As they do every summer, publicly traded companies posted their second quarter results as Americans exposed their beach bodies. But this year, the time was right. In several earnings calls in August, chief executives assured investors that the Ozempic revolution had not abandoned them, and that they could at least share in the blazing success of new diabetes and weight-loss drugs.
“This puts us in a great position to be the solution for drug users,” said Dan R. Chard, the chief executive of Medifast, which makes diet products like shakes and protein bars, added: “They’re looking for guidance.” He said this to analysts even as he explained that new-generation drugs contributed to falling profits, down 34.7 percent year-on-year.
“We will continue to study this,” Michael Johnson, the chief executive of nutritional supplement maker Herbalife, said. told investors. “And when we see an opportunity to capitalize on it, we do.”
In theory, that opportunity – both for profit and for losing fortunes – could be vast not only for the companies behind these drugs but also for some in completely different industries.
Known as GLP-1 drugs, the drugs are already bringing in huge profits. Novo Nordisk does the same Ozempic, which is only approved for Type 2 diabetes, and its close relative Wegovy, which is approved for weight loss. They mimic a glucagon-like peptide that regulates appetite in the brain, leaving people fuller for longer. Together they help with shipping Novo’s revenues rose 32 percent in the first half of this year, and Novo’s market value is now greater than the entire Danish economy. Eli Lilly’s sales rose 28 percent in the second quarter, thanks to another diabetes drug, Mounjaro, which may be approved by the Food and Drug Administration for weight loss this year.
And the full potential is not yet clear. The market for weight-loss drugs is huge: There are about 750 million obese people worldwide, including about 42 percent of adults in the United States, where diseases related to obesity incurs billions of dollars in health care costs each year. But Novo said GLP-1 drugs may have other uses, such as helping prevent cardiovascular disease in obese adults. There are signs that they can be treated addiction and even Alzheimer’stoo.
“The market potential is very, very significant,” Novo’s chief financial officer, Karsten Knudsen, told me when I visit the company in June. “We’re operating in kind of unusual territory.”
Diet companies are preparing for disruption. For decades, weight loss companies have relied on branded, prepackaged foods and lifestyle programs. Some, like WeightWatchers and Noom, rushed to sell GLP-1 drugs themselves, while others still hoped their products would survive the Ozempic era. Jenny Craig closed its weight loss centers in May after 40 years. And Simply Good Foods, which distributes Atkins diet products such as frozen meals and cookies, will market Atkins as “a perfect complement to people who are thinking about using drugs,” the chief executive said. of the company at the time, Joe Scalzo, told analysts in June.
The ripple effects are widening. Retailers like Walmart, Kroger and Rite Aid say GLP-1 prescriptions drive more people into stores, where they buy something else. Walmart’s chief executive, Doug McMillon, told analysts in August that its executives “expect consumables, and health and wellness, primarily due to the popularity of some GLP-1 drugs, to grow as a percentage of the total.”
Medtronic’s chief executive, Geoff Martha, said the company saw a “moderate” dip with bariatric surgery, people tend to opt for weight loss drugs instead. And some analysts believe the drugs could disrupt the American diet.
“If you eat fast food every day, you’re probably going to keep eating fast food every day,” Citrinas Capital Management’s James van Geelen said on Bloomberg’s “Odd Lots” podcast. “You’ll just eat less of it.”
However, there is room for other strategies in the fight against obesity. “These drugs are game-changers, but with an asterisk,” said David Ludwig, an obesity specialist and professor of pediatrics at Harvard Medical School. (Drugs come with a long list of side effects.) “Even if you can reduce weight in an entire population with drugs, it won’t eliminate the risks of a poor diet.”
Flush with cash, Novo agreed. “We have to look at what the next thing is,” its executive vice president for commercial strategy Camilla Sylvest told me. In June, the company launched an obesity prevention unit near Copenhagen, to research how to stop the disease before people need to take drugs to lose weight. — Vivienne Walt
IN CASE YOU MISS IT
The US labor market is starting to look like its old self. Employers added 187,000 jobs in August, the Labor Department reported Friday, and the unemployment rate rose to 3.8 percent as the economy continued to lose momentum built up after pandemic lockdowns.
