In October 2023 there was a popular media narrative that GLP-1 drugs, namely Ozempic and Zepbound/Mounjaro, would severely hurt the sales of McDonald’s and Walmart, with alarmist headlines such as “Ozempic, Wegovy dampening food sales, Walmart exec says“. I took the opposite side, arguing such fears were overblown, here and here.
Two years later, the verdict is out: I was right again. McDonald’s and Walmart sales appear unaffected:
Walmart stock meanwhile has surged.
In the second article about my decision to not invest in Eli Lilly (LLY), it would appear that I was wrong give how LLY stock is trading above $1000, which is a record high, but I am technically right in the sense that I incurred no opportunity cost by investing in tech stocks instead, which have done better since that article was published on October, 23, 2023. Had LLY outperformed tech stocks, then this would be a mistake on my part.
Second, LLY’s main competitor, Novo Nordisk (NVO), has done horribly due to competition from LLY, which produces the more powerful Zepbound compared to Novo’s Ozempic. Patients on Zepbound lose 5-10% more weigh compared to Ozempic. Also, LLY has a better pipeline, like Retatrutide, which is even more potent than Zepbound and is under trial. Like Zepbound, it’s reasonable to assume Retatrutide will be a blockbuster.
Due to competition from LLY, among other factors, NVO stock has done nothing since August 2021:
Had I diversified my portfolio 50/50 between NVO and LLY, I would have broken even, with the NVO losses negating the LLY gains, which is pretty terrible and unexpected given all the hype over obesity drugs over the past three or so years. I would have merely broken even after investing in the two companies that produced arguably the most hyped class of drugs in the past decade.
The word ‘Ozempic’, like ‘Google’ or ‘Netflix’, is a household name. I’m sure many have heard the infectiously annoying Ozempic jingle, which even merited a 2024 NYTs column about the cultural phenomenon. Celebrities and countless others on social media have sung the praises of Ozempic, or have mysteriously lost weight for no other plausible reason than these drugs. And in spite of this, NVO stock has been a disaster, and LLY has still lagged QQQ. This goes to show the inherent difficulty of investing and why I tend to stick to the same themes and sectors, like ‘big tech’. And even then I am really choosy. There just isn’t much margin for error in this industry.
On a related note, US obesity rates have fallen a bit, likely attributable to these drugs:
WASHINGTON, D.C. — After peaking at a record high of 39.9% in 2022, the U.S. adult obesity rate has gradually declined to 37.0% in 2025. This is a statistically meaningful decrease representing an estimated 7.6 million fewer obese adults compared with three years ago. Meanwhile, diagnoses of diabetes — a lifetime disease that can be managed but not cured — have now reached an all-time high of 13.8%. Both metrics are part of the ongoing Gallup National Health and Well-Being Index.
This undersells the good news, because the counterfactual extrapolating the underlying trend, shows that obesity rates would have climbed to 42-45% without these drugs, so the actual reduction of obesity is closer to 5-7% instead of 3%. However, it’s too soon or unfounded to say that obesity will be cured.
This is more illustrative of the sensitive nature of the math underlying the BMI, than America suddenly becoming thin. The majority of obese people are close to the cutoff for obesity, with BMIs between 30-35, so losing 10-15 lbs can make enough of a difference to fall just below the cutoff of 30 for being obese, yet such individuals would still be fat.
In 2023-2024, I predicted that the widespread use of weight-loss drugs would only lead to modest reductions of obesity and that people would, by in large, remain fat, due to variability of response and people discontinuing the drugs after a year or two of usage. A 6’0″ 300 lbs male who loses 15% from these drugs will still be obese, but not as obese. This is the reality for most users of these drugs. The posts on social media of individuals who go from ‘obese to thin’ are outliers or are women.
Disappointedly, men, for reasons unexplained, lose much less weight as a percentage of starting weight on these drugs compared to women. I see this on social media, where obese women lose the most weight, followed by obese men who comparably lose a smaller percentage of weight. This is also why the economic effect has not been that bad, because ‘obese women reducing food consumption’ does not represent that much of a loss of economic activity.
By my estimates, 2025-2026 represents maximum market penetration, after which we can expect a sizable percentage of users from 2022-2023 to discontinue and regain weight, so I don’t think obesity rates will fall much more than we’ve already seen. Rather than obesity going away entirely, the benefits will be seen along the margins for people who are at the cutoff point of obesity, and those rare hyper-responders who lose lots of weight and become long-term users.
Of course, it’s possible that the next generation of weight-loss drugs will cure obesity for most. This is why I am hesitant to take these drugs now (although I’m not obese, like many, I’m not averse to losing the last stubborn 10 lbs), because at the rate that progress is moving, it’s rational to wait until these drugs are cheap enough, are easier to use (no needles or only once-a month dosing), are more effective, and have fewer side effects (such as potential ‘muscle loss’).