During the last couple of years, no new pharmaceutical drug—possibly no product, length—has had such standard have an effect on because the diabetes drugs Ozempic and the weight-loss drug Wegovy, each made by means of Danish corporate Novo Nordisk. Most glaringly, the medication have modified the lives of the thousands and thousands of people that now rely on them to assist keep watch over their urge for food. Those two merchandise have taken Novo Nordisk from a a hit however second-tier drugmaker to essentially the most treasured corporate in Europe.
The medicine also are having ripple results around the industry international. To take one instance, snack and soda makers have questioned whether or not they wish to alter their methods for an international the place folks’s cravings for his or her merchandise have reduced. Some inventory analysts have even steered that the medication’ reputation would possibly spice up airline income—as a result of their passengers will weigh much less at some point.
Ozempic and Wegovy have additionally exerted massive affect in Denmark, giving the GDP of Novo Nordisk’s house nation a large spice up. The billions of greenbacks in income that the corporate is now bringing house—$5.7 billion within the first part of this yr—and changing into Danish krone has pushed up the price of the forex, which in flip has allowed Denmark’s central financial institution to stay rates of interest not up to it another way would possibly have finished. Novo Nordisk has additionally transform Denmark’s largest taxpayer by means of some distance: In 2022, it passed over 9 billion krone (about $1.3 billion) in company tax; the quantity shall be even upper this yr.
You could suppose that this all seems like unalloyed excellent information. However no excellent deed—or excellent fortune—is going unpunished; so of past due a stunning quantity of fretting has come from pundits and financial analysts in regards to the dangers that Novo Nordisk’s luck poses to the Danish economic system.
Closing yr, two-thirds of the rustic’s GDP expansion got here from the pharmaceutical business (during which Novo Nordisk is by means of a big margin the largest participant). And within the first quarter of this yr, prescription drugs accounted for 89 % of the rustic’s financial expansion; certainly, with out it, the remainder of Denmark’s economic system slightly grew in any respect. That more or less dependence, the argument is going, is unhealthy: If Ozempic and Wegovy fall out of favor or are eclipsed by means of competition, no longer simply Novo Nordisk’s inventory worth would undergo. All of Denmark would.
A catchy label has been coined for this downside: the Nokia lure. Within the early 2000s, the Finnish corporate Nokia was once an greatly influential tech corporate and the arena’s dominant mobile-phone maker (in 2006, it managed greater than 35 % of the worldwide marketplace). Nokia was once additionally the engine of Finland’s economic system—accounting, at its height, for a 5th of Finland’s exports, greater than 40 % of its R&D spending, and 14 % of its company tax income. And the corporate was the middle of a whole business ecosystem that resulted in a growth in call for for tech employees and gave upward push to a bunch of Finnish start-ups.
Then all of it fell aside. Nokia failed to acknowledge how touch-screen, app-driven smartphones just like the iPhone had been going to modify the mobile-phone industry, and inside 5 years of Samsung and Apple getting into the marketplace, in 2007, call for for its merchandise vanished. Its gross sales and income cratered, taking with them a large chew of Finland’s exports. Nokia laid off tens of hundreds of employees international. And what adopted was once a decade of sluggish expansion for Finland.
What came about to Denmark’s Nordic neighbor makes a excellent cautionary story—however there are causes to doubt that Denmark is in peril of falling into the Nokia lure. Initially, the suddenness of Nokia’s decline was once, if no longer utterly exceptional, indubitably very uncommon. A number of nations have had such “nationwide champions”; few have observed one fall up to now, so speedy. But even so, the marketplace for Ozempic and Wegovy is actually simply getting going, and patent protections are prone to insulate Novo Nordisk to some extent from pageant.
Extra necessary, even if it’s true that the corporate hitting a coarse patch could be unhealthy for the Danish economic system, that’s no longer the similar as announcing the corporate’s luck is a nasty factor for the economic system. For sure, for example, the advantages to Finland of Nokia’s ascendance some distance outweighed the eventual prices of its fall. The Finnish economic system have been within the doldrums for many of the Nineties, and Nokia performed a key function in yanking the rustic out of that slough and striking it on a gentle expansion trail for greater than a decade. Not anything assured that taking place with out Nokia.
To borrow an analogy from the NBA, you probably have Giannis Antetokounmpo for your crew and he comes to a decision to depart, you’re going to have an enormous hollow to fill. However you’d nonetheless somewhat have had Giannis than no longer.
Coverage makers will also be lulled into considering that as a result of one corporate is greatly winning, the economic system as a complete is doing nice—that could be a authentic possibility. To a point, actually, that did appear to occur in Finland, the place govt officers and politicians took a very long time to start countering the effects of Nokia’s decline. However the possibilities of that taking place in Denmark appear small—exactly as a result of Danish coverage makers are neatly acutely aware of, and feature been discussing, the divergence between the pharmaceutical business and the remainder of the economic system. The explanation we all know the size of pharma’s contribution to Denmark’s expansion charge is that the Danish govt makes some extent of publishing GDP numbers with and with out the pharmaceutical business.
Such indicators of consciousness a few conceivable Nokia lure are treasured: Fascinated by the chance as a possible fact must assist coverage makers mitigate any issues. Within the interim, Denmark has not anything to realize from Novo Nordisk being any much less a hit—and the perception that Danish civil servants and their political masters may just intrude to rev up selection new industries is fanciful. Even if diversification can get advantages an economic system, small nations can reap an outsize merit from specialization within the world economic system.
In the long run, of the entire issues an economic system could have, the luck of an organization like Novo Nordisk is a superb one to have. The Danes must glance their reward horse within the mouth, by means of all approach. They simply shouldn’t check out to go back it.