Novo Nordisk’s weight loss drug Wegovy is enjoying meteoric popularity.
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LONDON — The rapid rise of weight-loss drugs such as Wegovy and Mounjaro is giving rise to numerous new product lines as companies hope to land on the right side of disruptive change in healthcare.
Industries ranging from food and beverage to retail and fitness have come under the spotlight as demand for Novo Nordisk and Eli Lilly's so-called miracle drugs soars amid fears they could dramatically change consumer behavior.
However, some companies say they welcome the new-found market opportunities.
Dutch biotechnology company DSM Firmenich told CNBC on Wednesday that it is looking into nutritional supplements to complement and offset some of the effects of weight-loss drugs, with CEO Dimitri de Vreeze calling it the natural evolution of the industry.
“If you want to lose weight and succeed, you move on to health, nutrition and lifestyle, because basically you want to carry on as you have been doing. And that's where we come in,” de Vreeze told CNBC's “Squawk Box Europe.”
The weight loss injections are based on a group of drugs called GLP-1 (glucagon-like peptide 1) receptor agonists. They work by mimicking a naturally occurring gut hormone that helps regulate appetite in the brain.
Studies are ongoing into other health applications and possible side effects of appetite suppressants, but De Vreeze said his company is also looking into products to increase muscle maintenance and protein absorption.
“There are some side effects of weight loss drugs and that means it's harder to build muscle and keep protein levels up. And that's where we come in. We use ingredients and develop ingredients that kind of compensate for that,” he said.
Novo Nordisk and Eli Lilly did not immediately respond to CNBC's request for comment.
Consumer goods for airlines
DSM is not the only company looking to capitalize on the growing weight-loss drug market.
Swiss food giant Nestlé announced last month that it would launch a new frozen food range aimed at GLP-1 drug users. The Vital Pursuits range, which will initially include 12 items including wholegrain bowls and pizzas, is designed as a nutritional “companionship” to the medications, the company said.
CEO Mark Schneider told CNBC last week that while weight-loss drugs are changing consumer behavior, “the need for nutrients is not going away.”
GLP-1 drugs are “certainly an interesting addition to all the other needs we are trying to meet in the food industry,” Schneider said.
Danone CEO Antoine de Saint-Affrique also told CNBC in April that he viewed GLP-1 as a “complement” to the French food group, adding that it would only increase demand for its food products.
However, according to analysts at Barclays, it is not yet clear whether consumers are more or less inclined to choose healthy products because they take weight loss medication.
“Greater adoption of GLP-1 drugs could be viewed as replacements for food categories that are more focused on health and wellness,” analyst Andrew Lazar said in a research note last year.
“This means consumers may also eat more weight-control foods as they seek to eat healthier and use such products instead of more indulgent snack alternatives,” he added.
Such changes could have similar effects on restaurants, grocers and delivery services that “proactively” adapt to the drugs, the bank's analysts added. They cited fast-food companies such as KFC's Yum Brands and Shake Shack as potential beneficiaries if consumers see the drugs as “compensation” for such indulgences.
Airlines could also benefit massively from fewer passengers as they become increasingly keen to reduce jet fuel costs. In a September note quoted by Bloomberg, Jefferies analyst Sheila Kahyaoglu said: United Airlines would save $80 million per year if the average passenger weight were reduced by 10 pounds.
Even pharmaceutical packaging companies could benefit, Barclays said, with companies such as Germany's Gerresheimer seeing a two to four percent increase in sales from the weight-loss drug market, which is estimated to be worth $100 billion.
Increasing competition in weight loss drugs
It is not yet clear whether such supplements can replicate the meteoric rise of weight-loss drug makers such as Novo Nordisk and Eli Lilly.
“We think it is too early for investors to take a definitive position on the impact of GLP-1 drugs outside of healthcare stocks, and the range of possible scenarios is very wide,” Barclays analysts wrote.
When asked whether the increasing demand for food would be reflected in his company's share price, de Vreeze admitted that it was “too early” to make such a statement.
“This is something that has to be built over time. It's in the pipeline. But as soon as something changes, you'll see it reflected,” he said.
The new products come at a time when other pharmaceutical companies are hot on the heels of Novo and Eli, trying to grab a piece of the weight loss pie.
In China, a key market for the drug, about 15 generic versions of Ozempic and Wegovy are currently being developed, according to clinical trial records cited by Reuters on Thursday.
Meanwhile, some analysts have also expressed caution about the continued growth of the weight loss drug market.
“We don't necessarily believe that miracle cures will remain miracle cures forever,” Guillaume Menuet, head of investment strategy and economics for EMEA at Citi Wealth, told CNBC on Thursday.
