Earlier this month, Wal Mart, the largest chain retailer in the United States, warned that some consumers had reduced their shopping demand after taking the GLP-1 receptor agonist weight loss drug.
The most famous weight loss drug currently is Wegovy, developed and produced by Danish pharmaceutical company Novo Nordisk. After taking it, it can lower blood sugar levels, increase satiety, and help control appetite and weight.
At that time, John Foner, CEO of Wal Mart America Branch, said, "We confirm that compared with the general population, those consumers who are taking medicine do shop a little less, the number of shopping is slightly reduced, and the calorie consumption is also slightly reduced."
In addition, an increasing number of giants with access to business data are beginning to state that the widespread use of drugs such as Wegovy has indeed begun to have an impact on the overall food consumption market, which has sparked a sell-off in stocks of companies such as Nestle, Coca Cola, and Pepsi.
The pessimistic reaction may have gone too far
However, some investors are beginning to believe that the previous pessimistic reaction in the market may have been overdone, and now it may be an opportunity to buy food stocks on dips. Richard Saldanha, portfolio manager at Aviva, said, "People subjectively infer changes in long-term consumption habits, which I feel is a bit excessive
At present, Wegovy has achieved partial success in the United States and is being promoted in some European markets in Norway, Denmark, and Germany. Kiran Aziz, responsible investment manager of Norway's largest pension fund KLP, said that Novo Nordisk's breakthrough is bound to bring significant changes, not only in food and beverages, but also in other health related stocks.
It is understood that KLP holds shares in both Novo Nordisk and multiple food companies. Aziz added that investors should pay more attention to the impact of supermarkets, as their profit margins are lower and weight loss drugs may have a greater impact on their profitability.
Last week, Nestle CEO Mark Schneider revealed that he is developing a series of adjunctive products for use with weight loss pills. He said, "When you eat less, there is definitely a need for vitamins, minerals, and other supplements. You want to support the weight loss process and limit muscle loss
Schneider also mentioned that products used in conjunction with weight loss pills can also be used to ensure that weight does not rebound. In summary, weight loss pills currently have no impact on Nestle's performance, and even if negative impacts manifest in the future, they can be offset by new opportunities.
Limited coverage of drugs
It can be expected that with the help of these measures, some investors have come to believe that the long-term harm of the "weight loss elixir" to the industry may be relatively limited. In addition, the limited supply and high prices of such drugs may also mean limited coverage.
Ernst&Young executive Arda Ural pointed out that compared to groups with higher economic status, groups with lower economic status have a higher risk of obesity, but the cost of these drugs will be a limiting factor for them.
John Plassard, an expert at Mirabaud Group, an investment firm, believes that companies with higher risks in the stock market may be those that only produce 'junk food' or chain restaurants that do not have many alternative foods.
Brian Frank, the portfolio manager of Frank Value Fund, stated that he would consider increasing his holdings in stocks hit by Wegovy. "If the market is willing to give me a discount, I would be happy to accept it
Legal& My Nguyen, a research analyst at General Investment Management America, said that the craze for weight loss drugs seems to be led by the United States, "but in other places, such as emerging countries, it is still in the process of transitioning to snacks