The booming consumption of anti-diabetic drugs in the United States is causing Denmark's monetary policy to wobble. This surprising macroeconomic version of the "butterfly effect" is the genuine head-scratcher the National Bank of Denmark (DNB) has faced for many months. "The pharmaceutical industry, whose exports have doubled in the last ten years, has become one of the main drivers of our economy, to an almost dizzying extent," said Helge Pedersen, an economist at Nordea Bank. Capital Economics says the sector has contributed a third of Danish growth since 2020.
This can be explained by the robust financial results delivered by Danish drugmaker Novo Nordisk. Sales of its anti-obesity treatment Wegovy, launched in the US two years ago, soared by 344% in the first half of 2023, while sales of its injectable anti-diabetic Ozempic continued to increase. "We are serving more patients than ever before," said Lars Fruergaard Jorgensen, Novo Nordisk's chief executive, earlier this month. The group, whose sales came at €23.7 billion in 2022, sees revenue up by 30% this year. The group's market capitalization, which exceeds €300 billion, is almost as high as Denmark's gross domestic product, which, according to Eurostat, stood at €380 billion in 2022.
"These good results have caused the current account surplus to take off," said Andrew Kenningham, a Denmark specialist at Capital Economics. The measure of trade of goods, services and income recorded a surplus of 13% of GDP in 2022, up from 8.8% in 2019. Even Germany never performed any better. "Thanks to this, Danish growth has outperformed that of its European neighbors in recent months," Pedersen said. Growth was 0.5% and 0.6% in the last quarter of 2022 and the first quarter of 2023, compared with an average of -0.1% and 0.2% for the European Union.