It would perhaps be going too far to say that the Danish economy owes its positive growth figures to Kim Kardashian, Elon Musk and a TikTok fad about weight-loss drugs.
But still: pharmaceutical company Novo Nordisk is now single-handedly responsible for the lion’s share of Denmark’s economic growth. Of the 1.9 percent growth in the first quarter, at least 1.7 percent would be due to the pharmaceutical industry, according to an analyst from the Danish statistics office. The New York Times.
Novo Nordisk (48,000 employees, turnover 23.7 billion euros in 2022) was originally a producer of insulin, and became big with medication for patients with diabetes and obesity. The goose with the golden eggs is the active ingredient semaglutide, which causes the pancreas to release more insulin in response to food.
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The two main drugs Novo Nordisk has on the market are Ozempic and the slightly stronger Wegovy, which are intended for patients with type 2 diabetes and obesity who have trouble controlling their weight. It is given in weekly doses in a puncture form and helps patients lower their blood sugar levels. Possible side effects include nausea, stomach cramps and diarrhea. But whatever the means also cause: less appetite, and therefore weight loss. And that is why Ozempic and Wegovy have become extremely popular in a short time. That started when American doctors started prescribing the drug to obese patients, and when the effects became known, Hollywood started using it.
In the fall of 2022, it turned out that reality star Kim Kardashian had lost several kilograms in a short time thanks to Ozempic, so she tried on a Marilyn Monroe dress. Elon Musk bragged in tweets about how he helped maintain his weight thanks to Wegovy.
Video platform TikTok did the rest. Users shared their experiences in before and after videos and made Ozempic and Wegovy known to the general public as off tagweight-loss drugs: drugs that are used for a purpose other than that for which they were originally marketed. Manufacturer Novo Nordisk was completely overwhelmed by the explosion of demand that followed. The pharmaceutical company could not prevent a worldwide shortage of semaglutide.
Huge success
The popularity of the medication has meanwhile benefited Novo Nordisk. For several consecutive quarters, CEO Lars Fruergaard Jørgensen had to adjust the growth figures upwards.
Even with the latest figures, Novo Nordisk has no equal. Turnover in the first six months of this year amounted to 14.5 billion euros and operating profit of 6.5 billion euros was more than 40 percent higher than in the same period in 2022. Jørgensen once again revised up the turnover growth for the full year up to 33 percent at the latest.
While Ozempic and Wegovy were already popular as a slimming aid, an additional application was added at the beginning of August. Research found that the medication also reduces the risks of heart attacks and strokes by 20 percent.
These research results are seen as an important argument to persuade health insurers to reimburse the drug. The largest market is the US, where 40 percent of the population suffers from some form of obesity. If all health insurers start to reimburse the funds, analysts predict a new demand explosion and further shortages of the drug.
Novo Nordisk stock shot through the roof; after the publication of favorable research results, the share shot up by 40 percent, only to rise further in the following days.
Lower interest
Novo Nordisk’s home base is in Bagsvaerd, a sleepy suburb of Copenhagen. With a market value of 385 billion euros, the Danish pharmaceutical company has now surpassed the economy of its home country in size. It only has to tolerate the luxury brand conglomerate LVMH as the most valuable company in Europe.
The rapid growth of Novo Nordisk has now also had an impact on Denmark’s domestic economy. Because of the huge commercial success of the resources in the United States, a huge amount of foreign currency flows into Denmark. The Danish krone, which is linked to the exchange rate of the euro, is therefore threatening to rise in value too quickly – forcing the Danish central bank to intervene. To solve this, Denmark maintains a lower interest rate than the European Central Bank, which makes buying kroner unattractive. The Danish bank also spends a lot of kroner by replenishing foreign currency reserves.
Novo Nordisk is larger than Denmark’s economy by market value
In the longer term, an even larger growing Novo Nordisk is not seen as something positive for the Danish economy. How this can go wrong became apparent in Finland, where telephone manufacturer Nokia played a central role in the economy for many years. At its peak around the turn of the century, Nokia accounted for 4 percent of Finland’s gross domestic product and the phone manufacturer alone accounted for a fifth of Finland’s total exports.
The rise of the smartphone, which started with the launch of Apple’s first iPhone in 2007, turned out to be the final blow for Nokia. The Finnish economy was hit hard and entered a decade of stagnation, partly due to the credit crisis.
Lower doses
But for the time being, it is mainly a celebration for shareholders of Novo Nordisk. However, obese patients have other interests: the fact that the popular slimming drug has become extremely popular is a problem for them. Due to the worldwide shortages, not everyone who needs treatment can get the weekly dose.
Health authorities in various countries are calling on doctors to prescribe the drug only to obese patients who really need it – and not to the Instagramming family fathers and mothers who want to lose some kilos without too much effort. Novo Nordisk is trying to limit shortages by reducing the first doses for obese patients. Whether that is enough remains to be seen, the demand for the drug remains enormous.