From The Editor | November 7, 2024

Aftershocks: Catalent's Leader Assures The Market

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By Louis Garguilo, Chief Editor, Outsourced Pharma

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Hard to believe it was way back in early February we got the news, as reported in these pages: Novo Holdings Acquires Catalent, Shakes Up Outsourcing World.

But here we are, and as with any market “shake up,” the dust settles, gets brushed away, and emerging realities must be addressed.

As in this rather intricate case of Novo Holdings’ acquisition of Catalent, and its “selling” three major Catalent sites to Novo Nordisk, some unrealities may also emerge in the aftermath. These should also be put to bed.

This is being attempted via an “open letter” to “Customers Regarding Pending Acquisition by Novo Holdings,” authored by Alessandro Maselli, President and CEO of Catalent.

“I want to correct a few key inaccuracies,” Maselli starts out his missive, “that have been reported in the press regarding Novo Holdings’ pending acquisition of Catalent and reiterate that we are, and will continue to be, driven by our mission to develop, manufacture and supply products that help people live better and healthier lives.”

However, with all due respect and while a lofty sentiment, that’s a bit off target.

Our collective shock is not over some potential lack of empathy for patients or that the Catalent-Novo organization would no longer be mission driven as a (profitable) CDMO.

Rather, the shock was that suddenly three major outsourcing development and manufacturing facilities at locations around the world were being take off line.

As I wrote at the time:

Readers have perhaps worked with Catalent on as many projects as any other CDMO. But now the news is that outsourcing stream will be diminished:

Novo Nordisk is acquiring three fill-finish sites from Novo Holdings A/S in connection with the purchase of Catalent, Inc. by Novo Holding.”

“…The three manufacturing sites are specialised in sterile filling, and located in Anagni (Italy), Brussels (Belgium) and Bloomington (Indiana, U.S.). Together, they employ more than 3,000 people.

“It appears that’s 3,000 skilled manufacturing and fill-finish specialists who will never work with you again.”

That was the news.

Over these ensuing months – greatly added to by the simultaneously occurring BIOSECURE Act saga – the continuing fear is of what might be the next shoes to drop.

Would we experience more of this capacity-limiting activity by corporations like Novo Holdings or Big Pharma?

Perhaps somewhat overstated now, but it sure looked like our outsourcing model was being seriously challenged.

It’s OK, The CEO Stays

In fact, in his letter, Maselli does, if not directly, address our ongoing concerns and questions, such as:

Why should we select a CDMO under a corporate umbrella that might at any time take off-line the facility we have a project in?

Maselli tries to answer that:

“Following the closing of our transaction, as a private company under Novo Holdings’ ownership, Catalent will continue to operate as a leading global, independent, full-service CDMO.”

He then enumerates those (many) services at the remaining “network of nearly 50 global sites still within the Catalent family.”

Moving forward, Maelli continues, as "a securing commitment to sponsors as well as patients is ongoing," he will “continue to lead Catalent as President and CEO following the transaction close.”

“A key factor in my decision to continue in my role,” he explains, “is Novo Holdings’ commitment to provide support and capital to ensure unparalleled service to our customers and create new jobs as we drive Catalent’s growth.”

I added the italics to the word “capital.”

For me at least, here is where this open letter wrings out some fear, and offers real encouragement.

Follow The Money

If you are not familiar with Novo Holdings, for our immediate purposes let’s suffice to say they have plenty of funds to invest as they like.

And CDMOs need continuing investment, in infrastructure and instrumentation/equipment (currently in the face of inflation and elevated costs), to keep up with the quickening advancements throughout the global biopharma industry.

Those CDMO who have and will catch up to cell-and-gene therapy advancements, ~RNA platforms, etc., and take leading positions, do so by investing in facilities and a workforce (currently demanding larger paychecks).

Real money drives real enhancements at CDMOs. Novo Holdings has real money.

If a Catalent – or whomever – can secure a pipeline to quick and sufficient capital, it will have an edge on other CDMOs in delivering the services and products of today and tomorrow.

The news, then, from my reading of the situation, is Catalent can assuage fears by stating:

‘Yes, your projects are safe with us on a continuing basis. We are still some 50 sites strong and with Novo Holdings we’ve now got the capital few other CDMO have.

A Meaningful Message

Overall, kudos to Catalent-Novo, and CEO Maselli specifically. The organization has recognized a need to assuage current and potential clients publicly and via various communication channels.

The “real” message may have been buried a bit here, but I think we’ve parsed it out sufficiently enough so sponsors can breathe authentic sighs of relief.

Maselli ends his letter back with the patient and sponsors:

“This is our commitment to you and the patients you serve.”

That’s a most effective delivery.

What remains most important is the understanding that when considering a CDMO, sponsors still focus on selecting an organization that will stay committed to my projects, and after this event, also ensuring the facility utilized won’t be taken off line.