![](https://endpts.com/wp-content/uploads/2024/07/anchor_image.jpg)
ENDPOINTS WEBINAR: CDMOs’ critical role in a rapidly evolving biopharma landscape
In an engaging interview with Endpoints News’ John Carroll, Catalent CEO Alessandro Maselli shared his own insights around the company’s pending $16.5 billion sale to Novo Holdings and its potential to have a transformative impact on customers, employees, and Catalent’s robust pipeline. Maselli highlighted the deal’s resounding shareholder approval driven by the immense growth opportunities and a strong alignment with Novo Holdings’ mission. He reaffirmed the company’s steadfast commitment to its customers, attributing customer loyalty to Catalent’s high quality assets and top-tier customer service.
Reflecting on Catalent’s dynamic journey, Maselli discussed the rapid scaling of vaccine production during the pandemic and the subsequent adaptation to shifting demand. Despite these challenges, Catalent achieved remarkable milestones, including securing significant approvals like partner Sarepta’s DMD gene therapy and delivering impressive double-digit growth in Q1 2024. Looking forward, Maselli and Carroll explored upcoming challenges such as the Biosecure Act’s impact on Chinese manufacturers and Catalent’s strategic plans for navigating future acquisition opportunities post-deal.
Key Takeaways
- Catalent’s $16.5 billion deal with Novo Holdings received strong shareholder support and aligns with its growth strategy and customer commitment.
- Catalent successfully navigated pandemic-related challenges, leading to significant pipeline approvals and double-digit growth in Q1 2024.
- Future strategies include carefully navigating potential legislative impacts and continuing to expand service offerings for clients
Q&A: Endpoints’ John Carroll and Catalent CEO Alessandro Maselli
This conversation has been edited for length and clarity.
John Carroll: Well, thanks to everybody for joining us today. We’re in a conversation with Alessandro Maselli, the CEO of Catalent, one of the world’s largest CDMOs, and a company that’s been undergoing some major changes over the 14 years of your career there, and the last two years as CEO. And it’s really fascinating to watch this thing, but let’s focus on this deal initially, about what you’ve done here with Novo Holdings and the kind of unique corporate structure that you’re working with here. Then we can get into the implications for what’s going on for Catalent and all of its customers. Novo Holdings has agreed to acquire Catalent, taking it private. Novo Holdings manages the assets for Novo Foundation and also has a controlling interest in Novo Nordisk, which has had explosive growth with Wegovy, the obesity medicine, and semaglutide.
Tell us a little bit about Novo Holdings’ deal to acquire Catalent. And then, let’s get into the implications about what’s going on with Catalent as a result of this deal.
Alessandro Maselli: So first of all, thanks for having me here, John. It’s great to see you again. We happened to talk a few times over the [last] 12 months, and it’s always exciting, always very, very thoughtful conversations, and I’m glad to be here at this very exciting time. And really, February 5th, which is the day which we announced the transaction with Novo Holdings, was a very exciting day for us and should be one where we have announced something that is very interesting for our industry.
Novo Holdings has a history of investing in life sciences. Surely, also in the past, they’ve invested in other CDMOs, and so this is not the first time they are looking at this space. And surely, they see the opportunity that lies ahead of the pharmaceutical services space. The way the deal is structured is that Novo Holdings, once they close the deal, they’ve agreed to sell three sites. And let’s remind ourselves, these are 3 out of 50. So Catalent is a big network of sites. We’re only talking about three sites, which would be sold by Novo Holdings to Novo Nordisk, in order to support the scale-up and really the production of the very much-needed doses of these obesity drugs. At the same time, Novo Nordisk has confirmed that, as they take ownership of these three sites, they will continue to serve the contracts in existence with our customers. So it’s very exciting news for all of us, one that has surely triggered a lot of attention from our customers. And yes, our customers did have some questions about it at the beginning, what it all meant to them.
Carroll: The relationship that exists between CDMOs and their customers is one of extraordinary trust, one in which you’re responsible for making sure that they have the product to sell, or to test and they’re entrusting you with a huge amount of responsibility. So there’s always a tremendous amount of attention paid by pharmaceuticals, as well as biotech companies in their CDMOs, selecting their CDMO and going with their CDMO. And I’m curious — what do you hear from customers about this deal? What did they say to you?
