Can A Single Company Save A Country From Recession? It's Happening In Denmark

If you live in Denmark and suffer from obesity, Danish pharmaceutical giant Novo Nordisk has two talk-of-the-town drugs, Ozempic and Wegovy, that might be able to help you slim down.

For the entire economy of Denmark, these miracle medicines are actually fattening up an otherwise shrinking economy. The pharmaceutical giant Novo Nordisk¡¯s first-mover advantage in weight-loss drugs has single-handedly saved Denmark from recession.

What's Happening In Denmark's Economy?

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Denmark¡¯s GDP increased 1.7 percent in the first half of this year, outpacing the anaemic 0.2 percent in the 20-country eurozone. But if you strip out the contribution of Novo Nordisk, which sold $4 billion in weight loss drugs alone in the first half of the year, the Danish economy would have shrunk 0.3 percent.

There¡¯s almost nothing about this story that doesn¡¯t raise an eyebrow. The weight-loss company Novo Nordisk, which hails from a country of about 5.9 million people¡ªonly just bigger than Queensland¡ªthis month briefly had the largest market cap in Europe, knocking off luxury goods titan LVMH. It is bigger than at least the next 10 Danish companies combined, as per the Australian Financial Review report.

Also Read: All 20 Eurozone Countries Sink Into Recession After Germany

How Is the 100-Year-Old Weight Loss Pill Maker Saving The Country?

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The 100-year-old company has notched up a 42 percent share price increase since the start of this year, most of which came in a wild few days in early August after Wegovy was shown to help prevent cardiac problems as well. Sales are up 29 percent, and operating profit is up 32 percent.

The company celebrated the boom times by putting on a massive jamboree for its 10,000 staff on a field in Roskilde, the site of one of Europe¡¯s largest music festivals.

But officials and politicians are feeling a bit nervous. It¡¯s not so much a case of having all your eggs in one basket as having a single enormous golden egg that fills the basket.

"There are other big companies in Denmark, and they are also important, but we have not had something as big as this, and we have not had something growing as fast as this," Danske Bank chief economist Las Olsen said recently, as per the report. "Novo Nordisk is by far the biggest taxpayer in Denmark, and that¡¯s only increasing."

What Denmark's Economy Minister Has To Say

Economy Minister Jakob Ellemann-Jensen described the situation as "a bit bizarre". "Things wouldn¡¯t be looking quite as good [for the economy] if you removed Novo Nordisk from the equation. But luckily, it is part of the equation," he told reporters recently.

It¡¯s not just Danes who benefit. If you¡¯d bought yourself weighted exposure to the OMX Copenhagen 20 stock index at the start of this year, you¡¯d be up almost 13 percent. The 12-month growth has been 34 percent, despite a few big Danish companies faring very badly. You¡¯d be searching high and low for many other benchmark indices that could top that.

Also Read: How To Be Financially Prepared For A Recession

Why All May Not Be Well With The Company?

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Experts had begun sounding alarm about Novo Nordisk spending $11 million last year on meals and travel for thousands of prescribing doctors, as per a Fortune report published in July this year.

The company reportedly purchased more than 457,000 meals¡ªat a total price of more than $9 million¡ªto educate prescribers about Wegovy and other similar drugs it sells, known as GLP-1 agonists. But the pharm giant claims that it ¡°follows the highest ethical standards, as well as all legal and regulatory requirements, in our interactions with the medical community and our customers.¡±

But the report mentions that it's not uncommon for drug reps and prescribers to meet over meals, and marketing to doctors isn¡¯t illegal in and of itself, which puts the focus back on why the pharm giant did.

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