Recently, multinational pharmaceutical companies have launched another massive acquisition case, attracting global attention.
On February 5th, Novo Nordisk announced that its controlling shareholder, Novo Holdings, had signed a merger and acquisition agreement with Catalent. Novo Holdings will acquire Catalent for $16.5 billion in cash. As part of the transaction, Novo Nordisk will acquire three Catalent filling finished product bases from Novo Holdings for $11 billion to increase Smegglutide production capacity.
According to the terms of the agreement, Novo Holdings will acquire all issued shares of Catalent for $63.50 per share in cash. The acquisition price is 16.5% higher than the closing price of Catalent's ordinary shares as of February 2, 2024, and 47.5% higher than the 60 day volume weighted average price as of February 2, 2024. This merger is expected to be completed by the end of 2024.
Shortly thereafter, Novartis announced that it would acquire Morphosys AG for 68 euros per share or a total of 2.7 billion euros in cash. This acquisition requires meeting customary transaction conditions, including the acceptance threshold of a minimum of 65% of the outstanding shares in the acquisition offer and approval from regulatory authorities. This acquisition will further expand and supplement Novartis' product line in the priority treatment field of oncology, while also strengthening Novartis' global layout in the field of hematology. After the acquisition is completed, Novartis will have pelabresib (CPI-0610), a BET inhibitor, which can be used in combination with ruxolitinib to treat patients with myelofibrosis (MF).
As the global pharmaceutical market enters a new development cycle, market uncertainty factors are increasing. At the same time, innovative biotechnology companies are facing survival challenges. In order to explore and layout new technologies and product pipelines, multinational pharmaceutical companies with financial advantages are increasing their efforts in mergers and acquisitions, hoping to gain more certainty in the future.
Multinational pharmaceutical companies accelerating capacity expansion
For Novo Nordisk, a substantial acquisition of Catalent is a necessary move.
According to the 2023 performance report released by Novo Nordisk on January 31, its annual revenue was DKK 232.261 billion (approximately USD 33.681 billion at the latest exchange rate), a year-on-year increase of 31%, and its operating profit was DKK 102.574 billion (approximately USD 14.872 billion), a year-on-year increase of 37%. Such impressive market performance is closely related to Smegglutide.
Among them, in 2023, its subcutaneous injection product Ozempic (for hypoglycemic purposes) achieved a revenue of 95.718 billion Danish kroner (approximately 13.879 billion US dollars), and the sales of the oral tablet Rybelsus (for hypoglycemic purposes) reached 18.75 billion Danish kroner (approximately 2.719 billion US dollars), a year-on-year increase of 66%. The weight loss product Wegovy also soared, with sales of 31.343 billion Danish kroner (approximately 4.544 billion US dollars), a year-on-year increase of 407%. The three products of Smegglutide contributed a total of 145.811 billion Danish kroner (approximately 21.143 billion US dollars, equivalent to approximately 151.807 billion Chinese yuan) to Novo Nordisk in 2023.
Founder Securities believes that the weight loss market is rapidly expanding, and Smegglutide is expected to further open up the global market. Continuously optimistic about the potential application of GLP-1 therapy in health issues, and the domestic industry chain will further expand rapidly in the future.
Behind the impressive performance are strong market demand and shortage of production capacity. Lars Frurgaard Jrgensen, president and CEO of Novo Nordisk, said that he was very satisfied with the strong performance in 2023, which reflected that more than 40 million people benefited from innovative diabetes and obesity treatment. In 2024, we will cover more patients, promote the expansion of our product line, and continue to significantly expand our production capacity.
According to public information, Catalent, which was acquired this time, is a global contract development and production organization (CDMO) headquartered in Somerset, New Jersey, providing global life science companies with drug delivery technology, drug development, drug manufacturing, biologics, gene therapy, and consumer health products. The company was established in 2007 and went public in July 2014. According to its revenue in 2020, Catalent, along with two other CDMO companies, ranks among the top three in the global CDMO industry, with its highest market value reaching $22.091 billion in 2021.
In addition, Catalent has over 50 production bases on five continents worldwide, helping over 1500 partners plan and launch over 150 new products annually, supplying approximately 70 billion doses of nearly 8000 products annually. Catalent's revenue reached $4.83 billion in 2022, a year-on-year increase of 21%.
