For much of the past year, Wall Street has worried about the potential impact from GLP-1 medications like Ozempic and Wegovy that are used for weight loss. The medications have become popular. A lot of Americans are overweight. And the drugs influence eating patterns.
There was always one issue. The drugs are injected. Not everybody likes sticking themselves with needles.
But an announcement recently from the drugmaker Eli Lilly could change the trajectory: A successful Phase 3 trial of a GLP-1 medication in pill form.
In short, the trial, a key step in the development and approval of such drugs, found them to be just as effective as other GLP-1 medications to control blood sugar and promote weight loss. Users lost up to 16 pounds after 40 weeks.
That’s big, potentially, both for Americans and for restaurants.
A truly effective and safe weight-loss pill is a potentially notable development in a country with large population of people who are overweight and obese, of course. But this has implications for the industry.
As it is, use of such medications—including Ozempic, Wegovy, Zepbound and Mounjaro—has soared. Prescriptions for GLP-1 drugs soared from June through September, according to the data firm Truveta, as celebrities like Oprah Winfrey and Jim Gaffigan showed dramatic body changes after using them.
Various studies have found that users of such drugs cut spending on food once they start taking it. Households with at least one user cut their grocery spending by 6%, according to the data firm Numerator and the Cornell SC Johnson College of Business. Higher-income households cut as much as 9% from their spending.
GLP-1 users before they go on the drug tend to spend a lot at fast-food restaurants, according to the consumer firm Circana. And when they start using they cut back. Higher-income households cut their spending at restaurants at breakfast, according to Cornell and Numerator. Lower-income houesholds cut back on spending at dinner. (We also did a podcast on the topic.)
The changes level off after a year. But the impact is there.
Making the medication available in pill form could change the game further, by making it more palatable to a broader group of people. And the more people who take such medications, the bigger the potential impact. And the more restaurants will need to adapt to it, by promoting smaller portions, more protein or healthier items.
The likely impact is still on the margins, and the pill is still a way off from FDA approval and consumer use. There are numerous other issues for operators to worry about before they really start thinking of GLP-1 drugs, such as a potential recession or inflation-driving import taxes.
But the pill could mean a prospect of an even larger group of consumers cutting back further on their eating, and that’s something to watch out for.