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Alphaville has received a LOT of equity research regarding the effects of weight loss pills like Ozempic* and Wegovy (mainFT has a great overview here).
As the efficacy of these treatments becomes clear, many analysts are asking a fundamental question about their field: What happens to the companies I cover if inhibition of Food cravings become easy for a segment of the population?
Many analysts have recently leaned toward hypotheses including:
The gym will sell more memberships
Gyms will sell fewer memberships
The store will sell more clothes
Stores will sell less and less clothes
People will buy more cosmetic treatments
People will buy fewer cosmetic treatments
People will spend more on travel
People will spend less on travel
Among all this, there is one obvious and burning question that Citi has finally answered. From our inbox today:
It is possible that increased use of Ozempic, Wegovy, and related weight loss/diabetes treatments could significantly contribute to weight loss efforts among users in the United States. However, looking at some of our recent research into the A320’s airworthiness, the potential payload benefits from carrying lighter passengers are negligible, especially on high-speed flights. short range. The use of these treatments appears to have to be much more widespread to have any meaningful impact on the A320’s ability to carry out its mission. Citi maintains Buy ratings on Delta, Copa, United, Air France/KLM, Volaris and Azul, among others.
Okay, that’s not a completely unreasonable notion. Takeoff weight is an important issue for airlines, who have devoted much attention to making their planes lighter. But this seems really marginal. Here’s how Citi crunched the numbers:
With an estimated 9 million Ozempic and Wegovy users in the United States or 3% of the population, Citi considered a scenario in which a significant increase in use of these drugs would make only a small difference in load aircraft weight. The basic assumptions and considerations of this exercise are as follows:
There are 160 passengers on the average domestic flight.
The average weight of each passenger from infants to the elderly is 150 lbs.
The total human load weight in an average flight is 24,000 lbs (160 passengers x 150 lbs each = 24,000).
Air travelers are probably wealthier than the average citizen, which means they are also more likely to be able to afford these drugs.
9% of domestic passengers are Ozempic and/or Wegovy users or triple the current penetration rate.
9% of passengers per flight means that an average of 14.4 passengers per flight (9% of 160 passengers) used these weight loss pills (let’s round that number down to 14 passengers). guest).
The average weight of all other passengers remains unchanged.
Those 14 passengers each lost 10 pounds. That would reduce the total human payload weight per flight from 24,000 lbs to 23,860 lbs (146 passengers x 150 lbs each + 14 passengers x 140 lbs each = 21,900 + 1,960 = 23,860). This equates to a reduction in human load of just 0.6%.
Demand for food products purchased on planes or related businesses such as airport food courts has not decreased because these consumers eat less.
There continued to be no serious long-term side effects of either drug.
Of course, the reduced payload of 140 pounds is almost equivalent to an adult, but this does not mean that there will now be an extra empty seat on the plane. Starting at age two, each passenger needs their own seat.
They added, despite doing the above exercise:
It is important to note that a more detailed analysis of fuel consumption or improvement in seat cost due to passenger weight reduction is not straightforward. Those estimates vary based on route conditions such as climb and descent profile, cruise altitude, in-flight temperature, distance flown, etc., while calculating those effects depends depends on data that is not generally available in the public domain.
So there you go.
*Update: Novo Nordisk has asked us to clarify that Ozempic is a diabetes treatment and reminds readers that its widespread use as a weight loss drug is off-label. We apologize to anyone who started self-medicating based on this article.
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