How slimming drugs Ozempic and Wegovy are boosting Denmark’s economy

Novo Nordisk’s Wegovy and Ozempic is not just shrinking waistlines but also fattening economies. The weight loss drugs, made by Danish firm Novo Nordisk, is having a significant impact on Denmark’s economy.

We take a closer look at how these drugs, a preferred choice of many Hollywood celebrities to shed the extra kilos, has positively impacted Denmark and its economy.

Ozempic, Wegovy pump up Denmark’s economy

Danske Bank, Denmark’s largest bank, in its Nordic Outlook report on Tuesday (5 March) said that the Danish economy is expected to expand 2.1 per cent in 2024, up from a previous estimate of one per cent, largely owing to Novo Nordisk’s sales of Wegovy and Ozempic .

“The Danish economy performed much better than expected in the wake of high inflation and massive interest rate hikes,” the bank said in a press release. “Much of the reason is the huge success of pharma giant Novo Nordisk, whose growth is pushing overall activity levels up.”

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It further stated that the country’s 1.8 per cent growth last year would have been completely wiped out if it wasn’t for the pharmaceutical sector, mostly driven by the weight-loss drugs that were initially used to control diabetes.

“It does not look like Novo Nordisk is slowing down, and in the rest of the economy, we are also seeing some more growth,” the bank said. “Other types of manufacturing are gaining, consumer spending should benefit from higher real incomes and improving sentiment, and construction from lower interest rates.”

A godsend for Danish economy

And this isn’t the first time that Ozempic and Wegovy have been credited with boosting the Danish economy. As per the Danish government agency Statistics Denmark, the nation’s gross domestic product grew by 1.7 per cent in the half of 2023 from a year ago, and that was thanks to the pharmaceutical sector.

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It stated that the economy would have contracted by 0.3 per cent if it hadn’t been for the pharma sector. “If it wasn’t for Novo Nordisk, there wouldn’t have been any growth in the first six months of the year,” Las Olsen, the chief economist at Danske Bank, told AFP in September last year.

Moreover, the sales of the drugs in the United States had also pushed up the value of Danish krone, forcing the country’s central bank to keep interest rates lower than it otherwise would in order to rein in the value of the currency.

And with the lower interest rate, some homeowners landed up paying lower rates on their mortgages than their peers elsewhere in Europe.

In September last year, Jens Naervig Pedersen, chief analyst at Danske Bank, was quoted telling The Guardian: “Novo Nordisk is clearly making an impact on the country in many ways. It’s even making an impact on interest rates. We are in a situation where a weight loss drug and a pharmaceutical company are so successful that it’s impacting the interest rates of a small country.”

Moreover, as the pharma giant tries to keep up with the burgeoning demand for the drug, it is hiring more people and expanding factories. In fact, Novo Nordisk is looking to build a new production site in Odense, on the adjacent island of Funen. This, in turn, will help boost the numbers, a thought echoed by Søren Kristensen, chief economist at Danish bank Sydbank.

Helge J Pedersen, the chief economist at Nordea, was also of the opinion that a growing Novo Nordisk would bring more positives to Denmark. In a New York Times report, he made the observation that the company’s popularity could attract more students to the country’s educational institutions, as well as increase the government’s soft power. “If it helps maintain Denmark’s high-wage economy, it will also push other companies to be more innovative and efficient to stay competitive.”

Rise and rise of Novo Nordisk

Even for Novo Nordisk, the growing sales are a complete turnaround. Six years ago, the firm was contemplating a string of acquisitions to breathe new life into its drugs portfolio. According to the firm, sales increased by 29 per cent in Danish kroner during the first nine months of 2023, coming in at 166.4 billion kroner (Rs 1.3 lakh crore). Operating profit also rose by 31 per cent to 76 billion kroner (Rs 60,000 crore).

Last year in September, its market value exceeded the size of the Danish economy. And its soaring share price made it the largest company by market cap in Europe, surpassing luxury goods group LVMH .

And this boom isn’t expected to end anytime soon. The drugs, Ozempic and Wegovy have become popular among Hollywood crowds with even Jimmy Kimmel making a mention of it in his Oscars monologue last year. He had then said: “Everybody looks so great. When I look around this room, I can’t help but wonder, ‘Is Ozempic right for me?’”

And others like Amy Schumer and even Elon Musk have spoken about their use of the Type 2 diabetes drug that helps lose weight.

Moreover, obesity is a growing epidemic. Last week, a study published in the Lancet showed that more than a billion people worldwide – or roughly one in eight – has obesity. In such circumstances, the sales of these weight-loss drugs are only expected to rise. In fact, according to a survey last July by the Kaiser Family Foundation, nearly half of US adults said they would be interested in taking a weight-loss drug they knew to be safe and effective.

With inputs from agencies