Maselli: Look, clearly they had the questions and we knew about it. So we are a service company, we need to have an obsession to be always there for our customers when they have questions and provide answers. I had myself and my whole leadership deployed on the field, being able to speak with customers at all times, and we were able to address their questions. And I do believe that after the initial questions, the customer really saw the opportunity, which is similar to the one that you were mentioning before. You mentioned one word before that is very important in this industry for customers, which is stability, right? Customers need to see into the future a lot of stability. They want to make sure that you’re there for the long haul, then you can continue to provide them excellent services, no matter what, no matter how. And this is what we’ve done for the last several decades.
And surely, this deal provides increased stability into the future, to provide that very service. So all in all, I believe that, after the initial questions, the reaction has been overwhelmingly positive from customers. And this has also translated into a number of new wins. We’ve seen both in the first three months of this calendar year, 2024, but also continuing in the following three months, very good momentum on the commercial front, with the customer entrusting us with a lot of new programs. So I would say that where I stand today, I see all positives coming out of this.
Carroll: Why is this important for Catalent right now? What adds to the emphasis that you’ve got here in terms of completing this deal, which is now under review, and moving on ahead into the next chapter?
Maselli: Well, first of all, look, Novo Holdings, since the beginning, showed values and missions, which are very aligned to the mission of Catalent and our core values. And our first core value is patients first. We have values in and around integrity, uncompromising quality, and these are all values that are very relevant for Novo Holdings, what they’ve done. Let’s remind ourselves, this is a financial institution that invests exclusively in life sciences. So not only they have the set of values that are necessary to be successful in life sciences, they also are experts of this sector, which is very special and so we spoke since the very beginning with people that do understand us and do understand what it takes to be successful in the service industry. So since the very beginning, there was a large amount of alignment. Also, I believe that, at this point in time for our industry, being private and having a very long-term strategic focus is very important to us, but it’s also very important to our customers. And this was also a win-win for our shareholders. Only a few weeks ago we received overwhelming support from shareholders, with more than 99% support for the deal in shareholder votes. So I believe that this deal was really checking a lot of boxes for us, and we are excited about this opportunity going forward.
Carroll: The deal with Novo Holdings occurred after you had gone through a strategic review for the company. There have been a lot of changes at Catalent. There was a tremendous impact when the pandemic hit, you had a huge role to play in terms of the vaccines that were rolled out to deal with the pandemic and to contain it. And then, just as suddenly, virtually the market for the vaccines disappeared. It was this huge global demand, clamoring for vaccines, followed by an end to the clamor. So tell me, what kind of impact has that had on the company, and how does this deal affect Catalent in terms of its strategic response as a result of everything that’s been going on?
Maselli: I believe that, for me as an individual, and for Catalent as a whole, it will remain an honor, and I would say the pride of our lifetime and careers to have served what we’ve done during the vaccine, and during the pandemic with the vaccine production and distribution, really. The impact that we had in the world, on the lives of many, many people, including our own parents, or relatives, or friends, families, it was something that we never experienced before and probably will never experience in the future, I hope will not experience in the future. And surely, from a business standpoint, we had the vaccine, we had to work hard to get the vaccine out there, as many doses as possible, and there was a sharp correction of it. And it was not an easy transition, but we managed through, we got better, of course, we spent a lot of time in refashioning the operations of the company so that we could move forward. But also, at the same time, we had a lot of good things happening to us, some very consequential approvals, our pipeline really started to play out. The maturity of our pipeline really started to drive growth. When you think about the last quarter, our published results, we posted double-digit growth, which in the current environment is not very common. And this is ex-COVID, which means that our core business was able to grow double digits. And really, what is driving it in a biotech funding environment, which is still kind of mixed, was really the maturity of the pipeline. And very recently, we had these very consequential approvals for Sarepta, one of our key partners, which is part of it. So I believe it’s been, as I said, an intense period, but one that also brought a lot of opportunities for the future.
Carroll: And there’ll be a tremendous amount of change coming, right? Partly because of this deal that you’ve done, and everything else that’s going on within the CDMO industry globally. It is interesting to me, it’s definitely a global industry, you can’t look at this in a localized version at all. Meeting a global demand is something that’s really quite extraordinary. And when there are these sharp changes in direction in terms of who’s doing what and why, but right now, there’s the huge move into obesity and obesity drugs, by the part of Novo as well as one of its rivals. And then, there’s this whole influx of people who would love to take a piece of this market, and are developing just a whole host of new drugs in hopes that they can do something that could grab a piece of this incredible market. Really, what’s extraordinary about the semaglutide market issue is that it’s so difficult to make enough of this in order to meet what is global demand, and the demand obviously is really quite extraordinary.
So looking forward to this in terms of where you are strategically and how you deal with this post-deal, after this whole thing happens, you’re a private company, dealing with biotech, biopharma companies around the world. How do you see the company changing? What are the major strategic imperatives here that you have to look at?
