As Catalent prepares to join Novo family, CDMO's sales continue to slide

As Catalent gets ready to join the Novo fold, the contract manufacturing juggernaut continues to slide on its diminishing COVID-19 business.

In the second quarter of Catalent’s 2024 fiscal year, which covers the three-month period that ended Dec. 31, the company reported revenues of $1.03 billion. That sum was down 11% in constant currencies from the $1.15 billion the company nabbed for the same period the prior year. Catalent pointed to a “decline in demand for COVID-19 related programs” as the reason for the revenue slump.  

Overall, the manufacturer also suffered a net loss of $204 million, versus $81 million in net income in the second quarter of the 2023 fiscal year. Catalent again blamed the result on languishing COVID demand.

Sales were down across other business segments, too, with net revenue from the CDMO’s bread-and-butter biologics services operations sliding 24% to $446 million. The company’s pharma and consumer health division, for its part, saw sales climb 1% to $587 million.

Despite some turbulence at Catalent, investors still seem to be buzzed about the stock after this week’s announcement that Novo Holdings is buying out the CDMO for $16.5 billion. Shares of the contract manufacturer were still trending upward as of Friday.

“With the benefit of Novo Holdings’ expanded resources, we will be able to accelerate investment of our business and enhance key offerings for current and prospective pharma and biotech customers,” Alessando Maselli, Catalent’s chief executive officer, said in a statement.

The deal—which is expected to close in late 2024—will help Novo Nordisk beef up its manufacturing capacity for its GLP-1 blockbusters for diabetes and obesity. As part of the transaction, Novo Holdings will sell a trio of Catalent’s fill-finish sites to Novo Nordisk for $11 billion.

Not everyone is abuzz about the buyout, however. Novo’s chief rival in the diabetes and obesity space, Eli Lilly, for instance, has “questions about that transaction,” according to the Indianapolis-based company’s chief financial officer Anat Ashkenazi.

“We intend on holding Catalent accountable to their contract with us,” Ashkenazi added on a Lilly earnings call earlier this week.

Ashkenazi called Catalent an “integral” manufacturing player, especially in diabetes and obesity, noting that some Lilly products are made at Catalent sites.

Back in January at the J.P. Morgan Healthcare Conference, Catalent CEO Maselli said his company was a “top-positioned CDMO” for the GLP-1 market, which it’s played in since 2017.

For 2024, Catalent expected to reap less than $100 million from production of GLP-1 products, the company said last month. However, once the CDMO completes expansions planned through 2026, Catalent stands to bring in more than $500 million from the field, the company said in its JPM presentation.