The Ozempic Economy: Revolutionizing Society One Injection at a Time
Drugs like Ozempic have taken the internet and popular culture by storm. We have all seen the famous “Ask Your Doctor” ads playing on television and displayed across every billboard and subway station. But aside from this impressive marketing campaign, the surge of this “magic” weight loss drug in North America has brought with it debates in both the medical field over its safety for weight loss use and the field of finance, where analysts are examining the impact it will have on the economy.
So what is Ozempic and how will it reshape the North American economic landscape? This article will zoom out of the traditional Ozempic discourse, painting a picture of the multiple plausible economic impacts that Novo Nordisk’s pharmaceutical breakthrough could create.
What is Ozempic and Why is Everyone Talking about it?
Ozempic, known medically as glucagon-like peptide 1 or GLP-1 receptor agonists was originally developed as a type 2 diabetes treatment. Having been approved in 2017 by the FDA for this purpose, it is a weekly injection that lowers blood sugar by helping the pancreas make more insulin. It works by taking on the role of a natural hormone (GLP-1) that signals molecules to tell your brain that you are not hungry as the hormone levels rise. The drug is designed to be taken long-term, with weight loss being a side effect and not its original purpose.
Enough science talk. So while diabetes does impact hundreds of millions of people, why has the whole world become obsessed with it? The answer is simple: Ozempic and similar drugs in its category represent a breakthrough in stimulating weight loss. Whether the drug is suitable for weight loss purposes is for the FDA to decide. But what is certain is that the tangible weight loss results being seen in the United States — where the 40% obesity rate is a hindrance to the productivity of the economy — have led to the drug becoming a social media sensation. With celebrities like Oprah Winfrey, Amy Schumer, and Claudia Oshry speaking openly about their use of Ozempic for weight loss, its use is being normalized for a purpose it has yet to be medically approved.
A Cure or A Curse: Can Ozempic End the Obesity and its Accompanying Economic Epidemic?
Despite the success stories of millions who have used Ozempic to cut weight, it is noteworthy to mention that it is not a cure for obesity before drawing any conclusions on how it will impact the economy. It is reported that those who stop taking Ozemic often gain the weight they lost back, with others reporting that their weight loss plateaued, leaving them with a new “normal” weight while on the drug. As per Professor Joseph Trunzo at the Bryant’s School of Health and Behavioral Sciences, “There are many things that lead to people's behaviours around eating, and there’s no one treatment that will address all that”. Hundreds of physicians and experts share Trunzo’s sentiment. It is widely agreed upon that weight loss can only occur sustainably when all the pillars of physical health are met while taking Ozempic. This includes nutrition, physical activity, and mental health. Relying on Ozempic to “cure” obesity without addressing these elements is a recipe for disaster as the weight loss plateau may lead to anxiety and depression.
But how much of an economic anchor is obesity on North American economies? Through both direct and indirect impacts, obesity generates significant constraints. First, the financial cost of treating obesity is high, especially when accounting for the illnesses it can cause such as hypertension, type 2 diabetes, heart disease, and cancer. Estimates show that the annual medical cost to the healthcare system in the United States of obesity is over $173 billion.
By extension, employee productivity is an indirect cost of obesity as the disease fuels absenteeism and lost productivity while at work (presenteeism). Workplaces become less financially productive due to Obesity because of the high costs of disability benefit payments and training costs for employees with constrained physical functions. To quantify this, a study by Global Data examined the New York state economy and found that obesity costs $37.3 billion in reduced economic activity and has led to 165,000 fewer employees in the workforce due to the inability of some with the condition to work.
Potential for Economic Growth through GLP-1 Series Drugs
As per a study by Goldman Sachs, the mass-adoption of GLP-1 series drugs like Ozempic could foster large-scale economic growth. For instance, in Godlman’s baseline scenario, these drugs could directly increase the United States Gross Domestic Product (GDP) by 0.4%. If true, this could mean a trillion-dollar output boost over the upcoming four years. However, this would be dependent on companies like Novo Nordisk’s ability to ramp up supply of the popular drug. With the current supply constraints leading to a shortage, the scale of the productivity benefits Ozempic could bring would depend on manufacturing innovation and investments in the capital needed to keep up with demand.
Consumer Spending Patterns and Employment Benefits
As pharmaceutical costs continue to rise in North America, consumers choosing to use Ozempic for weight loss will have to bear a cost of $900 USD per month. While insurance plans will cover the drug for type 2 diabetes patients, the cost is transferred to consumers. In fact, only 7% of employers in the United States provide Ozempic coverage with no restrictions like prior authorizations. The high demand has led manufacturers to increase costs as they scramble to increase their manufacturing capacities.
In an economy burdened by obesity, however, some experts are suggesting that employers cover the cost of GLP-1 medications through employee benefits as this will provide long term financial benefits. On one hand, requests for coverage being made to corporate insurance plans have surged recently, providing companies with an incentive to add it to their coverage plans. This could alleviate the indirect costs obesity is causing companies to incur. On the other hand, covering such pricey drugs could have drawbacks for firms. To compensate for the cost, employers may have to raise employee benefits premium contributions, which could lead to employee dissatisfaction. Similarly, the budget constraints that covering the drugs could cause could prevent employers from offering other benefits and work initiatives that other employees rely on. With that said, it will be up to individual companies to weigh the benefits and drawbacks of introducing GLP-1 drugs into their benefits plans.
Denmark’s Pharmaceutical Revolution: The Motherland of Ozempic
Naturally, as Ozempic and other GLP-1 drugs became a viral sensation, pharmaceutical giants like Novo Nordisk were bound to benefit. The company has seen soaring revenues in the past several years, leading the wave of a new market of drugs that is expected to grow by $100 billion by 2030. Accordingly, Novo Nordisk’s share price has increased 84% over the last year. Headquartered in Denmark, the success of Novo Nordisk has reshaped the Danish economy, leaving it as the best-performing Scandinavian country in 2023 and 2024 in terms of GDP growth.
Starting in 2023, Denmark’s exports rose by 13.4%, driven primarily by the high demand for Ozempic and Wegovy, the other GLP-1 drug manufactured by the pharmaceutical giant. Aside from the revenues coming into Denmark through exports, Ozempic’s rise has dramatically benefited domestic economic policy. Increased profits for the company translate to higher tax payments to the government, which help fund initiatives like infrastructure projects and transitioning to a green economy, as well as providing high-skilled jobs as they invest in manufacturing expansions.
While these statistics paint a sunny picture of Denmark’s economic future, its government should avoid over-relying on Novo Nordisk. Nokia’s downfall and its impact on Finland’s economy should be considered when examining how to manage this newfound success. Instead of simply collecting revenues and watching Novo Nordisk dominate the market, some experts suggest that Denmark should use this money to develop their pharmaceutical capabilities and diversify into other sectors. Otherwise, if Novo Nordisk faces the same fate as Nokia, the sun may set on Demark’s recent economic successes.
Ozempic’s Economic Legacy: The Final Analysis
Any drug adopted by hundreds of millions of people around the world is bound to have significant impacts on the economy. However, with weight loss playing such a significant role in our social fabric, drugs like Ozempic are in a unique position. By addressing the direct and indirect costs of obesity on the North American economy, facilitating economic growth, reshaping consumer purchase behaviour, restructuring corporate benefits plans, and propelling Denmark to economic success, Ozempic could be on track to boost a slowing economy. On the other hand, the drug remains out of reach for many consumers and is raising equity concerns. With the rapid growth of a brand new industry, it is now on regulators and employers to ensure the safe administration of these drugs and to decide whether to implement benefits coverage for one of the most popular drugs in North America.