Bloomberg (“The Ozempic Effect: How a Weight Loss Wonder Drug Gobbled Up an Entire Economy“):
There is no escaping Ozempic and Wegovy. The diabetes and obesity drugs are a global phenomenon. They’ve won over the rich and famous, generated billions in sales and blown open a new market for weight loss drugs, which Goldman Sachs estimates will reach $100 billion a year by 2030.
The development of semaglutide, the key ingredient in the medicines, has also transformed their maker, Novo Nordisk, into Europe’s most valuable company, with profound implications for its home country of Denmark. Novo’s market capitalization of more than $570 billion is bigger than the Danish economy. Its philanthropic foundation is now the world’s largest, with assets twice those of the Gates Foundation. The drugmaker’s income tax bill in Denmark last year was $2.3 billion, and its massive investments and heightened production helped the domestic economy expand almost 2% — more than four times the EU average. That drove record government spending on defense, the green transition and support for Ukraine.
That a drug company’s valuation is higher than Denmarks’s GDP is just staggering. Granting that Denmark is a small country whose population is roughly that of Wisconsin, it’s still the 37th largest economy on the planet by nominal GDP.
Without Novo’s contribution, the Danish economy would have stagnated.
Little in Denmark can escape Novo’s gravitational pull. Its agenda influences educational and research priorities, and politicians consider the company’s perspective before making decisions on immigration policy or new infrastructure development. The drugmaker has created thousands of jobs in the six-million-person country — and more will come as Novo expands across multiple locations — but even citizens with no ties to the firm benefit from its gains. Danish pension funds are flush from record returns on Novo shares, and mortgages are cheaper as booming diabetes drug exports have forced Denmark’s central bank to keep interest rates low.
Novo’s enormous scale in Denmark also comes with risks, both for the company and its home market. Its every move is met with media scrutiny, making it especially vulnerable to public backlash and regulatory shifts. And a strategic misstep by the company would have a trickle-down impact on public coffers, scientific research and even jobs for the next generation of Danish university graduates.
This puts Denmark in a company with petrostates and others that are dependent on a single resource. Then again, even if Novo does everything else right, it’ll lose intellectual property rights to semaglutide by the end of 2031—possibly much sooner if various challenges to its patents succeed.
While Novo can’t anticipate how its decisions might affect Denmark, Chief Executive Officer Lars Fruergaard Jorgensen said in an interview, he’s also realistic about the drugmaker’s potential impact in its home country and elsewhere. “When you have superpowers,” he said, citing Swedish children’s story Pippi Longstocking, “you have super responsibility.”
I was curious whether Spider-Man’s Uncle Ben ripped off Pippi Longstocking or vice versa. The latter character predates the former in print by almost two decades and had been translated into English for more than a decade before the publication of Amazing Fantasy #15. Then again, literally every reference to Pippi Longstocking and “super responsibility” on the Internet seems to be from this article.
Such outsized influence can be a liability in a culture where humility is so deeply rooted that an unofficial social code exists to discourage flashy displays of success. And Novo has taken measures to downplay its stature: When the company rented Copenhagen’s famed Tivoli Gardens amusement park in September for a private two-day staff party, the drugmaker asked guests not to post pictures on social media for fear of repercussions, according to local media.
And this week, following months of debate over rising public spending on Novo medication, the firm quietly reduced prices for Ozempic in Denmark by nearly a third.
For now, Novo has an almost iconic status amongst Danes — policymakers included. There is an “extreme political attentiveness” to Novo, said Christoph Houman Ellersgaard, an associate professor at the Copenhagen Business School who researches Danish elites. Yet Novo is in a delicate position. If it continues to expand, so too will the power and influence it exerts in Denmark.And if it stumbles or falls, the country’s economy and society will feel the effects.
Economists call this the “Nokia risk,” referencing the Finnish telecommunications giant whose collapse, beginning in the first decade of the 2000s, dragged down that country’s entire economy. Not only did the then-phonemaker’s decline wipe out thousands of jobs, but the ripple effects extended to Finnish universities, businesses, and the public sector, all of which relied on its success.
I suppose you’d rather have the problem than not. But, rather obviously, more diversity in the economy would be preferable.
