According to Capital Economists, weight loss drugs could be a real game changer for the global economy. CR/Getty Images
According to Capital Economics, weight loss drugs could transform the global economy.
Countries with high obesity rates, such as the United States and Mexico, could benefit the most, strategists said.
Ultimately, artificial intelligence could boost the healthcare sector. Weight loss medications could be just the beginning.
This is a machine translation of an article from our US colleagues at Business Insider. It was automatically translated and checked by a real editor.
In recent months, GLP-1 drugs such as Ozempic and Wegovy have gained popularity as miracle weight loss drugs. The trend was noticeable everywhere from the stock market to pop culture. Goldman Sachs predicted the drugs could become a $100 billion global market. In addition, higher consumption of the drug in America could help the economy grow further.
If the drugs become widely accepted worldwide, it could result in a collective weight loss of millions of pounds. That, in turn, could ultimately trigger a global economic boom, according to Capital Economics.
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The growth prospects for these weight-loss drugs offer the potential to boost gross domestic product (GDP) around the world through improved labor market activity, a healthier population and ultimately more robust healthcare, strategists said.
GLP-1 drugs, which target specific hormones to reduce appetite and food intake, have so far primarily improved companies’ pharmaceutical sector. For example, shares in Zepbound distributor Eli Lilly have risen by 29 percent since the beginning of the year. Shares of Novo Nordisk, the maker of Ozempic and Wegovy, rose more than 31 percent in the same period. They achieved a market capitalization larger than that of Denmark.
The billion-dollar fluctuations in market capitalization occurred even though the proportion of the world‘s population actually taking the drugs is tiny. This means that the economic impact so far has been relatively small.
In the USA, it is estimated that only one to two percent of the population was taking the medication in 2023.
Proportion of obese adults by country. Capital Economics
“However, given obesity rates, the potential market for the drugs is huge (in the US, for example, more than 40 percent of adults are obese),” the strategists write. “So if drug use continues to rise rapidly, it could have far-reaching economic impacts.”
Healthier labor markets and populations
The Organization for Economic Cooperation and Development (OECD) predicts that between 2020 and 2050, OECD countries will spend an average of 8.4 percent of their health budgets on treating the consequences of “high body weight.”
Weight loss medications, in turn, could reduce overall healthcare costs in the long term.
“For countries where healthcare is predominantly provided by the public sector, these savings could improve fiscal positions,” said Capital Economics. “These funds could be redirected to other, potentially more productive areas or instead used to reduce government borrowing relative to other areas.”
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In fact, the World Obesity organization predicts that more people living healthier lives could mean less absenteeism, higher labor force participation and higher productivity.
According to Capital Economics, these labor market forecasts could result in the equivalent of 0.6 percent of global annual GDP by 2035. The OECD calculations assume around 1.6 percent of GDP per year until 2050.
In any case, the drugs could be particularly useful in countries with the highest obesity rates, such as the United States and Mexico be beneficial, according to the research firm.
Capital Economics found that stock prices of many fast food companies fell in 2023 as weight-loss drugs gained popularity, although some of those losses have since been recovered. Still, the impact could spread in several directions, such as purchasing new, smaller clothing and saving fuel on airplanes by reducing the number of passengers.
Of course, there are still many uncertainties. Some adverse side effects are still unknown, costs may remain prohibitive, and supply may not keep up with demand.
Weight loss drugs and artificial intelligence
The emergence of GLP-1 drugs coincides with the explosion of technology and the hype surrounding artificial intelligence.
These forces could eventually converge. Healthcare is already the sector receiving the most AI investment, according to Capital Economics.
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“Historically, technology has increased rather than reduced healthcare costs,” the strategists said. But AI could change that, for example by making drug research more efficient and cheaper. If so, the economic gains heralded by weight-loss drugs may be just the beginning.”
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