[Reporter's View] Denmark's corporate model, Wegovy success

I recently had the opportunity to visit the biotech industry in Denmark.

 

I toured facilities like Novo Nordisk, which rose to stardom with its GLP-1-based obesity treatment Wegovy, as well as LEO Pharma, with its 117-year history, and Lundbeck, a powerhouse in the central nervous system field.

 

What struck me was that all these companies, without exception, cited their 'foundation-owned governance structure' as the secret to Denmark's biotech industry competitiveness.

 

Denmark has Europe's most structured foundation-owned model.

 

Approximately 1,300 companies in Denmark operate under a foundation-owned structure.

 

Pharmaceutical companies like Novo Nordisk, LEO Pharma, and Lundbeck, as well as the toy company Lego, brewery Carlsberg, and shipping giant Maersk, all adopt governance structures where a foundation is the largest shareholder.

 

Examining the governance structure of these companies reveals that non-profit foundations run them.

 

A foundation controls an intermediate holding company, which is also a professional investment firm.

 

This holding company, in turn, oversees various operating companies.

 

It can be summarized as 'Foundation → Holding Company → Operating Company,' where the foundation indirectly controls its subsidiaries through a holding company-style investment firm.

 

Foundations support the life sciences field in all-in efforts.

 

The Novo Nordisk Foundation boasts one of the largest asset sizes globally, with Assets Under Management (AUM) reaching approximately $140 billion (KRW 194 trillion).

 

Thisfigure is more than twice the AUM of the Bill & Melinda Gates Foundation, North America's largest private foundation, which stands at $69 billion.

 

Such investment strengthens Denmark's scientific foundation nationwide and effectively attracts top talent from around the world to Denmark.

 

A unique aspect of the Danish foundation-owned model is that the founding family does not serve as the largest shareholder of the operating company, nor do they directly hold equity.

 

While some foundations may have founding family members play a symbolic role on the board, they do not exercise substantial control over the organization.

 

Denmark has thus created a corporate ecosystem that perpetuates the founder's philosophy through a foundation while separating equity ownership from operational management.

 

Due to this clear separation of ownership and management, companies can consistently pursue long-term strategies without being influenced by short-term performance.

 

Being free from the pressures of short-term profits from external investors or shareholders creates an environment where companies can concentrate on long-term research and development (R&D) while delivering public value.

 

Unlike private equity funds, which seek short-term returns based on profit, foundations can respond flexibly regarding equity maintenance or exit timing.

 

In my opnion, this Danish case could offer significant implications for the direction the Korean pharmaceutical industry should take as it faces a transition in its governance structure.

 

With the succession to the 3rd or 4th generation of founders gaining momentum, many Korean pharmaceutical companies are seeking solutions that simultaneously satisfy transparency in governance and continuity in management.

 

Listed pharmaceutical companies find themselves in a situation where they must find a 'sustainable governance' middle ground between companies seeking to continue family management and succession, and shareholders demanding accountability and transparency.

 

It doesn't imply that owner-management or professional management is better, or that the Danish model is superior.

 

Korean companies cannot simply replicate the Danish model.

 

Denmark has a highly sophisticated legal framework for foundation-owned companies, whereas South Korea lacks clear public interest foundation laws or a tax incentive structure.

 

In Korea's case, a strong perception exists that public interest foundations are often a means for illegal succession, due to past instances of irregular successions by some companies.

 

However, the Danish model can serve as a meaningful reference point for the Korean pharmaceutical industry when redesigning its governance structure.

 

The key is to reinterpret the Danish model and integrate it into a feasible structure that aligns with Korean culture, institutions, and management realities.

 

In the pharmaceutical industry, where a long-term vision is essential, the sustainability of the entire industry could be jeopardized without careful consideration of governance.

 

New ideas and discussions about new structures are urgently needed for the development of "K-made Wegovy."