Alan Kohler: Ozempic is making food and anti-snoring companies lose weight too


The weight-loss drug has plenty of big companies worried about getting smaller. Photo: TND/Getty
CSL shares fell 6.3 per cent one day last week and before that ResMed was down even more – 36 per cent in August and September.
The reason? Ozempic, the weight-loss drug, for both.
Last year, CSL bought a Swiss company called Vifor for $18.2 billion, and one of the things it does is treat kidney disease. Last Tuesday, the developer of Ozempic, Novo Nordisk, called off a trial studying Ozempic as a treatment for kidney failure in diabetes patients because it was clear that it would succeed. Next day, CSL lost $7.7 billion in market value.
ResMed’s problem is a little more obvious: Overweight people suffer more from sleep apnoea than thin people, so the more Ozempic is sold, the fewer masks the company is likely to sell. ResMed has lost more than $6 billion in market value since the start of August.
These two Australian businesses aren’t the only ones getting worried about the semaglutide drug branded Ozempic.
(Semaglutide was developed in 2012 by a team of researchers at Novo Nordisk, the Danish pharmaceutical company. It is a peptide similar to GLP-1, which stands for glucagon-like peptide-1, an amino acid hormone that increases the production of insulin and also lowers appetite and slows digestion in the stomach. Novo Nordisk sells it under the brands Ozempic, Rybelsus and Wegovy.)
This month, Walmart’s US CEO John Furner told Bloomberg that it had mined data from its own pharmacies and grocery lines and found that people who take Ozempic buy less food (which is the whole idea, of course, so no surprise there, but nevertheless it was news at the time).
Impact at the supermarket
“We definitely do see a slight change compared to the total population. We do see a slight pullback,” Furner said. “Just fewer units, slightly fewer calories.”
CEO of snack food maker Kellanova, Steve Cahillane, said: “We’re by no means complacent. Like everything that potentially impacts our business, we’ll look at it, study it and, if necessary, mitigate.”
And this from the Wall Street Journal: “Executives at food manufacturers from Campbell Soup to Conagra Brands said they are fielding questions from investors about the drugs’ potential impact, as internal teams start to assess consumer behaviour and brainstorm ways to respond.”
And it’s not just food. A story in Axios this week reported that a recent study with mice as subjects found that GLP-1 drugs (like Ozempic) reduce nicotine intake and reward.
“If enough people get on Wegovy, Ozempic and other such drugs, it could cripple sales for big alcohol brands like Anheuser-Busch and Miller, as well as major tobacco manufacturers like Altria and Philip Morris.”
We can only hope.
But you do wonder at what point the big shareholders of the food, alcohol and tobacco companies, who also tend to be the big shareholders of drug companies, start telling the drug companies to ease off with the drugs that make people buy less food, alcohol and tobacco.
Then again, maybe they’ll be making so much money from Ozempic that they won’t care about the losses on ResMed, CSL, Walmart and Anheuser-Busch.
The business of consumption
The largest shareholders of Novo Nordisk include BlackRock, Fidelity, Capital Research and Vanguard, much the same as all the other big US companies. The Danish pharmaceutical company’s shares have gone up 400 per cent in five years and the company is now worth 2.46 trillion krone, or $514 billion, about the same as Australia’s big four banks plus CSL, combined.
Apart from that, a drug that reduces consumption is a big deal for business generally, and for the economy, and for that matter, society as a whole.
Food companies spend billions on advertising to get us to eat more, and you only have to look around to see that it works. Obesity is one of the western world’s main health problems.
More broadly, consumption is the foundation of the economy; economists constantly measure it, applauding when it goes up, worrying when it goes down.
An Ozempic injection once a week reduces calorie intake by about 20 per cent and the prediction is that 24 million Americans will be taking it by 2035. Presumably those people are currently responsible for a lot of American consumption.
On the other hand, if people are healthier and live longer because they are slimmer, and there are fewer people suffering from type 2 diabetes, then presumably they will consume more.
Severe shortages
The only thing standing in the way of all this appears to be Novo Nordisk’s ability to make enough of the stuff.
There are dire shortages everywhere, including Australia.
The Therapeutic Goods Administration announced a month ago that Novo Nordisk had advised it “and the Ozempic Medicine Shortage Action Group that supply throughout the rest of 2023 and 2024 will be limited”.
“Novo Nordisk advised that demand had accelerated in recent months, particularly for the low-dose (0.25/0.5 mg) version. This additional demand is caused mainly by a rapid increase in prescribing for ‘off-label’ use (prescriptions to treat conditions other than those approved by the TGA).”
By the way, the “Ozempic Medicine Shortage Action Group” is a task force led by the TGA and including representatives of Novo Nordisk, pharmaceutical wholesalers and patient groups representing those suffering from diabetes and obesity.
Last week the Pharmacy Guild said the shortages would last for the rest of this year and well into next year, and added: “Ozempic is a drug which is meant to treat adults with type 2 diabetes, but because it’s known to help patients lose weight its popularity has been promoted by social media influencers”.
That’s right: Unlike the fast food containing the calories, the anti-calorie drug doesn’t have to be advertised because the targets of the advertising are desperately trying to find a way to escape its influence.
Of course, another way might have been to cut back the fast food and sugar advertising, but that might result in someone making less money.
Can’t have that. Far better to find a way to ensure that businesses and their owners make more money, not less.
Alan Kohler writes twice a week for The New Daily. He is finance presenter on ABC News and founder of Eureka Report