It’s an overcast morning in the small town of Bagsværd, Denmark, and the streets are empty.
The suburb north of Copenhagen looks like any quiet neighbourhood at first glance. It only takes a few minutes to walk the length of the main street, then you start to pass small red-brick houses with well-kept gardens.
This isn’t the type of place where you would expect to find one of Europe’s biggest companies. Turn a corner, though, and you suddenly face a long road with row after row of sleek office buildings.
In a few short years Novo Nordisk has morphed from a relatively low-profile Danish manufacturer of diabetes medication into a pharmaceutical giant, on the back of massive demand for its new weight-loss drugs, Ozempic and Wegovy.
READ MORE
The market value of the company surpassed the size of Denmark’s entire economy last year and, for a period, Novo Nordisk was Europe’s most valuable company, eclipsing LVMH, the French luxury brand conglomerate that includes Louis Vuitton, Dior and Tiffany.
“I think every second person works there,” says Dorte Soelmark, a woman who runs a bakery near Novo Nordisk’s headquarters in Bagsværd.
The presence of the pharmaceutical giant in the neighbourhood is good for business, but she says there are downsides as well, from traffic bottlenecks to rising house prices.
“You leave at a certain time during the day, the traffic is just horrendous,” Soelmark says.
[ Donald Trump says his tariff plan is working - but he now faces a vital callOpens in new window ]
Jesper Chistiansen, who owns a men’s clothes shop in a small outlet in the town, says Novo Nordisk’s success has been great for Denmark.
“It’s very good for the whole country, for the community in Bagsværd,” he says. “But also it’s very expensive to live here.”
The company has had a footprint in the Danish town since 1961, when it opened a laboratory. Its presence expanded significantly over the years. New offices for its headquarters were built a decade ago.
The company employs 77,000 people, half of whom work in Denmark between Bagsværd and Kalundborg, where it has plans to massively expand a manufacturing plant and other sites.
Novo Nordisk’s stratospheric rise has been tied to huge demand for its blockbuster weight-loss drugs, Ozempic and Wegovy. The anti-obesity medication inhibits the appetite and is administered by regular injections.
Popularised as a way to lose weight by Hollywood celebrities, there had been a global clamour for Ozempic, either prescribed by a doctor or through rapidly expanding black markets selling the jab online. Production has struggled to keep pace, leading to supply shortages.
Bumper corporate tax receipts from Novo Nordisk have insulated Denmark economically, but also left the public balance sheet exposed to any big downturn in the company’s fortunes.
The pharma sector – one of Europe’s big industrial beasts – is bracing itself for United States president Donald Trump to follow through on threats to levy huge tariffs on its exports to the US.
Trump has repeatedly talked about bringing jobs and manufacturing capacity created by US pharma multinationals in Europe back to the US.
To do this, the US president has threatened to put tariffs – which are effectively taxes on imports – of up to 200 per cent on pharma products coming across the Atlantic, in an attempt to force companies to make their medicines in the US.
The European Union (EU) and the Trump administration have negotiated a deal that would see tariffs on most EU imports capped at 15 per cent, to avoid a trade war.
The EU has pressed hard for any future import levies on pharma products to be capped at that blanket 15 per cent rate.
However, EU officials remain concerned that regardless of commitments in a preliminary deal, Trump could decide to put sweeping tariffs on pharma anyway down the line.
Novo Nordisk is on high alert waiting to see how things play out, like the rest of the industry.
Separate to the threats coming from Washington, the Danish company is also concerned about what is going on in Kinsale, Co Cork. That’s where US pharma giant Eli Lilly has been producing a rival diabetes and weight-loss drug, Mounjaro.
The US multinational has made up ground on Novo Nordisk in the race for the biggest share of the highly profitable anti-obesity market.
Research pointing to its drug offering better results, plus successful trials in the development of new medication that can be taken as a daily pill, rather than a weekly injection, has set Eli Lilly up to potentially overtake Novo Nordisk in that race.
Fearful of falling behind, Novo Nordisk recently announced a corporate reshuffle. Chief executive Lars Fruergaard Jørgensen, who had been with the company for more than three decades, was out.
In a statement announcing the shake-up this May, Novo Nordisk said its sales and profits had almost tripled during Jørgensen’s tenure at the top. However, the decision was taken based on “recent market challenges” and drops in the firm’s share price, it said.
[ Pharma companies unprepared for production shift amid US tariffsOpens in new window ]
In an industry where so much of the focus is on developing new products, the ousting of Jørgensen is a cautionary tale. “You can be flying one day and the next day you’re down on the ground,” says one source in another pharma company.
In Belgium, the pharmaceutical industry is managing the fall-off from a different type of recent boom in business.
The small country was a big producer of Covid-19 vaccines. A Pfizer factory in the north of the country in Puurs worked full throttle during the height of the pandemic. One of the company’s largest plants, it can produce 500 million vaccine doses a year.
