Novo commits $1.2B for new Danish facility
Ozempic maker Novo Nordisk A/S took two large steps toward meeting demand for its blockbuster drugs, committing $1.2 billion to build a new factory in Denmark shortly after it got the green light for the $11.7 billion purchase of three large facilities abroad.
The Danish pharmaceutical giant will establish a 430,000-square-foot production facility and warehouse on the outskirts of Denmark's third-largest city, Odense, a completely new location for the drugmaker, Novo said in a statement last week.
Its larger deal for existing factories formerly operated by contract manufacturer Catalent Inc. is also set to be completed in coming days after Novo announced recently that the Federal Trade Commission wouldn't challenge the acquisition.
Novo is racing to ramp up capacity across its portfolio after struggling to meet demand for its popular diabetes and weight loss medicines, which are facing growing competition from U.S. rival Eli Lilly & Co. Novo expects to invest $6.8 billion in production this year, up from $3.9 billion in 2023.
The new factory, about a two-hour drive from Copenhagen, will be designed to be "modular and flexible" and accommodate multiple product types that treat rare diseases, such as hemophilia, Novo said.
The plant will not support production of Wegovy and Ozempic in the first stage. However, Novo bought the land in Odense because of its "long-term potential" and hopes to be able to expand there in the future, CEO Lars Fruergaard Jorgensen told reporters at an inauguration event at the construction site on Monday.
Since the drugmaker's volumes within rare disease treatments is "relatively small," it is likely that drugs in other areas will be produced there in the long term, Fruergaard Jorgensen said, noting, however, that no such decision had been made yet.
Novo expects the factory will create 400 permanent jobs once completed in 2027, while as many as 1,000 external employees will be working during the construction process, which has now started.
More significant for Novo's weight-loss portfolio is the Catalent purchase. Novo is acquiring the three factories -- two in Europe and one in the U.S. -- as part of a three-way deal, with Novo's own main shareholder Novo Holdings A/S buying the contract manufacturer for $16.5 billion and then selling the three key facilities to the drugmaker.
The success of its obesity and diabetes portfolio has transformed Novo into Europe's most valuable company and triggered worries over Denmark's dependence on the drugmaker's success. Novo has had a major impact on the regions it's located in, boosting growth and jobs, but it has also brought challenges for other businesses, who face labor shortages because of the drug giant's hiring spree and attractive salaries.
Novo secured land and planning permissions for the factory in Odense earlier this year.
In the environmental report submitted as part of the permitting process, Novo laid out plans to potentially expand the site in stages over an 11-year period.
