Discover slim weight loss medications

Entry

Weight-loss drugs have taken the pharmaceutical industry by storm, and they have the potential to impact the economy in ways that investors need to be aware of. Since 2005, big pharma has sought to mass produce weight-loss drugs as the American population has become anything but thinner. By addressing the global obesity epidemic, these drugs will create ripple effects across sectors of our economy and change the purchasing habits of consumers who use them.

How much of an impact these drugs will have remains to be seen, as we’re still in the early stages of this weight-loss game. But growth projections and recent share price gains for key players in the market (e.g. Novo Nordisk, Eli Lilly) suggest this will be a huge undertaking for the pharmaceutical and healthcare sectors, insurers, and consumer discretionary brands.

Slimming Drugs Review

Deadline GLP-1 receptor agonists is a mouthful, but we can think of it as encompassing all the major weight-loss drugs currently prescribed. In terms of the major players in the market, Eli Lilly makes Mounjaro and Zepbound, and Novo Nordisk makes Ozempic and Wegovy. The main difference between these drugs is that Mounjaro and Ozempic are FDA-approved for the treatment of type 2 diabetes, while Zepbound and Wegovy are indicated for weight loss. Several other companies are developing a wide range of similar drugs for both indications.

What makes these drugs so powerful and effective is that GLP-1 receptor agonists contain semaglutide. This ingredient mimics the action of the hormone GLP-1, which is involved in regulating appetite. Instead of choosing a second donut, people feel full and reduce their total food intake for the day. Recent studies have shown that Mounjaro and Zepbound are more effective because they can target an additional receptor called GIP along with the GLP-1 receptors, while Ozempic and Wegovy only target the GLP-1 receptors.

In addition to weight loss, these drugs improve blood sugar control and may also have cardiovascular benefits. In addition to common side effects, mostly related to gastrointestinal issues, the cost of these drugs is a major concern for users, as out-of-pocket costs can reach $1,000, if not more, per month.

Market potential

The global obesity epidemic has created a significant market for effective weight loss solutions. According to a 2022 study by the World Health Organization, more than 1 billion people worldwide are living with obesity. If we look at the United States, a July 2024 study by the CDC suggests that 39.6% of American adults are classified as obese, 31.6% as overweight, and 7.7% as extremely obese. It’s astonishing when you add up these numbers and see that this amounts to 78.9% of American adults. The rising incidence of obesity-related conditions such as diabetes, cardiovascular disease, and some cancers further increases the need for weight management medications, as weight loss is usually the first step in managing comorbidities.

Ultimately, the growth in global spending on obesity drugs will depend on how long patients take the drug and whether the drugs are also used to treat other conditions. Market analysts predict significant growth in the market for weight-loss drugs, with BMO Capital Markets forecasting annual sales of the drugs to reach $150 billion by 2033, according to a recent Reuters article.

As is often the case after a product has experienced a huge surge, the issue of price wars arises. The big pharma companies face the challenge of whether the current unmet medical need and consumer demand will be enough to delay competitive price cuts. For now, demand far outstrips supply. The population that needs GLP drugs is huge, and prescribers are increasingly looking to introduce off-label access to these drugs. Off-label use is when a drug is prescribed for a treatment that has not been specifically approved by the FDA, while on-label use refers to prescribing it for a specific indication for which it is approved by the FDA. This distinction is crucial because an increase in off-label prescriptions could reduce the availability of weight-loss drugs to those who need them most.

It’s worth noting that there are ongoing efforts to both increase production of these drugs and bring new alternatives to market. As both of these efforts gain momentum, investors will need to see more prescriptions and more efficient manufacturing processes to maintain confidence in the earnings of the market leaders.

Healthcare and insurers adapt to growing demand

A key concern for the healthcare industry is the potential cost reduction associated with treating chronic diseases. Treating patients with cardiovascular disease and some cancers is extremely expensive, from both a provider and patient perspective. A smaller population means fewer medical interventions and fewer hospital admissions, which could impact future revenues and profits for hospitals and various clinical services.

Reducing obesity could also mean a drop in profits for pharmaceutical companies that make insulin and statins—both of which are used to help people with diabetes and high cholesterol. While Mounjaro is a boon for Eli Lilly, there are companies that will be hit hard by falling demand for their products.

Cost savings will also trickle down to health insurers, but only after they determine whether and how to cover the drugs. The reduction in obesity-related claims could be significant in the long term, once it overcomes the increase in short-term costs of covering these drugs. There is still a discrepancy in determining whether patients are taking a drug for type 2 diabetes or weight loss. The latter is not currently covered by insurance, even if the health impact is significant. This is likely to change over time as more supplies become available and the long-term cost benefits to insurers become clearer, but for now, weight loss is largely a consumer cost.

On the other hand, we see the life insurance industry benefiting greatly from GLP-1 if these drugs ultimately lead to longer lifespans. Remember, nearly 80% of Americans are considered obese or overweight – this is a huge opportunity for life insurers to make more money on the premiums they charge and defer claims payments.

Healthier shopping habits and second-order effects

We believe that consumers taking weight-loss medications will recreate their shopping habits. This presents a unique opportunity in the food and beverage industry for companies like Nestle, Conagra Brands, and Mondelez to capitalize on these new cravings. Low-calorie, high-protein foods will help people taking weight-loss medications maintain energy and avoid losing muscle mass. While snack food sales may be in free fall, additional revenue from healthier, more expensive foods could offset the decline. Beware of food manufacturers trying to create a new association with GLP-1 medications and their snacks, effectively creating a new subset of customers.

This shift towards healthier lifestyles is not limited to traditional snack companies. Even large alcohol companies such as Diageo are looking for ways to expand their portfolios and appeal to a population that is more health-conscious. Guinness, a Diageo brand, recently invested almost $27 million in a new facility in Dublin to produce a non-alcoholic version of its well-known stout. The company predicts that non-alcoholic drinks will soon account for 10% of Guinness brand sales in Ireland.

Finally, it’s worth noting that several recent studies show that GLP-1 can help reduce cravings more broadly. The drug’s effects may not be limited to food alone, and could extend to cravings for alcohol, nicotine, and even opioids. If these studies prove accurate and replicable across patient populations, it could ultimately lead to an even greater shift toward things like soft drinks and better health across the board.

Is the treatment permanent or is it just a passing fad?

It remains to be seen whether GLP-1 will become a permanent fixture in people’s lives, or whether it will be just a first step for those seeking weight loss and a healthier lifestyle. A recent article in Reuters highlighted the fact that most Wegovy patients stopped taking the drug after two years of use because the side effects and routine proved too demanding in terms of time and effort. That’s a big deal for drugmakers. Two years is a long time and a big revenue stream for pharma, but it’s not a lifetime revenue stream. For now, the prescription schedule isn’t a big deal because more people want the drug—as one patient leaves, a new patient can be brought on. But as supply increases, the duration of treatment becomes more significant.

In addition, there is not yet much data on the impact of stopping medication on consumer spending. Will people return to their bad habits, or will a newer, healthier consumer prevail?

History has shown that weight loss methods are fads that usually don’t produce lasting results. But thanks to a new prescription drug, that could change!

Whether the effects of GLP-1-induced weight loss are permanent for everyone, the impact is significant across sectors. These drugs are poised to change earnings growth and purchasing habits across a range of sectors. For investors, this is both an opportunity and a new set of risks to assess. A wide range of companies, from insurers like United Healthcare to staples like Nestle to drugmakers like Eli Lilly and Novo Nordisk, are facing a rapidly changing landscape, and each company must adapt and capitalize on its growth opportunities. This is definitely an area to watch!