Mpox gives Denmark another opportunity to demonstrate its pharmaceutical power

After the World Health Organization warned this week that a fast-spreading strain of Mpox poses a global threat, Denmark now has a potential solution, underscoring its ability to outshine traditional heavyweights in the US and UK.

From treating diabetes to depression, the Nordic country of six million people has achieved above-average success with its expertise in pharmaceuticals, and Bavarian Nordic A/S’s Mpox vaccine – the only officially approved vaccination against the deadly virus – represents the latest milestone.

What may seem like a sudden sensation has been decades in the making, thanks largely to a cluster effect triggered by Novo Nordisk A/S. The maker of the hit diabetes drug Ozempic and slimming drug Wegovy has built up a talent pool and spawned new competitors on its way to becoming Europe’s most valuable company in September last year.

“Many people want to repeat what is happening here, but it is not that easy,” says Christian Grondahl, a Danish biotech entrepreneur who has previously founded and sold two startups. “You need a lot of ingredients to repeat the success.”

The roots of this development go back over 100 years, when the first Danish pharmaceutical companies were founded. Novo Nordisk was founded in 1923, following the example of the antidepressant manufacturer H Lundbeck A/S.

This long tradition has been driven by a combination of public sector collaboration, strong universities such as the Technical University of Denmark and easy access to funding. Bavarian Nordic, Genmab A/S and Zealand Pharma A/S – which is also working on a weight-loss drug – were all founded in the 1990s.

Ownership structures that prioritize long-term strategies over short-term profits further underpin the steady development. Both Novo and Lundbeck are controlled by foundations, a model that helps keep them in Danish hands.

However, Novo’s rise has given the entire sector a boost in recent years. “If you move around in Danish biotechnology, you always meet people who have worked at Novo,” Grondahl said. “It’s become a snowball effect.”

As the world’s largest insulin manufacturer, the homegrown giant has long been a fixture in Denmark, but it became a global phenomenon after discovering the weight-loss benefits of diabetes treatment based on the body’s own hormone GLP-1.

Production of Ozempic and Wegovy has now become so important that Novo will account for about half of Denmark’s economic growth in 2023. Boosted by the company’s expansion, the government has almost doubled its estimate for this year’s growth, now at 2.7% – outpacing most other European Union economies. Economists have even coined the term “Novonomics” to describe how influential the drugmaker has become.

But Denmark’s reliance on the volatility of the pharmaceutical industry is not without risks. Novo’s $600 billion market capitalization is larger than the entire Danish economy, and while the company’s drugs have won over the rich and famous, trends can change quickly.

The country’s sensitivity was evident when Prime Minister Mette Frederiksen said earlier this year she was a “big fan” of Novo’s treatments. It was a rare public show of support and came as the company faces increasing criticism in the US over its pricing.

Despite the growing weight of the pharmaceutical industry, the smallpox crisis shows how large Denmark’s supply has become. Bavaria’s vaccination campaign developed after the September 11 attacks, when the United States decided to stock up on smallpox vaccines as part of its anti-terror program.

Bavarian beat out UK-based Acambis Plc for the contract. Although the deal was not announced at the time, it proved crucial in 2018 when the UK recorded the first case of Mpox – a smallpox variant that causes painful rashes and can lead to death. Bavarian’s Jynneos vaccine was approved against Mpox in the US in 2019 and in Europe in 2022.

Last year, Jynneos’ sales almost tripled to around 5 billion krone ($740 million), accounting for 71 percent of Bavarian’s annual sales, and this potential could increase following the WHO warning.

Bavarian announced on Friday that it plans to extend formal approval of its Mpox vaccine to adolescents – triggering another rally in its share price, which had already risen by more than half this year.

“We have supplies and we have the capacity,” Bavaria’s CEO Paul Chaplin told Bloomberg earlier this week, assuring that the company could provide 10 million doses by the end of 2025. “What we are missing are the orders.”

On Saturday, the company said it was working with the WHO to enable broad access to its Mpox vaccine and was in talks with the Africa Centers for Disease Control and Prevention to expand manufacturing capacity on the continent.

In addition to Bavarian’s jump in share price, investors are also flocking to the Danish pharmaceutical sector. Novo has gained a third so far this year, and Gubra A/S – a smaller company developing an anti-obesity drug – has seen its value increase almost fivefold.

Zealand Pharma has more than doubled in value and is emblematic of how Denmark’s pharmaceutical industry is basking in the glory of Novo. A recent $1 billion capital increase was significantly oversubscribed in just three hours, despite Zealand being relatively unknown in Denmark, let alone on Wall Street.

Although the weight loss drug is still in the testing phase, the country’s success story is generating a lot of interest. There is also speculation that New Zealand could attract takeover interest from a major pharmaceutical company looking for a weight loss drug.

Zealand’s market value has risen from 10 billion krone at the beginning of 2023 to 66 billion krone. The profits have secured the company a place in the Danish leading index OMX25, which now includes four pharmaceutical manufacturers and five other medical-related companies.

Zealand CEO Adam Steensberg, a former Novo employee, attributed Denmark’s pharma status to a steady influx of talent from universities and PhD programs at Novo and Lundbeck, as well as the government’s willingness to fund long-term projects. He noted that a parallel development can also be seen in green energy, where Denmark is also a world leader.

“In Denmark, we are ready to invest not only in the problems the world is facing now, but also in problems that we know will arise at a later date,” Steensberg said in an interview.

2024 Bloomberg LP. Distributed by Tribune Content Agency, LLC.