Here is the Ozempic effect on business

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It is rare that the presentation of the results of medical studies attracts a standing room only crowd. But that was the case a couple of weeks ago in Philadelphia, when medical professionals and the media packed a ballroom at a meeting of the American Heart Association.

They were there to hear the news that Wegovy, one of a new group of very popular weight loss medications, could not only make patients much thinner and reduce the risk of diabetes, but also reduce the chance of death from heart attacks. heart attack or stroke. by 20 percent.

Not since the rise of cholesterol-lowering statins, or perhaps even pain medications like Advil, has a group of pharmaceuticals captured the public imagination so much. Wegovy, and its better-known cousin Ozempic, are “semaglutides,” a class of drugs that slow down digestion and mimic the effects of natural appetite-reducing hormones. First marketed by the Danish insulin manufacturer NovoNordisk, they are now developed and developed by several major pharmaceutical companies. Not only do they lead to an average weight loss of 15-20 percent in obese patients, but they also seem to protect the heart, liver and kidneys, organs that are often subjected to excessive weight.

Prescriptions for these drugs are up more than 300 percent in the United States since 2020, despite the fact that they can cost between $300 and $1,300 per month. Bank of America expects 48 million Americans (about a seventh of the population) to be on medication by 2030.

This not only reflects the fact that three quarters of the US population is overweight, but also the impact of an intense media interest in drugs. They have been used not only by the truly overweight and/or diabetic patients for whom they were developed, but by Hollywood stars and others who believe that you can never be too rich or too thin.

Pre-diabetic patients have to avoid more serious diseases. Psychiatrists hand out prescriptions to patients whose antidepressants have caused them to put on weight. WeightWatchers acquired a telemedicine company to begin prescribing semaglutide via Zoom.

Some other companies in industries ranging from fast food to insurance to health and fitness are seeing their core business models disrupted by drugs that seem to fundamentally change how much people want to eat.

Let’s start with the pharmaceutical companies themselves. If you don’t have an Ozempic knock-off in the development pipeline, your share price may take a hit. Novo Nordisk now has a market capitalization that is higher than all of Denmark’s gross domestic product, and Eli Lilly’s share price is up 40 percent since it launched its own loss-making copycat Mounjaro of weight But both Pfizer and Moderna — neither of which has a successful semaglutide on the market — have seen their share prices drop in recent months.

And it’s not just companies in the weight loss business that are affected. At the beginning of October, when Novo Nordisk announced that Ozempic was so effective against kidney disease that it stopped a trial earlier, the shares in some dialysis providers soared.

Now, health analysts say the $250 billion cardiovascular disease market could shrink by 10 percent by 2050, and hundreds of billions in additional business from treatments for diabetes, kidney and liver disease and other diseases related to weight may be disturbed.

The Ozempic effect doesn’t stop there. Analysts downgraded donut maker Krispy Kreme recently amid concerns that Americans on semaglutide won’t just reach for as many sweet treats as they have in the past.

Last month, Walmart CEO John Furner said obesity drug customers weren’t buying as much groceries, which led to a short selloff in consumer stocks like Mondelez and PepsiCo. It’s no wonder that Coca-Cola’s chief financial officer, John Murphy, tried to get out of the problem later last month, emphasizing that more than two-thirds of his company’s portfolio consisted of low- and no-calorie products.

New weight loss drugs will also disrupt the US health care system – the only question is how. Semaglutides are expensive, but so is obesity.

One study found that obesity adds $1,861 in annual health costs per American. But if the government decided that Medicare should reimburse drugs for weight loss (currently not) that would create huge costs, too. Insurance companies have long complained about the costs of obesity, but they also do not like the idea of ​​tens of millions of Americans who immediately in semaglutides. Analysts say the jury is out on whether costs to the system as a whole will decrease, but it seems likely if you take into account possible reductions in conditions such as kidney failure, blindness, heart disease and liver complaints.

Of course, the new miracle weight-loss drugs do nothing to address many of the underlying causes of American obesity, from an outdated agricultural subsidy system that encourages the overproduction of unhealthy food to sprawling suburbs where people are forced to move. large swaths of their time in their cars. You can’t fix any of this with a pill. We still don’t know what the long-term health ramifications of taking these pills for years or even decades will be. What we do know is that they are already changing fortunes and waistlines across America.

rana.foroohar@ft.com