Denmark is often held up as an economic success story, with strong brands like Lego, Maersk, and Pandora known worldwide. But one industry in particular has come to dominate the Danish economy in recent years: big pharma, but more specifically – weight loss drugs.
As global demand surges for weight-loss injections like Novo Nordisk’s blockbuster drugs Wegovy and Saxenda, Denmark’s economic fortunes have become increasingly tied to the success of its booming pharmaceutical industry. But some observers warn that reliance on a single sector brings risks if appetite for anti-obesity therapies wanes in the future.
Novo Nordisk, the world’s leading producer of insulin, has its headquarters in Bagsværd, just outside Copenhagen. The Danish company was founded in the 1920s and has since grown rapidly on a global scale. This growth, in recent years, was further boosted by the global demand spike for injectable type-2 diabetes and obesity medications last year which led to a supply shortage in lifesaving medicine as many raced to obtain the drugs after seeing shocking weight loss results in others across social media.
“The current significant contribution to Danish economic growth has not come at the expense of other industries,” said Christian Jervelund, Partner at Copenhagen Economics, an international consultancy with offices across Europe advising organisations on global competition and policy issues.
In 2023, the pharmaceutical industry played an important role in the country’s economy. The first three quarters of the year showed that Danish GDP increased by 1.3 percent compared to the first three quarters in 2022. “Excluding the contribution from the pharmaceutical industry, the growth would have been negative at -0.5 percent,” he said.
Jervelund told Arabian Business that pharmaceuticals now account for an estimated 4.5 percent of Denmark’s GDP thanks largely due to fast-growing revenues from diabetes and obesity medications.
Novo Nordisk employs over 64,000 people globally. In Denmark alone, it employs more than 28,000 Danes and contributes billions in annual tax dollars. “A company like Novo Nordisk has many activities and employs many people also outside of Denmark,” Jervelund stated, suggesting future job opportunities and tax yields may lie overseas if global sales remain strong.
However, Denmark’s potential reliance on one industry has recently concerned experts who believe the country could risk turning into somewhat of a “hostage economy” – becoming vulnerable to the fortunes of a single company or industry.
Increased global demand for Novo Nordisk’s products will translate to higher revenues in the industry locally. A share of this would be channelled back to Denmark and will benefit other parts of the world such as countries where sales, production, and development also take place. “For the financing of the Danish healthcare system, the increased consumer demand for weight loss drugs does not have any direct impact as Wegovy and Saxenda are not reimbursed – they are out-of-pocket medicines,” he said.
“There are many estimates on the scope and nature of the global obesity problem and many predictions on how many people would find it useful to start using some of these drugs. I am not familiar with what kind of projections companies like Novo Nordisk have for the demand for weight loss drugs over the coming years and decade.”
While acknowledging pharmaceuticals have long been a Danish strength, Jervelund told Arabian Business that true economic vulnerability would require lost opportunities in other sectors.
“Pharmaceuticals and life sciences, in general, have always been a cornerstone of Danish industries also before weight loss drugs were introduced – shipping with Maersk as a global leader is another Danish stronghold. The current very significant contribution to the Danish economic growth has not come at the expense of other industries in Denmark, I believe,” he added.
A balanced approach
However, Jervelund cautions against overstating risks. Denmark has built institutions to balance industry and healthcare priorities, he said, pointing to the independent Danish Medicines Council which assesses value versus cost for new drugs in a process he believes is apolitical. Approved medicines also compete openly via public tendering systems.
For now, weight-loss therapies provide an unprecedented stimulus. But with rising prescriptions also comes rising scrutiny of long-term public health outcomes. Denmark must balance industry promotion with health system priorities, especially in universal care.
“We have in place a standardised process for assessing medicines,” Jervelund explained, noting authorities consider clinical value and budget impact.
Currently, Wegovy remains out-of-pocket only, indicating budget focus over full coverage. But future policy “balancing” will test Denmark’s ability to safeguard citizens against business capture if obesity drug growth distorts economic priorities.
While diabetes drugs buoy Denmark, Jervelund believes a single industry rarely holds the whole economy hostage. The well-educated populace also enables growth in other innovative industries.
“As a small country with no natural resources, Denmark prospers from a well-educated and innovative labour force. This aim seems to fit well with an innovative pharmaceutical industry. As is the case for most global pharma companies, the Danish pharmaceutical companies which in addition to Novo Nordisk also include among others H. Lundbeck and Leo Pharma, were founded many decades ago,” he said.
“They are such an integrated part of Danish business and have always played a role for patients and the Danish economy.”
Going forward, continued pharmaceutical leadership need not jeopardise Denmark’s balanced healthcare model, said Jervelund. With open and sustainable systems, Denmark can prosper from Novo Nordisk’s ongoing success long-term.
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