By Jody Godoy
NEW YORK (Reuters) -U.S. Senator Elizabeth Warren has asked antitrust regulators to scrutinize a $16.5 billion deal in which Novo Nordisk (NYSE:NVO)'s controlling shareholder would acquire contract drug manufacturer Catalent (NYSE:CTLT), saying it may give the pharmaceutical company an unlawful advantage in obesity drugs.
Novo Holdings, the investment firm that has a controlling interest in Novo Nordisk, signed a $16.5 billion deal to buy Catalent in February to boost supply of Wegovy, Novo's blockbuster GLP-1 injectable weight loss drug.
Warren urged the U.S. Federal Trade Commission to sue to block the deal if the regulator finds it illegal – which could delay the deal's expected closing later this year.
"I am concerned that Novo Nordisk's merger with Catalent will give Novo Nordisk unprecedented visibility into and control over its competitor's production capacity, costs, and business practices, and the ability to preference its own products and obstruct its competitors' use of Catalent to produce GLP-1 drugs," Warren said in the letter.
According to the terms of the deal, Novo Holdings would sell three of Catalent's fill-finish factories, where injection pens are filled in sterile conditions, in Italy, Belgium and the United States, onto Novo Nordisk for $11 billion.
Catalent shares edged down after the news.
Warren has been a political ally and supporter of FTC Chair Lina Khan, who some business groups have criticized, saying she is over-eager to block deals. Khan has said only a small fraction of deals the FTC reviews are ultimately challenged.
Eli Lilly (NYSE:LLY)'s GLP-1 drugs - Zepbound approved for weight loss and Mounjaro for diabetes - compete with Novo Nordisk's Wegovy and Ozempic.
Lilly also uses Catalent for GLP-1 and diabetes drug production.
David Ricks, Lilly's CEO, has criticized the deal. He told investors in August that while Lilly is building its own sites, the company is concerned by "the oddity of your main competitor being also your contract manufacturer and how to resolve that situation."
Demand for GLP-1 weight loss drugs in the U.S. has outstripped supply, leading to shortages and a rise in compounded versions that are created by combining, mixing, or altering drug ingredients.
Both Novo and Lilly GLP-1 drugs have experienced shortages during the last two years and one dose of Novo's Wegovy remains on the FDA's shortage list.
Under President Joe Biden, the FTC has sought to block vertical mergers it thinks would allow the merged company to block competitors' access to supply chains or distribution points, or hand over sensitive competitive data.