Money Talks: Why weight-loss drugs will reshape the world
Apr 18, 2024
auto_awesome
Georgia Banjo, a health writer for The Economist, and Michael Nedelcovych, a pharmaceuticals analyst at TD Cowen, dive into the booming market of weight-loss drugs. They discuss how these medications not only promise to revolutionize health outcomes for over a billion people suffering from obesity but also have immense economic implications. With companies like Novo Nordisk and Eli Lilly leading the charge, they explore market trends, pricing challenges, and the potential reshaping of societal views on health and body image. A fascinating look at the intersection of health and economics!
Weight loss drugs like zempic and wegovi produced by Novo Nordisk are reshaping the global economy by driving Denmark's economic growth and potentially influencing currency values and interest rates.
The market for weight loss drugs, projected to reach $40 billion globally by 2030, is dominated by Novo Nordisk and Eli Lilly, pointing towards potential expansions in availability and a shift in societal perceptions of body image.
Deep dives
The Impact of Weight Loss Drugs on Denmark's Economy
Denmark's economy heavily relies on the success of pharmaceutical giant Novo Nordisk, which produces weight loss drugs like zempic and wegovi. The economic growth of Denmark has been significantly driven by Novo Nordisk's success, with the country potentially avoiding recession due to the company's contributions. The weight loss injections, predominantly bought by Americans for over $1,000 per month, have substantial economic implications globally, influencing currency values and interest rates. Novo Nordisk's market dominance and the high demand for weight loss drugs signal potential long-term economic changes at a global scale.
Market Dynamics and Future of Weight Loss Drugs
The market for weight loss drugs, including GLP1s, is projected to reach around $40 billion globally, with significant growth expected by 2030. Novo Nordisk and Eli Lilly currently dominate the market for these drugs, with limited competition due to barriers to entry in the healthcare sector. Pricing and production capacity challenges persist, causing shortages and high costs, impacting access for consumers. However, investments in manufacturing and increasing supply suggest a gradual expansion in availability over the coming years.
Economic Impact and Accessibility of Weight Loss Medications
The direct medical care costs associated with obesity amount to around $300 billion annually in the US, highlighting the economic burden of the condition. The availability and affordability of weight loss drugs like azempic and wegovi remain critical factors in addressing obesity-related health costs. Insurance coverage for these medications is limited, posing challenges for broader accessibility. As prices decrease over time and competition rises, wider access to effective weight loss treatments could positively impact public health and healthcare costs.
Societal Shifts and Beauty Standards in a World with Widely Available Weight Loss Drugs
The widespread availability of affordable weight loss drugs may prompt societal shifts in beauty standards and perceptions of body image. As weight loss becomes more accessible, the traditional association of thinness with wealth and status could evolve, leading to new metrics of societal value and individual preferences. The impact of easily attainable weight loss on employment, discrimination, and social norms remains an intriguing prospect. In a future where weight management is simplified, how individuals perceive and project their physical appearance may undergo significant transformations.
More than 1bn people around the world are obese. That means there should be extraordinary demand for drugs to cure or mitigate the condition. Novo Nordisk is now Europe’s most valuable company and Eli Lilly’s market value has more than doubled. Both make the “miracle” drugs that can help people shed up to a fifth of their body weight. But these drugs promise to do more than boost drug companies’ profits. How will they reshape the economy?
Hosts: Alice Fulwood, Mike Bird and Tom Lee-Devlin. Guests: The Economist’s Georgia Banjo; pharmaceuticals analyst Michael Nedelcovych; and John Cawley, a professor of public policy and economics at Cornell University.
Subscribers to Economist Podcasts+ can listen to our January 2023 episode on the economics of thinness.
Sign up for our new weekly newsletter dissecting the big themes in markets, business and the economy at www.economist.com/moneytalks