Personal Finance Defined

LONDON (Reuters) – The sale of listed contract drugmaker Catalent (NYSE:) to the parent of Novo Nordisk (NYSE:) this week demonstrates the importance for big pharma companies of building an independent supply chain, Astrazeneca (LON:) said Thursday.

AstraZeneca (NASDAQ:), which is a client of Catalent for some of its drug manufacturing, is working to boost its in-house capacity to cut reliance on contract drugmakers, Chief Executive Pascal Soriot told reporters after the release of fourth-quarter results.

“It really means for us that we need to be as independent as we can, in terms of our own supply”, said Soriot, citing AstraZeneca’s ongoing capital expenditures including its $300 million investment announced on Tuesday in a facility in Maryland for discovery and development of cell therapies.

“There is a lot more to do”, Soriot said of AstraZeneca’s need to spend more to build its manufacturing capacity to produce its portfolio of medicines.

Soriot was responding to the announcement by Novo Nordisk’s parent company Novo Holdings on Monday that it was buying Catalent for $16.5 billion.

The market interpreted the purchase as a win for Novo in the competitive race between with U.S. rival Eli Lilly (NYSE:) and potentially other companies trying to develop more obesity drugs.

Analysts have estimated the market could be worth as much as $100 billion by the end of the decade, but ramping up production is a major hurdle.

Soriot’s comments reflect the pharma industry’s close monitoring of developments with Catalent. One of the largest contract drugmakers globally, Catalent has struggled with manufacturing problems and last year became the target of takeover interest from both private equity firms and strategic buyers.

After the announcement of Catalent’s sale on Monday, it was not immediately clear which pharma companies would be affected. Soriot said Catalent had since been in touch to confirm it will continue supplying companies it has contracts with.

Read the full article here