Americans are buying so much Ozempic that it is shifting the economy of Denmark, where the drug maker Novo Nordisk is based.
Novo, Europe’s second most valuable publicly traded company after LVMH, is experiencing a boom in demand for its diabetes and weight loss drugs, Ozempic and Wegovy, driving the company’s revenues to record highs.
Analysts expect Novo’s weight-loss drug sales to reach $6.1 billion this year and reach nearly $15 billion a year by 2027, according to FactSet polls.
But now Novo is exchanging US dollars from foreign sales for kroner in such an unusual amount that it has boosted the Danish currency against the euro, bankers and economists told the Wall Street Journal.
“Because the exports of the pharmaceutical industry have grown so much, it is driving a large inflow of currency into the Danish economy,” Danske Bank director Jens Naervig Pedersen told the outlet.
Danish policymakers have responded to the influx of Ozempic dollars by keeping their central bank rates lower than those of the European Central Bank
Novo’s market capitalization of $418 billion is an order of magnitude larger than that of the second largest Danish company, transport company DSV, which is valued at $41 billion
Denmark is working to keep its krone pegged to the euro at a fixed rate, and Danish policymakers have responded to dollar inflows by keeping their central bank rates lower than those of the European Central Bank.
Novo’s market capitalization of $418 billion is an order of magnitude larger than that of the second largest Danish company, transport company DSV, which is valued at $41 billion.
Novo’s valuation is even greater than Denmark’s gross domestic product of $409 billion, although the two figures are not comparable: one is the total value of all Novo shares and the other is the annual output of the Danish economy.
Novo manufactures its weight-loss drugs at two factories in Denmark, a location in New Hampshire and a sprawling complex in Clayton, North Carolina that employs 1,700 people.
However, experts warn that there are risks associated with a single company dominating the economy of a small country.
The Journal pointed to telecom Nokia’s role in Finland, where the company accounted for 4 percent of GDP at its peak in 2000, but has since declined.
Denmark could face similar risks if a more effective competitor upsets Ozempic and Wegovy, or if regulators question the drugs.
Already a slew of competitors are working on weight loss therapies similar to Wegovy, vying for a share of a market estimated to be worth $100 billion by the end of the decade.
Americans are buying so much Ozempic it’s shifting the economy from Denmark, where drug maker Novo Nordisk is based
Wegovy is a weekly injection that can help patients lose 15 percent of their weight alongside diet and exercise changes, and is so popular in the US that Novo is restricting delivery of starting doses.
Earlier this month, the company said it would extend limits put in place for Wegovy stocks, after saying in May it would halve supplies of starting doses to the US market for several months to ensure supplies for existing patients.
‘We have seen that the initiative we took earlier this year, limiting the starting dose, has actually helped to manage that dynamic. So we want to extend that in the coming quarters,” CEO Lars Fruergaard Jorgensen told reporters.
Jorgensen added in a separate interview with Reuters that the supply restrictions would “most likely” last until 2024.
The news came as the Danish drugmaker raised its full-year profit and sales forecasts for the second time.
Wegovy and Ozempic are different brand names for semaglutide, which works by tricking the brain into suppressing appetite and reducing calorie intake, resulting in significant weight loss.
It does this by mimicking the hormone glucagon-like peptide-1 (GLP-1), which is released after eating.
It was previously called Hollywood’s worst kept secret, with fans like Elon Musk and Jeremy Clarkson.
Even Kim Kardashian would have used it to quickly lose 16 pounds to fit into Marilyn Monroe’s “Happy Birthday Mr President” dress at the 2022 Met Gala.
Novo Nordisk’s financial report for the first half of 2023 shows that it has made a net profit of DKK 39.2 billion ($5.72 billion), compared to DKK 27.5 billion ($4 billion) last year.
The company said the trend was “primarily driven by” a 49 percent increase in sales of GLP-1 diabetes drugs.
In total, sales of these drugs amounted to 99 billion kroner ($14.4 billion).
Lars Fruergaard Jørgensen, president and chief executive of Novo Nordisk, said: “We are very pleased with the sales growth in the first half of 2023.
“Growth is driven by increasing demand for our GLP-1-based treatments for diabetes and obesity, and we are serving more patients than ever before.”
He added that obesity is aserious chronic diseases’ and weight-related conditions ‘can be significantly reduced by treating people with semaglutide’.