Acquisition Rocks CMO Supply Chain Landscape

The news of the Novo Nordisk (Novo Holdings) intent to acquire Catalent has taken the industry by storm. It is unprecedented and shifts the risk calculus for all who use CMOs for commercial supply. A lot of people went running to their filing cabinets to pull their manufacturing supply agreements with Catalent.

First, let’s state the obvious. This is driven by the virtually unconstrained demand for their products, particularly for their diabetes therapy Ozempic and obesity therapy Wegovy, and the need to secure their supply chain and more capacity. Both of these drugs are based on GLP-1 agonist semaglutide, which has driven group net sales up by more than a third towards $34 billion last year.

How does this shift the risk calculus for the industry? The risk of a major pharma purchasing a major CMO (contract manufacturing organization) has probably been no more than a sub bullet on a PowerPoint presentation in a few board rooms. Novo Nordisk has stated that it will honor all customer obligations at the three Catalent sites that Novo Nordisk is acquiring. Translation? Your commercial supply at Catalent is only as good as the manufacturing supply agreement you have in place now! If your commercial supply and significant revenue is dependent on these agreements, that could be concerning and that is something that will get more scrutiny in the future.

Longer term, Novo Nordisk may continue to expand its use of Catalent’s capacity, leaving less flexibility to expand capacity for existing and future clients.

Is Novo Nordisk going to abandon customers en masse? Of course not. They are in the business of making money, but their priority is going to be their supply chain and the profits from their pipeline going forward. The calculus has changed. We predict that the balance been between the Make vs Buy decision has shifted towards Make as a result of this news. How much remains to be seen, but this will reverberate for years.

Windshire is already strategically assessing future manufacturing options post-approval for clients to ensure smooth, operational continuity.

Dr. James Blackwell is a leading industry consultant with broad experience that encompasses early process development to commercial operations. His product experience includes antibodies, vaccines, recombinant proteins, small molecules, peptides, cell therapy and medical devices. Clients include virtual start-ups to multi-national pharma. Dr. Blackwell has regulatory experience with INDs, PAIs, DMFs, and leading NDA CMC submissions. He has extensive experience with CMO selection, oversight, and management. He has been involved with third party Consent Decree monitoring, organizational mentoring, and quality system remediation. He has led or actively participated in more than forty product, company, or technology due diligence projects. Dr. Blackwell was on the formative management team and led Manufacturing and Technical Operations for Shore Therapeutics in the successful recommercialization of Fenoglide.

He is a member of ISPE, PDA, AAPS and RAPS.  He has graduate training in chemical engineering (Ph.D.), microbiology (M.S.), and business/technology management (M.B.A./M.S.) at Northeastern University, The Ohio State University, and University of Maryland, respectively.