For a century, the Danish pharmaceutical company Novo Nordisk operated in the shadows and produced diabetes drugs. But recently, it has experienced a meteoric rise that has not only boosted the company's own business, but also reshaped the Danish economy and sparked unprecedented debates over economic statistics and central bank policy. We used ChatGPT to explain this tectonic shift:
Denmark's economy, which has a population of less than six million as of 2021, is used to the presence of influential giant companies, such as toy giant Lego and shipping giant Maersk. Still, Novo Nordisk's impact on the country's economy is of an entirely different magnitude. Jonas den Petersen of Denmark's national statistics agency revealed that two-thirds of Denmark's economic growth last year can be attributed to the pharmaceutical industry, and in the first quarter of this year the figure rose even more, with no less than 1.9% growth coming from pharmaceutical companies, of which Novo Nordisk is the largest.
The main catalyst behind this change is Ozempic and Wegovy, two drugs originally intended to treat diabetics, but after being discovered to also contribute to the treatment of obesity. This discovery boosted Novo Nordisk's value sharply, making it the country's largest company by a huge margin, with its current market capitalization of $426 billion, more than ten times larger than the next company in line (transportation services company DSV, worth $41.5 billion) and close to 14 times that of Maersk (Lego is a private company, so there are no market capitalization figures for it). This value is greater than the entire Danish economy, and second only to fashion giant Louis Vuitton in Europe ($447.5 billion).
Novo Nordisk's rise raises questions about the need for dedicated statistics and economics that exclude the company, given its disproportionate impact. The pharmaceutical industry's contribution to Denmark's economic growth significantly exceeds its contribution to employment, underscoring the need for a separate analysis of industry data from state data to accurately interpret Denmark's economic trajectory.
The influence of the company, and the industry in which it operates, is so great that it causes prices to rise in the price of the Danish krona, which also affects the country's interest rates and international trade (remember the complaints of exporters in Israel when the shekel price went up? And they received fewer dollars? So imagine a similar but much worse situation).
Despite concerns that Denmark may overrely on Novo Nordisk, the benefits are clear. The company's success positioned it as a vital contributor to Denmark's public purse, and strengthened the country's economy. Overall, its rise is good for the Danish economy, increasing its power in the international arena. Ultimately, it is also pushing Danish companies to pay more to their employees to remain competitive, so that all citizens are likely to benefit from the situation.
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