Quantcast
Channel: Endpoints News
Viewing all articles
Browse latest Browse all 2140

Why are Lilly and Roche trying to block Novo's deal for Catalent?

$
0
0

This week, Roche joined Eli Lilly in coming out against a deal that would add significant new manufacturing capacity to Novo Nordisk, to help it meet some of the huge demand for its GLP-1 drugs Wegovy and Ozempic.

Like every major pharma merger, Novo’s deal to buy several manufacturing plants from contract manufacturer Catalent has been under antitrust review by the Federal Trade Commission. But Lilly and Roche’s opposition is a new twist in the M&A world.

Lilly is, of course, Novo’s biggest rival in the anti-obesity space. And Roche has its own anti-obesity drugs in development.

There is a fair argument that Novo needs the deal to meet demand. Its drugs are in shortage, and Lilly’s competing drug just came off the official shortage list. Lilly has been investing heavily in building more capacity, and compounding pharmacies are also serving a significant portion of the market.

For now, capacity constraint — more than efficacy data — has been the defining characteristic of the market for anti-obesity drugs. So why not hobble your biggest rival by sticking a wrench in a deal that would help them compete?

One broader argument against the deal is that Catalent is one of the biggest contract manufacturers in biopharma, and selling itself to Novo Holdings, which owns a big chunk of Novo Nordisk, could concentrate manufacturing and development capacity in a problematic way.

(There is also the interesting fact that, if you dig back into the SEC filings around the Catalent sale, several of Catalent’s business partners — likely code for big pharma customers — took a look at buying the manufacturer. I’d be very interested to know who they were in the context of the opposition to the deal. Please feel free to drop me a line if you know!)

All of that said, I’m having a hard time remembering the last time that one set of big drugmakers was pushing antitrust regulators to oppose a merger by another major member of the industry. If anything, pharma has looked at the FTC as overreaching on deals (Amgen-Horizon, Sanofi-Maze) that might not have gotten much of a look in prior years.

Roche and Lilly trying to throw a wrench in the deal is proof of just how big the stakes are in obesity. But if they win the argument with antitrust regulators, they might regret it the next time they’re seeking to do a deal of their own.

— Drew


Viewing all articles
Browse latest Browse all 2140

Trending Articles