Novo Nordisk’s Wegovy weight loss drug has seen a meteoric rise in popularity.
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LONDON — The rapid rise of weight-loss drugs like Wegovy and Mounjaro is spawning a slew of new product lines as companies hope to get on the right side of health problems.
Industries ranging from food and beverage to retail and fitness have come under the spotlight amid demands for Novo Nordisk and Eli Lilly’s miracle drugs amid concerns they could dramatically change consumer habits.
However, some companies say they are seizing new market opportunities.
Dutch bioscience company DSM Firmenich told CNBC Wednesday that it is exploring nutritional supplements to complement and offset some of the effects of weight loss drugs, with CEO Dimitri de Vreeze describing it as a natural progression for the industry.
“If you lose weight and you succeed, you go to the health, nutrition, lifestyle counter, because you really want to continue what you have. That’s where we play,” said de Vreeze to CNBC’s “Squawk Box Europe.”
Body weight injections, which rely on a group of drugs called GLP-1 (glucagon-like peptide 1) receptor agonists, which mimic the natural gut hormone that helps regulate appetite in the brain.
Studies are ongoing into some of the health applications – and potential side effects – of appetite suppressants. But de Vreeze says his company is also looking into products to boost muscle retention and protein intake.
“There are some side effects of weight loss drugs and that means it’s more difficult to build up muscle, it’s more difficult to keep the protein level up. And here we come into play. We use ingredients, develop ingredients where it’s a sort of compensation,” he said .
Novo Nordisk and Eli Lilly did not immediately respond to CNBC’s request for comment on the matter.
Consumer goods to airlines
DSM is not the only company trying to capitalize on the growing market for weight loss drugs.
Swiss food giant Nestle announced last month that it was launching a new range of frozen meals aimed at GLP-1 drug users. The Vital Pursuits range, which will initially feature 12 items including whole grain bowls and pizza, is designed as a nutritional “companion” to the drug, the company said.
CEO Mark Schneider told CNBC last week that while weight loss drugs are changing consumer behavior, “nutritional needs are not disappearing.”
GLP-1 drugs “will certainly be an interesting addition to all the other needs that the food industry will have,” Schneider said.
Danone CEO Antoine de Saint-Affrique also told CNBC in April that he sees GLP-1 as “complementary” for the French food company, adding that it will only increase demand for nutritional products.
Whether weight loss meds will leave consumers more or less likely to reach for healthy products is uncertain, however, according to Barclays analysts.
“The greater adoption of GLP-1 drugs can be considered as a substitute for food product categories that are more relevant to health and well-being,” analyst Andrew Lazar said in a research note last year.
“That said, consumers may also eat more weight management foods as they strive to eat healthier and replace these products with more satisfying snacking alternatives,” he said.
The changes could have similar implications for restaurants, food retailers and delivery companies that “proactively pivot” to meet the drug, the bank’s analysts added. It cites fast food companies including KFC’s Yum Brands and Shake Shack as potential beneficiaries if consumers see the drug as “compensating” for such indulgences.
Airlines can also benefit greatly from trimmer passengers as they get busier by reducing jet fuel costs. In a September note cited by Bloomberg, Jefferies analyst Sheila Kahyaoglu said United Airlines would save $80 million a year if the weight of the average passenger dropped by 10 pounds.
Even pharmaceutical packaging companies could benefit, Barclays said, with companies like Germany’s Gerresheimer seeing a 2-4% increase in revenue from the estimated $100 billion weight loss drug industry.
Growing weight loss drug competition
It is not yet clear whether such ancillary products can replicate the meteoric rise of weight loss drug companies like Novo Nordisk and Eli Lilly.
“We think it is too early for investors to take a definitive position outside of healthcare stocks on the impact of GLP-1 drugs, and the range of potential scenarios is too broad,” Barclays analysts wrote.
Asked whether the increase in demand for nutritional products was reflected in the company’s share price, de Vreeze admitted that it was “too early” to say.
“It’s something you have to build over time. It’s in the pipeline. But when it changes, you’ll see what’s reflected,” he said.
The new product comes as other pharmaceutical companies are nipping at the heels of Novo and Eli in a bid to claim a piece of the weight loss pie.
In China, the main market for the drug, about 15 generic versions of Ozempic and Wegovy are currently in development, according to clinical trial records cited by Reuters on Thursday.
Meanwhile, some analysts also voiced caution over the continued rise of the weight loss drug market itself.
“We shouldn’t think that a ‘miracle’ drug will be a miracle drug forever,” Guillaume Menuet, head of EMEA investment and economic strategy at Citi Wealth, told CNBC Thursday.
