U.S. Sen. Elizabeth Warren has asked antitrust regulators to scrutinize a $16.5 billion deal in which major shareholder Novo Nordisk (NYSE:NVO) would acquire drugmaker Catalent (NYSE:CTLT), saying it can give the drug company an illegal advantage in weight loss and obesity drugs.
Novo Holdings, the investment firm that owns a majority stake in Novo Nordisk, signed a $16.5 billion deal to buy Catalent in February to boost supply of Wegovy, Novo’s blockbuster GLP-1 weight-loss drug weight.
Warren has urged the US Federal Trade Commission to file a lawsuit to block the deal if the regulator finds it illegal – which could delay the deal’s expected completion later this year.
“I am concerned that the merger of Novo Nordisk with Catalent will give Novo Nordisk unprecedented visibility and control over its competitor’s production capacity, costs and business practices, as well as the ability to favor its own products and impede the use of its Catalent from its competitors to manufacture GLP-1 drugs,” Warren said in the letter.
Warren has been a political ally and supporter of FTC Chairwoman Lina Khan, whom some business groups have criticized as too eager to block deals. Khan said only a small portion of the deals the FTC reviews are ultimately challenged.
Eli Lilly’s ( NYSE:LLY ) GLP-1 drugs — Zepbound approved for weight loss and Mounjaro for diabetes — compete with Novo Nordisk’s Wegovy and Ozempic.
Lilly also uses Catalent to make GLP-1 and diabetes drugs.
David Ricks, Lilly’s chief executive, criticized the deal. He told investors in August that while Lilly builds its own facilities, the company is concerned about “the oddity of having your main competitor also be your contract manufacturer and how to resolve that situation.”
Demand for GLP-1 weight loss drugs in the US has outstripped supply, leading to shortages and an increase in compounded versions created by combining, mixing or modifying the drug’s ingredients.
Both Novo and Lilly’s GLP-1 drugs have experienced shortages over the past two years, and one dose of Novo’s Wegovy remains on the FDA’s shortage list.
Under Chairman Joe Biden, the FTC sought to block vertical mergers that it believed would allow the merged company to block competitors’ access to supply chains or distribution points or to hand over sensitive competitive data.
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Reference;
Reuters (2024) US Senator Warren calls for scrutiny of Novo Holdings’ Catalent deal By Reuters, Investing.com. Investing.com. Available at: https://www.investing.com/news/stock-market-news/us-senator-warren-calls-for-scrutiny-of-novo-holdings-catalent-deal-3657547 (Accessed: 10 October 2024).
