Written by Mary V Carnell
A new class of drug is making a splash in the American market: GLP-1 drugs, like Ozempic, Wegovy, and Mounjaro are having profound effects nationwide. These drugs mimic appetite-regulating hormones to help their users lose weight. Insurance does not often cover these pharmaceuticals, as they can cost anywhere from hundreds up to thousands of dollars. Despite these steep prices, these drugs remain in high demand. Prescription volumes for these drugs increased 300% from 2020 to 2023, and the Wall Street Journal recently reported a booming international “gray market” spurred by unregulated bootleg versions of these drugs (Winkler, 2023). Amy Schumer, Elon Musk, and other influential celebrities have spoken about their experiences which has only furthered the popularity of GLP-1 drugs (Hosie, 2023). These drugs have become ubiquitous; 47% of Americans say they know someone who has taken them. Even aside from weight loss, GLP-1 drugs have recently caused unexpected effects in the stock market and American philanthropy.
As demand for these appetite-suppressants has risen, restaurant stocks have dropped significantly. The S&P 500 Restaurant Sub Industry Index has dropped 12% in the last three months, and the CEO of Walmart has warned that they were seeing signs of consumers using appetite suppressant drugs to reduce some of their food spending. Also on Wall Street, short positions on restaurants like Chipotle, Starbucks, and McDonald’s have seen large increases; with the short interest in restaurants altogether swelling to 12.2 billion dollars. Taking a short position means that investors sell shares of stocks that they do not own in the hopes to buy them back at a lower price to make a profit. A swelling short position means that investors are anticipating that the value of the stock will decrease in the near future. Of course, this can also be attributed to high interest rates forcing consumers to cut back on spending, as well as the pandemic’s continuing effects on the restaurant industry. However, there is a general consensus that in one way or another, Ozempic and its sister drugs are having more than their fair share of buzz on Wall Street. The managing director of the analytics firm S3 Partners weighed in, adding that “business for the restaurant industry could be hurt if more consumers resorted to GLP-1 medications such as type 2 diabetes drug Ozempic and weight-loss-targeted Wegovy, both of which curb appetite for food intake.” (Prakash, 2023) While food and restaurant stocks seem to be losing here, one might expect drugstores and other pharmaceutical distributors to have been better off because of these new drugs. However, it seems that their impact is unclear – Walgreens has performed poorly this year despite the drug distribution. Many other impacts of these drugs also remain to be seen.
The area where these drugs have made the most clear impact is, perhaps surprisingly, in philanthropy. Charity may not be the first thing to come to mind when thinking of big pharmaceutical companies like Eli Lilly and their weight loss drugs, but its impact is undeniable. Skyrocketing sales of drugs like Ozempic have boosted their producing companies to unbelievable profits. Eli Lilly is now the pharmaceutical company with the largest stock-market capitalization in the world: over $500 billion dollars. Their largest shareholder is the Lilly Endowment: a nonprofit organization that funds grants in the areas of education, religion, and community/youth development. As an 11% stakeholder in Eli Lilly, the Lilly Foundation has recently watched its coiffers explode in size. The endowment has quadrupled in size since 2018 and holds $40 billion in assets (Loftus, 2023). This makes them among the biggest philanthropies in the world, and the second largest in America.
Lilly is reshaping charitable giving right now. With the money they’ve gained from the explosion of GLP-1 profits, they’ve increased their charitable giving two-fold since 2018 and donated 1.28 billion dollars in 2022 alone. They’ve added 150 new grants, and increased their spending on all of their previous grants. They now supply 645 organizations with money to fulfill their projects. Some of their recent beneficiaries include the Indianapolis Motor Speedway Museum ($20 million), the American Indian College Fund ($38.8 million) and the Indianapolis Department of Parks and Recreation, which received $80 million for new playgrounds and parks (Loftus, 2023). The Lilly Foundation isn’t the only one hopping on this trend. The Novo Nordisk Foundation is another philanthropic organization that has been able to take on more projects with their newly large pockets. They recently gave $130 million to build a Danish cell-therapy plant, and $200 million for Denmark’s first quantum computer to be used for drug development and climate research (Loftus, 2023).
There are dark sides to these large pharmaceutical companies, of course. Their predatory pricing practices, special interests, and conflicting interests between safety and profits are not to be ignored. Similarly, the long-term effects of these weight loss drugs require further research, and it may be a long time before anyone gets definitive answers on their relative safety or benefits. It remains true, though, that one of the many ways these companies and their revolutionary drugs are changing up the American landscape is through philanthropic development. GLP-1 drugs have shown effects far beyond weight reduction, and are changing the American market landscape from Wall Street to Indianapolis and beyond.
Works Cited
Winkler, R. (2023, October 21). This Drug Could Be the Next Ozempic. Bootlegs Are Already Selling Online. The Wall Street Journal. https://www.wsj.com/health/pharma/the-next-hot-obesity-drug-wont-be-approved-for-years-online-sellers-hawk-it-anyway-e04d7cc3
Prakash, P. (2023, October 10). Wall Street is now betting against restaurant stocks because of Novo Nordisk’s Ozempic and high interest rates. https://finance.yahoo.com/news/wall-street-now-betting-against-114221577.html
Loftus, P. (2023, October 17). New Playground, New Court, New Classroom? Thank Ozempic. https://www.wsj.com/health/pharma/those-new-pickleball-courts-thank-ozempic-581899f3
Hosie, R. and Middleton, A. (2023, June 20). Celebrities who have used buzzy weight loss drug Ozempic — and who’s denied it. Insider. https://www.insider.com/ozempic-celebrities-denied-semaglutide-wegovy-weight-loss-drugs-khloe-kardashian-2023-3
Weight loss and bariatric surgery by <a href=”http://www.nyphotographic.com/”>Nick Youngson</a> <a rel=”license” href=”https://creativecommons.org/licenses/by-sa/3.0/”>CC BY-SA 3.0</a> <a href=”http://pix4free.org/”>Pix4free</a>