Denmark’s four largest pharma companies – Novo Nordisk, Lundbeck, LEO Pharma, and ALK – are all at least partly owned by independent foundations, which means that their profits are divided between their shareholders and the foundations themselves, with funds then channelled into academia and biotech start-ups. Here, a variety of stakeholders weigh in on the direct and indirect benefits of this model for the Danish life sciences industry as a whole.
A Unique Model
“The fact that Danish companies are owned by foundations means that they are here for the long term, investing in the entire ecosystem,” introduces Ida Sofie Jensen of industry association Lif. “This model is not limited to pharma and can also be found in shipping (Maersk), brewing (Carlsberg), and machinery (Danfoss). Foundation ownership has historically arisen in Denmark in connection with generational change in family-owned, large, exporting companies, where the foundation then becomes the major shareholder.”
Deborah Dunsire of Lundbeck – which operates in the notoriously challenging neuroscience space – agrees, adding that “having a foundation as the majority shareholder and owner gives us a long-term perspective. Lundbeck has existed for over 106 years, so having ownership that wants to ensure the company continues to be successful, grow, and increase in value for decades to come is very valuable. Some public companies with only public shareholders have a much shorter-term perspective, meaning that making investments that take a longer time to mature is not so easy.”
Some public companies with only public shareholders have a much shorter-term perspective, meaning that making investments that take a longer time to mature is not so easy
Deborah Dunsire, Lundbeck
Dunsire continues, “We also have the benefit of having 30 percent of our equity traded publicly. Having institutional shareholders, pension funds, and normal investment funds as shareholders brings a level of market discipline to the mix. I feel that it is a great blend and a model unique to Denmark, where multiple big Danish companies are either totally or partially owned by foundations. This gives great stability to companies that have grown up in Denmark and has enabled those companies to continue to grow and be headquartered in the country.”
This legacy stands in contrast to that of neighbouring Sweden, previously the home of Astra, which merged with British firm Zeneca and is now headquartered in the UK. As Dunsire points out, “While this merger has been very successful, there is now no longer such a significant Swedish company. Because of the foundation ownership, Danish companies have been able to withstand the short-term downswings that come with loss of exclusivities, and which sometimes lead to mergers or acquisitions, and instead progress within Denmark.”
Gravitational Centres of the Danish Ecosystem
The existence of these large companies, especially a giant like Novo Nordisk – which represents a full 15 percent of national exports across all industries – within Denmark has knock-on effects throughout the Danish life sciences value chain.
“The Danish life science industry has soared in the last ten to 15 years and exports now stands at over EUR 20 billion with projections to grow to EUR 30-40 billion in the next eight to ten years,” proclaims Carsten Hellman, CEO of allergy specialist ALK, which is part-owned by the Lundbeck foundation. “The four or five larger national companies that exist here are backed up by an enormous ecosystem of academia, spinout biotechs, as well as service providers like CROs and CMOs. For example, I was previously the CEO of Fisher Scientific – now Thermo Fisher Scientific – which was the biggest producer of life science consumables in the world and is now looking at super innovative fields such as growing cells in 3D.”
The four or five larger national companies that exist here are backed up by an enormous ecosystem of academia, spinout biotechs, as well as service providers like CROs and CMOs
Carsten Hellmann, ALK
Petter Hartman of the Medicon Valley Alliance, a non-profit membership organisation spanning the Danish-Swedish life science cluster Medicon Valley adds that, “The combination of global pharma giants like Novo Nordisk with many small innovative companies, a strong Science Park tradition, a well-funded public healthcare sector, and our excellent universities gives us a good dynamic and a very interesting and unique mix of possibilities.”
For Ejvind Mørtz – co-founder & COO of contract research organization (CRO) Alphalyse, which specialises in protein chemistry, mass spectrometry, and bioinformatics – the well-developed talent pool that Denmark’s big homegrown players have helped create is crucial. “Alphalyse has not had problems finding talent for positions in quality control and later-stage biologics development due to the presence of large biotechnology and pharmaceutical companies such as Novo Nordisk and Novozymes, and their respective manufacturing facilities in the region,” he notes.
Moreover, in the past two years Novo has been able to leverage its expertise and scale at speed to battle the COVID-19 pandemic. “Significant help from Novo Nordisk elevated Denmark’s testing capacity for COVID-19 through the development of our own COVID-19 tests, which in turn assisted in the management of the crisis,” points out Per Jørgensen, deputy director of Copenhagen University Hospital (Rigshospitalet).
“The beginning of the pandemic was characterised by fantastic collaboration between the public healthcare sector and the industry to provide personal protective equipment (PPE),” continues Ida Sofie Jensen. “Following that period, the industry led in setting up testing centres which now test 200,000 people per day. The Novo Nordisk Foundation was the first to set up such a centre before the government stepped in and established more.”
Significant help from Novo Nordisk elevated Denmark’s testing capacity for COVID-19 through the development of our own COVID-19 tests, which in turn assisted in the management of the crisis
Per Jørgensen, Rigshospitalet
Another direct impact that the Danish foundational model has is in supporting start-up biotech firms and translational science. The BioInnovation Institute (BII), for example, is an initiative from the Novo Nordisk Foundation that has committed to spending almost half a billion euros over the next ten years to support early-stage life science innovation.
CEO Jens Nielsen outlines how, since 2018, “approximately 45 companies have been taken through the BII’s program and these companies have raised nearly 130 million euros in capital either through investments or soft funding from various granting agencies in the EU and Denmark. This figure is approximately fourfold the amount these companies have been given by the BII. This achievement demonstrates that the relatively small amount of capital, in combination with the network, infrastructure, knowledge, and help provided by the institute, attracts further investment to these businesses and accelerates their growth.”