After 100 years of relatively quiet existence as a manufacturer of diabetes drugs, the Danish company Novo Nordisk has suddenly grown so large that the company is reshaping Denmark’s economy.
The reason: Ozempic and Wegovy, two drugs manufactured by Novo Nordisk that have been heralded as revolutionaries in the field of obesity.
The company’s huge success now explains almost all of Denmark’s recent economic growth, and the increase in drug sales abroad is prompting the Danish central bank to keep interest rates lower than it would otherwise. , say economists.
Novo Nordisk’s market value recently surpassed the size of the Danish economy. Its soaring share price has made it the second most valuable public company in Europe, after luxury goods group LVMH.
Denmark, a country of less than 6 million people, is no stranger to globally important companies such as Lego and shipping giant Maersk, but Novo Nordisk’s impact is singular.
“We have never been in a situation like this before in Denmark, where a single company has played such an important role,” said Jens Naervig Pedersen, an economist at Danske Bank.
Last year, two-thirds of Denmark’s economic growth could be attributed to the pharmaceutical industry, said Jonas Dan Petersen, chief adviser to Denmark’s national statistics agency.
And the impact has become even more stark: “Without the pharmaceutical industry, there was almost no growth” in economic output in the first quarter of this year compared to the previous year, Petersen added. The Danish economy grew 1.9 percent during that period, of which 1.7 percentage points came from the pharmaceutical industry.
For a long time, Novo Nordisk focused on fighting diabetes. But its new drugs are now widely prescribed for weight loss, particularly in the United States. The company’s profits rose 45 percent to 39 billion Danish crowns, about $5.7 billion, in the first half of the year, boosted by demand for the drugs.
Much of Novo Nordisk’s production is done abroad. Still, there are ample benefits for Denmark. Novo Nordisk is the largest corporate tax payer in Denmark, a boon for the country’s public finances.
Some economists in Denmark worry that the country could become too dependent on Novo Nordisk, with disturbing comparisons to the fate of the Finnish economy when Nokia lost its dominance in the mobile phone industry. There is also concern that the so-called Dutch disease could reach Denmark, said Helge J. Pedersen, chief economist at Nordea, referring to the economic phenomenon when a country experiences a large increase in its income, which seems like good economic news, but It actually has a negative effect on the rest of the economy.
Still, he sees more positives than negatives for the Danish people when it comes to Novo Nordisk. The popularity of the company could draw attention to the Country, as well as increase the soft power of the Government. If it helps sustain Denmark’s high-wage economy, it will also push other companies to be more innovative to remain competitive.
By: ESHE NELSON
BBC-NEWS-SRC: http://www.nytsyn.com/subscribed/stories/6890404, IMPORTING DATE: 2023-09-12 20:30:09
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