Proactive Investors - Novo Nordisk (CSE:NOVOb) (NYSE:NVO)’s takeover of three production sites through the acquisition of Catalent Inc (NYSE:NYSE:CTLT) is a sensible move, analysts say, and will help meet demand for its flagship weight loss drugs.
Though Catalent already provides two filling lines for Novo’s injectable Wegovy drug in Belgium and the US, transfer of ownership will see production capacity increase further, according to JP Morgan (NYSE:JPM) analysts, eventually also including the Ozempic treatment.
This is as Novo gradually reallocates capacity from existing customers to itself at these two sites, alongside another facility in Italy, which it is set to buy for US$11 billion.
“The conversion of the sites over time to sole use by Novo will provide them with much more filling capacity than is currently anticipated,” JP Morgan analysts said in a note.
“It will significantly speed up the fill-finish capacity available to Novo,” analysts added, “allowing them to ramp supply for US and globally”.
JP Morgan had anticipated Novo to boast capacity to fill 116 million pens come 2026, but noted the Belgium-based plant alone could offer space for 200 million units.
“[This] demonstrates the substantial potential increase in fill finish capacity his transaction could bring,” JP Morgan explained.
Morgan Stanley (NYSE:NYSE:MS) analysts added such an uptick in capacity should appear from 2026, with both banks noting the largely debt-financed acquisition will deal a low-single-digit blow to operating profit growth in the coming two years.
Novo Nordisk, which is Europe’s largest company by market cap, unveiled the takeover of the sites on Monday as part of a wider US$16.5 billion acquisition of Catalent.
This is expected to be finalised by late 2024 and remains subject to shareholder and regulatory clearance.