Talking Heads – Fármacos contra la obesidad: implicaciones…también para los inversores

This is an audio transcript of the Talking Heads podcast episode: The weighty impact of anti-obesity drugs, also for investors

Daniel Morris: Hello and welcome to the BNP Paribas Asset Management Talking Heads Podcast. Every week, Talking Heads, we’ll bring you in-depth insights and analysis through the lens of sustainability on the topics that really matter to investors. In this episode, we’ll be discussing obesity, drugs and their impact on the food industry. I’m Daniel Morris, Chief Market Strategist. And I’m joined today by Agne Rackauskaite, Portfolio Manager. Welcome on you and thanks for joining me. 

Agne Rackauskaite: Thank you for having me.  

DM: When we think about anti-obesity drugs, a lot of us might think, is this going to be a way that I can get thin and still be able to eat as much as I want? There are probably more serious implications [such as] what does this mean for the food industry if people are eating less, and particularly when you’re a portfolio manager what is going to be the impact on profitability. So, let’s talk about the impact of the rising popularity of anti-obesity drugs like Ozempic and Wegovy and their impact on the food industry. Can you help us unpack some of these effects on food consumption patterns? 

AR: Let’s start by understanding what these anti-obesity drugs are. Essentially, they’re medications that mimic a hormone which slows how quickly your stomach empties after eating; this action helps to moderate blood sugar spikes, and importantly for today’s topic, reduces appetite which can contribute to significant weight loss over time. Drugs like Ozempic were primarily developed for managing type-2 diabetes, but their scope has broadened with drugs like Wegovy, which was specifically approved for obesity management.  

The impact of these drugs has been significant, especially given their capacity for dramatic weight reduction: around 16 to 17%. This is notable when you compare it to earlier medications and even some surgical options. These drugs aren’t actually new. They’ve been around since around 2005.  

Why are they so important all of a sudden? Well, recently they gained traction not just for their effectiveness, but also because of extensive media coverage and marketing campaigns which often have included celebrities. This expanded their appeal far beyond diabetic patients to a wider public that’s interested in weight loss solutions.  

Moving to the crux of our discussion, how these drugs impact the food industry, there’s a lot to unpack based on various data analyses and anecdotal surveys. If these drugs become widely adopted, we will see significant shifts across the food, beverages and restaurant sectors. Most projections expect a long-term volume headwind of about a low single-digit percentage by 2035. In the US, particularly where drug adoption is likely to be highest, research has shown that users tend to reduce their daily calorie intake by 20 to 30%.  

Many people have reported spending less on groceries and significantly reducing restaurant and takeaway expenses. Interestingly, households also tend to be affected, with other members often adopting similar dietary changes.  

Surveys have shown a notable decline in high-calorie foods, in particular, for example, sweets, salty snacks and sugary drinks, whereas healthier options like protein bars, shakes and nuts tend to see an increase. So packaged food companies, particularly those involved in snacks and frozen foods, are likely to see the greatest headwinds, whereas those aligned with health and weight management products are likely to benefit.  

The restaurant industry is also likely to experience some shifts. Early evidence is showing that people using anti-obesity drugs are dining out less frequently, and when they do, they choose healthier, fast casual options over traditional fast foods. So, it’s fascinating to see how healthcare innovation can have such broad implications, not just for patients, but for entire industries. As these drugs continue to gain popularity, their influence on food industry trends will be another important development for companies to monitor and adapt to.  

DM: Those are quite surprising and significant impacts. And it does seem that these anti-obesity drugs could indeed be part of a solution to obesity. But what about some of the broader impacts? 

AR: Obesity is one of the most daunting health challenges we face globally, with a significant impact on millions of people and their health. Traditionally, the approach to managing obesity has focused on promoting natural and healthy food consumption. This has meant encouraging diets rich in fruit, vegetables and whole grains while also engaging in regular physical exercise.  

But now these drugs have emerged as a significant player in the obesity management landscape and data has shown compelling shifts in behaviour among users. For example, most respondents report that they had started consuming smaller portion sizes and large cohorts also report a new appreciation for healthier food choices. And these are not just minor adjustments. Many people talk about a decrease in appetite, especially for sweets, and we see a significant drop in the consumption of fast foods, ice creams, sugary snacks, etc.  

On the healthier side, there’s been an increase in the consumption of yoghurt, fish, vegetables, essentially foods that are crucial for a balanced diet. People have also shown an increased interest in vitamins and supplements to prevent muscle loss. All of these changes underscore a holistic approach to health, emphasising not just weight loss, but overall well-being. With obesity being such a critical challenge globally, the integration of anti-obesity drugs into treatment strategies seems to promote sustainable lifestyle changes alongside significant medical benefits.  

DM: We’ve discussed the traditional ways to tackle obesity, simply trying to eat better and exercise more. We’ve gone through the significant impact of the anti-obesity drugs. Are there other alternatives out there? 

AR: One of the most promising ones is continuous glucose monitoring or CGM. CGM is a technology that allows for the constant tracking of glucose levels through a slim sensor placed just beneath the skin. The sensor sends data wirelessly to a display device providing real time feedback on blood glucose levels throughout the day. The devices have traditionally been used to manage diabetes, but are now seeing broader applications.  

The real power of CMS lies in the fact that they let users observe how different factors like food, exercise, stress and sleep affect their glucose levels. This ongoing feedback is great for understanding and managing your metabolic health, especially if you’re trying to manage or reduce your weight.  

One of the most significant benefits of using CGMs is their impact on diet. When you can see in real time how your blood sugar reacts to certain foods, you’re better equipped to make informed decisions about your diet. CGM can provide actionable data that can discourage the intake of foods known to cause weight gain like sugary drinks and refined grains because users can see the immediate impact of these foods on their glucose levels. At the same time, they can encourage the consumption of stabilising foods like lean proteins and non-starchy vegetables, which help maintain steady glucose levels and support weight loss.  

There was an interesting study which involved CGM users with type-2 diabetes which showed remarkable results. After four months, the average user saw a nine-pound weight reduction and spent 10% more time within a healthy blood glucose range. These types of findings underscore how managing blood glucose can directly impact health and weight management. It’s also worth noting that CGM can be incredibly effective when used in combination with other treatments like anti-obesity drugs. This combination can optimise both glucose control and weight loss strategies, thereby offering a comprehensive approach to managing obesity.  

DM: Agne, thank you very much for joining me. 

AR: Thank you so much.