Health Economics
Company Makes Billions Combating US Obesity But Could Harm Its Country
The Global and US Obesity Obsession
As a doctor and journalist, Novo Nordisk has caught my attention despite my lack of expertise in economics. The next article links medicine, medications, and economics.
After reading America’s Obsession With Weight-Loss Drugs Is Affecting the Economy of Denmark in WSJ, I wanted to better understand the importance of health economics in a country’s budget and how it was so important in the treatment of obesity and diabetes mellitus 2.
The Impact of Giant Companies: Lessons from Nokia and Novo Nordisk
Do you know how in the world of business some companies become valuable? Imagine if a company is like a big puzzle piece in a country’s economy. This is happening more currently because some companies are getting giant and controlling whole industries.
Think about Nokia, the company that made those old mobile phones. But at some point, the economy changed. People started liking different phones, like iPhones, and Nokia’s phones became less popular. This was a problem for Finland because they had put so much focus on Nokia. Finland’s economy suffered for an extended period because of the company’s fall.
A similar event is happening in Denmark with Novo Nordisk. Denmark’s economy is changing significantly because of its success. It’s good as it generates jobs and money. But it can also be a little risky if the company faces problems.
It shows that depending too much on just one company can be tricky. It is like a coin with two sides — it can help a lot, but if something goes wrong, it can cause problems too.
The American Preoccupation with Obesity
Obesity is a growing global concern.
The influence of collectivism vs. individualism and monumentalism vs. flexibility on obesity prevalence was investigated in a study.
Analyzing data from 51 countries and imputed data from 155 countries, encompassing 98% of the global population, it was found that individualism is associated with higher obesity rates in males, while this relationship is not significant among females.
Notably, flexibility, a cultural trait emphasizing humility, self-control, and restraint, emerges as a strong negative predictor of obesity in all genders, even after considering potential confounding factors.
Obesity rates are significantly affected by national culture.
Obesity
CDC defines a BMI of 30 or more as obesity and 25.0 to 29.9 as overweight. Individuals with a BMI between 30 and 34.9 are classified as having class 1 obesity. Those with a BMI of 35 to 39.9 are classified as having class 2 obesity. Extreme or severe obesity, also known as class 3 obesity, is present in adults with a BMI of 40 or greater. A child is defined as obese if their BMI is at or above the 95th percentile for their age and sex. Overweight is defined as a BMI between 85th and 95th percentile.
Obesity is associated with serious health risks (1). Obesity-related complications like heart disease and renal failure are more likely with severe obesity (2,3). From 1999 to 2000 through 2015–2016, a significantly increasing trend in obesity was observed (4). Trends from 1999 to 2000 through 2017–2018 for adults aged 20 and over are also presented.
Novo Nordisk and markets
Today, Denmark finds itself in a similar situation with its flagship company, Novo Nordisk. The value of this pharmaceutical company has exceeded $419 billion, more than the country’s GDP of $406 billion.
According to data, Novo Nordisk’s market cap is $420.36 billion as of August 2023. This places Novo Nordisk as the 19th most valuable company in the world based on market cap.
The growth of Novo Nordisk has been propelled by the success of Ozempic, a medication for type 2 diabetes, and Wegovy, a treatment for obesity. These drugs have reached in gigantic impact on the US market, backed by FDA approval.
The global and US obsession with weight loss treatments has generated a massive influx of foreign currency into the Danish economy.
Currently, Denmark is facing a quite similar situation to what happened with Nokia in Finland back in the day.
The company became big due to two special medicines. One is called Ozempic, which helps people with type 2 diabetes, and the other is Wegovy, a treatment for obesity. These medicines did well in the United States, and that made that company earn a lot of money.
Ozempic
Semaglutide (Ozempic), offers innovative treatment options for type 2 diabetes. It is available in both subcutaneous and oral forms, with the latter being the first approved oral GLP-1 receptor agonist. Approved as a second-line treatment for improved glycemic control in type 2 diabetes, it is now under scrutiny for its potential anti-obesity effects.
Semaglutide is recommended for treatment intensification alongside metformin or insulin analogs. Although well-tolerated, it may cause gastrointestinal adverse effects that typically subside within two weeks.
When the company becomes super huge, it can affect the country’s economy in different ways. On the one hand, it’s good because it brings jobs and money. But if something goes wrong with the company, it could damage the whole country’s economy. It happened with Nokia in Finland before.
So, even though the company’s success seems spectacular, it is also tricky. That way, if anything happens, the country can still keep going strong.
In this sense, the central banks of Denmark have had to keep interest rates lower than those of the European Central Bank to balance the economy. However, the disproportionate growth of Novo Nordisk has also obscured other economic weaknesses in the country that would have otherwise been more clear.
Final Thoughts
The concentration of economic success in a single company carries considerable risk. The term “Nokia of Denmark” becomes a shadow looming over the Scandinavian nation. If Novo Nordisk were to face difficulties or decline, the entire Danish economy could be affected. Economic vulnerability is a palpable reality in this scenario, demonstrating the downside of excessive success.
Novo Nordisk’s success boosted job creation and national investment. Economic opportunities can arise from lower rates for homebuyers.
Excessive concentration on a single company can bring benefits, but it also carries significant risks. Countries must learn from these experiences and seek a balance between fostering business success and diversifying their economy to avoid potentially harmful economic dependence.
Until now, we must thank the efforts of this European pharmaceutical giant to solve the pandemic of diabetes and obesity. I hope each day this will be increasingly better for everyone, not just for the company.
Pharmaceutical companies and doctors generally perform their duties well, but some may cross ethical boundaries. The importance of ethics and FDA regulation cannot be overstated.
The safety and effectiveness of drugs are dependent on ethical production. Prescriptions should be limited to approved cases to ensure ethical conduct for doctors. The safety and correct usage of approved medications need to be ensured and monitored by the FDA and other government entities.
These drugs were approved for diabetes and obesity in 2021 by the FDA. Additionally, these medications require psychiatric monitoring in numerous patients because obesity can be caused not only by metabolic issues but also by anxiety or depression.
Announcement: I do have not a relationship with any pharmaceutical company. This is an informative article.