The Weight of Dependency: How Denmark Became a Pharmaceutical Petro-State
Novo Nordisk’s obesity drugs have transformed a diverse Nordic economy into Europe’s first single-molecule nation
Grüezi! – or Hej, this week!
Greetings from Denmark, current holder of the EU presidency.
During my mini-vacation I thought a brief reflection on its unique position in the world might be of interest!
1. The Company Town Goes National
Denmark has achieved what Gulf states managed with oil: complete economic capture by a single commodity. Except this time it’s not the resource curse of fossil fuels, it’s obesity drugs, and the consequences may prove equally transformative – and dangerous.
In the coastal town of Kalundborg, an hour west of Copenhagen, Brian Larsen recently shuttered his garage after eight years in business.
He had lost most of his employees to Novo Nordisk, maker of diabetes treatment Ozempic and weight-loss drug Wegovy, for 20% more pay.
His story echoes across Denmark, where small businesses are closing, hospitals are losing nurses, and construction projects sit unfinished – all because of a hiring spree by a single company that has transformed this Nordic nation into what economists increasingly recognise as Europe’s first pharmaceutical petro-state.
2. The Anatomy of Economic Capture
The dependency is there in the statistics. In 2022, pharmaceuticals drove 90% of Denmark’s GDP growth. In 2023, it was 50%. When pharmaceutical production dipped 12% in early 2024, the entire economy contracted 1.8% – its worst performance in four years.
Denmark’s statistics office tells it straight: “Without the pharmaceutical industry’s contribution, GDP would have fallen.” This is what economic dependency looks like in the 21st century: not oil wells or copper mines, but molecules and patents that can make or break a nation’s prosperity.
Like the high salaries in oil-rich economies that suck talent from other sectors, Novo’s scientists and workers earn packages that have emptied everything from Kalundborg’s city offices to Copenhagen’s hospitals.
“Even city government employees have been lost to this pharmaceutical company,” Kalundborg’s mayor told Bloomberg.
When Novo reported that its next-generation obesity drug CagriSema led patients to lose 20% of their weight at 68 weeks – less than the company’s projection of 25% – the stock tanked nearly 18% by midday – and with it, billions in Danish economic value evaporated in hours.
3. The Speed of Transformation
The transformation has been breathtakingly swift. When semaglutide – the active ingredient in both Ozempic and Wegovy – first gained approval in 2017, Novo Nordisk was a respectable but unremarkable century-old insulin manufacturer.
Today, it is Europe’s second-most valuable company, with a market capitalisation exceeding Denmark’s entire annual GDP. The company has increased its workforce by 75% in less than three years, from around 18,000 to 32,000 in Denmark alone.
When a single company’s production hiccups can slash national growth projections by nearly a third, you’re describing economic capture
This is economic dependency on a scale that would concern any nation. Denmark’s government revised its economic growth forecast for 2024, cutting it from 2.7% to 1.9% due to lower pharmaceutical export growth.
When a single company’s production hiccups can slash national growth projections by nearly a third, you’re no longer talking about an important industry – you’re describing economic capture.
The labour market distortions mirror those seen in resource-dependent economies worldwide. Workers are abandoning diverse industries for Novo’s higher wages, creating shortages across the economy.
Small businesses in towns like Kalundborg, where Novo has its largest manufacturing plant, have been forced to close as workers leave for higher pay. Hospitals report losing skilled medical staff to the company, leading to critical shortages and delays in services.
4. Infrastructure of Dependency
Think about the infrastructure being built to support the mono-economy. Kalundborg, with just 16,000 people, is getting nearly a thousand new homes and has a new train station, opened specifically to serve Novo Nordisk’s production complex. Its the same kind of single-industry infrastructure investment that’s so familiar in commodity-dependent economies.
It’s Denmark’s equivalent of oil pipelines or mining railways – physical manifestations of economic concentration.
The historical precedents aren’t encouraging. This pattern of single-company economic dominance has played out before, always with the same ending. If you’d visited Rochester, New York, in the early 80s, you’d have seen over 60,000 working for Kodak – it accounted for half the town’s economic activity.
Kodak’s demise devastated the region: jobs were replaced with lower-paying ones, pushing up poverty rates.
In Waterloo, Canada, BlackBerry’s collapse forced a complete economic restructuring, though the region was fortunate that some former employees created new companies to cushion the blow.
5. The Looming Competitive Threat
But Denmark faces a challenge that neither Rochester nor Waterloo confronted: active competition from a rival commercial power. Kodak fell to technological change and BlackBerry to market evolution, Novo Nordisk faces Eli Lilly – a larger, better-capitalised competitor whose tirzepatide molecule appears superior to semaglutide.
In 2024, Lilly grew 32% while Novo grew 26% – momentum is clearly shifting. As one analyst report put it: “We think that physicians may have permanently shifted preference to tirzepatide.”
