How Ozempic is changing the global economy
Sam Hawley: Every so often, a product comes along that takes us by storm and in the process, shifts spending and changes economies. The iPhone, Netflix, Chat GPT, they all spring to mind. But less obvious is something like Ozempic, a drug that’s now helping millions of people around the world lose weight. Today, the ABC’s business editor, Ian Verrender, on how it’s breaking down business models of fast-food giants and health companies. I’m Sam Hawley on Gadigal land in Sydney. This is ABC News Daily.Ian, I know you’re an economist rather than a doctor, but we’re going to discuss Ozempic in depth. And you have noted that not since the advent of Viagra has there been a bigger accident in the world of medicine.
Ian Verrender: Yeah, that’s right. It’s quite extraordinary, really. Most people wouldn’t even realise what Viagra was invented for. But yeah, it certainly had effects elsewhere, I guess, in the medical world.
Sam Hawley: Because it was actually intended to treat hypertension, wasn’t it?
Ian Verrender: Yeah, that’s right.
Sam Hawley: And then it had an unintended use.
Ian Verrender: That’s right. But Ozempic as well has had a huge unintended impact on global health, really. The company behind it is a very interesting company called Novo Nordisk, and it’s a Danish company. And the founder, a century ago, his wife had type 2 diabetes. And she was also a scientist as well. And she worked with him, worked very closely. And the pair of them worked tirelessly to try and come up with some kind of, if not a cure, something that would alleviate the symptoms. And that was the first company to basically come up with insulin as a result. So it’s been a pioneer in this field for a very long period of time. So this is the latest incarnation of their medicine for type 2 diabetes. But as it turns out, it has all these other effects on, particularly on appetite, which is impacting people’s weight. And that has made it just an incredible success story, I guess, from a sales point of view, to the point where it’s now Europe’s number one company. It’s worth something like half a trillion US dollars and accounts for almost all of Denmark’s economic growth at the moment.
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Sam Hawley: Ozempic was developed to treat type 2 diabetes, but it was discovered that actually it could help people lose weight. And that comes at a pretty important time, doesn’t it? Because obesity is a huge problem in the world right now.
Ian Verrender: It’s not the world’s worst killer. It still trails smoking and war, but it’s catching up really quickly. It’s right across the globe now and it’s becoming something of an epidemic.
Sam Hawley: OK, so that’s clearly why Ozempic is popular, because it does, I think, suppress the appetite and it helps people to lose weight and probably lose weight quite quickly. So it’s really taken off, as you said. But it’s not. I think it is important to note just now that it’s not for everyone and it doesn’t work for everyone.
Ian Verrender: No, it doesn’t. I mean, I guess these are early days in the development of this this kind of medication. But no, I think it has some gastric effects on some people.
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Ian Verrender: And if you give it up, you quickly revert back to your original weight, like a lot of diets and so forth. So it’s not, you know, look, it is a wonder drug in lots of ways, but it does have its drawbacks. There’s absolutely no doubt about that.
Sam Hawley: Millions of people, though, around the world are turning to this drug to help them lose weight. And as you said, it means huge money for the Danish company that came up with it and for Denmark itself as a whole. And not only that, it has other economic consequences, right? There’s a shift that’s going on.
Ian Verrender: Yeah, absolutely. There’s two industries that have grown up around our new lifestyle. One is the fast food industry. I guess they’ve spent many decades trying to come up with combinations and addictive combinations of fat, sugar and salt so that people eat more of their product. And that’s been a major cause of the obesity problem. But then on the other side, you’ve got a pharmaceutical industry that’s grown up trying to combat the impacts of those things with drugs to do with hypertension, with cardio problems, with all sorts of the health issues that are associated with being overweight and obese. And so both of those industries are now suddenly finding themselves under threat. It’s been a real phenomenon in the past six months, particularly on Wall Street, where you’ve had companies like Weight Watchers, for instance, it’s been forced to offer Ozempic now as part of its weight loss programs. On the fast food side, you’ve had things like Krispy Kremes, all these kind of companies that have really catered towards this shift towards highly processed foods. They’re under pressure as well. There’s just not as much consumption. And you’ve also got a lot of investors sitting back thinking, if this really does take off and it really does alter spending patterns and behavioural patterns, this is going to have a big impact on these companies. Let’s get out now. So you’ve seen a lot of companies with major share price falls as a result of this.
Sam Hawley: OK, so just I’ve got this straight. So there’s this sort of big money making machine out there, and it’s got two parts to it. One part is fast food and getting people to eat fast food and more of it. And then the other part is trying to fix the people that eat too much of the fast food and become obese or unwell because they’re not eating healthy food. So they kind of work in conjunction. And from what you’re saying, companies that put out drugs like Ozempic are getting in the way of that business model.
