Goldman Sachs (GS) estimates that weight-loss and diabetes drugs like Ozempic, Wegovy, and Mounjaro could reach 15 million patients by 2030. Of the three medications, only Novo Nordisk's (NVO) Wegovy is specifically approved for weight loss, though all three have demonstrated significant weight-loss benefits fueling their popularity. However, broader uptake is currently limited by insurance coverage restrictions and production constraints causing shortages.

Yahoo Finance's Anjalee Khemlani and Brooke DiPalma explore the surging popularity of diabetes drugs for their weight-loss side effects, discussing how these medications could impact the fast food and restaurant industries given the drugs' appetite-suppressing qualities.

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Video Transcript

JULIE HYMAN: Weight loss and diabetes drugs have captured Wall Street's imagination of late. Goldman Sachs projects these drugs could serve 15 million people by 2030. But what does the demand picture actually look like for all of the hype out there? We have been talking about this a lot, and Yahoo Finance's Anjalee Khemlani and Brooke DiPalma have been digging into it. Anjalee, let's start with you. So where do we stand right now with usage of these drugs?

ANJALEE KHEMLANI: Well, let's start off actually with just what they do, right? We know that they are weight-loss and diabetes drugs. Majority of the drugs out there of the three Novo Nordisk's Ozempic and Eli Lilly's Mounjaro are actually diabetes drugs, and only Novo Nordisk's Wegovy is actually approved for weight loss. But what does that all mean of these new formulas of GLP 1s? That's what they're called. They actually have just been really spectacular at providing record weight loss, and that's why they are so popular.

As you can see on your screen, Ozempic really taking the lead there with $3.1 billion alone for the last quarter. Meanwhile, Wegovy over a billion, and Mounjaro just getting to that billion mark, making them already blockbuster drugs. And this is just for use in about 1% of the population. Novo Nordisk's data does show that a majority of the users are still diabetes users.

So even though we're hearing so much about what the potential is for weight loss, it is still being used by largely diabetes population in large part because of the, you know, restrictions on insurance, the fact that there's production issues, so there's a shortage. So all of these are creating barriers essentially for broader uptake, and so that's sort of where things stand right now. It's not the frenzy that you're necessarily hearing but more of a slow ramp up, if you will.

JOSH LIPTON: And, Brooke, turning to you. We can see how this could mean big profits for drugmakers, but how does this also impact other companies like restaurant chains?

BROOKE DIPALMA: Yeah, Josh. Well, the drug doesn't necessarily stop you from eating entirely. It just really curves your appetite and makes you feel fuller for longer, and that can impact foot traffic at companies, or rather, chains that typically do cater to customers looking for a quick snack or beverage. 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. And what exactly people choose to eat could change as well. That would impact more fast casual chains like Olive Garden, Texas Roadhouse, or Chili's. Consumers could order less appetizers or desserts, and once again, those are consumers that are taking the drugs.

And Stifel analyst Chris O'Cull said in a note that if 25% of customers are using weight loss drugs and all of them choose not to get an appetizer, that could lower sales by roughly 1% to 2%, but 25% of customers doesn't seem too realistic in the near future, does it?

- That's right.