Analysts at Morgan Stanley think investors won't have the stomach for certain shares if Ozempic and others like it continue to rise in popularity.
The use of weight-loss drugs is showing no signs of slowing down. Glucagon-like peptide-1 (GLP-1) maker Novo Nordisk (NYSE: NVO) jacked up its full-year profit and sales estimates last week on an insatiable appetite for its slimming medication.
While Morgan Stanley is seeing growth in the weight-loss medication market, other industries have been spotlighted as possible dietary do-aways.
Ozempic threatens high-calorie ASX shares
Newton's Third Law: For every action, there is an equal and opposite reaction. If weight-loss drugs reduce appetite, there must be an 'equal and opposite reaction'. Well, it turns out the team at Morgan Stanley thinks so.
A report compiled by the analysts forecasts a base scenario of a US$105 billion category by 2030. The more optimistic 'bull case' estimates that weight-loss drugs could be a market worth more than US$140 billion in six years.
But where's the other part of Newton's equation?
It turns out the implications could be right on our doorstep. Australia is a hotbed for GLP-1s, according to the broker. The country's high obesity rate places it in pole position for highest demand across the Asia Pacific locale.
Food consumption is the most obvious reaction to increased Ozempic uptake. Morgan Stanley names Woolworths Group Ltd (ASX: WOW) and Coles Group Ltd (ASX: COL) as shares that could face the Ozempic chomp.
The broker also picks out certain food groups susceptible to calorie suppression, writing:
Our analysis suggests ice cream, cakes, cookies, candy, chocolate, frozen pizzas, chips, and regular sodas could see 4% to 5% reductions in consumption by 2035.
Alcohol faces the most pronounced risk in the beverages category with some GLP-1 patients citing a foregoing of alcohol consumption entirely
Quick service restaurants with a focus on unhealthy food items, including fried chicken and pizza, present with greater risks from a consumption standpoint, and could require menu adaptation.
It's not hard to imagine which listed companies deal in the abovementioned areas. This might suggest that Ozempic threatens ASX shares such as Domino's Pizza Enterprises Ltd (ASX: DMP), Endeavour Group Ltd (ASX: EDV), and KFC operator Collins Foods Ltd (ASX: CKF).
Does Resmed make the list?
Despite being the poster child for Ozempic disruption early on, Resmed CDI (ASX: RMD) was not one Morgan Stanley warned of in its report. Neither was it labelled as a beneficiary.
Instead, the broker presented a more balanced outlook for the sleep apnea device maker, stating:
It is conceivable that GLP-1s drive increased awareness and interaction with the healthcare system among patients with obesity, leading to higher rates of diagnosis for obstructive sleep apnoea and ultimately some increased penetration to partially offset the patient losses.
The Resmed share price suffered an unceremonious dumping last year. Fear gripped the ASX healthcare share after a link between obesity and sleep apnea was made. The Ozempic concern sent shares down 36% before it began to recover.
