The popularity and demand of weight-loss treatments, especially the ones endorsed by celebrities, is appearing to be a double-edged sword for experts. While medications such as Ozempic and Wegovy might have stopped Denmark from falling into recession, experts are concerned that the country might meet the same fate as Finland whose over-reliance on Nokia led to a lost decade.
According to a report in Financial Times, diabetes treatment Ozempic and anti-obesity medication Wegovy have propelled Novo Nordisk to become the most valuable company in Europe. Novo Nordisk’s market capitalisation at $410 billion is now larger than Denmark’s annual gross domestic product of $400 billion (last year).
The report quoted Denmark central bank’s chief economist who said that the country has a two-speed economy – the pharmaceutical industry and the rest. He also warned of the risk of thinking that the economy is doing better than it actually is.
The impact on the GDP is broadly acknowledged, the report said, adding that Denmark’s statistics agency produces data both with and without the pharma sector. The economy expanded 1.7 per cent in H1 2023 as compared to the previous year but if the Novo Nordisk-dominated pharma sector is taken out of equation, then the GDP would have fallen by 0.3 per cent.
As demand surges, Novo Nordisk is reportedly scrambling to boost its production to keep up with the overwhelming numbers.
Another business executive was quoted as saying that the concern is if something goes wrong, even as Novo Nordisk is “so fantastically successful”. He also cited the example of Finland that ended up with a lost decade when Nokia started having its problems.
Nokia’s profits that had soared on the back of mass adoption of mobile phones, collapsed from 2000s onwards following the release of Apple iPhone. Nokia contributed 4 per cent of Finland’s GDP and provided a quarter of its corporate tax revenues. Following Nokia’s fall, Finland’s economy barely grew during the 2010s, the report stated.
Moving to Denmark, Novo Nordisk has been one of the biggest companies for over a decade but its valuation, profits and sales soared due to Ozempic and Wegovy’s success.
Nevertheless, there are many experts who don’t see this as a problem. Helge Pedersen, chief economist of Nordea bank, called it a “huge benefit” and not the creation of “over-reliance”.
Jonas Dan Petersen, chief adviser at the statistics agency underscored that the big revenues show up in the GDP but do not have an explosive effect on employment as most of its production is overseas.
Jakob Ellemann Jensen, Denmark’s vice-prime minister and minister for economic affairs said that there are “significant differences” between Denmark-Novo Nordisk and Finland-Nokia cases.
Meanwhile, the European Medicines Agency (EMA) is set to discuss the risk patients on Ozempic and Wegovy or similar drugs may suffer certain complications under anaesthesia that can lead to pneumonia. The regulator's Pharmacovigilance Risk Assessment Committee (PRAC), which monitors drugs' side effects, will discuss at its monthly series of meetings this week.
In July, the EMA began investigating GLP-1 drugs after Iceland's health regulator flagged three cases of patients thinking about suicide or self-harm. Britain's drugs watchdog launched a similar probe later that month.
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