The growing popularity of weight loss medications, such as Ozempic, is raising significant concerns for a range of companies, including those in the fast-food, tobacco and beverage sectors, according to a report from Barclays strategists.
Medications not only help people in their quest to lose weight, but they also present anecdotal evidence that they may reduce urges to use addictive substances such as alcohol and cigarettes.
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The report suggests that this trend could pose a real risk to companies such as PepsiCo, maker of Pepsi and Lay's chips, McDonald's and Altria, a cigarette maker.
Although it is still unclear to what extent these medicines will affect these companies' revenues, the possibility of reduced demand for addictive products is a consideration that investors and strategists must take into account.
Concerns regarding the impact of weight loss drugs on companies may be reflected in stock prices.
A packaged foods index, for example, is down about 14% this year, while the S&P 500 index is up about 10%.
This difference suggests that investors are taking into account the potential implications of these drugs for the food and beverage industry.
Despite concerns, some companies may benefit from the proliferation of these drugs. One example cited by strategists is CVS Health, which could benefit if more consumers were prescribed these medications.
Additionally, Aetna, its health insurance division, could benefit if people lost weight and consequently had fewer health problems.
In any case, weight loss driven by drugs, such as Ozempic, is seen as something extremely positive when it comes to people's quality of life.
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