The emergence of a new class of weight-loss drugs has sent shockwaves through global equity markets and rattled investors in various industries. These drugs, known as GLP-1s, are expected to dominate corporate earnings calls as companies assess the impact of consumer behaviors on their products. Shares of consumer-exposed companies, such as Mondelez International Inc. and Constellation Brand Inc., have dropped nearly 9% since early August, double the losses of the S&P 500 Index. Meanwhile, companies involved in the production of insulin pumps have experienced a significant decline in their stock value, amid concerns that fewer people will require their products.
On Thursday, companies like Nestle SA, Pernod Ricard SA, and Intuitive Surgical Inc. will shed more light on the influence of Novo Nordisk A/S's Ozempic on consumer appetite and overall health. The growing prevalence of these appetite-suppressing drugs is likely to be discussed extensively during earnings calls. PepsiCo Inc. recently reassured investors that the drugs have not affected their business, as they raised their 2023 earnings forecast due to increased consumer demand for higher-priced snacks. Coca-Cola Co., Hershey Co., and Keurig Dr Pepper Inc. are among the companies scheduled to report results in the coming weeks.
However, the potential broader adoption of these weight-loss drugs, which can reduce food and beverage volumes by 1% to 2%, has industry analysts concerned about the impact on snack wrapper producers and restaurants. Citigroup analyst Anthony Pettinari warned that snack wrapper makers could see a decline in volume growth, potentially affecting companies like Ardagh Metal Packaging SA and Crown Holdings Inc. Similarly, restaurant investors are expressing fears, though BTIG analyst Peter Saleh believes the negative implications for food operators' earnings might be limited.
Healthcare companies will also need to address investor concerns regarding the potential influence of Ozempic on their profit expectations. Abbott Laboratories provided some relief by reporting positive quarterly results for its medical devices, indicating growth in areas such as heart disease and diabetes. This alleviated concerns that GLP-1s could negatively impact their business.
The market for GLP-1s is projected to reach $100 billion by 2030, making them a captivating topic for investors and analysts across all sectors. However, this week, some eager equity investors were left disappointed when a Chinese company apologized for misleading investors by exaggerating its ties to these weight-loss treatments.
The long-term effects of these drugs on various industries are yet to be fully understood. As more companies report their earnings in the upcoming weeks, their commentary will provide valuable insights into the extent to which consumer behaviors are being altered by the availability of Ozempic and other similar drugs.