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Novo Nordisk has agreed to acquire three manufacturing sites for $11bn, as the Danish drugmaker races to expand production of the weight loss drugs whose runaway success has sent the company’s valuation beyond $500bn.
The group last week reported record sales for 2023, driven by surging demand for its anti-obesity drugs Ozempic and Wegovy. However, Novo Nordisk warned that supply chain bottlenecks were hampering its ability to produce enough of the best-selling treatments.
The purchase of the three sites was part of a three-way transaction announced on Monday in which Novo Holdings, the Danish group’s controlling shareholder, agreed to buy US drug manufacturer Catalent for $16.5bn.
As part of the transaction, Novo Holdings, which controls the majority of the Danish pharma group’s voting rights, has agreed to sell three of Catalent’s manufacturing sites to Novo Nordisk.
The sale of Catalent comes after the New Jersey-based company had faced calls from activist investor Elliott to shake up its board and improve the performance of its shares. Elliott said on Monday that it backed the company’s sale.
The plants Novo Nordisk is acquiring from Catalent, which specialises in “fill-finish” operations, or the final stage of manufacturing drugs, are in Indiana, Brussels and Anagni, Italy. Two of the three are already contracted by Novo Nordisk to fill its injection pens.
Novo Nordisk is under pressure to ramp up production of both its filled injection pens and semaglutide, the active pharmaceutical ingredient used in Ozempic and Wegovy.
The new sites would not immediately solve its supply chain constraints but would “gradually increase its filling capacity from 2026 and onwards”, Novo Nordisk said.
Shares in Novo Nordisk climbed 4 per cent on Monday, taking their gain over the past 12 months to 69 per cent.
“We are very pleased with the agreement to acquire the three Catalent manufacturing sites, which will enable us to serve significantly more people living with diabetes and obesity in the future,” said Lars Fruergaard Jørgensen, president and chief executive at Novo Nordisk.
Catalent was a major manufacturer of Covid-19 vaccines, including the AstraZeneca, Johnson & Johnson and Moderna shots. Its plants have also suffered some manufacturing issues.
Under the terms of the deal, Catalent investors will receive $63.50 a share in cash. Including around $5bn in debt, the transaction values Catalent at $16.5bn on an enterprise basis. Shares in Catalent jumped 10 per cent in early trading in New York.
Novo Holdings owns 28 per cent of the shares in Novo Nordisk but has 77 per cent of the voting rights. It is an investment group created to manage the wealth of the Novo Nordisk Foundation, which has become the world’s largest charitable foundation on the back of the anti-obesity drug boom.
The success of Ozempic and Wegovy has delivered a windfall to Novo Holdings, which is paid a dividend by Novo Nordisk.
“Catalent is substantially larger than what we’ve done before,” Kasim Kutay, chief executive of Novo Holdings, told the Financial Times. “We’re also substantially growing. The dividends coming our way from Novo Nordisk are substantially higher from where they were a few years ago.”
While Novo Nordisk will control the three fill-finish plants, Novo Holdings will retain the rest of Catalent’s assets, adding to its portfolio of life sciences services.
“As a significant investor in Catalent, Elliott fully supports the transaction announced today,” said Marc Steinberg, a partner at the New York-based firm.
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