The Ripple Effects of Ozempic

The effect of weight loss drugs such as Ozempic, Wegovy, and Mounjaro is having an impact on more than just the healthcare industry. These drugs, part of the class known as glucagon-like peptide-1 (GLP-1) agonists, have been shown to help control blood sugar and dramatically lower weight in clinical trials. Patients have described a decrease or even a complete absence of appetite while taking this type of drug.

Novo Nordisk, the maker of Ozempic, reports that sales are up 58% this year alone. Wall street investors are betting against the food and snack industry, which has helped to drive the obesity epidemic in America. The S&P Food and Beverage Select Industry Index has seen a decrease of 12% over the last 3 months, although it is hard to prove direct correlation between the popularity of Ozempic and this drop.  

How are different industries impacted by the increase in use of this newer class of drugs?

Food and Snacks Industry: Bloomberg reported that Krispy Kreme stock shares fell last week over worries that Novo Nordisk's Ozempic and other similar drugs used for weight loss will shrink demand for donuts. Walmart said it has taken a hit on food sales, but expects revenues from health and wellness products to increase through next year. Conagra, which owns Birds Eye, Duncan Hines, Marie Callender's, and Healthy Choice, among others, is considering changing portion sizes of its snacks if the rising use of weight-loss drugs leads to a change in consumer food consumption patterns.

Health Care Companies: Healthcare companies that provide devices for bariatric surgery or diabetes devices like insulin pumps have also tried to soothe nervous investors about the specter of reduced demand. Johnson & Johnson's third-quarter sales for devices used in abdomen surgeries was down, as many obese patients opted for Wegovy or Ozempic instead of bariatric surgeries. J&J Chief Financial Officer Joseph Wolk added that the use of these drugs could eventually make more patients eligible for procedures like hip and knee replacements.  

Airlines: Airlines are already calculating how much lighter flyers will save them on fuel costs. If the average airline passenger lost 10 pounds, it could impact the amount of fuel needed to fly - equating to up to $80 million in annual fuel savings per airline.

Clothing brands: Clothing brands could see a boost from slimmed-down shoppers eager to update their wardrobes.  

Upcoming Advancements: There is a pipeline of GLP-1s in development, including some that consumers may find more enticing because they will not require injections.  Novo Nordisk and Eli Lilly are both racing to get oral versions of GLP-1s through clinical trials and to market. Pfizer is also working on its own oral GLP-1. "We're keeping an eye on all next-generation data for drugs in the class and adjacent classes," Brian Abrahams, senior analyst in equity research at RBC Capital Markets, said.