Shares in diet group WW (formerly WeightWatchers) climbed by 7% recently after US television personality Oprah Winfrey, a board member and one its largest investors, said she was taking weight-loss medication as a “maintenance tool”, says Erich Schwartzel in The Wall Street Journal.
Her statement introduces “star wattage” to the debate about weight-loss drugs that have “rocked the pharmaceutical, food and diet industries since their widespread adoption”. Her comments come as the company has begun its long-awaited shift to incorporate such prescriptions alongside its... “iconic count-your-points eating plan”, in the hope it will help WeightWatchers stock “reverse a steep, years-long decline”.
WW’s change of plan is a “significant shift” for a company that has long focused on “behaviour-based strategies” such as alterations in diet and exercise, counting calories and “relying on a community of support”, says Alice Park for Time magazine. The shift began in 2018 when it ditched the WeightWatchers name to emphasise “wellness”.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
In 2023 it bought digital health company Sequence, and will now, for an extra $99 a month, offer members digital consultations allowing them to get prescriptions for weight-loss drugs such as semaglutide (Ozempic and Wegovy) and Eli Lilly's tirzepatide (Zepbound). They have proven to be “more effective than any previous weight-loss drugs”. The decision to build a business “around pushing pharmaceuticals” is a clever way to embrace the threat of drugs that might otherwise make WW seem “obsolete”, says Lauren Silva Laughlin on Breakingviews.
Early results seem to suggest it is working, with the number of clinical subscribers at WW jumping far more quickly than expected while latching on to the hype surrounding Wegovy has given the stock a fillip of 60%.
While giving their customers an easier path to a drug in short supply gives WW an “edge”, the key will be “whether WW can break out of the familiar cycle of customers ambitiously signing up for weight-loss programmes, only to fail and drop their subscriptions”. The Wegovy boom has also been good news for its manufacturer Novo Nordisk, say Jonas Ekblom and Lisa Pham on Bloomberg. The stock has risen by 42% this year as investors “latched on to the growth potential of a market that some analysts predict could reach $100bn by 2030”. However, while this surge has “pushed the Danish firm’s value past the size of its domestic economy”, repeating the trick “won’t be so easy” thanks to “rising competition, issues with producing enough of its blockbuster drugs, and a valuation that’s getting stretched”. In addition to Eli Lilly’s Zepbound, cheaper than Wegovy, drugs from Zealand Pharma as well as Amgen are on the horizon.
This article was first published in MoneyWeek's magazine. Enjoy exclusive early access to news, opinion and analysis from our team of financial experts with a MoneyWeek subscription.
-
House prices rise 2.9% – will the recovery continue?House prices grew by 2.9% on an annual basis in September. Will Budget policies and ‘higher-for-longer’ rates dent the recovery?
-
Nvidia earnings: what to expectNvidia announces earnings after market close on 20 November. What should investors expect from the semiconductor giant?
-
Investing in a dangerous world: key takeaways from the MoneyWeek SummitIf you couldn’t get a ticket to MoneyWeek’s summit, here’s an overview of what you missed
-
DCC: a top-notch company going cheapDCC has a stellar long-term record and promising prospects. It has been unfairly marked down
-
How investors can use options to navigate a turbulent worldExplainer Options can be a useful solution for investors to protect and grow their wealth in volatile times.
-
Invest in Hilton Foods: a tasty UK food supplierHilton Foods is a keenly priced opportunity in an unglamorous sector
-
HSBC stocks jump – is its cost-cutting plan already paying off?HSBC's reorganisation has left questions unanswered, but otherwise the banking sector is in robust health
-
Lock in an 11% yield with SabreTips Sabre, a best-in-class company is undervalued due to low profits in the motor insurance industry. Should you invest?
-
Byju’s – the startling rise and fallIndia’s educational technology start-up Byju's attracted big-name backers and soared to vertiginous heights during Covid. It has now plummeted. What happened?
-
A bull market on borrowed timeWhile the US enjoys a bull market, it may not last. Will the US rate cut push stock prices down?
