Ozempics’s Economic Impact

The Weight Loss Drug Ozempic's ripple effect on the health economy.

A slice of cake.

Good Morning.

A recent report from Pitchbook, a financial data firm, shows that Ozempic and its counterparts — WeGovy, Mounjaro, and other semaglutides — are doing more to the health economy than helping people lose weight.

Never mind how people are losing and what kind of weight they’re losing — I’ve covered that in a previous newsletter.

And for the record — I’m not against weight loss pills!

I have two clients who use them, have lost weight due to their curbed appetites, and understand that their dosage will determine how feasible it is to wean off them after they’re done using them.

Ozempic’s Economic Impact

The ripple effect of the weight loss drug could mean more than just a bunch of people with remarkable weight loss stories.

We might see fast-food stock prices plummet, other drug companies’ share prices drop, or even surge as they try to join the party.

Other telehealth companies and healthcare providers must start working weight loss into their care equation for patients.

And hopefully, doctors’ offices will start asking more questions about resistance training, cardiovascular exercises, and other physical health questions they should’ve already been asking for years…

Here are some things to consider:

• 40% of Americans fall under the classification of obese

• If even just a portion of those Americans began to lose weight from semaglutides, healthcare costs across the board could also drop significantly

• Airlines are predicting that they could save up to 10% on fuel costs if passengers weighed less (this is a terrible way to encourage weight loss, but okay)

• We still don’t know the long-term effects of using these drugs for extended periods (but, like vaccine-deniers during the height of COVID, I think fearmongering about that isn’t worth it).

The availability and costs about the drug a few months ago troubled me the most.

But now, with competing companies and more scale to the weight-loss pill operation, costs are dropping, albeit slowly.

And more people are getting access to different brands and versions of the drug (though I think we should be wary of which brands are rushing to push a product out vs. the ones who carefully crafted theirs).

For the food industry, food producers, especially those who pump out the highly-processed, hyper-palatable bullshit (looking at you, Kraft, Mondelez, etc.), might have to prepare for tailwinds in their profits as economic analysts forecast a 1-2% reduction in U.S. calories consumed.

If that number sounds small, remember there are 350 million Americans, and we consume an average of 3540 calories a day, so that’s a lot of cut calories.

In Denmark, Big Pharma Is King

You might be thinking, but who will profit from these drugs?

Novo Nordisk, the leading supplier of Ozempic and WeGovy, the first on the market, is cashing in.

Bigly.

The Danish-based company can proudly say (or shamefully, depending on how you view Big Pharma) that it has been responsible for nearly all Denmark’s recent economic growth.

According to the New York Times, Novo Nordisk’s boom in production fueled Denmark’s economy the past two quarters, accounting for 1.7% of its 1.9% growth since Q1.

You’re welcome for being unhealthy, Denmark - Americans.

Novo Nordisk’s market capitalization — a company’s “net worth,” so to speak — is larger than the GDP of Denmark itself.

And it’s only poised to grow more.

The Ozempic Upside?

While there are criticisms of the drugs’ efficacy — namely the fact that most weight loss occurs in lost muscle — the fact remains that weight loss, whatever the kind, will improve most of, if not all, biomarkers.

And that’s a great thing.

In the short term, I’m willing to bet most Americans would unquestionably trade a few thousand dollars for this therapy in exchange for fewer doctor visits, lower cardiovascular risks, less chronic pain, and all the other co-occurring issues of obesity.

What doctors are also noticing, however, is something else that’s being curbed — addictive tendencies and craving toward other vices like alcohol, smoking, and even gambling.