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BUSINESS

Novo Nordisk to invest €2.1 billion in French obesity drug plant

Danish pharmaceutical giant Novo Nordisk will announce Thursday a major investment in a French production site to expand capacity for a blockbuster anti-obesity drug, the French presidency said.

Published: 23 November 2023 16:39 CET
Novo Nordisk to invest €2.1 billion in French obesity drug plant
Novo Nordisk workers working at a haemophilia API* production facillity in Hillerød, Denmark. Photo: Novo Nordisk

In a deal to be sealed officially with President Emmanuel Macron, Novo Nordisk will invest 2.1 billion euros ($2.3 billion) in an existing facility in Chartres, southwest of Paris.

Novo Nordisk is the European Union’s most valuable company with market capitalisation of around $460 billion, mostly thanks to growing use of its anti-diabetes drugs as weight-loss derivatives.

The Danish company has found that its Semaglutide medication, originally meant for diabetes, is also effective against obesity, giving it massive global potential.

Marketed as Wegovy in the United States, Denmark, Norway and Germany, the drug helps chronically overweight patients by stimulating insulin secretion and acting as an appetite suppressant.

Goldman Sachs, a financial firm, predicted last month that the global market for anti-obesity medication (AOM) could grow to $100 billion by 2030, against around six billion now.

Obesity rates have almost tripled around the world since 1975, and are set to rise further, it said.

In the United States alone, 15 million adults were likely to receive anti-obesity treatment by 2030, Goldman said, identifying Novo Nordisk, and rivals Eli Lilly, as the world’s two dominant AOM makers by then.

Novo Nordisk will double the size of its French site, adding 500 jobs to the 1,600 already there. The investments mostly concern the production of diabetes drugs, cartridges and vials, it said, with a 2028 target date for completion.

Novo Nordisk already said this month it was investing 42 billion Danish kroner ($6.1 billion) to expand its facilities in Denmark.

The French presidency credited Macron’s drive to attract foreign industrial investment to France for the Novo deal.

It follows a 6.7-billion-euro ($7.3 billion) pledge for the production and recycling of electric batteries by Asian firms.

An investment of 500 million euros by US pharma company Pfizer was announced in May during a “Choose France” investment conference hosted by Macron.

Stung by recent drugs shortages in France, including for basic antibiotics and pain medicine paracetamol, the government has been keen to bring pharmaceutical production back to the country.

Novo Nordisk said it hopes to win full regulatory approval to sell Wegovy as an anti-obesity drug in France next year.

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ECONOMY

S&P downgrades French credit rating in blow to Macron

Ratings agency Standard & Poor's downgraded France's credit score on Friday citing a deterioration in the country's budgetary position, a blow to Emmanuel Macron's government days before EU parliamentary elections.

Published: 1 June 2024 15:44 CEST
S&P downgrades French credit rating in blow to Macron

In a statement, the American credit assessor justified its decision to drop France’s long-term sovereign debt rating from “AA” to “AA-” on concerns over lower-than-expected growth.

It warned that “political fragmentation” would make it difficult for the government to implement planned reforms to balance public finances and forecast the budget deficit would remain above the targeted three percent of GDP in 2027.

The S&P’s first downgrade of France since 2013 puts the EU’s second-largest economy on par with the Czech Republic and Estonia but above Spain and Italy.

The announcement will sting for Macron, who has staked a reputation as an economic reformer capable of restoring France’s accounts after low growth and high spending.

The risk of a ratings downgrade had been looming for several quarters, with the previous “AA” assessment given a “negative outlook”.

The surprise slippage in the public deficit for 2023 to 5.5 percent of Gross Domestic Product (GDP) instead of the expected 4.9 percent did not play in the government’s favour.

France’s general government debt will increase to about 112 percent of GDP by 2027, up from around 109 percent in 2023, “contrary to our previous expectations”, the agency added.

Responding to the downgrade decision, Economy Minister Bruno Le Maire reaffirmed the government’s commitment to slashing the public deficit to below three percent by 2027.

“Our strategy remains the same: reindustrialise, achieve full employment and keep to our trajectory to get back under the three percent deficit in 2027,” he said in an interview with newspaper Le Parisien, insisting that nothing would change in the daily lives of the French.

Le Maire claimed the downgrade was primarily driven by the government’s abundant spending during the Covid pandemic to provide a lifeline to businesses and French households.

The main reason for the downgrade was because “we saved the French economy,” he said.

Government critics offered a different rationale.

“This is where the pitiful management of public finances by the Macron/Le Maire duo gets us!” Eric Ciotti, head of the right-wing Republicans party, wrote on social media platform X.

Far-right leader Marine Le Pen called the Macron administration’s handling of public finances “catastrophic” and denounced the government as being “as incompetent as they are arrogant”.

A credit downgrade risks putting off investors and making it more difficult to pay off debt.

Earlier this year, influential ratings agencies Moody’s and Fitch spared handing France a lower note.

S&P also maintained its “stable” outlook for France on Friday on “expectations that real economic growth will accelerate and support the government’s budgetary consolidation”, albeit not enough to bring down its high debt-to-GDP ratio.

“S&P’s downgrading of France’s debt simply reflects an imperative that we are already aware of: the need to continue restoring our public finances,” Public Accounts Minister Thomas Cazenave wrote in a statement sent to AFP.

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