See the effect of Ozempic on business

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It is rare for a presentation of the results of a medical study to attract a standing-room-only crowd. But that was the case a few weeks ago in Philadelphia, when medical professionals and media alike filled the ballroom at the American Heart Association meeting.

They were there to hear the news that Vegovi, one of a new group of massively popular weight-loss drugs, could not only make patients much thinner and reduce their risk of diabetes, but also reduce their chances of dying from a heart attack or stroke. by 20 percent.

Not since the rise of cholesterol-lowering statins, or perhaps even pain relievers like Advil, has a group of drugs captured the public imagination so much. Vegovi and its better-known cousin Ozempic are semaglutides, a class of drugs that slow down digestion and mimic the appetite-suppressing effects of natural hormones. They were first commercialized by the Danish insulin manufacturer NovoNordisk, and are now being developed and introduced by many large pharmaceutical companies. Not only do they lead to an average weight loss of 15-20 percent in obese patients, but they also appear to protect the heart, liver and kidneys, organs that are often exposed to excess weight.

Prescriptions for these drugs have increased by a staggering 300 percent in the US since 2020, despite the fact that they can cost between $300 and $1,300 a month. Bank of America expects 48 million Americans (about one-seventh of the population) to be on medication by 2030.

This reflects not only the fact that three-quarters of the American population is overweight, but also the impact of the media’s intense interest in drugs. They are used not only by the truly obese and/or diabetics for whom they were developed, but also by Hollywood stars and others who believe that you can never be too rich or too thin.

Prediabetics take them to avoid a more serious illness. Psychiatrists give prescriptions to patients whose antidepressants have caused them to gain weight. WeightWatchers has acquired a telemedicine company to begin prescribing semaglutide via Zoom.

Any number of other companies in industries from fast food to insurance to health and fitness are seeing their core business models disrupted by drugs that appear 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 development, your share price may be affected. Novo Nordisk now has a market capitalization larger than the entire gross domestic product of Denmark, and Eli Lillis’ share price has risen 40 percent since it introduced its own weight-loss imitator, Mounjaro. But both Pfizer and Moderna, neither of which has a successful semaglutide on the market, have seen their stock prices fall in recent months.

And it’s not just weight loss companies that are affected. In early October, when Novo Nordisk announced that Ozempic was so effective against kidney disease that it stopped the trial early, shares in some dialysis providers fell.

Now, health analysts say the $250 billion cardiovascular disease market could shrink by 10 percent by 2050, and hundreds of billions worth of additional jobs in the treatment of diabetes, kidney and liver disease and other weight-related diseases could be disrupted. .

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

Last month, Walmart CEO John Furner said customers using obesity drugs were not buying as many groceries, prompting a brief sell-off in consumer staples such as Mondelez and PepsiCo. No wonder Coca-Cola’s chief financial officer, John Murphy, tried to weigh in on the matter earlier last month, pointing out that more than two-thirds of his company’s portfolio consists of low-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 to annual health care costs per American. But if the government decides that Medicare should reimburse weight loss drugs (not currently), that would also create huge costs. Insurance companies have long complained about obesity-related costs, but they also don’t like the idea of ​​tens of millions of Americans suddenly going on semaglutide. Analysts say the jury is out on whether costs for the system as a whole will drop, but it seems likely when you consider possible reductions in conditions such as kidney failure, blindness, heart disease and liver problems.

Of course, new miracle weight-loss drugs don’t help address many of the root causes of American obesity, from an antiquated farm subsidy system that encourages overproduction of junk food to the sprawling suburbs where people are forced to spend. large parts of their time in their cars. You can’t fix any of that with a pill. We also don’t yet know what the long-term health effects of taking these pills will be for years or even decades. What we do know is that they are already changing fortunes as well as waistlines across America.

rana.foroohar@ft.com