With Catalent’s Latest Quarterly Numbers Down, Experts Reaffirm Novo’s Buy 

Glass medical ampoule vial for injection.

Pictured: Glass medical ampoule vial for injection and bottles with aluminum cap/istock, ivandan

Novo Nordisk’s buy of Catalent remains a significant topic of conversation in the biotech world. While the CDMO’s latest quarterly numbers were down, analysts told BioSpace that Novo’s investment would help accelerate manufacturing for its GLP-1 receptor agonists Wegovy and Ozempic while limiting production capacity for competitors. 

“(Novo’s) biggest choke point and in getting Wegovy out there and competing against Lilly appears to be in sterile fill finish, and I’m sure this was a much quicker path for them,” Sean Dodge, an analyst at RBC Capital Markets, told BioSpace. “Buying all of this was a lot faster way to create new capacity than putting a shovel in the ground and creating something from scratch.” 

Max Smock, an analyst at William Blair, added that the deal does make sense as there is not a lot of prefilled syringe manufacturing capacity space available, and Novo bringing this in-house will allow the Danish pharma to have more control over the process. He also noted that the purchase of Catalent will enable Novo to get ahead of its competition. 

“You have these potential copycats coming into the market,” he told BioSpace. “You just took out a major CDMO that can fill out that drug product capacity.” 

Underwhelming Numbers

On Friday of last week, Catalent’s second-quarter fiscal year 2024 results showed that the manufacturer pulled in net revenue of $1.03 billion, a 10% decrease from a year ago. Catalent said this was due to a drop in demand for COVID-19–related programs. Catalent also saw a 24% drop in net income from its biologics segment over the same period, reporting $446 million compared to $580 million the year prior. 

It was an “underwhelming quarter,” Smock told BioSpace.  

It’s not the first time the CDMO has announced disappointing financials, as its year-end report at the end of last year noted the company posted losses of $539 million and cut 1,100 jobs. But in terms of the company’s financial health, Sean Dodge, an analyst at RBC Capital Markets, told BioSpace that with 50 sites spread out all over the world, there is a lot of opportunity to grow its footprint and grow revenue. 

Catalent CEO Alessandro Maselli said in a statement that last week’s deal with Novo will help make that growth happen. “With the benefit of Novo Holdings’ expanded resources, we will be able to accelerate investment in our business and enhance key offerings for current and prospective pharma and biotech customers.” 

Smock noted that one area the Novo deal will help is in expanding Catalent’s capacity to make drug products such as prefilled syringes. In recent years, production of this type of drug has been a significant boon to Catalent’s bottom line, but the CDMO has had only has limited capacity and encountered issues in its manufacturing facility in Brussels, Reuters reported. In August 2023, Novo Nordisk had to call upon Thermo Fisher Scientific to manufacture Wegovy doses as demand rose and Catalent could not keep up. 

“I think the Novo acquisition acknowledges that [Catalent] can speed up some of the investments [the company] was looking to make in those areas,” Smock said. 

A Unique Situation

Novo’s buy of Catalent is a unique situation in the CDMO space. “Novo needed a lot of capacity and relatively soon to support the massive volumes that will be coming down the pipe here on GLP-1s,” Brian Scanlan, a partner at Edgewater Captial Partners, wrote in an email to BioSpace. “Let’s not forget, the bulk of the new drugs in development are more niche, targeted therapeutics that require generally lower volumes. Companies focused in these type of therapeutics may not be too quick to buy up a bunch of capacity.” 

Dodge and Smock agreed. The deal runs “completely counter-current” to what big pharma has been doing for the past 15 years, Smock said. “You’re seeing [pharma] shift away . . . from having this capacity in-house; we would expect more outsourcing moving forward.” 

Tyler Patchen is a staff writer at BioSpace. You can reach him at tyler.patchen@biospace.com. Follow him on LinkedIn

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