(Bloomberg) — Novo Nordisk A/S agreed to buy three manufacturing plants for $11 billion to help it meet surging demand for the obesity drug Wegovy and diabetes shot Ozempic.
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Novo is paying its main shareholder, Novo Holdings A/S, in cash for the fill-finish sites. Novo Holdings on Monday agreed to buy the owner of the assets, Catalent Inc., in a deal with an enterprise value of $16.5 billion. The transactions are the largest ever for both Danish companies.
Catalent shares rose about 13% in premarket trading. Novo shares, which have been soaring alongside demand for its drugs, gained as much as 3.4% on the news, touching a record. The drugmaker is Europe’s most valuable company with a market capitalization of more than $520 billion.
Novo Nordisk is under pressure to increase its supply of Wegovy as it faces competition from Eli Lilly & Co.’s recently approved Zepbound shot, which is predicted to become the best-selling drug in history. In patient trials, Lilly’s drug led to more weight loss than anything Novo has put out to date.
Read More: Eli Lilly’s $600 Billion Weight-Loss Empire Was Late, But Lucky
The acquisition of factories in Italy, Belgium and Indiana isn’t an immediate fix for Novo’s production problems. It will gradually increase manufacturing capacity from 2026 and onward, according to a spokeswoman. Production has been a thorn in the Danish drugmaker’s side even as it profits from the new class of obesity drugs it helped pioneer.
There are “clear business reasons for Novo Nordisk to acquire these three manufacturing plants in order to speed up supply of key products – not least Wegovy,” Brian Borsting, a credit analyst with Danske Bank A/S, said in a note to clients.
The deal for Catalent has the backing of Elliott Investment Management, the activist investor, which has a stake in the US company. The agreement is worth $63.50 per share in cash, a 17% premium to Catalent’s Friday close, according to a statement.
Catalent had drawn takeover interest from other market players as well. Last year life sciences company Danaher Corp. expressed interest. Based in Somerset, New Jersey, the contract manufacturer gained prominence during the Covid-19 pandemic as a producer of vaccines and treatments. Its factory in Bloomington, Indiana has been linked to regulatory problems in the past, including for Wegovy.
The Catalent deal is the latest in a series of moves by Novo to boost its manufacturing capacity. Late last year, the drugmaker unveiled plans to invest in new production facilities in Denmark and France. Last week, it said it has more than doubled the number of Wegovy starter doses it’s shipping to the US, enabling more people to get on the treatment.
In addition to expanding the scale and speed of production, acquiring Catalent’s factories offers flexibility for the future, Novo said.
Catalent CEO Alessandro Maselli talked up the company’s push into glucagon-like peptide-1, or GLP-1, drugs like Wegovy last month at the JP Morgan Healthcare Conference in San Francisco. He predicted the company’s revenue from manufacturing in the drug category would be more than $500 million when considering current and planned investment.
“When you think about the growth story of the company, the first one is GLP-1,” Maselli said.
–With assistance from Shelly Banjo and Dinesh Nair.
(Updates with details throughout)
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