Covid-19 vaccines accounted for a third of Belgium’s pharma exports in 2022, according to a recent industry report. Pharma is one of Belgium’s biggest exports, with the US accounting for about a quarter of that trade.
Trump’s tariff agenda has caused serious uncertainty, says Liesbet Sommen, a centre-right MEP from Belgium. “One day he says one thing and the next day he says another,” she adds. Huge numbers of people were employed by Belgium’s “pharma valley”, so the stakes are high, she says.
Several sources in the industry say companies would likely have to suck up the cost of US tariffs, rather than pass part of them on. This is because they are locked into long-term contracts on pricing in the US. Accepting import taxes of 15 per cent would be a hit.
Nathalie Moll, director general of the European Federation of Pharmaceutical Industries and Associations, says part of the problem is the intertwined nature of supply chains.
“There’s no product that is made in one country. Sometimes products cross the Atlantic a couple of times before they are finished, so if you had tariffs on one side, and or the other side, you would end up adding cost to that product,” she says.
“There’s really a danger of completely destabilising the supply of medicines for patients, wherever that might be in the world,” she says.
This is a point the industry has spent a lot of lobbying capital in Washington trying to drive home to the Trump administration.
About a dozen of the EU’s 27 states host sizeable pharma industries, though few governments are feeling as exposed as Ireland. Pharmaceuticals account for a huge portion of the Republic’s large flow of exports to the US.
Several US multinationals – Pfizer, Merck Sharp & Dohme (MSD), Eli Lilly, Johnson & Johnson (J&J) and others – have manufacturing plants in Ireland. The sector employs tens of thousands of people and a handful of those companies alone account for a decent chunk of the State’s corporate tax take each year.
When talking about pharma, Trump repeatedly singles out Ireland as having “stolen” those jobs and revenues from the US.
[ Irish exports climb to €134.4bn as US pharma sales surgeOpens in new window ]
Taoiseach Micheál Martin has compared notes with several senior pharma executives about the best way to manage Trump’s threats.
Martin spoke to Pfizer’s global chief executive, Albert Bourla, on the phone the day after Trump announced his “liberation day” tariffs on nearly all global trading partners in early April.
The Taoiseach outlined the thinking in the EU, while Bourla “updated on discussions and contacts with the US administration”, a note of the call said.
Separate calls on the same day with Robert Davis, chief executive of MSD, and Joaquin Duato, the chief executive of J&J, covered much the same ground.
Tariffs weren’t the only thing on the mind of the pharma executives, Davis also mentioned planned reforms of the EU’s regulations governing the sector, according to a note taken of the call.
The proposed changes would cut back a current eight-year window pharma companies have to exclusively sell new drugs they produce, before cheaper generic competitors enter the market.
The idea is to tie more strings to the number of years of market dominance drugmakers enjoy over new medicines, to push companies to roll out medicines in smaller and poorer EU states more quickly.
The industry has been furiously lobbying national capitals to kill that element of the proposed overhaul.
A parallel lobbying campaign has been waged in Brussels, targeting MEPs in the European Parliament and the European Commission, the EU’s executive arm that proposed the reforms.
Documents obtained by The Irish Times show the pharma industry has kept up that lobbying pressure, in Dublin and Brussels. The risk posed by Trump’s potential tariffs has strengthened the industry’s hand when arguing that now is not the time for such changes.
In a letter on March 7th to a senior adviser of EU industry commissioner Stéphane Séjourné, Pfizer said there was an “urgent need” for Europe to do more to be economically competitive, due to “recent geopolitical developments”.
The commission’s plan to cut back firms’ regulatory protection over new medicines was “not the right approach”, Michaela Hagenhofer, head of J&J’s Irish operation, told Minister for Enterprise Peter Burke. The February 25th letter asked Ireland to join the coalition of “pro-innovation” countries opposing the changes at EU-level.
Samantha Humphreys, MSD’s Irish director, urged the Government to maintain the “status quo” in a February 11th letter. The correspondence was released to The Irish Times following Freedom of Information Act requests.
Further internal records reveal the Department of Health wanted Ireland to stick to its “more balanced” view that some changes were needed, according to a March 18th briefing paper.
[ Looming ‘patent cliff’ facing Big Pharma adds to sector’s woesOpens in new window ]
In the end the Taoiseach came down on the side of industry in the debate. Ireland switched positions and joined the camp of countries opposed to diluting the “protection” firms had over new drugs they developed.
National capitals settled on keeping the eight-year window untouched, in an EU vote earlier this year. A pared-back version of the new regulations are likely to be signed off in the coming months, in what will be a significant win for the pharma sector.
Many of the industry’s top executives have probably spent recent months wishing they could command the same level of influence over policy in the White House, given the fight over tariffs that is likely still to come.