Maselli: First of all, what is not changing is that we are a service company. So the underlying key element of the success of the company is to have a customer obsession and understanding that maybe customers come to us the first time because of our technical abilities and the quality of our assets, but they stay with us, and they come again and again to us because of the experience we are able to give to them. That is not going to change. That is going to be continuing to be the key of our success, which is a foundational culture at our company. And so I do believe that, in the last couple of years, we decided intentionally to go a little bit earlier in the cycle, with our acquisition, acquiring assets which were a little bit more quote/unquote “immature” or earlier in the life cycle. That was an intentional choice. Clearly, we’ve been spending the last period in bringing these assets to operational maturity, fully integrating them in the Catalent ecosystem. And clearly, after the closing of this deal, we expect ourselves to continue to look at opportunities for further enhancement of our ecosystem of services for our clients. At the end of the day, the way I see Catalent is one player that helps and enables the customer to bring innovation to patient outcomes. And so, as much as we can help our customers to do that, like we’ve done recently also with our partner Sarepta, that’s our job to be done, and I believe that this deal is also enhancing our opportunities to do so.
Carroll: Well, let’s talk about Sarepta for a second. What happened at Sarepta? Obviously, there was a big announcement recently regarding Sarepta. What happened at Sarepta and how does that affect Catalent?
Maselli: Well, first of all, what happened is I believe more [than] to Sarepta is the great news for these patients. So let’s remind ourselves, Duchenne [muscular dystrophy], is something that gets diagnosed very early in life, it’s essentially a death sentence, and is a sentence that doesn’t have a good development over the years. So people very easily, very soon stop walking, they become non-ambulatory, and it goes on and on, with a very slow disease progression, which leads to a very difficult death. And so I believe what happened is great news for patients, first of all. I do believe that our job is to be ready and to continue to be there for Sarepta, to continue to scale up the manufacturing, and make sure that now that there is access, there is no shortage of availability. And from where we see today, we have plenty of supply available for these patients, so to start getting treated, and this goes on for all the supply chain. So we are here, ready for them, as for all the other partners, and we’re going to play a role in this.
Carroll: Where do you see new growth coming from Catalent? What are the areas that you look at where you say this is likely to have a big impact in terms of your business and the CDMO business broadly?
Maselli: So twofold: One is, as I said before, the maturity of our pipeline. So when you look at our drug substance business, when you look at our gene therapies, when you look at some of the other offerings, we still have a very good pipeline. In 2023, we were the number one CDMO by number of approvals. So being the number one CDMO for approvals is something we’re very proud of. It means that we have really not only served a lot of customers but have been also selecting the right assets to focus on, which came to a positive outcome. I also believe that some of the dynamics, including geopolitical dynamics, are bringing more customers to us. And in general, this is a transformative time – transformative meaning more uncertainty. And Catalent has been known always for being a very reliable, agile, and flexible partner. So these are three attributes that are very, very important through these times. The ability to adapt very rapidly as we have demonstrated during the pandemic, as we have demonstrated with GLP-1s. So we really are a company that can adapt very fast and very quickly to new circumstances, and this is something that is very valuable to customers. So I believe the combination of the maturity of the pipeline and more and more customers coming to us is really driving that growth.
Carroll: Agility, maturity, and stability are all key assets in CDMOs, right? Because when you’re making a drug for a market or you’re testing a drug for approval or anything like that, you’re engaged in this epic journey, an epic journey of assessing, and finding demand, and meeting demand on a global basis, which is extraordinary.
So one of the other backdrops to everything, and you mentioned some of the geopolitical aspects of what’s going on within the industry right now that’s having an extraordinary effect, is the BIOSECURE Act, proposals related to Chinese producers, manufacturers, and how that’s going to play out within the broad industry. And obviously, that’s been incredibly disruptive. So tell me, from your own perspective, what’s going on here with BIOSECURE, geopolitical issues, and how it’s going to affect Catalent?
