EU interviews rivals over Novo Holdings’ $16.5bn Catalent acquisition

European Union antitrust regulators are scrutinising Novo Holdings’ planned $16.5 billion takeover of contract drug manufacturer Catalent, amid growing opposition from pharmaceutical rivals and consumer groups.

The EU watchdog has asked competitors and customers for feedback on four business areas within the contract development and manufacturing sector, including injectables and pre-filled syringes. The regulator has set a 6 December deadline for its preliminary review.

The acquisition, announced in February, is seen as crucial for Danish drugmaker Novo Nordisk’s efforts to boost production of its popular weight-loss drug Wegovy. Under the deal, Novo Holdings plans to sell three of Catalent’s fill-finish sites to Novo Nordisk for $11 billion after the acquisition closes.

Swiss pharmaceutical giant Roche has called on authorities to block the deal, expressing concerns about competition in the growing weight-loss drug industry. “Limiting the competition in this space is not a good idea,” said Thomas Schinecker, Roche’s chief executive officer. “From an industry perspective, it would be a wrong decision by authorities.”

Eli Lilly, Novo’s main rival in the obesity drug market, has also voiced concerns about the merger’s impact. During an earnings call in August, Lilly’s chief executive officer David Ricks noted: “We do rely on one of the Catalent sites for GLP-1 and other diabetes production. It’s more the oddity of your main competitor being also your contract manufacturer and how to resolve that situation.”

The deal has drawn criticism from US lawmakers, with Senator Elizabeth Warren asking the Federal Trade Commission to scrutinise the acquisition closely, noting Novo’s 55 per cent market share in GLP-1 drugs.

Catalent has attempted to address market concerns, with president and chief executive officer Alessandro Maselli stating the company would continue to partner with pharmaceutical companies and maintain its fill services.

Novo Holdings maintains that the deal will benefit the industry. “We are excited to partner with Catalent as it enters a new phase of growth and accelerates its mission to develop, manufacture and supply products that help people live better and healthier lives,” said Kasim Kutay, Novo Holdings’ chief executive officer.

The transaction was initially expected to close towards the end of 2024, subject to regulatory approvals. The EU regulators can either clear the deal with or without remedies or open a full-scale, four-month investigation if they have serious concerns.