Stay informed with free updates
Simply register at Pharmaceutical sector myFT Digest – delivered straight to your inbox.
It is rare for presentations of medical study results to attract standing-room-only crowds. But that was the case a few weeks ago in Philadelphia, when medical professionals and media filled the ballroom at a meeting of the American Heart Association.
They were there to learn that Wegovy, one of the popular new weight-loss drugs, could not only make patients much thinner and reduce their risk of diabetes, but also reduce the risk of death from heart attack or stroke. by 20 percent.
Not since the rise of cholesterol-lowering statins, or perhaps even painkillers like Advil, has a group of pharmaceuticals so captured the public imagination. Wegovy and its better-known cousin Ozempic are “semaglutides,” a class of drugs that slow digestion and mimic the effects of natural appetite-reducing hormones. First marketed by Danish insulin manufacturer NovoNordisk, they are now developed and deployed by many major pharmaceutical companies. Not only do they cause an average weight loss of 15 to 20 percent in obese patients, but they also appear to protect the heart, liver and kidneys, organs often put under strain by being overweight.
Prescriptions for these drugs have increased 300% in the United States since 2020, despite the fact that they can cost between $300 and $1,300 per month. Bank of America projects that 48 million Americans (about one-seventh of the population) will be taking medications by 2030.
This reflects not only the fact that three-quarters of the American population is overweight, but also the impact of intense media interest in these drugs. They are used not only by the overweight and/or diabetic patients for whom they were developed, but also by Hollywood stars and others who believe that one can never be too rich or too thin.
Prediabetic patients consult them to avoid more serious illnesses. Psychiatrists hand out prescriptions to patients whose antidepressants have made them gain weight. WeightWatchers acquired a telemedicine company to begin prescribing semaglutides via Zoom.
A number of other companies in industries ranging 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 food people want to eat .
Let’s start with the pharmaceutical companies themselves. If you don’t have a knockoff of Ozempic in development, your stock price could suffer. Novo Nordisk now has a market capitalization larger than Denmark’s entire gross domestic product, and Eli Lilly’s share price has risen 40 percent since it launched its own weight-loss copycat Mounjaro. But Pfizer and Moderna – neither of which has a blockbuster semaglutide on the market – have seen their stock prices fall in recent months.
And it’s not just companies in the weight loss industry that are affected. In early October, when Novo Nordisk announced that Ozempic was so effective against kidney disease that it was prematurely stopping a trial, shares of some dialysis providers fell.
Today, healthcare analysts say the $250 billion cardiovascular disease market could be reduced by 10% by 2050, and hundreds of billions of dollars in additional activity in treatment of diabetes, kidney and liver diseases and other weight-related illnesses could be disrupted.
The Ozempic effect doesn’t stop there. Analysts recently downgraded donut maker Krispy Kreme over concerns that Americans on semaglutides simply won’t be able to consume as many sugary treats as in the past.
Last month, Walmart Chief Executive John Furner said customers taking obesity medications weren’t buying as many groceries, leading to a brief selloff in consumer staples stocks such as Mondelez and PepsiCo. It’s no wonder that Coca-Cola CFO John Murphy attempted to take the lead last month, pointing out that more than two-thirds of his company’s portfolio was made up of low- or no-calorie products.
New weight-loss drugs will also disrupt the U.S. healthcare system – the only question is how. Semaglutides are expensive, as is obesity.
One study found that obesity adds $1,861 to annual health care costs per American. But if the government decided that Medicare should reimburse weight-loss drugs (which is not currently the case), that would also entail enormous costs. Insurance companies have long complained about the costs of obesity, but also don’t like the idea of tens of millions of Americans suddenly taking semaglutides. Analysts say it is unclear whether costs for the system as a whole would decline, but it seems likely when taking into account possible reductions in diseases such as kidney failure, blindness, heart disease and liver problems.
Of course, new wonder weight-loss drugs do nothing to address many of the underlying causes of American obesity, from an outdated farm subsidy system that encourages overproduction of unhealthy foods to sprawling suburbs. where people are forced to spend money. much of their time in their car. You can’t fix anything with a pill. We also don’t know what the long-term health consequences of taking these pills for years or even decades will be. What we do know is that they are already transforming fortunes and waistlines across America.
