Denmark's Economic Downturn: Strategic Risks for Novo Nordisk and LEGO Group in a Tariff-Driven World

Denmark’s revised 2025 economic outlook, slashed from 3% to 1.4% growth, underscores a critical inflection point for global investors in export-dependent sectors. The pharmaceutical and manufacturing giants Novo Nordisk and LEGO Group, which together account for a significant portion of Denmark’s export revenue, now face compounding risks from U.S. tariffs, domestic economic headwinds, and intensifying global competition. This analysis examines how these firms are navigating these challenges—and what it means for long-term investor confidence.

Novo Nordisk: A Double-Edged Sword of Innovation and Cost-Cutting

Novo Nordisk, the world’s largest insulin producer and a leader in GLP-1 obesity drugs, has become a bellwether for Denmark’s economic health. Its U.S. market dominance, however, is under siege. Sales of Wegovy and Ozempic have slowed as Eli Lilly’s Mounjaro and compounded drug alternatives erode market share [2]. To counter this, Novo Nordisk has implemented aggressive cost-cutting measures, including a 23.8% reduction in R&D spending and a global hiring freeze [1]. While these steps have boosted short-term operating profits, they risk long-term innovation gaps, particularly in a sector where R&D pipelines are critical to maintaining leadership [3].

Compounding these challenges are U.S. tariff threats. A potential 15–250% tariff on EU pharmaceutical imports could force Novo Nordisk to raise prices, further squeezing its competitive edge in a price-sensitive market [4]. The company’s pivot to emerging markets, where revenue now accounts for 40% of its total, is a strategic hedge—but it also exposes it to regulatory and currency risks in less stable economies [5]. For investors, the question is whether Novo Nordisk’s cost-restraint strategy can offset these pressures without sacrificing its long-term R&D momentum.

LEGO Group: Resilience Through Nearshoring and Brand Loyalty

The LEGO Group, a symbol of Danish manufacturing prowess, has fared better in 2025, with H1 revenue rising 12% to DKK 34.6 billion. Yet its path forward is not without risks. U.S. tariffs, which could see “very high” rates on Danish goods under Trump-era policies, threaten to inflate costs for its U.S.-bound products [6]. The company’s reliance on Mexican manufacturing—a country already targeted by U.S. tariffs—adds another layer of vulnerability [7].

LEGO’s response has been a nearshoring strategy. A new factory in Vietnam and a planned U.S. facility due in 2027 aim to shorten supply chains and reduce exposure to cross-border tariffs [8]. CEO Niels Christiansen has emphasized that gaining market share, not merely avoiding tariffs, is the priority—a stance supported by LEGO’s strong brand equity and product innovation [9]. However, industry experts warn that tariffs could still drive U.S. prices up by 50%, potentially eroding consumer demand [10]. For now, LEGO’s diversified production and digital expansion (e.g., partnerships with Formula 1 and Bluey) provide a buffer, but investors must monitor how effectively these strategies offset macroeconomic turbulence.

Strategic Risk Reassessment for Investors

Denmark’s economic slowdown, driven by Novo Nordisk’s struggles and U.S. tariff pressures, highlights a broader theme: the fragility of export-dependent economies in a protectionist era. For Novo Nordisk, the risks are twofold—short-term margin compression from cost-cutting and long-term innovation risks. Investors should scrutinize its R&D reorganization and emerging market investments to gauge resilience [1].

LEGO’s nearshoring efforts and brand strength offer a more optimistic outlook, but its exposure to U.S. tariffs remains a wildcard. A data-driven analysis of its regional revenue breakdown and production costs would clarify its vulnerability [see visual query below].

Conclusion

Denmark’s economic recalibration forces investors to weigh short-term volatility against long-term strategic adaptability. Novo Nordisk’s cost-cutting and market diversification may stabilize its near-term performance, but its reliance on the U.S. GLP-1 market remains a high-stakes gamble. LEGO’s nearshoring and brand loyalty provide a stronger buffer, yet its success hinges on navigating U.S. tariff uncertainties. In both cases, the ability to balance innovation, cost efficiency, and geopolitical risks will define their trajectories—and, by extension, Denmark’s economic recovery.

Source:
[1] Novo Nordisk's Cost-Cutting Measures and Strategic Rebalancing [https://www.ainvest.com/news/novo-nordisk-cost-cutting-measures-strategic-rebalancing-buying-opportunity-growth-reassessment-2508/]
[2] Novo Nordisk woes prompt Denmark to slash country's 2025 growth forecast [https://www.reuters.com/world/europe/novo-nordisk-woes-prompt-denmark-slash-countrys-2025-growth-forecast-2025-08-28/]
[3] Novo Nordisk's Strategic Cost-Cutting and Market Expansion [https://www.ainvest.com/news/novo-nordisk-strategic-cost-cutting-market-expansion-era-obesity-drug-leadership-2508/]
[4] Novo Nordisk faces tariff threats amid U.S. pharmaceutical policy changes [https://www.cashumarkets.com/news/novo-nordisk-faces-tariff-threats-amid-us-pharmaceutical-policy-changes_dd52500ec530c6fb9376658a0f1f95a34674b0da]
[5] Strategic Aspirations 2025 progress - Annual Report 2024 [https://annualreport.novonordisk.com/2024/introducing-novo-nordisk/strategy-execution-progress.html]
[6] LEGO could be among those affected by Trump's tariff threats [https://www.brickfanatics.com/lego-could-suffer-trump-tariff-threats/]
[7] Lego CEO on Trump tariffs: We won't let it destroy our ... [https://finance.yahoo.com/news/lego-ceo-on-trump-tariffs-we-wont-let-it-destroy-our-momentum-163214101.html]
[8] From Production to Play - About Us - LEGO.com [https://www.lego.com/en-us/aboutus/news/2025/april/from-production-to-play]
[9] The LEGO Group H1 2025 - About Us [https://www.lego.com/en-us/aboutus/news/2025/august/the-lego-group-achieves-double-digit-top--and-bottom-line-growth-in-h1-2025]
[10] Will Trump's Tariffs Make LEGO Sets Cost 54% MORE? [https://www.youtube.com/watch?v=FCUu4QVVsds]