2023-09-11 05:38:03
All countries want to have companies that make them proud and that shine throughout the world. In extremely rare cases, it happens that the local flagship becomes bigger than the national economy.
This is what is happening in Denmark, which is currently experiencing a period of glory with the success of Novo Nordisk, a company born on its territory 100 years ago.
The pharmaceutical company manufactures the two most popular products in the world today, Ozempic and Wegovy. These two drugs very successfully treat diabetes and obesity, illnesses that afflict millions of people and are very expensive for health systems, public and private.
Novo Nordisk’s products are currently the only ones to have obtained approval from the Federal Drug Administration, which opened up the American market and the entire world. Demand far exceeds the volume of production that the company is able to supply.
Investors have flocked to the stock of Novo Nordisk, whose value has more than doubled over the past year. At more than US$435 billion on Friday on NASDAQ, the company’s market capitalization now exceeds the gross domestic product (GDP) of its native country of 6 million, Denmark, which stands at US$398 billion.
Quebec, with its 8.7 million inhabitants and a GDP equivalent to that of Denmark, has no business that comes even remotely close. The largest market capitalization in Quebec is that of CN, at some 96 billion Canadian dollars (70 billion US).
A double-edged weapon
The Danish economy therefore benefits greatly from the success of Novo Nordisk. Its currency, the crown, whose value is linked to that of the euro, is strengthening thanks to the significant exports of its star company. This allows the central bank of Denmark to keep its key rate lower (3.35%) than that set by the European Central Bank for the euro zone (4.25%), and to prevent its currency from soaring . The population, moreover, benefits by paying less interest on mortgage loans.
The country has just raised its economic growth forecast for 2023 from 0.6% to 1.2%, a revision largely due to the performance of Novo Nordisk.
The weight of pharmaceuticals in the national economy is such that Danish economists are wondering whether the country should not adopt a national accounting system excluding the company, to have a better picture of its economic situation.
As long as Novo Nordisk is on a roll, no one worries, but there are still risks in being so dependent on a single company.
Finland can attest to this. Nokia, the country’s flagship and pride, dominated the global mobile phone market for two decades. Although the company never had the importance that Novo Nordisk has in Denmark today, it was the largest market capitalization in Europe and put its country on the map of the global economy.
Nokia has seen its market swallowed up at spectacular speed by rivals Apple and Microsoft, leaving thousands of layoffs and a big hole in the Finnish economy.
It might happen in Denmark and Novo Nordisk. The company currently enjoys a dominant position because its products are the only ones approved and sold in the world’s main markets. Things might change if competition arises. The American company Eli Lilly is in the race with its diabetes and obesity product, Mounjaro, which is awaiting approval from the Federal Drug Administration.
If the Nokia scenario repeats itself with Novo Nordisk, the consequences might be less dramatic in Denmark than in Finland. The Danes can boast other big names among their business citizens.
The toy giant Lego as well as Maersk, the container transport behemoth, are companies which do not display the spectacular growth rate of Novo Nordisk, but these heavyweights of the national economy also have an indisputable reputation in the global scale.
1694451325
#Economic #planet #Small #country #big #flagship