Commerce Secretary Gina Raimondo visited China. He had the difficult task of promoting trade between the two superpowers while holding tightly technology export limitations imposed in the name of American national security. The two countries agreed to create new dialogues, including a working group for commercial issues.
The White House has named the first drugs slated for Medicare price negotiations. The long awaited list of 10 drugs will undergo a landmark new program meant to reduce costs for Medicare. Drugmakers have pushed the plan, including in court, and Republicans have criticized the initiative as government overreach.
UBS reports $29 billion in quarterly revenue, with an asterisk. The big gain — the biggest in banking history — comes from the bank’s acquisition of rival Credit Suisse this spring for about $3.2 billion, a steep discount that skews UBS’s results. But that belies the challenges facing UBS as it moves to complete the biggest takeover of a bank since the 2008 financial crisis.
The final female boss
When Emily Weiss stepped down last year as chief executive of Glossier, the skin care and beauty brand she founded in 2014, some called it the end of a “girlboss.” That archetype — of media-savvy female founders with venture-darling, millennial-focused start-ups — was pushed by “#Girlboss,” Nasty Girl founder Sophia Amoruso’s 2014 memoir.
Glossier, with its direct-to-consumer model and voice-y website, has changed the way women buy makeup, later passed a $1 billion valuation. But the brand stumbled as it struggled to move into brick-and-mortar retail; faced criticism from retail employees who alleged a toxic, racist work environment; and stores projects such as a makeup line that leaves from the dewy, barely there look.
DealBook spoke with Marisa Meltzer, author of the upcoming book “Glossy: Ambition, Beauty, and the Inside Story of Emily Weiss’s Glossier,” about what lessons we can take from Weiss and the # Girl boss movement.
This interview has been edited and shortened for clarity.
Can you contextualize the #Girlboss movement?
It is quite offensive and small. No one but Sophia calls themselves a girlboss. But it was also something that benefited them because it attracted interest. It’s a way for them to get press about their businesses that isn’t the usual stuff that female founders and CEOs sometimes have to do, like a fashion spread.
There was a big debate at the time about whether the press would cover scandals in companies like Voices outside, Male Repeller and Glossier different if they have men at the helm. What do you think?
I think there is a little bloodlust. These women are propped up in a way that’s quite annoying — I’m sure it annoys them too.
Some of those companies have had real problems, such as lawsuits over the firing of pregnant employees. And other companies are, like Glossier, an accusation of having a workplace, mainly for their retail employees, that is not ideal. That is different from criminal behavior.
The truth is that these companies are not the same. Women at their helm are not all the same. And they don’t make the same mistakes. And they didn’t have the same level of success either.
What will happen to Glossier now?
Looks like Glossier took the time since Emily came down to re-evaluate. They decided really late to go into retail. They launched at Sephora in February. The bigger task they are trying to do is get the company in better shape for an exit.
Who can buy them?
A company like Estée Lauder owning many boutique brands would make sense. There’s also Kering, the fashion house that owns Gucci, which is making some visible plays to get more into the beauty market.
On our radar: The story of Carlos Ghosn
In 2019, while facing criminal charges of financial wrongdoing, former Nissan executive Carlos Ghosn skipped bail and fled to Japan in an elaborate plot involving a private jet and a trunk with breathing holes. At the time, DealBook called it “a movie-level caper,” and two projects — one by the BBC and another by Netflix — quickly described it on video. But it didn’t do as well as a four-part Apple TV+ documentary series released last week.
“Wanted: The Curious Case of Carlos Ghosn” was produced by The Wall Street Journal and is based on a book by two of its reporters. Starring Ghosn, it tells the thriller-like drama of one of the most memorable business stories of this decade while exploring its nuances.
“The series implicitly poses the question of Carlos Ghosn: victim or villain?” Adrian Horton of The Guardian writing. “With blurred lines, overlapping narratives, and paper trails, it doesn’t come down to a simple answer.”
Thanks for reading! See you on Tuesday.
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