“Zepbound users achieved 20% average weight loss compared to 14% with Wegovy”
The market data confirms this shift. Prescriptions of Zepbound outpaced Wegovy for the first time in the first quarter of 2024, a trend expected to accelerate.
More damning still, Eli Lilly’s Q1 earnings report showed Zepbound users achieved 20.2% average weight loss compared to 13.7% with Wegovy. In pharmaceutical markets, these kinds of efficacy gaps are product killers.
6. The Immigration Paradox
Meanwhile Denmark needs people to continue to fight back. Its labour crisis has become so acute that Novo is focusing its workforce growth on China, France and the US. This isn’t a strategic shift so much as an acknowledgment that Denmark’s labour market has been exhausted.
Denmark maintains some of Europe’s strictest immigration policies, with Prime Minister Mette Frederiksen pursuing a goal of “zero” arrivals outside the UN resettlement system.
Yet the same government has been forced to dramatically expand its “Positive Lists” for skilled workers, adding 141 job titles for individuals with higher education and 61 for skilled workers to address the country’s crippling labour shortages.
Denmark maintains Europe’s strictest immigration policies while desperately needing foreign workers
This populist contradiction – needing workers while maintaining restrictive immigration policies – creates economic inefficiencies. Pandering to voters prejudices may be good politics but it’s poor policy.
And the gap between perception and reality goes unchallenged. In a 2019 poll Danes were asked what proportion of young male immigrants had been convicted of a crime. Denmark’s far-right supporters estimated 30%. The actual number? 3.5%.
Even Denmark’s attempts at economic diversification reveal the challenge of escaping single-commodity dependence. The government’s strategy relies heavily on hoping that Novo’s profits will seed new industries – an approach that has proven “difficult” in many resource-dependent economies.
Saudi Arabia’s Vision 2030, launched in 2016 to diversify away from oil, demonstrates how challenging such transitions can be even with substantial resources and political will.
7. The Dutch Disease and Denmark’s Future
The most troubling parallel may be the Dutch disease effect. When the Dutch discovered vast natural gas deposits in Groningen in 1959, rapid extraction and export drove up the guilder’s value, making other industries uncompetitive. Denmark’s pharmaceutical exports are creating similar distortions. The success of one industry makes all others less competitive internationally, creating a vicious cycle of economic concentration.
What makes Denmark’s situation particularly precarious is the speed of change in pharmaceutical markets. Oil reserves deplete over decades; patent cliffs and competitive challenges can destroy pharmaceutical franchises in months.
Novo’s stumble with CagriSema – its next-gen obesity drug that disappointed investors – suggests the company may already be losing its innovative edge. Novo could generate another $166bn in revenue from Ozempic, Wegovy and Rybelsus over five years, but those five years may be all Denmark gets before Eli Lilly’s superiority becomes insurmountable.
The broader lessons extend beyond Denmark’s borders. In an era of winner-take-all capitalism, even developed nations can find themselves reduced to single-commodity economies. Denmark’s transformation from Nordic economic diversity to pharmaceutical dependency happened in less than a decade. The speed of capture should concern policymakers everywhere.
For Denmark, the question is no longer whether its pharmaceutical boom will end, but whether it can use this window of prosperity to prepare for what comes next. The historical record offers both cautionary tales and potential paths forward. Some oil-dependent economies have successfully built sovereign wealth funds and invested in economic diversification, while others have struggled with the “resource curse”.
Denmark’s leaders insist they’ve learned from history. Officials dismiss suggestions of a “Nokia risk”. Economy Minister Stephanie Lose argues that because much of Novo’s production happens abroad, the company is not “deeply infiltrated in the Danish economy”. Yet the evidence suggests otherwise – from labour shortages to GDP sensitivity to pharmaceutical exports.
The people of Kalundborg, watching their local businesses close as Novo Nordisk’s production complex expands, are experiencing firsthand the transformation of their economy.
They’ve learned what citizens of commodity-dependent economies worldwide have discovered: when your entire economy depends on a single product controlled by a single company, economic precarity follows.
Denmark has become Europe’s first pharmaceutical petro-state, joining the ranks of nations whose prosperity rests on a single commodity. Like all such economies, its current success masks underlying fragility – foundations as vulnerable as a patent, as temporary as any monopoly in the history of capitalism.
In trying to capture the global market for obesity drugs, Denmark has instead been captured by them
The weight of this dependency now threatens to unbalance Denmark’s traditionally diverse economy. In trying to capture the global market for obesity drugs, Denmark has instead been captured by them.
The transformation is complete: from Nordic mixed economy to pharmaceutical dependency, from economic diversity to single-commodity concentration.
The only question remaining is whether Denmark will recognise and address this vulnerability while it still has the resources to do so – before the next molecular breakthrough or expired patent transforms prosperity into crisis.
Thanks for reading!
Best
Adrian