The stunning success of Ozempic and Wegovy is having a big impact on Denmark’s economy.Huge US sales have strengthened Denmark’s currency while also lowering its interest rates.Denmark-based Novo Nordisk has seen its market value soar in the past year to the second largest European company. Loading Something is loading.
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Surging demand for effective weight-loss drugs in America is having a big impact on Denmark’s economy in the form of lower interest rates and a strengthening currency.
Denmark-based Novo Nordisk manufactures Wegovy and Ozempic, a GLP-1 drug that helps patients lower their blood sugar levels and lose upwards of 25 pounds.
The drugs, which were first to market in the US for the treatment of obesity, have sent Novo Nordisk’s market valuation soaring to the second most valuable company in Europe after luxury goods maker LVMH.
Novo Nordisk has seen its market value soar 38% year to date to $413 billion, which is more than Denmark’s estimated 2022 GDP of about $406 billion.
The fast uptake of Wegovy and Ozempic has led to shortages of the drug as the company races to increase supply to meet demand. The company is expected to generate sales of about $6 billion for its weight loss drug, and analysts at FactSet expect that revenue figure to surge to about $15 billion annually in 2027.
The massive success for Novo Nordisk is a boom for Denmark’s economy as the company increases hiring, creates new jobs, and reinvests its profits in the company.
And as Novo Nordisk exports its drug to America, in return it receives an influx of billions of US dollars, which are then converted into the Danish kroner.
According to the Wall Street Journal, the large influx of currency has strengthened the Danish kroner relative to the euro. Since the kroner is pegged to the euro, Denmark’s central bank has kept interest rates lower than rates set by the European Central Bank to weaken the currency.
And lower interest rates could be a boon for Danish consumers who are in the market for a house or car or other big purchase that often requires some form of financing.
But having one company disproportionately drive a country’s economy is a double-edged sword, as any potential downturn in the company could hit the broader economy. Such has happened to Denmark’s neighboring country, Finland, which rode the success of Nokia for more than a decade until the iPhone took over the cell phone market in the 2010s.
For Novo Nordisk, the strength in the company’s weight-loss drugs is expected to continue for many years, though it does face competition from Eli Lilly’s mounjaro, which is still awaiting FDA approval for the treatment of obesity.