Novo Nordisk to Invest €2.1 Billion in French Facility to Expand Production Amid Surging Demand for Weight-Loss Drugs

Intelligent Finance and Economics News learned that Novo Nordisk (NVO.US) will invest 2.1 billion euros ($2.3 billion) to expand its production in France, as the company faces supply bottlenecks amid high demand for its blockbuster weight-loss drug. According to the French President's office, French President Emmanuel Macron is set to officially announce the investment later on Thursday at Novo Nordisk’s plant in Chartres, located southwest of Paris. An aide to Macron did not immediately respond to questions about whether the amount includes public subsidies.

This Danish company is working hard to increase the production of two sister drugs, the weight-loss medication Wegovy and the diabetes drug Ozempic, as well as its injection pens, to meet the growing demand. These drugs have gained the support of celebrities and entrepreneurs, including Elon Musk, and the frenzy surrounding these medications has made Novo Nordisk the most valuable company in Europe currently, with its stock price rising by about half this year.

Both of these injectable drugs, which contain the active ingredient semaglutide that mimics the action of intestinal hormones to induce a feeling of fullness, are in short supply. Wegovy has been proven to help users lose an average of 15% of their body weight, and recent studies have also demonstrated its benefits for heart health. To date, Novo Nordisk has only launched this drug in a few countries. In France, it is available only to morbidly obese patients with other risk factors such as heart disease or sleep apnea.

Macron's office said that the investment would bring more than 500 job positions. Reversing the decline of the country's industry has been one of Macron's main economic goals, and earlier this year he introduced a series of measures to achieve this goal, including expanding tax credits for investments and simplifying the procedures for opening new factories.

France's attractiveness as an investment destination may also get a boost from a ruling last week by Germany's constitutional court. Berlin was forced to urgently freeze spending to assess the impact of the ruling, which said that about 60 billion euros could not be transferred into a fund meant to support a range of industrial projects.

As competition in the weight-loss market intensifies, the Danish pharmaceutical company is accelerating the construction of factories and production lines. The market is expected to reach $100 billion by the end of this decade. Earlier this month, Novo Nordisk unveiled plans to invest more than $6 billion in building a 1.7 million square-foot manufacturing plant in Denmark.

This investment builds on Novo Nordisk's January announcement of a €130 million expansion of its Chartres plant, which currently employs 1,450 people and produces insulin for more than 8 million patients worldwide.