Roche comes out against allowing takeover of drug manufacturer Catalent

By Ludwig Burger

FRANKFURT (Reuters) -The CEO of pharmaceuticals giant Roche said authorities should block the takeover of contract drug manufacturer Catalent by Novo Nordisk's controlling shareholder, as it could hit competition in the booming weight-loss drug industry.

Though it stressed on Wednesday it was not itself affected, Roche is among the first drugmakers to voice opposition to the transaction with potentially wide-ranging repercussions for weight-loss drugs based on the gut hormone GLP-1.

"Limiting the competition in this space is not a good idea," Roche's CEO Thomas Schinecker said in a media call. "From an industry perspective, it would be a wrong decision by authorities." 

"It could be a problem for other smaller players, if there is a restriction in how many (contract manufacturers) are available," he told journalists, speaking after the release of quarterly sales on Wednesday.

The company said it would not comment further on any interactions with competition authorities.

"In general, if companies start buying up CMOs (contract manufacturing organisations), that will limit the amount of competition that there can be," Schinecker added in a later analyst call.

Last week, an alliance of U.S. consumer, patient and workers advocacy groups petitioned the U.S. Federal Trade Commission to block Novo Holdings, which controls Novo Nordisk, from acquiring Catalent, saying the deal threatened competition in weight loss drugs and gene therapies.

Executives at Eli Lilly, Novo's main rival in the obesity and diabetes drug market, have repeatedly voiced concerns over the transaction, which will also see Novo Nordisk take direct ownership of three Catalent sites where injection pens are filled in Italy, Belgium and the United States. 

The advocacy groups said at the time that the deal could constrain competitors such as Amgen, Pfizer, Roche and AstraZeneca, which are reportedly developing their own obesity drugs, some of which are based on difficult-to-make peptides. 

Viking Therapeutics, Structure Therapeutics and Sun Pharma could also be affected, the advocacy groups said.

A Novo Nordisk spokesperson, commenting on the Roche CEO's remarks, said: "If the acquisition is approved, Novo Nordisk will purchase three manufacturing sites from Novo Holdings. Catalent will still operate close to 50 sites independently and separate from Novo Nordisk."

The Novo Nordisk spokesperson said that a "large number" of other contract drugmakers compete with Catalent and said that, if the acquisition is approved, pharma and biotech companies "will continue to have access to ample choice for contract manufacturing, including Catalent." The spokesperson reiterated the company's expectation that the transaction will close towards the end of this year.

Novo Holdings said Catalent would continue to operate independently as a leading contract drug manufacturer.

Catalent said: "We are confident that the transaction is pro-competitive, and we are unaware of any competitive GLP-1 products being manufactured for commercial sale at the three sites that Novo Nordisk is planning to acquire."

It added it would continue to work closely with European and U.S. regulators and that it still expected the transaction to close towards the end of 2024.

Novo would not be the first pharma major to run contract manufacturing operations serving rivals, as Pfizer and Boehringer Ingelheim, for example, also own such divisions.

The head of Roche's pharmaceutical division, Teresa Graham, underscored on Wednesday that Roche itself was not impacted: "We are quite confident in the capacity we have. We have reserved capacity with other CMOs."

When asked last week to comment on scrutiny of the Catalent deal, Roche said it would use both in-house and external manufacturing for future commercial production of its obesity drugs.

(Additional reporting by Maggie Fick in London, Editing by Rachel More, Tomasz Janowski, Mark Potter and David Evans)