The impact of new weight loss treatments is being felt well beyond the health-care industry . Analysts used the ritual of quarterly earnings calls to probe companies on whether their businesses were being helped — or hampered — by the latest trend. Drugs that mimic gut hormones such as glucagon-like peptide-1, or GLP-1, were first used to treat diabetes, but have gained favor as obesity treatments. These drugs have helped people shed more pounds than previous therapies, creating excitement that has pushed up the shares of Novo Nordisk , the maker of Ozempic and Wegovy, and Eli Lilly , which makes Mounjaro. Threat or opportunity? “We actually don’t see this as a threat, but we see it as an opportunity,” said Joe Scalzo, CEO of The Simply Good Foods Co. , during a call with analysts in late June. Simply Good owns low-carb food brand Atkins, as well as Quest, which focuses on healthier versions of snacks such as cookies and chips. Scalzo said the company has positioned itself as a “lifestyle” brand, and Atkins pitches its products to promote health by either maintaining weight or losing smaller amounts. In the company’s fiscal third quarter, sales rose 2.6% to $324.8 million from a year ago. Regeneron co-founder George Yancopoulos echoed Simply Good’s opportunity mindset, saying the biotechnology company’s muscle preservation and growth offerings could be used to mitigate potential side effects from the drugs related to muscle loss. “We are very actively pursuing everything that we can imagine,” he said. Walmart ‘s management brought up GLP-1 medications for the second straight quarter. During the fiscal first quarter, the company called out a shift in consumer behavior toward healthier foods as they sought to overhaul their habits, and said the lower-margin fruits, vegetables and fresh meat pressured its profits. During the second quarter, which beat expectations , shoppers were still focused on health and wellness, CEO Doug McMillon said Thursday. But the company was also excited about the expected increase in general merchandise sales in the second half of the year and raised its full-year estimates. WMT KR YTD mountain Walmart and Kroger in 2023 Kroger management said growing demand for weight loss drugs boosted its prescription sales but not necessarily its profits given the treatments’ relatively low margins. The grocery store chain parted ways with Express Scripts at the start of the year, and sales would have fallen further without the impact of the pricey GLP-1 drugs, which can cost more than $1,300 per month. Cardinal Health also said the medications provided a tailwind to its revenue for another quarter. The company raised its fiscal 2024 pharmaceutical sales outlook, citing help from the drugs. Employers watch health-care costs More than 40% of the U.S. adult population is considered obese, and some worry health-care costs will rise rapidly as the drugs become widely used. Some companies already bar weight loss medications from their insurance plans to keep costs down. A new analysis released this week found these drugs cost significantly more in the U.S. than in other countries. One company feeling the pressure is professional services firm Insperity . Its management pointed to higher-than-expected pharmacy costs as a headwind in the quarter. Executives said it was tied to an increase in specialty drug use for weight loss and diabetes. Still, management questioned if it will become a long-term issue, with CEO Paul Sarvadi likening the drugs to a “fad.” He said the medicine is being used in ways it wasn’t originally designed for and that its use could wane due to “some long-term effects that are not positive for people.” Eli Lilly’s Mounjaro hasn’t yet been approved for weight loss, though some people are taking it off label for that reason. The Food and Drug Administration is expected to approve it later this year. Also, some people are taking these drugs to lose small amounts of weight, which is different from patients being treated for obesity. That said, biotech and pharmaceutical industry analysts expect more insurance companies to provide coverage of the drugs in the wake of last week’s study that showed promising heart health data for those on Wegovy. The companies are trying to make the case that patients losing weight will become healthier, which will lead to lower costs over time. Novo Nordisk and Eli Lilly have been racing to ramp up production capacity amid surging demand. Product packager AptarGroup , which provides components used for three of the drugs on the market, reported sales within its injections division were flat in its fiscal second quarter year over year but 50% higher than the prior quarter . CEO Stephan Tata said companies are starting to secure future capacity from Aptar. ATR YTD mountain Aptar shares are up 10% since the start of the year. Still, Tata hedged on tying future performance to a singular business opportunity. While calling it “exciting growth,” he noted that the injection products accounted for only a small portion of total revenue last year. “In our business, there’s no single project that is a big needle mover,” Tata said on the call late last month. “It is a numbers game, but the numbers game looks good.”
Sumber: www.cnbc.com