Ozempic and Wegovy, Novo Nordisk’s Weight Loss Drugs, Reshape Denmark’s Economy – The New York Times

This month, the results of a five-year trial found that Wegovy slashed the risk of serious heart problems, a finding that could increase pressure on insurers to cover the drugs, and further expand their reach.

With all this money being made, and expected to be made, in the United States, economists say there is an influence on Denmark’s currency.

“You have companies, such as Novo Nordisk, that have a greater need for exchanging foreign currency into Danish kroner, then you start to see an upward pressure emerge on the Danish krone,” Mr. Pedersen of Danske Bank said. But Denmark keeps the krone pegged to the euro, so when the krone rises in value, “the central bank has to respond,” he added.

The central bank has been spending kroner to buy foreign exchange and building up reserves. Because of these purchases, the central bank has also increased the gap between Denmark’s interest rates and the ones set by the European Central Bank. By keeping the Danish interest rate slightly lower than the one in the eurozone — currently 0.4 percentage points lower than the E.C.B.’s rate — it should discourage foreign investors from holding the krone.

The central bank declined to comment for this article.

Some economists in Denmark worry that the country could become too dependent on Novo Nordisk, with fretful comparisons to the fate of the Finnish economy when Nokia lost its dominance in the cellphone industry. There are also concerns that so-called Dutch disease could come to Denmark, said Helge J. Pedersen, the chief economist at Nordea, referring to the economic phenomenon when a country suddenly experiences a large increase in income, which is seemingly good economic news, but it actually has a negative effect on the rest of the economy.

This content was originally published here.

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