The Power of the Pharmaceutical Industry: Danish Weight Loss Drugs Boost Country’s GDP

Novo Nordisk has become one of the most prestigious companies in Europe thanks to the production of Ozempic, a weight loss drug. The price of Novo Nordisk’s stock has risen by more than 40 percent this year, raising the company’s market capitalization to 2.3 trillion Danish kroner, or 328 billion dollars, reported Business Insider.

For comparison, the market capitalization of LVMH (Moët Hennessy Louis Vuitton), currently the most valuable European company, is 376.95 billion euros or 402 billion dollars. In addition to Ozempic, the company produces another weight loss drug called Wegovy, which briefly made Novo Nordisk worth more than LVMH on the stock market a few weeks ago.

The astonishing rise in the company’s stock this year has been driven by two incredibly popular weight loss drugs, especially since these products are currently a big hit in the U.S. for treating obesity. Elon Musk and Amy Schumer have also stated that they have used the products.

Novo Nordisk’s earnings in the first half of 2023 amounted to 107.7 billion Danish kroner, or 15.5 billion dollars in total revenue for that period, which is about 30 percent higher than a year ago. The company’s market value now exceeds the entire economic output of Denmark, estimated at 323 billion pounds this year.

The increase in drug sales abroad has boosted the value of the Danish krone, forcing the country’s central bank to keep interest rates lower than usual to curb the value of the currency. It is worth noting that the krone is pegged to the euro to facilitate trade with the eurozone.

GDP is also rising

– Novo Nordisk clearly affects the country in many ways. It even influences interest rates. We are in a situation where the weight loss drug and the pharmaceutical company are so successful that they affect the interest rates of a small country – said Jens Naervig Pedersen, chief analyst at Danske Bank, to the Guardian.

Denmark’s GDP grew by 1.7 percent in the first half of 2023 compared to the previous year, according to official statistics – all thanks to the pharmaceutical sector. The economy would have contracted by 0.3 percent if it weren’t for the pharmaceutical industry, reported the national statistics department on August 31.

– If it weren’t for Novo Nordisk, there would have been no growth in the first six months of this year – said Las Olsen, chief economist at Danske Bank, to AFP on September 6.

Jonas Petersen, an analyst at the Danish statistics department, further stated to AFP that this trend ‘changes the picture of the economy’. Novo Nordisk is also increasing the number of employees and bringing billions of dollars from drug exports to the U.S.

The company’s stock price fell 2.4 percent on Friday to 666.50 Danish kroner. Nevertheless, the shares have risen by 42 percent this year.