Novo Nordisk (NVO) to Acquire 3 Catalent Sites for $11B
Novo Nordisk NVO announced that it will acquire three manufacturing sites from Novo Holdings A/S for an upfront payment of $11 billion to expand its manufacturing capacity for obesity treatments.
The announcement comes pursuant to Novo Holdings’ agreement to acquire global contract development and manufacturing organization Catalent, Inc. CTLT for $63.50 per share in cash.
Novo Nordisk expects the acquisition to increase its filling capacity from 2026 onward. The three manufacturing sites (out of Catalent’s more than 50 global sites) specialize in the sterile filling of drugs and are in Anagni, Italy; Brussels, Belgium; and Bloomington, IN. The three sites employ more than 3,000 people and each site has ongoing collaborations with Novo Nordisk.
NVO is looking to expand manufacturing of its current and future treatments for diabetes and obesity, given the huge demand. The acquisition enables an expansion of the manufacturing capacity at scale and speed while providing future optionality and flexibility for Novo Nordisk’s existing supply network.
The acquisition will take place immediately after Novo Holdings acquires Catalent, which is expected toward the end of 2024.
The upfront payment comprises enterprise value for the sites implied in Novo Holdings’ acquisition of Catalent plus additional value for certain corporate assets and liabilities attributable to the acquired business.
Shares of CTLT are up following the acquisition announcement.
Novo Nordisk expects the acquisition to negatively impact operating profit growth in the low single-digit in both 2024 and 2025.
Shares of Novo Nordisk have increased 68.7% in the past year compared with the industry’s growth of 23.3%.
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NVO’s earnings and revenues beat estimates in the fourth quarter of 2023 on the back of higher Diabetes and Obesity care sales.
Obesity drug Wegovy sales skyrocketed to DKK 9.6 billion during the fourth quarter, as a second contract manufacturer for Wegovy initiated production in April 2023 to meet the increasing demand for the drug.
NVO continues to expand its supply capacity for Wegovy after its relaunch in the United States as well as in other geographies. The increasing demand trend for the drug is encouraging and expected to fuel higher revenue incomes in the upcoming quarters.
Zacks Rank and Other Stocks to Consider
Novo Nordisk currently sports a Zacks Rank #1 (Strong Buy).
Some other top-ranked stocks from the drug/biotech industry worth mentioning are Puma Biotechnology, Inc. PBYI and Journey Medical DERM, each sporting a Zacks Rank #1 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
In the past 30 days, the Zacks Consensus Estimate for Puma Biotech’s 2023 earnings per share (EPS) has remained constant at 73 cents. During the same time frame, the consensus estimate for Puma Biotech’s 2024 EPS has remained steady at 69 cents. Over the past year, shares of PBYI have gained 2.7%.
PBYI beat estimates in three of the last four quarters while missing on one occasion, delivering a four-quarter average earnings surprise of 76.55%.
In the past 30 days, the Zacks Consensus Estimate for Journey Medical’s 2023 loss per share has remained constant at 16 cents. During the same period, the consensus estimate for Journey Medical’s 2024 loss per share has remained steady at 69 cents. Over the past year, shares of DERM have skyrocketed 127.4%.
DERM beat estimates in one of the trailing four quarters and missed on the other three occasions, delivering an average earnings surprise of 118.25%.
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Novo Nordisk A/S (NVO) : Free Stock Analysis Report
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Catalent, Inc. (CTLT) : Free Stock Analysis Report
