Denmark’s status as one of Europe’s few countries with an expanding economy rests in part in the success of its local hero, the manufacturer of. Thanks to the astronomical rise of the pharmaceutical giant, the country had a 3.5% growth last year, surpassing most nations in the region. But after a series of stumbling, Novo is struggling to maintain its advantage in the competitive US weight loss market.
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This, in turn, creates concern about whether the company’s problems can lead to mass layoffs or become a weight to the widest Danish economy.
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The market value of the new crushed almost $ 100 billion this week, after, citing the intensification of competition and similar drugs in the US. It was the second time this year that the pharmacist has reviewed her earning projections down. The shares plummeted 23% – the largest drop in a single day ever registered – and the stock price continued to fall in the following days.
Novo’s bad news translated into an immediate financial impact for Danish families. Apart from retirement economies, Danes lost 38 billion crowns ($ 5.8 billion) in regular stock portfolios on Tuesday alone, according to Sydbank estimates. This is equivalent to almost 3% of total private consumption.
“There will be shareholders who have lost quite large amounts,” said Mikael Bak, CEO of the Danish Association of Shareholders. “It’s quite conceivable that we see some Danish investors holding expenses such as buying a new car or the expensive vacation reserve.”
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Given the size of the new, the damage can spread beyond the stock market. Economists warned that a long drop in the new could affect the country’s exports – a concern shared by the state financial supervision agency, which reduced its export forecast in May following the new profit alert – and even influence interest rates.
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In addition, as Denmark’s Gross Domestic Domestic Product (GDP) production, any overhaul of expectations will “almost mechanically impact” the country’s growth numbers, Las Olsen, Danske Bank chief economist, said Denmark’s largest bank.
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“Less growth of new means lower GDP growth in Denmark, it’s simple,” said Olsen.
A drop in drug sales made the Danish economy shrink slightly in the first quarter, according to Statistics Denmark, and the second trimester’s GDP figures will be released on August 20. The new is still growing, emphasized Olsen, but if completely stagnant, Denmark would no longer be among the highest growth economies in Europe.
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Soren Kristensen, Sydbank’s chief economist, warned not to interpret the fall of the new too much. Analysts predict the company’s revenue and profit growth will continue until the end of the decade, and Kristensen pointed out that while the company’s gains increase, the Danish economy will benefit. Still, he added that the new is “in a slightly more vulnerable position” than previously assumed.
“If things get worse,” he said, “the effects will appear in various areas.” He pointed to industrial production and exports in the country as the most exposed.
The vast production of the new helped boost the great surplus of Denmark and strengthened the Danish Crown. This made it necessary for the Denmark Central Bank to maintain a lower interest rate than the European Central Bank to defend currency parity. However, if exports have a big impact, Kristensen said Denmark may need to reverse policy and increase rates.
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Within Denmark, a prolonged deceleration of the new could also limit funding increases in scientific research, health and social programs, said Olsen. This is because the New Nordisk Foundation, which holds a controlling participation in the company, has significantly increased its concessions in these areas based on the increasing profits of successful medicines Wegovy and Ozepic. The Foundation supports work and pays salaries of about 9,500 scientists.
Novo’s rise in recent years has fueled a broader concern about Denmark becoming excessively dependent on a single company. For those concerned about the disproportionate role of the pharmacist in the country, this week’s setbacks evoked Nokia Oyj ghosts, the Finnish telecommunications giant whose decline in the early 2000s dragged the entire Finnish economy.
Denmark Prime Minister Mette Frederiksen recognized in an interview last year that authorities need to be aware of the risks linked to the dominant position of the new, but ruled out comparisons with Nokia, noting that the economy forces are not only concentrated in the pharmaceutical sector.
Danske Bank’s Olsen has a similar view. He noted that the new is still growing, while Nokia has undergone a serious contraction, and argued that even if the new experienced a similar fall, the Danish economy would be better positioned to absorb the shock.
Despite growth, he said, the pharmacist has a limited impact on national use and wages – both remain resilient – and the Danish economy is more flexible due to their adaptive salary structures and rules that make it easier for employees to resign. Denmark also depends on large foreign labor flows to meet the needs of the workforce, which can be adjusted as needed.
Still, the company employs more than 30,000 people directly in Denmark. If layoffs are on its way, such as the new CEO Maziar Mike Doutdar suggested, key centers of the new, such as Kalundborg and Bagsvaerd, will probably be affected.
Outside the agricultural industry, Novo was responsible for half of all employment growth in the private sector in Denmark between the beginning of 2023 and 2024, according to the state supervisory body.
“Locally, it may seem quite severe, even if it does not appear strongly in national statistics,” said Kristensen, especially because investment cuts and reductions are likely to reverberate the network of suppliers and contractors from Novo.
Nowhere in Denmark the rise of the new was felt as strongly as in Kalundborg, where the main production facilities of the company are. As new corporate tax revenue has increased more than ten times since 2011, unemployment has dropped to record levels and the city has experienced a boom.
Novo factories expansions and rapid signings have strengthened local businesses, universities and research programs settled in the city, and investments flow to housing and infrastructure.
“What was the impact of the massive growth of the new Nordisk?” said Olsen. “He delivered GDP growth, return to shareholders, extra tax revenue and current account surplus. So if the situation went the other side, all these effects would naturally revert to.”
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