Drug bites at food market
‘SCARED’: CEOS FEEL THE EFFECT OF OZEMPIC Potential threat of the appetite suppressant sees some seeking advice.
Makers of everything from snacks to knee implants are facing a potential threat from Novo Nordisk’s powerful appetite-suppressing treatments. So they’re calling the drug maker for advice.
“A couple of CEOs from food companies have been calling me,” said Novo CEO Lars Fruergaard Jorgensen.
He did not name names, saying that questions had centred on how the drugs worked and how fast they would roll out. “They are scared about it,” he added. The impact of the drugs, including Ozempic and Wegovy, could vary across industries, Jorgensen said.
He pointed to the success of clinical trials of Wegovy on weight-linked ailments like kidney disease and knee arthritis and recent Wall Street research showing how a small change in consumer behaviour can have major financial implications.
The new class of drugs known as GLP-1s, prescribed for diabetes and obesity, causes weight loss at levels previously achievable only with surgery.
With a new competitor from Eli Lilly & Co, Zepbound, on the market since December, it is estimated that the weightloss market could reach $80 billion (about R1.5 trillion) by 2030.
That’s left companies from Walmart to Chipotle Mexican Grill grappling with how a less-hungry, potentially healthier customer will affect business. Chipotle says that fresh food will still appeal to people who are trying to lose weight.
French company Danone, which makes popular yoghurt brands, also sees GLP-1 drugs boosting business. People taking drugs like Ozempic and Wegovy are “looking for products with high protein and low-fat content,” Danone’s chief financial officer Juergen Esser said last year.
Unilever CEO Hein Schumacher said: “I say you can never close your eyes on any development that is happening.” He added that he had not called Jorgensen.
Nestlé, the Swiss maker of Kit Kat chocolate, said in October it was working on products designed to complement the new class of weight-loss drugs and help limit the loss of lean muscle mass.
Others are watching and waiting. Conagra Brands CEO Sean Connolly said that the snackmaker had “an entire department of demand scientists” studying changes in consumer behaviour every day.
“There’s still so many unknowns regarding the rate of adoption and the impact on food choices,” he added.
Hershey’s CEO Michele Buck said last year: “We’re doing more work constantly to understand those future potential impacts on our categories.”
So far, the impact of Wegovy and Ozempic has been moderated by Novo’s struggle to meet demand.
Jorgensen pointed to Novo’s $11 billion acquisition of three Catalent factories as key to boosting production.
He said Novo would put its quality control processes in place at the factories. Catalent has faced production issues with some of its orders, including Moderna’s Covid vaccine and a widely used eye drug from Regeneron Pharmaceuticals. Getting a site up to speed can slow productivity in the short term, Jorgensen said.
In the long term, Novo will be able to use Catalent’s capacity more efficiently and boost supply, he added. He predicted that Novo would be able to make obesity drugs available not just “for the rich, but actually for the many”.
“Demand is much bigger than what we can supply today,” he said.
He predicted that Lilly’s entry into the market would also benefit Novo.
“If there’s one more company going out and convincing employers to opt in for obesity coverage, that’s actually a bigger benefit than a competitive threat,” he said.
Lesshungry consumer will affect business