Novo Nordisk Invests $1.2 Billion in New Denmark Factory, Fresh Off Catalent Deal

Novo Nordisk A/S (NYSE:NVO) has committed $1.2 billion to build a new production facility in Odense, Denmark. This marks the first new production site for the Danish pharmaceutical giant in the country this century. The facility, spanning 40,000 square meters, is set to accommodate treatments for rare diseases like hemophilia. Construction is expected to be completed by 2027, creating 400 permanent jobs and as many as 1,000 temporary positions during the build.

New Facility Won’t Produce Ozempic Yet, But Holds Long-Term Potential for Novo

Novo Nordisk, the maker of Ozempic, made two significant moves to address the soaring demand for its blockbuster medications. The company announced an 8.5 billion kroner ($1.2 billion) investment in a new factory in Denmark, shortly after receiving approval for a $11.7 billion acquisition of three major facilities overseas. This latest project is expected to generate 400 permanent jobs once the facilities are completed. During construction, up to 1,000 external workers will be employed on-site.

The new facility will be designed to be modular and flexible, allowing Novo to diversify production across a range of products. While it will not initially support the production of blockbuster drugs like Ozempic and Wegovy, the site is seen as a key long-term asset for Novo.

CEO Lars Fruergaard Jorgensen emphasized that the site’s location in Odense, Denmark’s third-largest city, holds significant future potential, with the company planning to expand as demand grows. This investment comes as part of Novo’s broader strategy to increase its production capacity, responding to surging global demand for its diabetes and weight-loss medications.

Novo Expands Production to Meet Global Demand for Diabetes and Weight-Loss Drugs

In addition to this new build, and as part of its ongoing efforts to increase production capacity, Novo Holdings has recently cleared all regulatory hurdles to complete its $16.5 billion acquisition of Catalent Inc. (NYSE: CTLT), a global contract manufacturing company based in New Jersey. Despite opposition from unions, consumer groups, and public interest organizations, the deal has received approval, including from the European Commission. Novo Nordisk, a separate entity, will acquire three manufacturing sites from Novo Holdings A/S as part of this agreement, with the transaction expected to close within days. 

These plants, located in Europe and the United States, are critical to Novo’s strategy of expanding its global production footprint. The facilities are critical to meeting the rising demand for its diabetes and obesity treatments. The company’s growth has made it Europe’s most valuable firm, further solidifying its market leadership. However, critics have raised concerns about Denmark’s over-reliance on Novo and its potential risks.

The acquisition will slightly impact Novo Nordisk’s financial performance in 2024. It will modestly reduce operating profit growth and free cash flow due to acquisition costs. Despite this, Novo has confirmed it will continue its 20 billion Danish Kroner share buyback program as planned.

In 2025, operating profit growth is projected to decline moderately due to higher debt-financing interest costs. These added costs will affect net financial items for the year. As a result, Novo Nordisk has decided not to initiate a share buyback program in 2025.

Novo’s Buyouts and Expansion Drive Efforts to Overcome Production Constraints

Author

Bernice Lottering