Are weight-loss drugs like gym memberships? The answer is worth billions

livemint.com:

Subscribe to enjoy similar stories. If obesity is a chronic disease, like kidney or heart conditions, demand for GLP-1 drugs shouldn’t ebb and flow with the seasons. But the weight-loss market is far from typical.

After analyzing data going back to 2016, one analyst thinks he has identified a seasonal pattern in demand for drugs such as Eli Lilly’s Zepbound and Novo Nordisk’s Wegovy: The drugs have stellar growth in initial sign-ups in the first half of the year followed by slower gains in the second half. This pattern resembles the cyclical nature of gym memberships rather than the steady trajectory of most pharmaceutical markets, and for good reason: At the start of the year, people often make resolutions to lose weight, exercise or start new diets. It stands to reason that some of these resolutions might also lead to increased demand for weight-loss prescriptions such as GLP-1 drugs.

If the logic is even half-right, it could help explain Eli Lilly’s back-to-back misses that have confounded Wall Street. After starting off the first half of last year strong, Eli Lilly in October reported lower-than-expected third-quarter sales for its blockbuster weight-loss and diabetes drugs, sending its stock tumbling. Then, earlier this month, the company released a fourth-quarter and full-year 2024 outlook that again fell short of analysts’ estimates.

While the company says it isn’t worried about quarterly fluctuations and sees demand as being strong, it sent some on Wall Street into a tizzy. But Umer Raffat, an analyst at Evercore ISI, thinks the market, and perhaps the company itself, might be overlooking the seasonal aspect of GLP-1 demand. He sifted through new patient start data and noticed that much of the slowdown in the