Ian Verrender: They are indeed, because it’s I guess it’s altering a whole range of health issues. You know, people with blood pressure, for instance, if they lose a lot of weight, they might not have the blood pressure problem anymore. And so the the pharmaceutical companies that are making the blood pressure tablets are all going to be under pressure. That’s just one example. I mean, even in Australia, we’ve got a couple of big companies here. One is CSL. It used to be a government owned body, Commonwealth Serum Laboratories. Mostly it relies upon its key business, which is creating plasma, blood plasma. But it’s expanded into things like kidney diseases, cardiovascular diseases, you know, to come up with medications to combat these problems. Now, one trial that Ozempic conducted itself was to look at kidney disease. Now, they started off with the trials. They had to give that up in the in the early stages because it was so obvious that it had a major beneficial impact. Another Australian company, ResMed, it’s actually based in America these days, but started off here. It deals with sleep apnea and creates devices to combat sleep apnea. But again, sleep apnea is one of those problems that is exacerbated by obesity. And so as a result of that, its share price is just absolutely tumbled in the last year or so. And as I said, you know, it seemed a bit perverse that you would have two industries combating one another, one, you know, firmly committed to making sure people stack on the weight and then the other side trying to fix the health problems as a result of that. And you’ve got this medication now that unexpectedly and unintentionally has ridden into the middle of it all and potentially could solve all these problems.
Sam Hawley: And even bigger than that, the insertion of something like Ozempic in the middle has the potential, as you’ve said, to impact the whole global economy. That’s amazing.
Ian Verrender: Well, you know, if you think that of the number of days that are lost because people are sick, they’ve got all sorts of health issues. If you’ve got some kind of formulation that, you know, does away with a lot of those health issues, you could potentially see a lot more people be a lot more productive. And that would have a big impact on the global economy. When this first took off, I heard about it, I guess, around about a year ago, when a friend of mine who does have type 2 diabetes and a very fit guy in his, I guess, late 40s, early 50s. And he was suddenly, I mean, he was never overweight, but he was a very tall and muscly kind of guy. And I saw he’d lost lots of weight. And I was down the beach and I said, oh, you’ve been on a diet or something? And he said, no, I’ve been diagnosed with type 2 diabetes and they’ve given me this drug and it’s just my weight’s just falling away. And I think when people saw that, who had been trying to lose weight through, you know, diets, fad diets and everything, they all rushed out for it. And there was an extreme shortage of this medication. And then I think a lot of doctors were very wary of the idea of people just jumping onto this simply to lose weight. A lot of those doctors, one doctor I spoke to just recently said he was very sceptical about all of this in the early stages, but he’s now seen that, well, firstly, it doesn’t have a lot of side effects, not nasty side effects. And if it can solve a whole lot of other health issues, he’s now gone the other way around and recommending it to people who don’t have diabetes, but possibly could end up with it if they continue with carrying the weight that they are.
Sam Hawley: Hmm. And one argument is, Ian, that if society needs less food per person and then we spend less money on health care for people, then that actually boosts productivity.
Ian Verrender: Yeah, absolutely. And it’s the days lost through work. It’s, you know, the amount of money that’s spent on health systems that in this country, for instance, our health system is largely publicly funded. So that’s tax dollars that are being spent there for things that possibly may not be necessary down the track. And I mean, you know, we’re talking about something that’s in its very early phases. So I hate to kind of talk about things like a wonder drug and so forth, but it is possible that it might alter in a very large way the way we live and, you know, the way we operate.
Sam Hawley: Wow. Okay. I mean, we don’t want to jump ahead of ourselves, of course, but Ian, tell me how long do you think it would take for Ozempic to entirely change global productivity?
Ian Verrender: Oh, look, I don’t know. I think probably quite a long time, because maybe if people who are quite sedentary and who don’t do much exercise and probably eat the wrong kind of foods, if they do lose the weight, it becomes more attractive to them. It’s easier for them to get out and about and become more physically active. Then it might alter lifestyles. But I think ultimately you do really need to think about doing that for yourself rather than just relying on a pill to do it all. But if it makes it easier for that to happen, then, you know, we might all become more motivated to be healthier as a result.
Sam Hawley: But the fast food outlets, they could be sort of panicking a little bit right now.
Ian Verrender: I think very much so, yeah, because what this does is it suppresses your desire to want that kind of food.
Sam Hawley: Ian Verrender is the ABC’s business editor. This episode was produced by Bridget Fitzgerald and Nell Whitehead. Audio production by Anna John and Sam Dunn. Our supervising producer is David Coady. I’m Sam Hawley. ABC News Daily will be back again tomorrow. To get in touch with the team, please email us on ABC News Daily at abc.net.au. Thanks for listening. We’ll see you next time.
