Novo Nordisk acquiring Catalent to expand, meet GLP-1 demand
Novo Nordisk (NVO) — Yahoo Finance's 2023 Company of the Year — shares are on the move Monday morning after parent company Novo Holdings announced a $16.5 billion acquisition deal of Catalent (CTLT). This deal includes an $11 billion purchase of three manufacturing sites in the US. The company hopes to meet demands for GLP-1 products with this buy.
Yahoo Finance’s Seana Smith and Brad Smith break down the pharmaceutical giant's move and the possible timeline for the company.
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Editor's note: This article was written by Eyek Ntekim
Video Transcript
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SEANA SMITH: We've got Novo Nordisk shares climbing higher after its parent company Nova Holdings inked a $16.5 billion deal to buy manufacturing giant Catalent. Now Novo Nordisk purchasing three of the newly-acquired US plants for 11.5 billion to keep up with increasing demand for obesity drugs. So drilling down into what exactly this means for Novo Nordisk. Which to remind you is Yahoo Finance's company of the year.
This is all to play. A meeting that demand for their weight-loss drugs. But we've been talking about time and time again. Yes, we have seen a surge in demand. And as a result, we've seen a surge in the company's market cap. And shares over the last several months, they're struggling to keep up with that demand. They're hoping that this new transaction-- newest transaction, I would say, would help them better do that.
It is important to point out that this isn't going to have an immediate impact on the company. When it comes to increasing production manufacturing capacity, it's going to be a 2026 play, and onward. But again, it shows the fact that Novo Nordisk is taking action doing all it can to try and meet that demand, which has really propelled the stock over the last year.
BRAD SMITH: Yeah. They actually acknowledged contingent on the timing of closing. So this acquisition actually could have a low-single digit negative impact on operating profit growth in both 2024 and 2025. But you mentioned it and spot on, it is about this long-term growth trajectory that the company sees within some of the obesity and diabetes treatments as well. Enabling some of the expansion and scaling up for that manufacturing capacity is what they're talking about.
And it seems like this is really targeted on three sites that employ about 3,000 people. So we'll see how accretive this is able to become for the business long term. And then additionally, where this essentially allows them to try and stave off any other market competition that we know is revving up fast and furious.
SEANA SMITH: Certainly is. And we heard from the CEO when he joined us after being named Yahoo Finance's Company of the Year that they're just scratching the surface. When it comes to their role in the weight loss demand in the community there for that drug. So we'll see what exactly future holds when they're making a big bets like this in order to try and meet that demand.
