Weight-Loss Drugs and the Future of Health and Wellness Companies
Health and wellness companies are embracing weight-loss drugs and building offerings around them in an effort to avoid the fate of WeightWatchers, which declared bankruptcy this week, citing vastly increased use of the new blockbuster medicines.
But some of WeightWatchers’ closest rivals, newer telehealth companies, face a new challenge of their own as federal regulators crack down on the cheaper versions of Novo Nordisk’s Wegovy and Eli Lilly’s Zepbound that have become a big part of the companies’ sales. The telehealth companies’ success may ultimately depend on partnering with the name-brand drugmakers, one analyst said.
WeightWatchers’ Bankruptcy and the Rise of Telehealth Companies
WeightWatchers filed for bankruptcy on Tuesday, as Americans shunned its weight management business in favor of the Novo and Lilly drugs and copies from pharmacies that can cut a person’s weight by 15%-20%. The drugs, from a class of digestion-slowing medicines known as GLP-1 agonists, have eaten into demand at some big companies, including Walmart’s food business.
WeightWatchers, when it filed for bankruptcy, said its weight management system stopped being attractive to customers given changing views about weight versus wellness, competition from telehealth companies fully embracing the weight-loss drugs, and even fitness influencers on TikTok. The company has an agreement with creditors to restructure its debt and quickly exit the court process.
Adam McBride, CEO of Telehealth company Eden, said WeightWatchers, which tried to pivot to telehealth and sell weight-loss drugs, had an old-school system that relied on points and in-person gatherings that customers didn’t like. “I don’t think that they were listening to their members,” McBride said.
Telehealth Companies and Weight-Loss Drugs
Eden and rival Noom both operate weight-focused telehealth platforms with integrated lifestyle coaching – something WeightWatchers struggled with.
The newer companies have been selling unbranded versions of the in-demand weight-loss medications as part of their offerings.
Clinical subscriptions that provide access to clinicians and prescription drugs make up over half of Noom’s revenue, said CEO Geoff Cook.
At rival Hims and Hers, compounded weight-loss drugs accounted for 20% of revenue last year, and even WeightWatchers relied partly on such revenue.
Weight-Loss Bandwagon
Other health companies see room for products and services that take advantage of the popularity of new weight-loss drugs, which some analysts forecast will have annual sales of $150 billion in the next decade.
Health retailer The Vitamin Shoppe has seen a spike in demand for supplements that could help with loss of appetite, decreasing muscle tone, and other GLP-1 side effects, said President Muriel Gonzalez. Sales of a set of supplements marketed to people taking such drugs jumped more than 20% from a year ago, a company spokesman said.
Last year, The Vitamin Shoppe launched a telehealth service, Whole Health Rx, that connects consumers with medical providers who can prescribe weight-loss drugs and recommend supplements to give people protein, fiber and multi-vitamins while on them.
Challenges and Opportunities for Wellness Companies
But easy sales of cheaper versions of the drugs are ending, even as lawsuits remain. The U.S. Food and Drug Administration is blocking sales of cheaper compounded versions of the drugs now that Wegovy and Zepbound and their related diabetes medicines — Ozempic and Mounjaro — are no longer in shortage.
Selling cheaper versions of the drugs has been a huge profit driver for these companies, and the loss is an issue, said Morningstar healthcare analyst Karen Andersen.
One path forward for wellness companies is to work with brand-name drugmakers, Andersen said.
“Companies like Novo, they need partners that have access to patients,” she said. But finding creative ways to partner with key competitors is no small task, she added. “It will be a rocky path.”
Conclusion
The rise of weight-loss drugs has significantly impacted the health and wellness industry, with companies like WeightWatchers facing bankruptcy and telehealth companies thriving. As the industry continues to evolve, it will be essential for companies to adapt and find new ways to partner with brand-name drugmakers and provide value to their customers.
Frequently Asked Questions
Q: What is the current state of the weight-loss drug market?
A: The weight-loss drug market is rapidly growing, with sales forecasted to reach $150 billion in the next decade. Companies like Novo Nordisk and Eli Lilly are leading the market with their GLP-1 agonist drugs.
Q: How have telehealth companies been impacted by the rise of weight-loss drugs?
A: Telehealth companies have seen significant growth in revenue from selling unbranded versions of weight-loss medications. However, they now face challenges as federal regulators crack down on cheaper versions of the drugs.
Q: What is the future of wellness companies in the weight-loss market?
A: Wellness companies will need to adapt and find new ways to partner with brand-name drugmakers to remain competitive. They will also need to provide value to their customers through integrated lifestyle coaching and other services.
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