Alan Kohler: Ozempic is making meals and anti-snoring firms shed extra pounds too

CSL shares fell 6.3 per cent at some point final week and earlier than that ResMed was down much more – 36 per cent in August and September.

The explanation? Ozempic, the weight-loss drug, for each.

Final yr, CSL purchased a Swiss firm known as Vifor for $18.2 billion, and one of many issues it does is deal with kidney illness. Final Tuesday, the developer of Ozempic, Novo Nordisk, known as off a trial learning Ozempic as a therapy for kidney failure in diabetes sufferers as a result of it was clear that it will succeed. Subsequent day, CSL misplaced $7.7 billion in market worth.

ResMed’s downside is a bit more apparent: Obese individuals undergo extra from sleep apnoea than skinny individuals, so the extra Ozempic is offered, the less masks the corporate is prone to promote. ResMed has misplaced greater than $6 billion in market worth for the reason that begin of August.

These two Australian companies aren’t the one ones getting frightened in regards to the semaglutide drug branded Ozempic.

(Semaglutide was developed in 2012 by a group of researchers at Novo Nordisk, the Danish pharmaceutical firm. It’s a peptide just like GLP-1, which stands for glucagon-like peptide-1, an amino acid hormone that will increase the manufacturing of insulin and in addition lowers urge for food and slows digestion within the abdomen. Novo Nordisk sells it underneath the manufacturers Ozempic, Rybelsus and Wegovy.)

This month, Walmart’s US CEO John Furner advised Bloomberg that it had mined knowledge from its personal pharmacies and grocery strains and located that individuals who take Ozempic purchase much less meals (which is the entire thought, in fact, so no shock there, however however it was information on the time).

Influence on the grocery store

“We positively do see a slight change in comparison with the overall inhabitants. We do see a slight pullback,” Furner stated. “Simply fewer items, barely fewer energy.”

CEO of snack meals maker Kellanova, Steve Cahillane, stated: “We’re on no account complacent. Like every thing that doubtlessly impacts our enterprise, we’ll have a look at it, research it and, if essential, mitigate.”

And this from the Wall Road Journal: “Executives at meals producers from Campbell Soup to Conagra Manufacturers stated they’re fielding questions from traders in regards to the medication’ potential impression, as inside groups begin to assess client behaviour and brainstorm methods to reply.”

And it’s not simply meals. A narrative in Axios this week reported {that a} current research with mice as topics discovered that GLP-1 medication (like Ozempic) scale back nicotine consumption and reward.

“If sufficient individuals get on Wegovy, Ozempic and different such medication, it may cripple gross sales for giant alcohol manufacturers like Anheuser-Busch and Miller, in addition to main tobacco producers like Altria and Philip Morris.”

We will solely hope.

However you do surprise at what level the massive shareholders of the meals, alcohol and tobacco firms, who additionally are usually the massive shareholders of drug firms, begin telling the drug firms to ease off with the medication that make individuals purchase much less meals, alcohol and tobacco.

Then once more, perhaps they’ll be making a lot cash from Ozempic that they received’t care in regards to the losses on ResMed, CSL, Walmart and Anheuser-Busch.

The enterprise of consumption

The most important shareholders of Novo Nordisk embrace BlackRock, Constancy, Capital Analysis and Vanguard, a lot the identical as all the opposite massive US firms. The Danish pharmaceutical firm’s shares have gone up 400 per cent in 5 years and the corporate is now value 2.46 trillion krone, or $514 billion, about the identical as Australia’s massive 4 banks plus CSL, mixed.

Other than that, a drug that reduces consumption is an enormous deal for enterprise typically, and for the economic system, and for that matter, society as a complete.

Meals firms spend billions on promoting to get us to eat extra, and also you solely have to go searching to see that it really works. Weight problems is among the western world’s important well being issues.

Extra broadly, consumption is the muse of the economic system; economists consistently measure it, applauding when it goes up, worrying when it goes down.

An Ozempic injection as soon as every week reduces calorie consumption by about 20 per cent and the prediction is that 24 million People might be taking it by 2035. Presumably these persons are presently accountable for lots of American consumption.

Then again, if persons are more healthy and dwell longer as a result of they’re slimmer, and there are fewer individuals affected by sort 2 diabetes, then presumably they are going to eat extra.

Extreme shortages

The one factor standing in the best way of all this seems to be Novo Nordisk’s potential to make sufficient of the stuff.

There are dire shortages all over the place, together with Australia.

The Therapeutic Items Administration introduced a month in the past that Novo Nordisk had suggested it “and the Ozempic Drugs Scarcity Motion Group that offer all through the remainder of 2023 and 2024 might be restricted”.

“Novo Nordisk suggested that demand had accelerated in current months, significantly for the low-dose (0.25/0.5 mg) model. This extra demand is induced primarily by a speedy enhance in prescribing for ‘off-label’ use (prescriptions to deal with circumstances apart from these authorized by the TGA).”

By the best way, the “Ozempic Drugs Scarcity Motion Group” is a process drive led by the TGA and together with representatives of Novo Nordisk, pharmaceutical wholesalers and affected person teams representing these affected by diabetes and weight problems.

Final week the Pharmacy Guild stated the shortages would final for the remainder of this yr and nicely into subsequent yr, and added: “Ozempic is a drug which is supposed to deal with adults with sort 2 diabetes, however as a result of it’s recognized to assist sufferers shed extra pounds its recognition has been promoted by social media influencers”.

That’s proper: In contrast to the quick meals containing the energy, the anti-calorie drug doesn’t should be marketed as a result of the targets of the promoting are desperately looking for a strategy to escape its affect.

After all, one other approach might need been to chop again the quick meals and sugar promoting, however which may end in somebody making much less cash.

Can’t have that. Much better to discover a approach to make sure that companies and their house owners earn more money, not much less.

Alan Kohler writes twice every week for The New Each day. He’s finance presenter on ABC Information and founding father of Eureka Report