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Novo Nordisk Foundation’s Acquisition Faces Regulatory Hurdles

 |  May 6, 2024

The $16.5 billion acquisition deal between the Novo Nordisk Foundation and contract manufacturer Catalent has encountered yet another obstacle on its path to completion. Bloomberg reported that the U.S. Federal Trade Commission (FTC) has raised concerns, prompting a request for additional information regarding the transaction.

According to a recent Securities and Exchange Commission (SEC) filing by Catalent, the FTC’s request for more information will extend the acquisition’s waiting period by up to 30 days. Both Novo Nordisk Foundation and Catalent have affirmed their commitment to cooperating with the regulator’s inquiry, currently in the process of gathering the necessary documentation to address the concerns raised.

The acquisition, which was first announced in February 2024, is primarily focused on three fill-finish sites. These facilities are expected to bolster Novo Nordisk Foundation’s pharmaceutical division, enabling it to better meet the ever-growing demand for its weight-loss and diabetes treatments.

However, this latest setback follows a series of challenges for the acquisition. In response to informal discussions with the FTC, Novo Nordisk Foundation withdrew and subsequently refiled its antitrust submissions, affording the regulatory body an additional 30 days for review, as reported by Bloomberg.

The regulatory hurdles don’t stop at the U.S. border. The European Medicines Agency (EMA) launched its own investigation into the deal’s potential impact on drug supply in February 2024. While the specific drugs under scrutiny were not disclosed, the EMA stated its intention to collaborate with member states to assess the merger’s effects on manufacturing sites and identify any risks of supply shortages, according to Bloomberg.

Both the FTC and the Department of Justice have been reassessing their policies on mergers and acquisitions, as outlined in a draft document released in July 2023. These guidelines aim to evaluate whether proposed transactions could result in anti-competitive outcomes, considering factors such as market concentration, coordination risks, and impacts on market entry.

The Novo Nordisk Foundation’s acquisition of Catalent has not only attracted regulatory attention but also raised competitive concerns within the industry. During Eli Lilly’s fourth-quarter and full-year 2023 earnings call, questions were raised about the merger’s potential impact on existing contracts with Catalent. Anat Ashkenazi, CFO of Eli Lilly, emphasized Catalent’s critical role in manufacturing Lilly’s products and stated the company’s intention to hold Catalent accountable to their contractual obligations.

Source: News Bloomberg Law