Vials transfer alongside a conveyor on the Novo Nordisk A/S manufacturing amenities in Hillerod, Denmark, on Monday, June 12, 2023. The success of Novo’s bestsellers Ozempic and Wegovy, medication that assist folks lose important quantities of weight, has created one thing of a gold rush within the pharma trade with about 40 corporations growing merchandise that may intensify competitors.
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Denmark’s financial development, which economists say is because of an “distinctive surge” in pharmaceutical exports, is predicted to weaken this 12 months — however the looming risk of U.S. tariffs on the pharma trade will not be a lot of a contributing issue, in accordance with the Worldwide Financial Fund.
The IMF on Tuesday stated in its latest report on the Nordic country that it expects Denmark, whose economic system grew 3.7% in 2024, to see its output reasonable to 2.9% this 12 months and to 1.8% in 2026. The declines are set to happen amid anticipated weak point in export development, together with that of pharmaceutical items.
The fund however famous that Denmark can be shielded from potential U.S. tariffs on pharmaceutical imports, as most Danish drug merchandise are neither produced within the nation, nor cross its borders.
Danish drugmakers have turn into more and more reliant on a “merchanting and processing” system by which many of the worth of the medicines is attributable to the mental property embedded in them, with drugs companies contracting manufacturers in other countries to produce and ship the products.
“The U.S. is a key buying and selling accomplice; nevertheless, exports produced in Denmark passing by customs account for under 3 p.c of complete exports, limiting the direct affect of U.S. tariffs on the Danish economic system,” the IMF stated, including that “direct impacts from U.S. tariffs are anticipated to be restricted, however heightened commerce tensions and commerce coverage uncertainty pose dangers to the outlook.”
Past 2026, the fund stated, medium-term development is projected at round 1.5%, “reflecting a maturing pharmaceutical sector and a declining working-age inhabitants.”
Final fall, IMF economists remarked that Denmark’s growth had been driven by an “exceptional surge” in its pharma industry whereas the remainder of the economic system had remained “comparatively subdued.”
The fund singled out Danish pharmaceutical big Novo Nordisk‘s huge improve in overseas demand for its diabetes and weight reduction medicines, Wegovy and Ozempic, as a driver of development, noting that the corporate’s gross sales as a share of Denmark’s GDP elevated from 1% within the early Nineteen Nineties to eight.3% in 2023.
Looming risk posed by Trump
A much bigger headwind for the broader European pharmaceutical trade is U.S. President Donald Trump’s risk to impose tariffs on drug imports.
Prescription drugs have been exempted from Trump’s preliminary “reciprocal” tariffs regime introduced in April, however the president has since set his sights on the worldwide trade, threatening to position separate levies on prescription drugs exported to the States and demanding that U.S. drug costs come down.
Signaling his intent on the matter, Trump on Monday signed an government order directing drugmakers to decrease their drug costs to align with the considerably decrease costs which can be paid overseas.
The president didn’t confer with particular nations, however signaled that he would goal different developed nations as a result of “there are some nations that want some further assist, and that is tremendous.”
“Principally, what we’re doing is equalizing,” Trump stated throughout a press occasion on Monday. “We’re going to pay the bottom worth there’s on the earth. We are going to get whoever is paying the bottom worth, that is the worth that we’ll get.”
White Home officers didn’t disclose which medicines the order will apply to, however stated that it’ll affect the business market in addition to Medicare and Medicaid.
In 2022, U.S. costs throughout all medication (manufacturers and generics) have been practically thrice as excessive as costs in 33 OECD comparability nations, according to data released in 2024 by the U.S. Department of Health & Human Services.
U.S. President Donald Trump gestures on the day he indicators an government order on prescription drug pricing throughout a press convention within the Roosevelt Room on the White Home in Washington, D.C., U.S., Might 12, 2025. REUTERS/Nathan Howard
Nathan Howard | Reuters
The specter of tariffs on pharmaceutical imports has been described as a “sword of Damocles” hanging over Europe’s pharma industry, with CEOs warning that there may very well be an exodus of main continental gamers to the U.S. in a bid to keep away from levies.
The European Federation of Pharmaceutical Industries and Associations (EFPIA), which represents main European pharmaceutical corporations — together with Novo Nordisk, Bayer, AstraZeneca, GSK, Roche and Sanofi — warned European Fee President Ursula von der Leyen in April that “until Europe delivers speedy, radical coverage change then pharmaceutical analysis, improvement and manufacturing is more and more prone to be directed in the direction of the U.S.”
It stated {that a} survey of its members confirmed that round 100 billion euros ($112 billion) value of capital expenditure and analysis and improvement investments have been in danger consequently.
“The U.S. now leads Europe on each investor metric from availability of capital, mental property, pace of approval to rewards for innovation. Along with the uncertainty created by the specter of tariffs, there’s little incentive to spend money on the EU and important drivers to relocate to the U.S.,” the EFPIA said.
— CNBC’s Annika Kim Constantino and Karen Gilchrist contributed reporting to this story