Novo Nordisk and Orsted troubles spark fears Denmark faces its own 'Nokia moment'

Novo Nordisk layoffs and Orsted’s offshore wind troubles expose the risks of Denmark’s reliance on a handful of corporate giants

The Revolution Wind construction hub in Rhode Island in June 2024. Trump issued a stop-work order for the nearly completed project. Photographer: Adam Glanzman/Bloomberg

AT THEIR heights, Denmark’s corporate champions seemed untouchable.

Novo Nordisk, long known mostly as an insulin maker, was Europe’s most valuable company last year — after riding a surge of demand for Ozempic and Wegovy.

That followed the success of Orsted, the world’s largest offshore wind developer, which was celebrating record valuations and racing to expand internationally as governments poured money into green energy in 2021.

Now, those triumphs look fragile. On Wednesday, Novo announced 9,000 job cuts — more than half taking place in Denmark — after losing its lead in the US obesity market to rival Eli Lilly.

Orsted has been forced to scrap multibillion-dollar projects, take heavy write-downs, and raise new cash amid soaring costs, supply-chain snags, and Donald Trump’s war on offshore wind.

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Both companies have suffered steep valuation losses, and the investor euphoria that once defined them has largely disappeared.

The turbulence at these two giants hasn’t just rattled investors and executives.

Novo’s setbacks have sent tremors through Denmark’s government ministries, pension funds, and households.

Consumer confidence is worsening, stoking concern that both domestic spending and the country’s flourishing investment
culture may take a hit.

Economists are warning of lower growth, and there are fears Denmark is facing a so-called “Nokia risk” — a reference to how Finland ended up in a downward spiral after the country’s over-dependence on the company left it exposed when the iPhone came along.

The bad news from both companies “comes at a time when consumer confidence is already very low, and many Danes are deeply concerned about the economy”, said Las Olsen, the chief economist at Danske Bank.

“This very bleak sentiment could easily get worse,” he added.

No place in Denmark is more of a seismograph for Novo’s fortunes than Kalundborg, the industrial town that hosts the drugmaker’s main production site. Locals not only fill Novo’s factories, but also invest heavily in the company itself.

Michael Rasmussen, who runs the nearby Meny supermarket, said the stock’s recent plunge has weighed on residents.

“Right now, it’s really taking a psychological toll,” he said.

“That, of course, affects some people when it comes to immediate decisions like buying a new kitchen, a new car, or other big consumer goods.”

The dominance of Novo and Orsted — as well as AP Moller-Maersk, Lego, and Carlsberg — speak to Denmark’s role as a breeding ground for name-brand companies.

While revenues of the country’s 10 largest companies corresponded to about 20% of its GDP in the 1980s, that number is now around 45%.

This is according to Martin Jes Iversen, a researcher in business history at Copenhagen Business School. That has transformed Denmark into one of the world’s richest countries as measured by GDP per capita.

Denmark’s economic clout has not only elevated Danes’ standards of living, it’s also quietly transformed their sense of identity.

The popular tourist location of Nyhavn Harbor in Copenhagen. Picture: Hilary Swift/Bloomberg

Jeppe Nevers, a historian at the University of Southern Denmark specialising in modern Danish political and economic history, said: “It has become ingrained in the Danish mentality or public consciousness that the foundation of our high level of prosperity and our welfare society is our ability to build highly successful multinational companies.”

Yet the risk embedded in this dynamic is becoming more visible. Novo and Orsted’s troubles in the US market have become a liability for both them and for Denmark.

While Denmark’s economy is fundamentally strong and diverse — and its public finances solid — that stumbles if these corporate giants threaten to undermine government spending and its self-perception as a small nation that punches above its weight, economically.

In late August, lawmakers and journalists
assembled in Copenhagen for a budget presentation that could have been mistaken for a giveaway show.

Flanked by colleagues, Denmark’s finance minister listed the perks his countrymen were about to receive: Cheaper chocolate and books thanks to tax cuts, lower electricity bills, and better-funded welfare programs.

It all had been made possible by record employment levels and corporate tax revenue, with 15% of it coming from Novo, according to a 2023 estimate.

It’s an overstatement to say Denmark’s economy relies on Novo, but not by much. The success of Ozempic and Wegovy helped drive GDP growth well above the country’s European peers.

