Regulatory Challenges in Novo Holdings’ $16.5 Billion Catalent Acquisition
Creators: name: Hoke, Delaney
Publisher: name: American University
Year: 2025

description: As of November 22nd, 2024, Novo Holdings is expected to secure full antitrust approval from the European Union for its proposed $16.5 billion acquisition of Catalent, a U.S.-based contract drug manufacturer.[1] Novo Holdings is a Danish investment company with significant investments in the life sciences sector, including a controlling stake in Novo Nordisk.[2] Novo Nordisk is a Danish company based in diabetes care, obesity treatment, and other serious chronic diseases.[3] They are best known for their products Ozempic and Wegovy, which catapulted Novo Nordisk to prominence worldwide.[4] Catalent is a U.S.-based contract development and manufacturing organization that specializes in drug development, delivery technologies, and supply solutions.[5]<br>In February, 2024, Novo Holdings announced plans to acquire Catalent for 16.5 billion.[6] Following the acquisition, Novo Nordisk intends to purchase three of Catalent’s manufacturing facilities for $11 billion to expand the production capacity for Ozempic and Wegovy.[7] This deal is significant as Ozempic and Wegovy are experiencing a high global demand, and the acquisition would address current supply constraints and strengthen Novo Nordisk’s position in the obesity and diabetes treatment market.[8]<br>Since the proposed acquisition involves both Danish and U.S. based companies, it will have to undergo regulatory scrutiny from the European Union Commission and the Federal Trade Commission (FTC).[9] Approval from both regulatory bodies is necessary for the transaction to close.[10] The European Commission set a decision deadline of December 6, 2024, to determine whether to approve the acquisition.[11] Reports currently indicate that the Commission is expected to not find any antitrust concerns and grant unconditional approval.[12] <br>In the U.S., the FTC issued a second request for information in May, 2024 during its antitrust review process.[13] This deeper review reflects the FTC’s increased scrutiny of mergers under the Biden administration.[14] Catalent and Novo Holdings have stated their intentions to cooperate with the FTC to obtain antitrust approval by the end of 2024.[15]<br>However, there are concerns about reduced competition due to the rapidly growing demand for obesity and diabetes treatments.[16] The increased production capacity may solidify Novo Nordisk’s dominant market position, potentially deterring smaller competitors from entering the weight-loss drug market and stifling innovation and increasing prices.[17] Industry competitors, such as Roche, a Swiss healthcare company, have expressed concern that the acquisition would limit competition in the industry.[18]<br>Past pharmaceutical mergers provide insight into possible outcomes for this deal. In 2015, the FTC approved Pfizer’s acquisition of Hospira on the condition that Pfizer divest rights to four pharmaceutical products to protect competition in specific markets.[19] In 2019, the FTC required Bristol-Myers Squibb to divest Celgene’s Otezla, a leading treatment for psoriasis, as a condition for approving the merger.[20] In 2021, The FTC blocked Illumina’s proposed acquisition of Grail, a maker of early detection tests for cancer, citing concerns that the deal would stifle competition for life-saving cancer tests in the U.S.[21]<br>The Novo Holdings-Caltalent acquisition highlights the balance regulators must find between innovation and market dominance. While the acquisition promises to increase production to meet rising demand for obesity and diabetes treatments, it raises concerns about competition that harms consumers. The regulatory decisions made by the European Union and the FTC now will set important precedents for future pharmaceutical mergers in the global market.<br><br><b>Sources:</b>Foo Yun Chee &amp; Maggie Fick, Novo Holdings Set to Win EU Nod for $16.5 Bln Catalent Deal, Source Says, Reuters (Nov. 22, 2024), https://www.reuters.com/markets/deals/eu-antitrust-regulators-set-okay-165-bln-novo-holdings-catalent-deal-source-says-2024-11-22/.IdCatalent, Inc., Novo Holdings to Acquire Catalent (Feb. 5, 2024), https://investor.catalent.com/financial-news/news-details/2024/Novo-Holdings-to-Acquire-Catalent/default.aspx.Novo Nordisk, Novo Nordisk to Acquire Three Fill-Finish Sites from Novo Holdings A/S in Connection with the Catalent, Inc. Transaction (Feb. 5, 2024), https://www.novonordisk.com/news-and-media/news-and-ir-materials/news-details.html?id=167017.Catalent, Inc., Catalent and Novo Holdings: Unlocking Greater Value, Together, https://transaction.catalent.com/.Catalent, Inc., supra note 3Novo Nordisk, supra note 4.Foo Yun Chee &amp; Maggie Fick, supra note 1Colin Kellaher, FTC Seeks More Information on $16.5 Billion Novo-Catalent Deal, Wall St. J. (May 3, 2024), https://www.wsj.com/health/pharma/ftc-seeks-more-info-on-16-5-billion-novo-catalent-deal-704fb4d9.Colin Kellaher, supra note 9Foo Yun Chee &amp; Maggie Fick, supra note 1IdColin Kellaher, supra note 9Colin Kellaher, supra note 9Colin Kellaher, supra note 9Novo Holdings' $16.5 Billion Catalent Buyout Could Be a Problem for Smaller Drugmakers, Roche CEO Says, Fierce Pharma (Oct. 23, 2024), https://www.fiercepharma.com/pharma/novo-holdings-165-catalent-buyout-could-be-problem-smaller-drugmakers-roche-ceo-says.Amy Baxter, Backlash Builds Against Novo’s Catalent Takeover, PharmaVoice (Oct. 30, 2024), https://www.pharmavoice.com/news/backlash-novo-nordisk-catalent-acquisition-roche/731406/.Fierce Pharma, supra note 16.Federal Trade Commission, FTC Requires Pfizer Inc. to Sell Rights to Four Products as a Condition of Acquiring Hospira Inc. (Aug. 24, 2015), https://www.ftc.gov/news-events/news/press-releases/2015/08/ftc-requires-pfizer-inc-sell-rights-four-products-condition-acquiring-hospira-inc.Federal Trade Commission, FTC Requires Bristol-Myers Squibb Company and Celgene Corporation to Divest Psoriasis Drug Otezla as a Condition of Merger Approval (Nov. 15, 2019), https://www.ftc.gov/news-events/news/press-releases/2019/11/ftc-requires-bristol-myers-squibb-company-celgene-corporation-divest-psoriasis-drug-otezla-condition.Federal Trade Commission, FTC Challenges Illumina’s Proposed Acquisition of Cancer Detection Test Maker Grail (Mar. 30, 2021), https://www.ftc.gov/news-events/news/press-releases/2021/03/ftc-challenges-illuminas-proposed-acquisition-cancer-detection-test-maker-grail.