CDMO giant Catalent draws buyout interest from Danaher: Bloomberg

Contract biopharma manufacturer Catalent has reportedly drawn buyout interest as COVID-related declines weigh on its outlook and stock performance.

In recent months, fellow life sciences conglomerate Danaher has expressed interest in purchasing Catalent at a "significant premium," Bloomberg reports, citing people familiar with the matter.

It’s unclear how Catalent will react to the offer, and a deal isn’t imminent, Bloomberg reports. Catalent’s stock rose 22% on Monday. The company has a market value of around $10 billion based on Friday’s closing price.

As one of the largest biopharma contract manufacturers, Catalent enjoyed a large windfall helping produce COVID vaccines for Moderna, AstraZeneca and Johnson & Johnson. Catalent’s stock price doubled from the beginning of the pandemic into 2021.

But as demand for the shots dropped, Catalent’s stock price fell and recently returned to pre-pandemic levels.

Part of the stock price decline was attributed to a worsening business outlook. In the three months between June and September, Catalent reported a 1% revenue decrease year over year after taking out the effects of M&A and currency fluctuations. The company in November cut $350 million from its revenue projection for the fiscal year that ends in June 2023.

And back-to-back FDA warnings have added to the company's headaches. The FDA last year issues Form 483s to Calatent’s facilities in Brussels in Belgium and Bloomington, Indiana, the latter of which caused a temporary hiccup to the shipment of Moderna’s COVID boosters. Catalent later resolved the observations.

On the flip side, Catalent has been using the COVID-related revenue to strengthen its infrastructure, especially in biologics and cell and gene therapy. Back in 2020, Catalent unveiled a plan to shell out $130 million to expand its cell and gene therapy suites in Maryland. At its flagship Bloomington campus, Catalent plans to invest $350 million over the coming years to support its biologics drug substance and final product manufacturing capacity. And it last year paid $44.5 million to acquire a cell therapy factory in New Jersey.

The company is investing in traditional oral solids, too. Catalent recently bought North Carolina CDMO Metrics Contract Services for $475 million. And Catalent last year announced a $175 million project to expand its Winchester, Kentucky, facility, which handles oral medicines.

In the middle of the expansion spree, Catalent just installed a new CEO, Alessandro Maselli, who took over mid-2022 from longtime helmsman and now chairman, John Chiminski. The CDMO also adopted a new corporate structure, which divides the company into two departments—biologics, plus pharmaceuticals and consumer health—instead of four.

As for Danaher, the company also appears to have developed an increased interest in cell and gene therapy. In two back-to-back deals in 2021, Danaher acquired Vancouver-based Precision NanoSystems and put down $9.6 billion to buy North Dakota-based Aldevron. The latter provides plasmid DNA, mRNA and recombinant proteins for vaccines, and cell and gene therapies. 

For its part, Precision offers nanoparticle delivery platforms for genetic medicines like mRNA. The two deals added to Danaher’s previous purchase of Integrated DNA Technologies in 2018.

Danaher is in the process of spinning off its environmental business by the end of this year.