Denmark, once lauded for its robust economic performance, now faces significant headwinds. The nation’s economic growth forecast for 2025 has been slashed from 3% to 1.4%, primarily due to challenges faced by pharmaceutical giant Novo Nordisk and the reintroduction of U.S. tariffs. These developments have raised concerns about Denmark’s economic resilience and its over-reliance on a single industry.
Novo Nordisk’s Impact on Denmark’s Economy
Novo Nordisk has been a cornerstone of Denmark’s economic success. In 2023, pharmaceutical exports accounted for 24% of Denmark’s total goods exports, with Novo Nordisk contributing a significant portion of this share. The company’s blockbuster drugs, such as Ozempic and Wegovy, drove a 13.4% year-on-year surge in Danish exports that year, propelling the country to rare growth in a stagnant European economy.
However, recent developments have cast a shadow over this success. The GLP-1 drug market, once a goldmine for Novo, is now a battleground. Eli Lilly’s Mounjaro and Zepbound have siphoned market share, while compounded generics undercut Novo’s pricing power. As a result, Novo’s stock has declined by 58% from its 2024 peak, and its revenue growth projections for 2025 have been revised downward.
This slowdown has had a ripple effect on Denmark’s economy. The country’s GDP contracted by 0.5% in the first quarter of 2025, largely due to the challenges faced by Novo Nordisk. The company’s troubles have also impacted employment, with Novo responsible for half of all private-sector job growth in Denmark between early 2023 and 2024.
The Impact of U.S. Tariffs
In addition to the challenges posed by Novo Nordisk, Denmark is grappling with the reintroduction of U.S. tariffs. The Confederation of Danish Industry estimates that these tariffs will reduce Denmark’s GDP by 38 billion kroner and result in the loss of up to 13,000 jobs. The tariffs have also strained trade relations, with other countries’ trade with Danish companies being affected.
The Danish central bank has indicated that it will cut its economic outlook for 2025 substantially due to weaker sales growth at Novo Nordisk and U.S. tariffs. This marks a significant shift from previous projections and underscores the challenges facing the Danish economy.
The Risk of Over-Reliance
Denmark’s heavy dependence on Novo Nordisk has raised concerns about the country’s economic vulnerability. The company’s valuation exceeds Denmark’s GDP, making it a de facto proxy for the nation’s economic health. This concentration of economic activity in a single company mirrors Finland’s historic dependence on Nokia, which led to economic challenges when the company’s fortunes declined.
The lack of diversification in Denmark’s economy means that any downturn in Novo Nordisk’s performance has a disproportionate impact on the nation’s overall economic health. While the company remains a significant contributor to GDP and employment, its recent challenges highlight the risks associated with over-reliance on a single industry.
Conclusion
Denmark’s economic outlook has been significantly impacted by the combined challenges of Novo Nordisk’s decline and the reintroduction of U.S. tariffs. These developments underscore the need for Denmark to diversify its economy and reduce its reliance on a single industry. As the global economic landscape continues to evolve, Denmark must adapt to ensure long-term economic stability and resilience.
