The global demand for weight loss drugs fuelled a sustained spike in the stocks of companies such as Novo Nordisk (NVO) and Eli Lily (LLY) while at the same time decreasing investment interest in medical devices and food and beverage shares. According to Yahoo Finance, this sector will continue its growth in 2024 but without detracting value from the other markets.
Impact of weight loss drugs on medical devices and food and beverage stocks waning
Sales of Novo Nordisk’s (NVO) diabetic drug, Ozempic, escalated by more than $1bn between its $2.3bn in Q3 2022 and $3.5bn in Q3 2023. Yahoo Finance noticed the absence of any discussions around GLP-1s at two conferences. A JPMorgan analyst, who attended a healthcare conference in January 2024, viewed this as good news for the medical devices sector and wrote in a note:
Thankfully, what we didn’t hear was mention of GLP-1s – that bubble of fear and panic seems to have burst for the most part.
Pharmaceutical GLP-1 agonists treat type 2 diabetes by mimicking the GLP-1 hormone. These include Ozempic, Wegovy, Zepbound, and Mounjaro. Although these drugs have existed for almost 20 years, recent variations have recorded significant weight loss successes.
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An in-depth Bank of America report published in October 2023 sparked a sell-off frenzy as it predicted sales drops for sectors such as the food industry due to decreased cravings. Despite these doom prophecies, restaurant franchises such as McDonald’s (MCD), Restaurant Brand International (QSR), and Wendy’s (WEN) have since improved their financial performance.
Markets feared weight loss and insulin control would reduce the need for bariatric procedures and monitoring gadgets such as blood glucose testers. The opposite, however, happened, as people became keener to track their health journeys.
