Novo Nordisk A/S has just reached another milestone in its meteoric rise: the market value of the Danish company has exceeded the size of its domestic economy.
The shares surged this week on news weight-loss drug Wegovy comes with a heart benefit. The gain catapulted the market capitalization above 2.87 trillion kroner ($423 billion), more than Denmark’s 2022 gross domestic product, and means Novo is vying for the title of Europe’s most valuable company.
Novo had already become the highest valued in Denmark in 2008, overtaking container-shipping behemoth A.P. Moller-Maersk A/S with the gap between the two firms widening ever since. It’s now worth more than the combined value of all the other companies in the Danish benchmark index, the OMXC25, helped by soaring sales of drugs to treat obesity and diabetes.
“Novo has become a very dominant share in Denmark and the company also has a significant influence on the Danish business community,” Josephine Cetti, chief strategist at Nordea Bank Abp’s asset and wealth management division, said by phone. “Novo has helped give Danish shares a stamp of quality as the company’s success is rubbing off on other companies in the eyes of investors.”
Copenhagen’s stock exchange already changed its benchmark index back in 2013 because Novo had grown too big and made up about 45% of the gauge. The index is now capped, meaning the weight of individual stocks can’t exceed 20%. If the old index was still used today, Novo would make up 58%.
“Having a successful company like Novo has probably also helped other Danish pharmaceutical companies get better access to funding,” Cetti said, adding that acting as a talent pool has meant it has “helped raise the quality of Danish companies across the board.”
There’s still some way to go for Novo to reach the dominant position that Nokia Oyj held for years in nearby Finland. In 2000, around the time the dot-com bubble burst, the technology company was Europe’s most valuable company, back when it still made mobile phones. Its market capitalization was twice the size of the Finnish economy and it accounted for roughly 4% of the country’s GDP.
--With assistance from Jonas Ekblom.