From The Editor | February 12, 2024

Novo Holdings Clarifies, But Competitors Circling Catalent


By Louis Garguilo, Chief Editor, Outsourced Pharma

Birds in sky-GettyImages-539977924

I have some answers for you.

Christoffer Søderberg, Managing Partner and Head of Principal Investments, Novo Holdings, responded to our request for a more definitive disposition of Catalent once it is acquired by the private investment company, and minus the three fill-finish facilities purchased by Novo Nordisk.

The prompt reply is appreciated, and fortuitous; competitors are circling the CDMO. 

For readers who need catching up, or would like a review, see:

Novo Acquires Catalent, Shakes Up Outsourcing World
A Future Renaissance At Catalent? Employees Think So

Otherwise, with no further delay, here are Søderberg's replies to the questions that have thrown the industry into a conjecture colloquium.

Together Forever

  • Will the now Novo-Catalent assets remain together as a single CDMO? Or could parts be sold off or made independent facilities? 

Søderberg's reply:

"Novo Holdings’ investment case assumes Catalent will be run as a single CDMO entity going forward, with the exception of the three sites being sold to Novo Nordisk.

Allow me to suggest this is the optimal statement to indicate direction and directive.

"Investment cases” are the keys that unlock the dollars that form the deals.

They are the basis – the fundamental reason – organizations change hands and forms.

Multi-billion-dollar decisions ($16.5 billion in this case), we might assume, are particularly steeped in current market research and industry projections, keen financial analysis, and a myriad of other detail (and even arcana.) 

In a word, Novo Holdings is betting on the CDMO and the outsourcing model.

Catalent, Søderberg says, is "a leading partner to some of the most innovative biopharma companies in the world,  and will benefit as the biopharma industry launches new and exciting technologies." (emphasis mine)

Next, he reminds us what successful investment firms do: add resources. 

As a “partner” of Catalent, Søderberg tells me, Novo Holdings will bring its “expertise and track record of investing in high quality life sciences businesses, and looks forward to supporting the company’s stakeholders in the years ahead – especially employees and customers as they work to develop new products to benefit patients.”

Who are those other “high quality life sciences businesses?"

You can find a (long, and frankly, impressive) list here. To name a few (including other service providers): Anthos Therapeutics; Claris Bio; Evosep; Mission Bio; Oxford Biomedica.

We can expect, then, the investments that will keep Catalent on (or propel it to, depending on your direct experiences) the cutting-edge of science, technology, and delivering outsourcing services.

In part 2 of our analysis, we contrasted public (stock-market listed) CDMOs and privately held CDMOs, and stipulated that the nature of the biopharma contract business might best serve the organization and its customers as the latter.

A reader picked up on that, and offered this opinion:

"On the question of private vs public, I think that a CDMO can function well as a public entity if they are part of a much larger company that is more diversified (e.g. Patheon and ThermoFisher). Also, large CDMOs that focus on commercial programs make for steady and more predictable (higher margin) business than those that play in the development and clinical manufacturing space."

We’d certainly classify Catalent as Big CDMO – with 47 some sites remaining after the three fill-finish facilities go to Novo Nordisk.

However, what’s happening here might suggest the requisite investment, or at least the leeway to operate with levels of funding – was not best provided by stockowners with public shares, and might fare better with (a more patient, perhaps) private backer.

Which leads us to our final question and answer. 

What Does a Novo-Catalent Look Like?

  • What is the plan for the many other Catalent facilities and sites (minus the 3 Novo Nordisk will acquire)? 

Initially, Søderberg iterates, Novo-Catalent will focus on ensuring "all employees and customers remain unaffected by the change in ownership and retain operations at the highest standards.”

With skilled workers at CDMOs so often on the move, attempting to nip defections in the bud will require an ongoing effort. Søderberg agrees.

He iterates Novo Holdings will work closely with Catalent’s management to grow the business and contribute the best way possible to Catalent’s onward commercial success, and customer service." This, he says, will be a "long-term sustainable value creation through an engaged, supportive ownership approach.”

What About Novo Nordisk?

 There remains another seminal question on the industry's mind:

  • In future, is it possible more facilities will be acquired by Novo Nordisk from Novo Holdings?

Current contemplation, says Søderberg, is "Novo Nordisk will not acquire any other facilities."

He adds another attempt to mitigate what might be categorized as the starkest fear among customers. 

“Novo Holdings operates independently from Novo Nordisk with neither party influencing the others’ day-to-day operations. Any decision regarding Catalent under Novo Holdings’ ownership will be made in the interest of Catalent and Novo Holdings.”

Shall we take this – and all of the above – as gospel? I'd answer, with the same biblical implications, that nothing in our industry is set in stone, but I see no reason here to by a doubting Thomas.

BD Starts It’s Engines

I was once privileged to have led a global business development team for a contract research, development and manufacturing organization.

Despite the above, if I were still in that position, I’d have our team actively working to pull concerned clients of Catalent into our facilities.

Readers may have already heard the drum beats (or started conducting the orchestration).

Frankly, a number of CDMOs have reached out to me seeking further information – and mentioning intentions to “go after Catalent customers concerned with this announcement.”

So while in no way intentional, the above responses from Novo Holdings may somewhat reduce the stress level of targeted Catalent customers – and in other regards, of wider parts of the industry.

Not mitigated is that three, large fill-finish facilities – Anagni (Italy); Brussels (Belgium); and Bloomington (Indiana, U.S.) – are being erased from future outsourcing-opportunity maps, and is an industrywide concern.

And another concern remains entrenched:

We may not have seen the last of these deals.