Thanks in part to the drugmaker, the government has raised future revenue estimates several times since 2022, resulting in more than 100bn kroner (€13.6bn) in additional available funds through the end of the decade.

That has translated into income tax cuts, higher spending on healthcare, green energy initiatives, and support for Ukraine.

Denmark’s fortune is so tightly bound to the pharmaceutical giant that even modest shifts in its prospects can ripple through the country’s growth figures and labour market.

Two years ago, a key ministry report cited Novo 31 times in its assessment of Denmark’s economic outlook — an unusual decision for a paper that typically avoids mentioning companies by name.

In this, some economists hear echoes of Nokia Oyj, which drove Finland to unprecedented growth and tax revenues in the 1990s and 2000s before its collapse — alongside a global financial crisis and decline in the paper industry — dragged down the entire economy.

“I really see similarities,” said Jyrki Ali-Yrkko, a researcher at the Research Institute of the Finnish Economy ETLA, who spent decades studying Nokia’s impact.

In fact, Novo may even play a bigger role in Denmark, as it accounts for an estimated 5% of GDP and a larger proportion of direct employment. That scale, he argued, should concern policymakers.

Having grown accustomed to living off the fat of Novo’s profits, Denmark has become vulnerable to “lifestyle creep”, said Herman Mark Schwartz, a University of Virginia professor of politics who studies small states that are reliant on single firms.

That happens when nations, like people, increase their spending as their income grows, giving them farther to fall.

“People get used to this higher level of expenditure and also to the growth in the level of expenditure,” Schwartz said. “If it stops, or worse if it goes down, then it’s painful.”

For all its recent troubles, Novo is still expanding.

“They’re growing sales, they’re growing profit, but they’re just not living up to the expectations that they have communicated themselves,” said Kare Schultz, a former Novo executive who managed and mentored the new CEO.

Novo's sprawling campus in Malov, Denmark. Novo has invested billions of dollars in expansion projects and new factories. Picture: Carsten Snejbjerg/Bloomberg

Orsted doesn’t weigh as heavily on Denmark’s economy as Novo, but its crisis runs deeper and strikes directly at the country’s image of itself as a global leader in green energy. Wind supplies account for roughly 60% of Denmark’s electricity, the highest share in the world, and Orsted is seen as the face of these efforts.

Once a coal-heavy utility that ran Denmark’s energy infrastructure, Orsted began a dramatic shift in the late 2000s, pivoting to offshore wind and expanding internationally.

After growing in Europe, it entered the US — a move that proved disastrous, as spiralling costs, supply chain delays, and regulatory hurdles have forced the partially state-owned company to abandon projects, book hefty writedowns, and rethink the pace of its growth.

Its troubles have been compounded by the Trump administration, whose attacks on offshore wind projects have made the line between financial and political risk increasingly blurry. In August, Orsted shares plunged by a third when it announced a $9.4bn capital raise — the biggest for a European energy company in over a decade — with half coming from the Danish state. Less than two weeks later, it was dealt another blow when the Trump administration issued a stop-work order on a nearly-completed $6.3bn (€5.4bn) offshore wind project that Orsted was developing off the coast of Rhode Island. The firm has since challenged the decision in court.

The government has reassured Danes that it can afford the one-off capital infusion. Still, with the stock losing billions on paper, the move has drawn fire from opposition parties who view it as a step too far in the name of green energy. It’s sparked debate over how far taxpayers should go in propping up national champions, and whether the state’s ties to the firm have given the US political leverage over Denmark.

Back in Kalundborg, the mood is subdued. At Costa Kalundborg Kaffe by the harbour, owner Shaun Gamble has been watching the ups and downs of Denmark’s corporate crown jewel with a mix of familiarity and forbearance.

A former warehouse worker at Novo, he started the cafe in 2020 after selling roasted beans to colleagues inside the factory.

Business has grown steadily ever since, and Novo’s expansion plans gave him the confidence to invest further, betting that new permanent jobs would bring more residents to town.

“It’s not the news you want to hear,” he said after Novo announced lay-offs.

“Maybe things will slow down in Kalundborg, so that’s a shame.”

Still, he said, his plans haven’t changed. He’s been through Novo’s hiring freezes and job cuts before, and remains optimistic about the drugmaker’s longer-term prospects — and his own.

Bloomberg