“We definitely do see a slight change compared to the total population — we do see a slight pullback in the overall basket,” he said.
His comments led to a modest sell-off in consumer goods stocks, with Mondelez and PepsiCo shares sliding 7 and 5 per cent respectively in the following days. Companies such as PepsiCo and Pringles maker Kellanova have insisted that it was too soon to see any impact.
“So far the impact is negligible in our business,” said PepsiCo chief executive Ramon Laguarta.
Chief financial officer Hugh Johnston told the Financial Times: “The adoption of these [drugs] are likely to be pretty slow... they’re obviously quite expensive and they’re injectable drugs.”
The number of patients taking the drugs is forecast to grow almost fivefold to 24 million people, or 7 per cent of the US population, by 2035 according to a Morgan Stanley analysis. Those taking them were likely to reduce their daily calorie intake by 20 to 30 per cent, they added.
About 42 per cent of the adult population of the US is obese, according to the US Centers for Disease Control and Prevention, and so would qualify for the drug. But their access to it will depend on how many health insurers decide to cover it. The speed of adoption will also depend on Novo Nordisk scaling up supply.
So far, Wegovy has launched only in the US and in a handful of markets in Europe, including the UK and Denmark, where supplies are still constrained.
But Evan Seigerman, analyst at Canadian investment bank BMO, forecasts the entire market for the weight-loss and diabetes drugs will eventually be worth between US$130b and US$140b.
To date, there have been no significant studies that show whether or not the drugs change people’s appetite for specific foods. But clinicians and analysts have found that patients were more likely to cut back on foods that are high in sugar and fat, such as baked goods, confectionery, sugary drinks and alcohol.
“The impact will be concentrated on companies where there is a heavy concentration of snacking in their portfolios,” said Pamela Kaufman, analyst at Morgan Stanley, adding that companies that manufacture weight-management foods such as protein bars and shakes could benefit, as patients gravitate towards products deemed healthier.
The drugs are designed to be prescribed as part of a weight-loss programme, which would include healthy eating advice. Some patients suffer significant nausea as a side effect, which also may encourage them to avoid overly stodgy foods.
Emily Field, an analyst at Barclays, said the side effects of the drug were lessened if patients stuck to a diet of fresh and healthy foods.
“Clinicians have indicated [the drug] transforms people’s relationship with food, dramatically more than exercise,” she said, but added that it remained to be seen whether enough people would take the drug to materially impact the consumer goods landscape.
Dr Domenica Rubino, director of the Washington Center for Weight Management and Research, who also served as an investigator on a trial for the Novo Nordisk drug Wegovy, said patients had quite different responses to the medicine. Some just snacked less, but some lost their appetite significantly, she said.
Others did seem to be able to make better choices, she added, because the drugs appeared to quash the “intensity of the inner brain talk”.
“All the choices they have been trying to make become easier, to eat more healthily, more fruit, more vegetables. They feel empowered because they are not drawn to other foods any more,” she said.
In an analysis Barclays estimated that the widespread use of obesity drugs could lead to a sales volume reduction of up to 1.2 per cent for food companies, while alcohol companies could suffer up to 3 per cent volume declines.
Analysts at Morgan Stanley said snack food manufacturers such as Hershey’s, Cadbury-maker Mondelez and Twinkies-maker Hostess were more likely to see negative impacts, increasing the pressure on them to reshape their portfolios to focus on healthier products.
Companies such as Unilever and Nestlé have come under pressure from investors in recent years to set more ambitious targets for sales of healthy foods.
Naveed Sattar, professor of metabolic health at the University of Glasgow, said while there was no “definitive evidence”, weight-loss drugs did seem to dial down cravings.
“Most cravings are things that give you a hit of really nice flavour: sugary, salty, fatty stuff. On that basis, one would assume that people cut down on discretionary foods,” he said.
Ozempic’s ability to reduce the craving mechanism could also be bad news for alcohol companies. A pre-clinical study in rats with alcohol use disorder showed that it decreased their desire for alcohol. Scientists are now researching the drug as a possible treatment for alcohol use disorders.
Bruno Monteyne, analyst at Bernstein, said that while the drug could make consumers eat less of the food they craved, it could also make people live longer — which would equate to more purchases.
“A happy, healthy consumer is a good thing for consumer companies,” he said.
Written by: Madeleine Speed and Hannah Kuchler
© Financial Times
