Weight loss and diabetes drugs – a potential $100 billion industry – have captured Wall Street’s imagination. It’s a market dominated by just three products so far – Novo Nordisk's (NVO) Ozempic, Wegovy, and Eli Lilly’s (LLY) Mounjaro. These drugs belong to a class known as GLP-1s, named after a hormone in the body they mimic which slows down digestion. Analysts say this could impact a number of industries and change long-term consumer habits. Here are the top things investors need to know.

1. Preliminary forecasts (00:00:31)

Everything from food and beverage to medical devices, insulin, and bariatric surgery – are all estimated to see slower revenues due to GLP-1 use. The drugs could eventually impact industries like snack and beverages, restaurants, tobacco, gaming, apparel, food, and retail, according to Bank of America (BAC) analysts.

2. Consumer staples (00:00:52)

While prescriptions are regulated, it hasn’t stopped people from getting access – especially if they are willing to shell out the annual $15,000 out of pocket. Combined with other headwinds, the S&P Consumer Staples Index is down 3% year-to-date, compared to the 8% gain the larger index enjoyed.

3. Food and beverage (00:01:10)

Companies like Hershey (HSY), PepsiCo (PEP), and Coca-Cola (KO) have already been diversifying their portfolios to cater to shifting consumer needs, introducing zero calorie options and smaller sizes. Restaurants sales could be hit too, though if diners opt for pricier salads over burgers, overall sales could end up getting a boost.

Yahoo Finance's Brooke DiPalma says that the impact could be felt by certain restaurant chains."Jack in the Box and Taco Bell, all owned by Yum! Brands (YUM), are often visited by snackers in the early afternoon or late night after 9 pm," says DiPalma. "Coffee giants like Starbucks (SBUX) and Dutch Bros (BROS) typically cater to visits that are not necessarily tied to consuming a meal."

4. Medical devices and pharmaceuticals (00:01:54)

The popularity of the drugs has put pressure on bariatric surgery, which has seen a slight slowdown since the start of the year. Medical devices like insulin pumps and glucose monitoring devices have not been impacted by the drugs, despite analyst predictions.

5. Current market (00:02:08)

Despite being used by a little over 1% of the U.S. population, the drugs have seen record demand this year. Analysts say sales of Lilly’s Mounjaro, which is still only approved to treat diabetes, are already on a $4 billion run rate. And the popularity of Ozempic briefly made Novo Nordisk the most valuable company in Europe last month. Currently, Mounjaro has 23% of the overall weight loss market, while Ozempic occupies a 42% share.

Yahoo Finance's Anjalee Khemlani says that the drugs have been "really spectacular at providing record weight loss." Khemlani added, "Ozempic really taking the lead there with $3.1 billion alone for the last quarter. Meanwhile, Wegovy over $1 billion, and Mounjaro just getting to that $1 billion mark, making them already blockbuster drugs."

6. What's next? (00:02:56)

So what does this all mean? Well, the reality is the long-term implications of these weight loss drugs are largely unknown. They may not permanently change consumer behavior, or they may only be hastening trends that were already underway.

Video Transcript

BROOKE DIPALMA: Weight loss and diabetes drugs, a potential $100 billion industry, have captured Wall Street's imagination.

ANJALEE KHEMLANI: It's a market dominated by just three products so far, Novo Nordisk's Ozempic, Wegovy, and Eli Lilly's Manjaro. These drugs belong to a class known as GLP 1, named after a hormone in the body they mimic which slows down digestion.

BROOKE DIPALMA: Analysts say this could impact a number of industries and change long term consumer habits. Here are the top things investors need to know.

ANJALEE KHEMLANI: Everything from food and beverage to medical devices, insulin, and bariatric surgery are all estimated to see slower revenues due to GLP 1 use. The drugs could eventually impact industries like snack and beverages, restaurants, tobacco, gaming, apparel, food, and retail, according to Bank of America analysts.

BROOKE DIPALMA: Though the prescriptions are regulated, it hasn't stopped people from getting access, especially if they're willing to shell out the annual $15,000 out of pocket. Combined with other headwinds, S&P consumer staples index is down 3% year to date compared to the 8% gain the larger index enjoyed.

ANJALEE KHEMLANI: Companies like Hershey's, Pepsico, and Coca-Cola have already been diversifying their portfolios to cater to shifting consumer needs, introducing zero-calorie options and even smaller sizes. Restaurant sales could be hit too, though if diners opt for pricier salads over burgers, overall sales could end up getting a boost.

BROOKE DIPALMA: Jack in the Box and Taco Bell, owned by Yum Brands, are often visited by snackers in the early afternoon or late night after 9:00 PM. We could see a drop in traffic then. Coffee giants like Starbucks and Dutch Bros typically cater to visits that are not necessarily tied to consuming a meal. Half of visits are not tied to consuming a meal there. So they too could feel the impact.

ANJALEE KHEMLANI: The popularity of the drugs has put pressure on bariatric surgery, which has seen a slight slowdown since the start of the year. Medical devices like insulin pumps and glucose monitoring devices have not been impacted by the drugs despite analyst predictions. But, despite being used by just a little over 1%, of the US population, the drugs have seen a record demand this year. Analysts say sales of Lilly's Manjaro, which is still only approved to treat diabetes, are already on a $4 billion run rate, and the popularity of Ozempic briefly made Novo Nordisk the most valuable company in Europe last month. Currently, Manjaro has 23% of the overall weight loss market, while Ozempic occupies a 42% share.

They actually have just been really spectacular at providing record weight loss, and that's why they're so popular. Ozempic really taking the lead there with $3.1 billion alone for the last quarter, meanwhile Wegovy over $1 billion, and Manjaro just getting to that billion mark, making them already blockbuster drugs.

BROOKE DIPALMA: So what does this all mean? Well, the reality is the long term implications of these weight loss drugs are still largely unknown. They may not permanently change consumer behavior, or they may only be hastening trends that were already underway.