dissolved pills, and soft gels.

The inquiry was directed at large pharmaceutical and CDMO firms following Novo Holdings' request for EU clearance of the acquisition on October 31. A preliminary review deadline has been set for December 6. Novo Holdings has until November 29 to propose any necessary remedies.

EU regulators may either approve the deal, with or without remedies, or launch a comprehensive four-month investigation if there are significant concerns.

This $16.5 billion agreement, revealed in February, reflects Novo Nordisk's intent to enhance its Wegovy production, which is administered as a weekly injection. Post-acquisition, Novo Holdings plans to transfer three of Catalent's fill-finish facilities located in Italy, Belgium, and the USA to Novo Nordisk for $11 billion. These facilities will facilitate the production of Novo Nordisk's injection pens.

All parties involved anticipate that the transaction will finalize by the end of this year.

In May, the trio received a secondary request from the U.S. Federal Trade Commission (FTC) seeking additional information regarding the merger, with no further updates on the FTC's review since then.

Novo Nordisk faces stiff competition from U.S. competitor Eli Lilly (NYSE:LLY) and its obesity drug, Zepbound. Analysts project that the obesity market could reach up to $150 billion by the early 2030s.

Based in the U.S., Catalent, one of the largest contract manufacturers globally, benefited significantly during the COVID-19 pandemic by partnering with various companies for vaccine production.

However, post-pandemic, Catalent has encountered challenges with reduced COVID-vaccine revenues and increased costs stemming from quality control issues highlighted by U.S. drug regulators at three of its facilities.