According to the terms of the agreement, Novo Nordisk has acquired three production bases, located in Italy, Belgium, and the United States, with a prepayment of $11 billion, specializing in sterile filling of drugs. These three production bases have a total of over 3000 employees.
"We are very happy to have reached an agreement to acquire three production bases of Contilent, which will enable us to provide services for more patients with diabetes and obesity in the future. This acquisition is a supplement to the significant investment we have made in active pharmaceutical ingredient factories, which will provide strategic flexibility for our existing supply network." Lars Frurgaard Jrgensen said.
Searching for opportunities for cooperation in changing situations
In addition to focusing on production capacity layout, accelerating investment in innovation pipelines has also become an important direction for multinational pharmaceutical companies to target.
On the same day, Novartis announced that it would acquire Morphosys AG for 68 euros per share or a total of 2.7 billion euros in cash. This acquisition will further expand and supplement Novartis' product line in the priority treatment field of oncology, while also strengthening Novartis' global layout in the field of hematology.
According to public information, after the acquisition is completed, Novartis will have pelabresib (CPI-0610) as a BET inhibitor, which is well tolerated and safe when used in combination with ruxolitinib to treat patients with bone marrow fibrosis (MF). Novartis will also have tumimetostat (CPI-0209), an early dual inhibitor of EZH1/2 protein under study, currently undergoing phase I/II research in patients with solid tumors or lymphoma.
This acquisition also aligns with Novartis' new strategy. Sheriram Aradhye, President and Chief Medical Officer of Novartis Global Drug Development, previously stated in an interview with 21st Century Business Herald that Novartis focuses on four core treatment areas in China, including blood diseases, and currently has ongoing projects in each treatment area.
On January 5th, Novartis announced its acquisition of Sinovac Pharmaceuticals to further strengthen its presence in the field of kidney disease. According to the acquisition agreement, Novartis will acquire the remaining shares of Sinovac Pharmaceuticals. After the transaction is completed, Sinovac Pharmaceuticals will be integrated into Novartis China as a whole. This acquisition is expected to expand Novartis' kidney disease product portfolio in China.
Regarding the successive acquisition cases of multinational pharmaceutical companies, securities analysts pointed out to 21st Century Business Herald reporters that pharmaceutical research and development is a time-consuming and high-risk industry. In the current market environment, multinational pharmaceutical companies are seizing the opportunity of this industry reshuffle to reshape their product pipelines, sales systems, and strategic direction of sales personnel.
Against the backdrop of increasingly fierce competition in the global pharmaceutical market, many innovative pharmaceutical companies choose to enter the international market in order to gain more development opportunities and market share. Meanwhile, acquiring new technologies and products through acquisitions or collaborations is also an important strategy for multinational pharmaceutical companies to enhance market competitiveness. This market attitude and behavior are reasonable actions taken by all parties to achieve strategic goals in the current globalized pharmaceutical industry environment. At the same time, we have also observed multi angle cooperation between local pharmaceutical companies and MNC, such as extensive cooperation from the raw material end to the promotion end.
Based on this, the above analysts believe that in the layout of "buy buy", enterprises need to fully consider factors such as the technical level, market potential, and management team ability of the target company or partners. At the same time, it is necessary to conduct in-depth analysis of the target market, understand the development trends, competitive landscape, and regulatory policies of the market. In addition, companies need to have clear strategic planning to ensure that acquisitions or collaborations can bring substantial value to the company.
At the same time, when choosing cooperation tracks and partners, it is necessary to consider avoiding the risk of "returns": first, it is necessary to clarify the goals and expected effects of cooperation, ensuring that cooperation can bring win-win results to both parties. Secondly, it is necessary to have a thorough understanding of the partners, including their technical strength, market performance, and the ability to manage the team. At the same time, detailed negotiations and confirmation of the cooperation content and terms are also needed to prevent future disputes and risks. Finally, it is necessary to establish a reasonable regulatory and evaluation mechanism to ensure the healthy and sustainable development of the cooperative relationship.
"As a member of the bureau, I can personally feel the speed and challenges of market changes. We need to be more flexible and innovative to adapt to the continuous evolution of the market. At the same time, we have also seen more opportunities for cooperation and collaboration to jointly address the challenges and opportunities of the industry," said the analyst.