Denmark's Economic Growth Threatened by Novo Nordisk's Struggles

Denmark's economy is heavily reliant on Novo Nordisk A/S, which has experienced a significant decline in its market value due to disappointing US weight-loss market results and intensified competition. This has led to concerns about potential mass layoffs and a broader impact on the Danish economy, including a possible drag on exports and interest rates. Economists warn that a prolonged Novo slump could impact the country's GDP growth numbers.

Denmark's economy, long bolstered by the pharmaceutical giant Novo Nordisk A/S, is facing significant challenges due to the company's recent decline in market value. The Danish economy's growth rate of 3.5% last year, driven largely by Novo Nordisk's success, is now under threat as the company struggles in the competitive U.S. weight-loss market.

On July 29, Novo Nordisk issued a profit warning, citing intensified competition and copycat drugs in the U.S. The company's shares plunged 23%, marking the steepest single-day drop on record. This has led to concerns about potential mass layoffs and a broader impact on the Danish economy, including a possible drag on exports and interest rates [3].

The stock market reaction was immediate and severe. Outside of pension savings, Danish households lost 38 billion kroner ($5.8 billion) in regular stock portfolios on Tuesday alone, according to estimates by Sydbank A/S. This is equivalent to almost 3% of total annual private consumption [3].

Economists warn that a prolonged Novo slump could impact Denmark's GDP growth numbers. Las Olsen, chief economist at Danske Bank A/S, stated that lower growth in Novo means lower GDP growth in Denmark. A decline in drug sales caused the Danish economy to shrink slightly in the first quarter, and second-quarter GDP numbers will be released on Aug. 20 [3].

Despite these challenges, analysts predict that Novo Nordisk's revenue and profit growth will continue through the end of the decade. Soren Kristensen, chief economist at Sydbank, emphasized that as long as the firm's earnings are increasing, the Danish economy will benefit. However, he added that Novo is now in a more vulnerable position than previously assumed [3].

The company's vast output has helped drive Denmark's large surplus and bolstered the krone. This has necessitated a lower interest rate by the Danish central bank compared to the European Central Bank to defend the currency [3].

Novo Nordisk is preparing to file for approval of CagriSema in 2026, a combination drug that has demonstrated significant weight loss in clinical trials. However, the drug also reported higher gastrointestinal adverse events compared to the placebo group. The company is also developing Amycretin, a dual-action GLP-1 and amylin receptor agonist, which has shown promising results in early trials [2].

The recent leadership change, with Maziar Mike Doustdar replacing Lars Fruergaard Jørgensen, has raised questions about the company's alignment with its long-term cultural values. Doustdar's focus on high performance and innovation is promising, but his lack of Danish citizenship and residence in Switzerland has sparked concerns [2].

Analyst sentiment remains mixed, with 3 sell, 11 hold, and 16 buy recommendations, and an average stock price target of $84. However, the prevailing market mood appears bearish, with the Q2 earnings report on August 6th likely to influence investor confidence [2].

References:
[1] https://www.reuters.com/markets/europe/european-stocks-close-up-novo-nordisk-logs-its-biggest-daily-drop-record-2025-07-29/
[2] https://www.ainvest.com/news/novo-nordisk-shares-fall-3-6-surprise-profit-warning-2508/
[3] https://www.bloomberg.com/news/articles/2025-08-03/novo-nordisk-s-troubles-weigh-heavily-on-denmark-s-economy