Ozempic: the big disruptor

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There’s no doubt that Ozempic (and drugs like it) are an enormous step forward in the treatment of diabetes. But as it turns out, Ozempic is disrupting a number of other businesses, and in a big way.

Insulin is Big Business

10% of the entire worldwide population has diabetes. It’s officially recognised as the world’s fastest growing chronic illness. Diabetes is also a killer, causing 6.7 million deaths a year (that’s one every five seconds).

Both types of diabetes are treated with insulin, a hormone that breaks down glucose (sugar) from food so it can be stored as energy . Without it glucose can’t be stored in muscle cells and instead it stays in the blood. Because we’re constantly absorbing glucose from the foods and drinks we consume blood sugar levels rise without insulin. This can result in diabetic ketoacidosis - where the body begins breaking down fat because no sugar is available in the muscles, which the liver then processes into a fuel called ketones, which are released into the blood, making it acidic and therefore toxic – hence ketoacidosis.

That’s how insulin saves lives. And with 10% of the world’s population needing it (and growing) the insulin market is BIG – USD 36 billion in 2023 and projected to pass USD 41 billion by 2033.

And then, along comes Ozempic.

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Everybody has heard of Ozempic

Ozempic is new, in pharmaceutical terms: it’s turning 8 this year. Here’s the TLDR of the science stuff , because this article is really about the business side:

• Ozempic is a brand name for the drug semaglutide.
• Semaglutide belongs to a class of medications known as GLP-1 receptor agonists, which mimic the action of the glucagon-like peptide-1 hormone in the body, helping to lower blood sugar levels and promote weight loss.
• The drug was originally approved for medical use in the United States by the Food and Drug Administration (FDA) in 2017 for the treatment of type 2 diabetes.
• Its approval was based on its effectiveness in improving glycemic control in adults with type 2 diabetes when used alongside diet and exercise.

Despite its life-changing impact on diabetics, It’s the promote weight loss that Ozempic became famous for – at the animal trial stage the subject rats would simply stop eating if they had a large enough dose. If they had too much, they would starve themselves to death …

Which is extremely relevant because 90-95% of all diabetics have Type 2 diabetes, which can sometimes be stopped or slowed by dietary changes and physical activity.

The really big problem for Type 2 diabetics though is that it has a kind of mutual cause and effect loop with body fat. Diabetes causes the body to accumulate extra fat, and too much extra fat increases the risk of diabetes.

It just doesn’t seem fair, does it?

So when Ozempic arrived with its proven ability to lower blood sugar levels by generally raising the body’s own ability to secrete insulin, it was basically a wonder drug. One injection a day for stable blood sugar beats multiple blood sugar measurements & carefully checking the contents of your food at every meal.

Ozempic: Increase insulin production AND lose weight.

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Novo Nordisk: now Europe’s most valuable company

In late 2023 the Danish producer of Ozempic, Novo Nordisk, overtook LVMH as Europe’s largest company by market capitalisation. It’s still number 1 as of today :

Novo Nordisk received an additional boost from August 2023 when it’s drug Wegovy (a weight loss drug related to Ozempic) was shown to reduce the risk of heart attack by 20%.

This is not likely to be the company’s peak either: it’s expected to dominate the anti-obesity medication market with 80% share by 2030, when the market is expected to be worth approximately USD 100 billion .

And then there’s the Oprah Effect : in December 2023 Oprah announced she was taking weight-loss medications, and quit the Weight Watchers board to avoid any potential conflict of interest. In the same month Weight Watchers announced their own membership program including semaglutide medications.

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It’s fair to say that Weight Watchers moving away from its traditional programs of eating less and more healthy by taking on drugs is a massive shift.

And yet it’s not the only business having to pivot to ensure its continued relevance, or struggling to determine the impact of weight loss drugs on their overall business

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Who’s seen a Weight Loss drug wave wash over them? (good and bad)

• Krispy Kreme suffered a large share price drop in late 2023
• Producers of snacks and beer like Nestle and Mondelez have likewise taken some hits (minor at this stage)
• Walmart announced that food sales volumes are down and attributed this to weight loss drugs
• Airlines will save a lot of money on fuel – estimates are that United Airlines will save over 100 million litres of fuel annually if passengers lose on average 4.5kg each
• Clothing brands could look forward to a bonanza as wardrobes need updating for slimmer figures
• Portion sizes in restaurants, ready to eat meals, takeaways, and supermarkets will be reviewed, due to smaller appetites

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Disruption

Sometimes we don’t realise a new product, service, or business is a disruptor until after it happens. Other times it becomes apparent immediately that change is happening very quickly and businesses need to respond quickly or be steamrolled.

The food/drink and weight loss industries have been feeding off each other for a very long time. Their intertwined business models haven’t been successfully challenged because new products/services/companies tend to get absorbed quickly (remember real craft beer?).

Ozempic is the most recognised of a number of weight loss drugs that have now started to break that down. I wonder where this will take us next.

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?? Hi, I'm the founder of?Ascern Advisers . We do Strategic & CFO advisory for businesses with Growth Potential. DM me or email me at?[email protected] ?if you want to chat.