The European Union has proposed a reform to the bloc’s pharmaceutical legislation, which would aim to increase competition among drugmakers in Europe and improve access to medication across the EU’s 27 member states.

However, Novo Nordisk, the pharmaceutical giant driving a weight-loss craze in the U.S., thinks the proposed changes will hurt innovation and drive the company toward the States at the expense of its Europe operations. 

Speaking to the Financial Times, Novo’s CEO Lars Fruergaard Jørgensen said the proposed changes would accelerate the company’s decoupling from Europe.

“When we start clinical development, we start in the U.S. When we start commercial activity, we always start in the U.S.  

“And the success in the U.S. means that we are slower getting going in Europe because it’s just less attractive.”

Under new rules, the period for which drugmakers enjoy exclusivity for their products would drop from 10 years to eight years. Pharmaceutical groups will regain two years of exclusivity if they make medicines available in all 27 countries within two years of being granted a license, benefitting poorer members of the bloc. 

While this would improve access to medicines, critics argue the reduced guaranteed exclusivity hurts the appeal of producing drugs in Europe compared with other regions.  

Novo using its clout

A September study by the Regulatory Affairs Professionals Society (RAPS) suggested the new rules could cause three fewer rare disease drugs to come to market each year. 

The study was commissioned by the European Federation of Pharmaceutical Industries and Associations (EFPIA), a trade body that represents the biggest pharmaceutical companies in Europe. Novo’s chief executive Jørgensen is also president of the EFPIA.

The Novo boss was speaking to the FT ahead of the launch of a new report by the EFPIA, which argued that R&D investment in Europe would drop by €2 billion ($2.1 billion) a year under the new rules.

It added that one in five projects would no longer be economically viable and the EU’s share of global R&D investment would fall from 32% now to 21% in 2040. 

Novo is using the clout of its huge economic presence in Europe to try and lobby against the proposed changes. The company has taken on new significance since its GLP-1 diabetes drugs, including Wegovy and Ozempic, proved to aid weight loss and enjoyed a resultant demand surge in the U.S.

The Danish drugmaker overtook Bernard Arnault’s LVMH as Europe’s largest public company in early September, after becoming more valuable than the entire Danish economy in August. Denmark partly credited the success of Novo with doubling its GDP forecast this year.

However, the group’s U.S. footprint, both in terms of production and sales, is already beginning to eclipse its presence in Europe. Novo sold $900 million worth of Wegovy in the third quarter of 2023, nearly all of which was in the U.S.

The company’s total sales in the States grew by 48% in the third quarter compared with a year earlier. Sales in EMEA meanwhile rose at a relatively mild 14%. 

Jørgensen told the FT that many of Novo’s new medicines were now being made in Boston.

Europe’s drugmakers swarm on EU

Europe is still the preeminent region for pharmaceutical production across the globe. Out of the 10 biggest pharmaceutical exporters in the world in 2021, nine came from Europe, according to data compiled by the Observatory for Economic Complexity. 

Now, though, the continent’s biggest pharmaceutical hitters are taking digs at new legislation, which they fear will shrink that dominance.

In April, U.K.-based GlaxoSmithKline (GSK) warned that proposed changes by the EU could cause an investment shift to other regions. The company’s chief executive Emma Walmsley told reporters on an earnings call that pharmaceutical groups “have choices on where our capital and resources are focused.”

Speaking to Science|Business Stefan Woxströmhe, a senior vice president at the U.K.’s second-largest public company, AstraZeneca, said the new rules would stifle innovation in the region. 

“Of course, that will play a role when companies are looking into where they will put their future investments in new types of medicines,” Woxströmhe said.

The European Commission didn’t immediately respond to Fortune’s request for comment.