Big Food vs. Big Pharma: Companies bet on snacking just as weight loss drugs boom

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Kellogg, J.M. Smucker and other food companies are making big bets on snacking, but the rise of Wegovy and Ozempic could pose a threat to future sales growth.

But not everyone in the industry agrees with that assessment.Boxes of Ozempic, a semaglutide injection drug used for treating type 2 diabetes and made by Novo Nordisk, is seen at a Rock Canyon Pharmacy in Provo, Utah, May 29, 2023.

For one, GLP-1 drugs like Wegovy and Ozempic are expensive, with a list price of roughly $1,000 a month. That high price has led some insurers to decide not to cover the treatments.Aetna, cover prescriptions of these drugs, the federal Medicare program, many state Medicaid programs and some commercial insurers don't, leaving patients to pick up the bills themselves.Many of the consumers who eat the most junk food likely won't be able to afford Wegovy or Ozempic.

What's more, patients have to inject themselves once a week, and if they stop taking the treatments, their effects disappear, usually erasing any weight loss that had occurred over time. "We acknowledge that the impact in the near term is likely to be limited given drug adoption will grow gradually over time, but we could see a longer-term impact as drug prevalence increases," Morgan Stanley's Paula Kaufman wrote in a note to clients."Moreover, we expect companies to adapt to changes in consumer behavior through innovation and portfolio reshaping efforts."

 

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