If food suppliers weren’t already spooked by the surge in demand for weight loss aids like Wegovy and Ozempic, they’ve now been given another $900 million warning as to why they should.
Danish pharmaceutical company Novo Nordisk has released figures that prove the growing interest in weight loss aids is more than just hype.
According to Novo’s third-quarter financial results, the Ozempic and Wegovy maker’s revenue increased 29% year-over-year, and the company’s net income increased 56%.
Meanwhile, Wegovy’s revenue increased more than eight times compared to Q3 2022 to SEK 10 billion (approximately $900 million). The company’s overall sales of obesity drugs more than doubled during this period.
Novo’s shares rose more than 2% in early trading after the results were announced. With a market capitalization of $436.6 billion, the drugmaker is Europe’s largest publicly traded company and is worth more than the entire economy of its native Denmark.
The Danish government cited Novo’s success in August when it raised its 2023 GDP forecast from 0.6% to 1.2%.
US buys up Novo shares
Demand is much more driven by the US, which accounted for 95% of Novo’s Wegovy sales in the third quarter of 2023.
Diabetes drugs known collectively as GLP-1 have skyrocketed in popularity in recent years after being shown to be effective in weight loss. Elon Musk drew global attention to its capabilities last year when he said he was using Ozempic to lose a few pounds.
According to CNN, about 1.7% of people who visited a doctor in the U.S. in 2023 were prescribed Wigoby, Ozempic, or a similar option.
There is little sign that GLP-1’s influence will abate in the coming years. BMO Capital Markets analyst Evan David Sagerman predicted that the global market for weight loss aids could reach $100 billion by 2035, with the U.S. alone reaching $70 billion.
Sales of Novo’s GLP-1 drug series could have been even higher had supply shortages not limited the company’s output. The discovery of GLP-1’s weight-loss ability led to an unexpected surge in demand, leaving Novo scrambling to supply sufficient quantities.
Novo announced in July that one of its obesity drugs, Saxenda, would be in short supply until the end of the year.
“Novo Nordisk is investing in internal and external production capacity to increase supply in the short and long term,” the group said in its earnings report.
“While Wegovy’s supply capacity is being gradually expanded, lower dose strength supply in the U.S. will remain limited to protect continuity of treatment.”
Retailers take note
Novo’s latest results will serve as a reminder of the existential threat big retailers and food suppliers face from leaner, less hungry American consumers.
Walmart has already noticed a decrease in shoppers’ basket sizes, with U.S. CEO John Farner noting that people are buying “slightly fewer calories.”
Other companies have begun trying to allay investors’ fears about their drug exposure.
Coca-Cola CEO James Quincey told CNBC. cry on the street He said his company has been gearing up for years to appeal to less indulgent American consumers with lower-calorie drinks like Coca-Cola Zero. Quincey suggested that 28% of the company’s portfolio was low-sugar or zero-sugar beverages, which helped protect it from changing appetites.
“We think this is an environment where people are looking to eat fewer calories…We definitely have the right portfolio for that,” Quincey told CNBC.
Meanwhile, food and household products maker Nestle said it is working to develop nutritionally complete products in hopes of complementing Americans’ changing diets.
This article originally appeared on Fortune.com