Ozempic maker Novo gets calls from ‘scared’ food CEOs
Makers of snack food, knee implants and other items are facing a potential threat from Novo Nordisk’s powerful appetite-suppressing treatments. So they’re calling the drugmaker for advice.
“A couple of CEOs from, say, food companies have been calling me,” Novo Chief Executive Officer Lars Fruergaard Jorgensen said during a discussion in New York. He declined to name names, saying questions had centered on how the drugs work and how fast they would roll out. “They are scared about it.”
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 such as kidney disease and knee arthritis, as well as recent Wall Street research showing a small change in consumer behavior can have major financial implications.
The new class of drugs known as GLP-1s, prescribed for diabetes as well as obesity, cause weight loss at levels previously achievable only with surgery. With a new competitor from Eli Lilly & Co., Zepbound, on the market since December, Bloomberg Intelligence estimates the weight-loss market could reach $80 billion by 2030.
That’s left various companies grappling with how a less hungry, potentially healthier customer will affect business. Some, such as Chipotle, have said fresh food will still appeal to people who are trying to lose weight.
French company Danone, which makes popular yogurt brands, also sees GLP-1 drugs boosting business.
People taking drugs such as Ozempic and Wegovy are “looking for products with high protein and low fat content,” Danone Chief Financial Officer Juergen Esser said on a call last year.
Nestle, 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.
SUPPLY STRUGGLES
Thus far, the impact of Wegovy and Ozempic has been moderated by Novo’s struggles to meet demand.
Jorgensen pointed to Novo’s $11 billion acquisition of three Catalent Inc. factories as key to boosting production.
He predicted that Novo will 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 the entry of Lilly’s Zepbound into the market will benefit Novo, too. “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.”