America’s Obsession With Weight-Loss Drugs Is Affecting the Economy of Denmark

Ozempic and Wegovy are tilting the scales of Denmark’s economy.

Their Danish manufacturer, Novo Nordisk, has generated billions of dollars of revenue and supercharged the company’s market capitalisation. That has led to lower interest rates in the country, according to a bank report and economists.

The market value of Denmark’s biggest company has risen by more than a third so far this year to about $419 billion, bigger than the country’s gross domestic product of about $406 billion. The measures aren’t synonymous: market capitalisation is the value of all Novo Nordisk shares, while GDP measures goods and services produced in a year. But the comparison demonstrates how Novo Nordisk has surged past companies such as Lego and Carlsberg to sway the economy of its nordic homeland.

Take foreign-exchange management for one example.

Denmark’s currency, the krone, is pegged to the euro. Central bankers in Copenhagen adjust interest rates and make other interventions to keep its value steady with that of the continent’s common currency.

Novo Nordisk’s U.S. sales of Ozempic and Wegovy have been so strong that it has had to convert dollars into kroner in unusually large quantities, raising the krone’s value relative to the euro, said Danske Bank director Jens Naervig Pedersen.

“Because the pharmaceutical industry’s exports have grown so much, it’s creating a big influx of currency into the Danish economy,” he said.

Denmark’s central bankers have responded by keeping interest rates below the European Central Bank’s, weakening the krone, said Pedersen.

Denmark’s central bank declined to comment.

Novo Nordisk’s success with drugs used for weight loss and diabetes is overall a boon to the Danish economy, which will benefit from more jobs created by the company’s growth as it invests domestically, economists said. Lower interest rates also benefit home buyers who can secure mortgage rates somewhat lower than in the rest of Europe, they said.

“It is an embarrassment of riches—this is good for the Danish economy and they’re getting a lot of export revenues,” said Gian Maria Milesi-Ferretti, an economist and senior fellow at the Brookings Institution.

For small countries, having a domestic company play such a disproportionate role in the economy carries risks. For years, fellow Nordic nation Finland’s economy was dominated by telecom Nokia, which at its peak in 2000 accounted for 4% of the country’s GDP, more than a fifth of exports and some 70% of value on its stock exchange. It played a significant role in Finland’s growth from 1995-2007, when GDP per capita rose 55%, nearly double the increase in the U.S.

Nokia’s decline also coincided with a decade of economic stagnation in Finland after 2008. The collapse of Nokia’s handset market, largely because of competition from the iPhone that Apple introduced in 2007, exacerbated Finland’s economic woes, which under austerity policies and the eurozone crisis saw its per capita income decline over the next decade.

Novo Nordisk is now the second-most valuable public company in Europe after luxury brand LVMH Moët Hennessy Louis Vuitton.

Analysts estimate Novo Nordisk’s weight-loss drug sales to be $6.1 billion this year and to reach nearly $15 billion annually in 2027, according to data provider FactSet.