30 November 2023
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Glucagon-like peptide-1 (GLP-1) drugs are transforming the healthcare scene. These drugs, such as Ozempic and Wegovy (brand names for Semaglutide), are being hailed as game-changers in the treatment of diabetes and obesity. They function by mimicking the action of the body’s natural GLP-1 hormone, suppressing appetites, contributing to weight loss and better management of blood sugar levels. The results have been astounding, with trial results showing patients losing between 15% to 26% of body weight within 18 months, depending on drug and dose. We believe the significant market opportunity for weight loss drugs, with over 650 million obese adults worldwide, has made GLP-1 drugs extremely attractive and profitable; given this backdrop some analysts are predicting that the anti-obesity market may become the largest pharmaceutical market in history.
GLP-1 mechanism of action when blood sugar levels increase
The pivotal STEP 1 trial showed greater than 16% weight loss
Unsurprisingly the rise of GLP-1 drugs has had a ripple effect, extending beyond pharmaceutical companies to touch other industries such as food retail, consumer packaged goods, restaurants and medical devices. Traditional weight loss companies like Jenny Craig have felt the tremors, with some closing their weight loss centres due to the popularity of these drugs. Others have adapted and incorporated these drugs into their weight loss programmes. Retailers with pharmacies such as Walmart and Kroger initially reported increased foot traffic from GLP-1 prescriptions, but more recently Walmart reported lower average basket size and calories purchased. On the flip side, the pharmaceutical companies that focus on this area will be obvious beneficiaries; it should also be a boon for the health insurance industry as the population gets healthier over the long term. One prediction took things a step further and suggested one of the less obvious beneficiaries could be airlines given the potential for fuel savings if the average passenger was a few kilograms lighter.
The share prices of medical device companies, particularly those specialising in diabetes and obesity management, are beginning to feel the pressure. However, it is not all doom and gloom. While GLP-1 drugs are indeed impactful, they are not without their setbacks. Side effects, cost concerns and patient persistence issues can still make medical devices a more appealing option for some. This underscores the necessity of maintaining a diverse range of treatment options for optimal patient outcomes. In the diabetes market, for instance, continuous glucose monitoring (CGM) and insulin pumps are not expected to be overwhelmed by the new drugs due to concerns over patient access, complications and patient falloff. Dexcom recently pointed out that it is seeing CGM device use increase in type 2 diabetes patients who are using GLP-1 drugs. Similarly, in the weight loss segment, bariatric surgeries continue to provide more sustainable clinical outcomes compared to the drugs. Despite the promising potential of GLP-1 drugs, they are not expected to replace medical devices entirely. The future will most likely see a coexistence of GLP-1 drugs and medical devices, each playing an integral role in patient care.
GLP-1 drugs are indeed transformative, but they are not without their challenges. As they continue to disrupt the medical landscape, a balanced approach that includes both pharmaceuticals and medical devices will be crucial for sustainable patient outcomes.
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