Summary: GLP-1 obesity drugs are seen as a solution to the world’s obesity epidemic, but the ease of taking a pill makes people stop exercising and increase their intake of junk food. As supply of GLP-1 obesity drugs fall short of demand in 2024, the world sees a pickup in obesity rates and related health problems, resulting in lower global productivity.
The GLP-1 obesity wonder drug has surprised everyone in the world, but most importantly, the promise to fight obesity has seen demand take off like nothing the pharmaceutical industry has ever seen before. The GLP-1 drug market is expected to hit USD 71 billion in 2032, and expectations of rapid growth and profitability have already catapulted Novo Nordisk to become the most valuable publicly listed European company. Recently, two studies have shown that the GLP-1 drug also reduces heart risks and limits the progression of renal impairment in people with chronic kidney disease.
As supply of GLP-1 obesity drugs is expanded, prices come down and governments choose to designate the obesity drugs as vital for improving health and stopping the obesity epidemic. The rationale is that by fighting the obesity epidemic, governments can save costs elsewhere in the healthcare system, because overall health will improve and second-order illness from obesity is reduced, which increases global productivity. These widespread benefits suggest that insurance cover could be likely, which would mean a significant demand surge.
However, in a turn of events, supply of GLP-1 obesity drugs is unable to meet the widespread demand, and patients need to wait for years to get their injections. Meanwhile, they stop exercising or keeping to a healthy diet now that a pill can keep weight in check, fuelling a major health crisis. Global adult obesity rates shoot up from the current 39% to 45% in 2024, bringing a host of other side effects, such as a rise in diabetes incidence or even a spike in heart disease, more injuries due to reduced muscle strength and general reduction in immune system efficiency. Increased illnesses and sick days make global productivity dip.
Market impact: The processed food industry sees a significant demand lift, McDonalds and Coca-Cola stock prices outperform broader markets by 60% each.
2024: The wasted year
Markets are driven by election optimism, overshadowing growing debt and liquidity concerns. The 2024 elections loom large, but economic fundamentals and debt issues warrant cautious investment.
As US economic slowdown hints at a shift away from exceptionalism, USD faces downside with looming Fed cuts. AUD and NZD set to outperform as their rate cuts lag. JPY gains on carry unwind bets and BOJ pivot.
Amid AI and obesity drug excitement, equities see varied prospects: neutral on overvalued US stocks, negative on Japan due to JPY risks, positive on Europe. European defence stocks gain appeal.
With the economic slowdown, quality assets will gain favour, especially sovereign bonds up to 5 years. Central banks' potential rate cuts in Q2 suggest extending duration, despite policy and inflation concerns.
Commodities poised for rebound. The "Year of the Metal" boosts gold and silver, copper awaits rate cuts. Grains may recover, natural gas stabilises. Gold targets $2,300-$2,500/oz, copper's breakout could signal growth.
Markets are driven by election optimism, overshadowing growing debt and liquidity concerns. The 2024 elections loom large, but economic fundamentals and debt issues warrant cautious investment.
As US economic slowdown hints at a shift away from exceptionalism, USD faces downside with looming Fed cuts. AUD and NZD set to outperform as their rate cuts lag. JPY gains on carry unwind bets and BOJ pivot.
Amid AI and obesity drug excitement, equities see varied prospects: neutral on overvalued US stocks, negative on Japan due to JPY risks, positive on Europe. European defence stocks gain appeal.
With the economic slowdown, quality assets will gain favour, especially sovereign bonds up to 5 years. Central banks' potential rate cuts in Q2 suggest extending duration, despite policy and inflation concerns.
Commodities poised for rebound. The "Year of the Metal" boosts gold and silver, copper awaits rate cuts. Grains may recover, natural gas stabilises. Gold targets $2,300-$2,500/oz, copper's breakout could signal growth.