Corporate America evaluates the business impact of new weight loss drugs

Nov 8 (Reuters) – U.S. companies in sectors such as food and beverage makers and makers of glucose monitors are facing investor questions about future sales risk from the growing popularity of promising weight-loss treatments.

Drugs known as GLP-1s, such as Novo Nordisk’s ( NOVOb.CO ) Wegovy and Ozempic, as well as Eli Lilly’s ( LLY.N ) Mounjaro, have been shown in clinical trials to help control blood sugar and dramatically reduce weight.

The US Food and Drug Administration on Wednesday approved Eli Lilly’s Zepbound for weight loss, giving the drugmaker official market access.

Mounjaro, which uses the same active ingredient, was approved last year for diabetics, but some consumers were using it off-label for weight loss.

What companies say about the potential impact:

Retailers, FOOD AND BEVERAGE COMPANIES

Conagra ( CAG.N ) may consider changing the portion sizes of its snacks if increased use of weight-loss drugs leads to changes in food consumption patterns.

Walmart ( WMT.N ) expects revenue from health and wellness products to increase in the second half of the year, largely due to the popularity of weight-loss drugs.

PepsiCo ( PEP.O ) Chief Financial Officer Hugh Johnston said the company still “has not seen any impact” from the popularity of weight-loss drugs.

Coca-Cola ( KO.N ) CEO James Quincey said the company was monitoring the effects of any weight-loss drugs.

Hershey’s ( HSY.N ) CEO Michele Buck said the use of the drugs had not significantly affected the chocolate maker’s business.

Keurig Dr Pepper ( KDP.O ) CEO Robert Gamgort said drug use had no effect on coffee consumption.

DIALYSIS SERVICE PROVIDERS

Germany’s Fresenius Medical Care ( FMEG.DE ) said the use of Ozempic and other drugs in the same class would have an overall neutral effect on how many patients will need kidney dialysis services in the future.

Davita ( DVA.N ) is closely monitoring drug developments and expects a limited impact from the drugs’ use, as they may only benefit some patients with kidney disease.

MEDICAL DEVICE MANUFACTURERS

Johnson & Johnson’s ( JNJ.N ) third-quarter sales of devices used in abdominal surgery were driven by lower demand for weight loss and other procedures as more obese patients turned to Wegovy and Ozempic.

J&J Chief Financial Officer Joseph Walk said the drug’s use could eventually qualify patients for procedures such as hip and knee replacements or other orthopedic surgeries.

Abbott Laboratories ( ABT.N ), which makes glucose monitoring products, said the market was overestimating the impact of the drug’s growing popularity on its sales.

Abbott CEO Robert Ford said long-term diabetes patients could use glucose monitors along with weight-loss drugs. Dexcom ( DXCM.O ), which also makes such monitors, said something similar in late October.

Insulet Corp ( PODD.O ) expects the use of Ozempic and Mounjaro to delay the time it takes patients to become dependent on insulin, but does not expect its long-term market for insulin pumps to be affected.

Intuitive Surgical ( ISRG.O ), a maker of surgical robots, said the growth rate for weight-loss surgery in the U.S. is slowing as patients consider new drugs instead.

However, Intuitive doesn’t expect patients to stay on these drugs for more than a year or two.

Boston Scientific expects the effects of weight loss drugs on cardiac devices to be “very limited” in the short term and “small” in the long term.

Michael Farrell, CEO of Resmed ( RMD.N ), which makes devices to treat sleep apnea, said in an investor call in October that the company “is following thousands of patients on GLP-1 and we are seeing compliance maintained.” I see that the firmware is saved and there is really no change”.

DRUG DISTRIBUTORS

AmerisourceBergen, Cardinal Health ( CAH.N ) and Cencora ( COR.N ), formerly known as McKesson ( MCK.N ), all flagged potential earnings growth this year due to growing demand for weight-loss drugs.

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