Semaglutide drugs like Wegovy and Ozempic have weight-loss benefits — and could transform the economy

Some companies have already noticed changes in consumer behavior due to GLP-1 drugs. Getty Images

• A new wave of weight-loss drugs could have indirect impacts for all types of businesses.
• It is also possible that people’s productivity increases over their lifetime, which impacts the economy.
• Better-for-you products could be the winners of the future economy, an expert told Insider.

Ozempic has taken the world by storm because of its ability to help people lose weight, but it could also mean much more for the economy.

Ozempic is a brand name for semaglutide, a diabetes medication that also has weight-loss effects. Patients inject it weekly and it reduces appetite. Semaglutide is also sold for weight loss under the brand name Wegovy.

Although it is still too early to say exactly how GLP-1 drugs will impact the overall economy in the long term, it has already had a significant impact on patient consumption and companies are keeping an eye on future developments.

Walmart, for example, which sells Ozempic and other GLP-1 drugs, found that customers who bought these drugs spent less on groceries but more on lifestyle and fitness year after year.

Nik Modi, managing director of consumer staples-focused RBC Capital Markets, told Insider this is a sign that people aren’t spending less. They simply buy different products.

“Consumers are looking for products that are better for them,” Modi said, adding that healthier products will be a big winner as consumers change their habits in this economy.

The impact could be much broader than food and healthcare. As Josh Barro recently wrote in his business and business newsletter “Very Serious,” workers could be more productive because they live longer, healthier, and happier lives.

“A lower disease burden means fewer sick days and higher work productivity,” predicts Barro. “And personal happiness will increase tremendously: well over a hundred million Americans who have struggled all their lives to control their weight will finally be able to do so, and in a way that does not require much mental effort.” .”

This could increase people’s self-esteem, Barro said, and allow people to redirect energy and resources from dieting to other activities and change their consumption. Additionally, employee productivity could increase as Americans realize the long-term benefits of weight loss and stay in the workforce longer.

Radical weight loss could change people’s purchasing habits and impact companies’ profits

Some companies have already noticed changes in consumer behavior due to GLP-1 drugs. Clinical studies have shown that patients can lose an average of 15% of their body weight within 68 weeks.

An August survey of 300 people taking GLP-1 drugs for weight loss by Morgan Stanley found that 77% of respondents said they were visiting fast-food restaurants “less often,” while 61% and 59%, respectively, said the same about casual ones Restaurants and cafes said, respectively.

In the meantime, GLP-1 could also indirectly help other companies such as airlines. A Jefferies Financial analyst used data from United Airlines and calculated that if the average passenger weighed 10 pounds less, the company could save 27.6 million gallons of fuel per year, a cost of $80 million.

For example, Walmart, which sells GLP-1 drugs like Ozempic, found that customers who bought these drugs spent less on groceries but more on lifestyle and fitness year after year. Scott Olson/Getty Images

Additionally, some patients also noted reduced cravings for alcohol, tobacco, and even opioids, suggesting that these medications could be used to treat addiction.

Although GLP-1 drugs are not approved as addictive drugs, these observed side effects could boost the economy and the workforce, Barro wrote.

“Ex-smokers work more than current smokers because they are less burdened by illness and disability,” Barro wrote. “They’re probably taking their earnings and spending more than they otherwise would have on products and services that have nothing to do with cigarettes.”

In addition to weight loss, some patients also noted reduced cravings for alcohol. Courtesy of Houlihan Lawrence

However, the drugs are expensive — up to $1,000 a month for the diabetes drug Ozempic and even more for the weight-loss drug Wegovy. Insurance coverage is still limited for people without diabetes, companies are reluctant to offer it to their employees, and people are likely to need coverage for life.

If you add up all the medical advances, it’s likely that people will live longer, healthier lives. It could also put more money in people’s pockets, such as lower health care costs, insurance premiums, grocery shopping and fewer restaurant visits, and potentially earn more over their lifetime by staying in the workforce longer.

Citrinitas Capital’s James van Geelen recently compared the obesity epidemic to the COVID crisis on Bloomberg’s Odd Lots podcast and discussed how weight loss drugs can be made more readily available.

“Why shouldn’t the state pay for this?” van Geelen said, pointing out that COVID vaccines are being provided free of charge.

While obesity does not lead to a lockdown like COVID, treating it could save lives and have huge benefits for the economy and the country.

“I would say that these are probably comparable public health crises,” van Geelen said. “If [the drug companies are] If it is effective to demonstrate that the side effects are moderate and the overall benefits are sustainable and good, why shouldn’t the government cover it? If they cover COVID vaccines, they probably should cover this too.”

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