New weight loss drugs melt away excess pounds, but could their effects spill beyond the health-care industry?

The emergence of blockbuster glucagon-like peptide-1 (GLP-1) weight loss drugs, such as Wegovy, Ozempic and Mounjaro, has wide-ranging implications for both waistlines and investment portfolios. The popularity of these drugs, which can moderate cravings, has prompted investors to consider the long-term earnings profiles of companies that thrive on selling high-calorie snacks and treat weight-related medical issues.

Even more so than investors, doctors are watching closely for signs that the hype around these drugs is justified. To get the skinny, Double Take recently welcomed Dr David Katz, founder of Yale University’s Yale-Griffin Prevention Research Center and former president of the American College of Lifestyle Medicine. Katz’s company, Diet ID, helps consumers assess and track their diets.

According to Katz, GLP-1 drugs are producing unprecedented weight loss, as well as metabolic benefits that improve insulin sensitivity and the management of type 2 diabetes. Research also suggests that an individual’s heart disease risk may be reduced while on the drug.

However, Katz remains cautious, as the narrative around GLP-1 drugs reminds him of similar frenzies around previous medications.

We were here once before with a drug called rimonabant. It was marketed as Acomplia, and all these same questions were being posed. This was maybe a decade ago now. It produced remarkable weight loss. Everybody was very excited. The sales were skyrocketing. It was approved in the European Union. It was under consideration by the FDA [US Food and Drug Administration]. But before the FDA approved it, data started to emerge that this drug, which was affecting brain chemistry and appetite pathways, was leading to an increase in affective disorders and suicides. And ultimately, it was determined—this was only after it was marketed widely in Europe—that it was doubling the rate of suicide. It was withdrawn in Europe, never approved in the United States, and that whole class of drugs called endocannabinoid receptor blockers was decommissioned. So, this (GLP-1) looks to be different. These incretin drugs look so far to do a whole lot more good than harm. But, I’m not ready to say this is the moment when pharmacotherapy solves the obesity pandemic.

Dr David Katz, founder and CEO of Diet ID

According to Katz, the evolution of existing obesity treatments, such as bariatric surgery, suggests new breakthroughs may initially target the most obese population, but over time more and more people could be deemed eligible.

So, we’re talking about a huge population, massive economic implications. And yes, the complications, the downstream effects of obesity basically reverberate through all of modern epidemiology and show up on almost everybody’s death certificate ultimately, because a majority of adults in the modern world are overweight or obese, and these conditions increase the risk of every major chronic disease that populates the list of leading causes of the premature death.

Dr David Katz

In Katz’s view, the GLP-1 drugs are “definitely not perfect” as they are only currently available in injectable form, and ingestible versions would need to prove stable in the gastrointestinal tract with manageable side effects. There are also concerns, Katz said, related to skin health after use of the drugs. Additionally, these medications have unclear effects on mood, perception, energy and cognition, he said.

Katz added that those studying the market implications of GLP-1s should not underestimate the ability of major food companies to stimulate appetite and keep consumers coming back.

We are definitely dealing with a situation of out of control eating, but I would say the fault is not with ourselves, but with our food supply. And I think that begs the question, do we really want to have a food supply that is wilfully engineered by extremely smart, highly credentialed people using the best tech on the planet to be addictive, and then use drugs to treat that addiction?

Dr David Katz

To hear more, subscribe to “Double Take” on your podcast app of choice or view The skinny on weight loss drugs episode page to listen in your browser.


Jack Encarnacao

Jack Encarnacao

Research analyst, investigative, Specialist Research team

Raphael J. Lewis

Raphael J. Lewis

Head of specialist research

This is a financial promotion. These opinions should not be construed as investment or other advice and are subject to change. This material is for information purposes only. This material is for professional investors only. Any reference to a specific security, country or sector should not be construed as a recommendation to buy or sell investments in those securities, countries or sectors. Please note that holdings and positioning are subject to change without notice. This article was written by members of the NIMNA investment team. ‘Newton’ and/or ‘Newton Investment Management’ is a corporate brand which refers to the following group of affiliated companies: Newton Investment Management Limited (NIM), Newton Investment Management North America LLC (NIMNA) and Newton Investment Management Japan Limited (NIMJ). NIMNA was established in 2021 and NIMJ was established in March 2023.

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