Business
It didn’t take much for Novo Nordisk’s “miracle” drugs Ozempic and Wegovy to surge in popularity—after all, they offered a safe path to fall kilos whereas, in fact, decreasing some health risks.
Now, major British bank Barclays is predicting the impact and potential uptake of such drugs to be so substantial that it’s recommending that investors short stocks that are targeted by the weight-loss drug trade—including junk food and cigarette companies.
In a Tuesday file, the bank highlighted that the popularity of such drugs may put a dent in the demand for companies such as Pepsi Co., which makes Pepsi drinks, Cheetos and Doritos.
“The impacts of GLP-1s potentially introduce disruption into a alternative of industries,” Barclays’s strategists wrote, according to Bloomberg.
GLP-1 medications like Ozempic, archaic to treat Kind 2 diabetes, and Wegovy, archaic as an weight problems treatment, mimic a hormone produced in the intestines after meals which helps curb appetite, thus aiding weight-loss.
A imaginable negative impact of such medication on user brands has already begun reflecting in stock costs. For instance, an index of packaged foods is down by about 14% so far in 2023 against a 20% rise in the S&P 500 index for the same length, Bloomberg reported.
Novo Nordisk and Barclays didn’t immediately return Fortune’s interrogate for comment.
The market for Novo’s twin drugs archaic to aid weight-loss is predicted to skyrocket to $100 billion by 2035, according to BMO Capital Markets. And as these drugs have already proven promise for what they can achieve and have been unofficially endorsed by the likes of Elon Musk, Wall Boulevard is making an attempt to gauge how far their ripple effects may reach.
Funding bank Jefferies said last week that if patrons adopt healthier diets to complement the usage of drugs like Ozempic, that may harm restaurants as properly as other players in the food and beverage sector. And because of the excessive designate of the drugs, the medication may instant customers to relieve back on spending on discretionary goods like furniture.
Business Are there any winners?
While weight-loss drugs may harm trade in some sectors, they aren’t without their fair share of winners.
Barclays expects players like American pharmacy chain CVS Health to be among the beneficiaries of the fast-rising weight-loss medication trade as extra patients derive prescriptions for such drugs.
Banks also anticipate there to be companies that in a roundabout way gain from this fashion.
For instance, Jefferies said that United Airlines, a leading American carrier, may save as much as $80 million a year if passengers’ weight fell by 10 kilos as part of a survey assessing the broader ripple-effects of popularity of weight-loss medications.
“Weight is a crucial factor for gasoline effectivity… Airlines’ biggest expense is gasoline, which has been exacerbated as jet gasoline costs have rebounded,” Jefferies analysts wrote, according to Insider.
Business The rise of Novo Nordisk
Aided by the stratospheric rise of weight-loss and diabetes drugs, Novo in short became Europe’s most valuable company last month, dethroning luxury brand LVMH. That’s also when the company debuted in the U.K., its fifth market globally, where Wegovy was hailed as a “game-changer” by Top Minister Rishi Sunak.
The Danish company, which has been around for about 100 years, has considered a meteoric rise in fresh years. The U.S. Food and Drug Administration approved Ozempic in 2017, whereas Wegovy was approved in 2021—making it the primary weight-loss drug to be approved by the physique in eight years.
As the company began to expand past the U.S., which aloof remains a key market, Novo’s market value overtook the scale of Denmark’s financial system in 2022. The sheer scale of the company’s trade has even safeguarded Denmark from a recession.
Demand for Novo’s blockbuster drugs have like a flash outpaced present, leading it to curb its starter doses. In Britain, Wegovy’s release has been in a “cramped and managed manner” anticipating a deluge of customers. All the buzz surrounding these drugs have resulted in a nick of fake drugs being peddled to desperate patrons as unauthorized versions of semaglutide, the active ingredient in Wegovy and Ozempic.
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