FTC Raises Concerns Over Novo Nordisk's $10 Billion Bid for Metsera Amid Fierce Competition with Pfizer

The pharmaceutical industry is witnessing a high-stakes battle for control of obesity drug developer Metsera, with Novo Nordisk and Pfizer locked in a bidding war that has now drawn scrutiny from U.S. regulators. The Federal Trade Commission (FTC) has expressed concerns about Novo Nordisk's proposed $10 billion acquisition, citing potential violations of merger laws and raising questions about the deal's structure.

FTC Flags Potential Merger Law Violations

In a letter addressed to lawyers representing Novo Nordisk and Metsera, the FTC warned that the proposed transaction "may violate the procedural provisions" of the Hart-Scott-Rodino (HSR) Act if completed without proper premerger review. Daniel Guarnera, Director of the FTC's Bureau of Competition, highlighted "potential concerns about proceeding with the transaction without filing under the HSR Act," focusing on the procedural aspects rather than broader antitrust issues.

The FTC's primary concerns revolve around Novo Nordisk's unorthodox deal structure, which involves a large upfront payment for half of Metsera's shares, regardless of whether the deal closes. This approach, according to the FTC, could allow the companies to sidestep requirements for a premerger review, potentially leading to anticompetitive harm before regulatory scrutiny can occur.

Intense Competition and Escalating Bids

The regulatory intervention comes amid an escalating bidding war between Novo Nordisk and Pfizer. Novo Nordisk's latest offer of $10 billion surpasses Pfizer's updated bid of $8.1 billion, both significantly higher than Pfizer's initial agreement of $7.3 billion in September. Metsera has declared Novo Nordisk's offer "superior," despite its existing acquisition agreement with Pfizer.

Pfizer, whose own bid has already cleared FTC review, maintains that Novo Nordisk's offer structure is illegal under the HSR Act. The company has launched two lawsuits against Novo Nordisk and Metsera, arguing that the proposed deal constitutes "attempted monopolization and conspiracy to monopolize" given Novo Nordisk's dominant position in the obesity drug market.

Implications for the Obesity Drug Market

The acquisition of Metsera would significantly bolster either company's position in the rapidly growing obesity treatment sector. Novo Nordisk, already a market leader with its blockbuster drug Wegovy, stands to gain up to eight additional weight loss candidates through the acquisition. This prospect forms the core of Pfizer's antitrust argument against the deal.

Karsten Munk Knudsen, Novo Nordisk's finance chief, expressed confidence in the deal's compliance with regulations, stating, "We do comprehensive homework in terms of living up to all laws and regulations in order for the deal to close." However, the FTC's intervention adds a layer of uncertainty to the acquisition's future.

As the pharmaceutical giants continue their pursuit of Metsera, the industry watches closely to see how regulatory concerns will shape the outcome of this high-profile acquisition battle. The resolution of this case could have far-reaching implications for future mergers and acquisitions in the pharmaceutical sector, particularly in the increasingly competitive obesity drug market.