Novo Nordisk A/S's (NYSE: NVO) remarkable success with its weight-loss treatment, Wegovy, is not only a cause for celebration but also a source of caution for Denmark.
The company's rise to the top of Europe's most valuable listed companies, surpassing even luxury giant LVMH Moet Hennessy Louis Vuitton SA (OTC: LVMUY) (OTC: LVMHF), has brought substantial economic benefits to the country.
In August, the Danish government revised its annual economic growth forecast, crediting Novo's achievements, which have translated into a 1.2% growth compared to the previously predicted 0.6%.
The Novo Nordisk Foundation, which controls Novo, anticipates record profits that could generate over $12 billion in the coming years.
These profits will boost tax revenues and employment, with the company already adding 3,500 jobs in Denmark in 2022, bringing the total to 21,000 employees.
Furthermore, international attention garnered by Wegovy has enhanced Denmark's reputation as a hub for scientific innovation.
This newfound prominence allows the Foundation to collaborate with ministers on critical issues like climate and sustainability, aligning their efforts for a brighter future.
However, as Novo's influence grows, concerns arise about the Danish economy's dependence on a single, highly successful company. While some worry about a potential "Nokia moment," where over-reliance led to a decline in Finland's economy when Apple's smartphones emerged, others point to Novo's patent on semaglutide, the key ingredient in Wegovy, which is secure for nearly a decade.
Price Action: NVO shares are up 0.20% at $89.22 during the premarket session on the last check Thursday.