Maselli: You and I have talked about this in the past, with this re-shoring, bringing back into the West, some of the production and so on, and I believe it’s now happening. This has been talked about before the pandemic, it became a real topic during the pandemic, and now, after the pandemic. What we have realized during the pandemic and a few additional items that are happening as we speak, is really becoming a reality. So our presence is mostly in the Western part of the world. So of course, we are well positioned to grasp the opportunity that comes with these dynamics. I would say also the pipeline itself, the structure of the business, and somewhat also the IRA, are all dynamics that are pushing towards more outsourcing. This is a dynamic that is true for all CDMOs, right? The outsourcing rates are increasing. I predict that they will continue to increase, because, when you’re looking at these modalities and you look at most of the clients are playing more and more in the unmet need space, there are less and less companies that are out there doing the me too play, right? And this means that once you get the approval, there are a lot of patients out there that don’t have a cure and don’t have a treatment. And so you need to scale up very, very fast. So you need the ability to scale up fast. Surely, IRA puts some more pressure in making sure that you go into the market as fast as you can. So these are all things that CDMOs can do very, very well. And so when you combine that with the fact that most of the pipeline is with companies that don’t have a lot of manufacturing footprint and development expertise, when it comes to formulation, clearly, all of these dynamics all combined together, brings more outsourcing into the space, which is good news for CDMOs. And surely, great news for a CDMO like Catalent that has a track record of being able to do these fast scale-ups and sell to customers to get into the market at laser speed.
Carroll: You mentioned earlier in our conversation here today, that you had, as a company, focused on bringing a lot of companies together in consolidation. You’ve had to work to mature the organizations, to bring them up to speed where they needed to be, fit them within the larger organization that you have created at Catalent. So it is interesting, and it would be interesting to clarify, Novo Holdings has incredibly deep pockets right now, and has had for quite some time. So in terms of their direction and the consistency of their direction, they don’t do things lightly, and they don’t tend to fly from thing to thing. They tend to get with it and they tend to stick with it. And that’s always been their MO, they’ve always done that. It’s just me commenting, but it must be encouraging for you that you’re dealing with an owner now that has a very clear idea of what it wants and what it expects, and allows you the opportunity to pursue this probably on your own?
Maselli: Well, look, John, I couldn’t stress how important it is at this point in time in our industry to have a long-term focus, right? There are incredible opportunities, but they’re coming from modalities that are still in the immature phase, both from the way you should think about clinical trials, but also the way you should think about the production processes, the manufacturing processes. This will all come to a great future, but it’s going to take time. And so having a partner with somebody that shares the need for long-term focus and for strategic focus is something very, very exciting at this point in time.
Carroll: So I’d like to talk a little bit about you here. You’ve had an opportunity recently to meet with a lot of people at the company. Obviously, meeting with customers and talking with customers is a big part of this, but at the same time, it’s a very large organization, and I’m sure you’ve had a lot of questions from your own own employee group, an enormous group of people, about what’s happening and what kind of impact it’s going to have on them. And there are always concerns in any kind of an acquisition about what the culture has been and what the culture will be. So tell me a little bit about how you dealt with that: I mean, on an internal basis, is this something that’s taken a lot of your time and what do you say when people say, “Who are we and what are we going to do?”
Maselli: Well, look, I’m a big believer that the leaders need to be on the front line. And to me, my front line are customers and employees. So the more I spend time speaking with my employees and my customers, the better the outcome. That’s my biggest belief. So yes, since the announcement, I’ve spent probably 90% of my time between customers and employees, traveling around the world. I’ve been in Asia, I’ve been in North America, I’m now traveling in Europe, being there, showing your face, being genuine and transparent. Acknowledge that this news can bring some questions, and address those questions. But I believe this is also a good story to tell, right? So first of all, you read in the news about Novo Holdings, it’s a long-term holder, they tend to stick with what they do. The fact that they belong to the biggest philanthropic organization in the world, and the fact that some of the returns you generate go back for philanthropic work, which is, again, something again aligned with what we do as an organization and what we want to do as an organization. The fact that our mission is to help people live better and healthier lives, which is aligned with what they do, I believe resonates with our employees. And surely, they see the opportunity here that is ahead of us. They understand how we came to this point, but also, it’s easy to explain to them the strategy and why that strategy is so exciting to them. So I believe this is one story that has resonated well with our customers.
Carroll: Well, on that note, we’re going to wrap it up. I really appreciate taking this opportunity and having this conversation. It’s always interesting. I mean, I think we get together, every six months or so, for one reason or another, and have a conversation about the industry and what’s going on. Always fascinating to get your views on that. I really appreciate your taking the time, and I appreciate the audience taking their time to join us today. Thanks very much.
Maselli: Thanks a lot for having me again. I’m very thankful for the time, but also very thankful for what our employees are doing around the world. I would like to take the opportunity to thank them for their engagement, passion, and professionalism in serving our customers. I would [also] like to thank our customers for the trust that they continue to put in us. So we are very excited where we are in the industry and the opportunities ahead of us. And again, thanks for your time, John. Always a pleasure.
Register to watch the full interview on demand.