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Novo Holdings, the controlling shareholder of Danish drugmaker Novo Nordisk, plans to invest up to $7bn annually by 2030, as dividend payments from the maker of diabetes drug Ozempic and weight loss treatment Wegovy boost its coffers.
The life sciences investor manages the holdings of the Novo Nordisk Foundation, the world’s largest philanthropic body. This includes an investment portfolio valued at $24bn in 2022 consisting of life sciences and capital investments, in equities, bonds, real estate and infrastructure, as well as controlling stakes in companies Novo Nordisk and industrial enzymes maker Novozymes.
Kasim Kutay, Novo Holdings chief executive and a Novo Nordisk board member, told the Financial Times that rising income from its 28 per cent stake in Novo Nordisk and other investments would give his fund $5bn a year to invest in the next five years, rising to $7bn by 2030.
“We’ve got an ever growing investment portfolio that’s generating very attractive returns,” said Kutay. “That’s going to keep on growing, then we’ve got obviously the growth of . . . Ozempic and Wegovy and a lot of dividends . . . we have more money than ever to invest.”
The move marks an increase from $3bn in deals in 2023 and a step change in ambitions for Novo Holding’s investments portfolio. It booked a 6 per cent loss in 2022, a year the company described in its most recent annual report as “among the most challenging in recent memory, from both a geopolitical and economic perspective”.
The success of the Danish pharma group’s blockbuster weight-loss drugs helped it book record sales last year, pushing it to a $500bn market capitalisation.
Analysts expect the diabetes and weight loss category to reach $100bn in value by 2030, with demand for Ozempic and Wegovy forecast to remain high despite competition from rival Eli Lilly. “These are once in a generation drugs,” said Kutay.
The increased funds for Novo Holdings will be split equally between its capital investments and life sciences investments, with Kutay saying Novo Holdings’ investments in larger life sciences companies are “very scalable”. “What you’ll see us doing . . . is to start to do bigger deals and deploy more equity,” he said.
The bullish projection comes after Novo Holdings struck a $16.5bn deal on Monday to acquire Catalent, a pharmaceutical manufacturing company, before selling three Catalent sites for $11bn to Novo Nordisk, in which it holds the majority of voting rights.
Kutay said the deal was a “one-off” in scale that would enable Novo Nordisk to expand its manufacturing capacity for its blockbuster diabetes and weight loss drugs by 2026, while also providing Novo Holdings with a pharmaceutical services asset, an area in which it has other investments.
It was “too early to tell” if Novo Holdings would sell off parts of Catalent, but he said this was “not part of the core thesis”.
The Catalent sites specialise in “fill-finish” operations, the final part of manufacturing syringe-based products like Ozempic. The company is also a partner for several pharmaceutical companies.
Eli Lilly chief executive David Ricks described the acquisition as “unusual” on Tuesday and called for competition authorities to look into the deal. AstraZeneca chief executive Pascal Soriot said on Thursday that the move showed the need for pharmaceutical companies to have “independent” supply chains.
Kutay declined to comment on Ricks’ concerns but said Novo Nordisk had committed to honouring existing contracts with manufacturers. He said: “Ultimately, at some point in the future, those sites will be either fully or close to fully dedicated to supplying [Novo Nordisk].”
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