Country Report: Denmark and Sweden - Pharmaceutical Executive

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Country Report: Denmark and Sweden

Pharmaceutical Executive


DENMARK: A LAND FLOWING WITH MILK AND PHARMA


Denmark VS Sweden
How has a nation of a modest 5.6 million been able to build a pharmaceutical industry that exported medicinal products worth USD10.1 billion (DKK58 billion) in 2011? "It is a historical success born through partnership between the industry and the Danish government," said Minister of Trade & Investment Pia Olsen Dyhr.

"Novo Nordisk, for example, benefits from the government's decision to give all patients with diabetes access to free medication. The company has hence been able to build on the domestic market before going global. In the same way, Lundbeck and Leo Pharma benefitted from Public-Private Partnerships to build an export business."


CEO-Talk
Another shared characteristic of Denmark's top pharmaceutical companies is that they are controlled by foundations. As majority owner, the foundation usually decides who sits on the board, monitors corporate activities, and helps whenever the companies need support, including financial backing for acquisitions. "This model has a lot of potential for innovation and the development of new drugs, something we couldn't do to the same extent if we were just focused on what the stock market wanted us to do," said Lundbeck Foundation CEO Christian Dyvig. The Lundbeck Foundation owns 70 percent of Lundbeck's shares and is majority owner of ALK, a supplier of allergy immunotherapy products with a global market share of approximately 33%.

Can the absence of the stock market as a reality check lead subsidiaries to get too comfortable where they are?


NO CONSENSUS ON CONSENSUS
"That is a risk," Dyvig said. "Academic articles on foundations describe the notion of the dead hand. An owner with a dead hand loses dynamism in the business. That's one of the reasons that we like our companies to be stock listed. The duality between the long-term nature of the foundation and the short-term nature of the stock market brings a lot of benefit. It is in that friction that you end up having the best results."


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