Weight Loss Drugs are Tipping the Scales

If you’re in marketing, this kind of chart makes you want to dance around the office.

This is the growth in the percentage of American adults who are obese, from 1975 to 2016.

You don’t call it that, you call it Total Addressable Market.

That number is now over forty percent of adult Americans.[1]

But that’s not even the whole story. There’s a further unmeasurable number of people, who are not obese, but who are nevertheless concerned about their weight, image, appearance, hotness, health, relationship with their mirror, state of their marriage, status among peers, ability to be successful in business. And all those people, at various times in their lives, may say to themselves: “does this [item of clothing] make me look fat?”

I don’t know how much that adds to the TAM, but there’s a lot of money in it.

None of this is new. Obesity in America has been a topic for as long as that graph has been climbing, and many, many operators of all kinds have tried to sink their fangs into that juicy addressable market.

They have not succeeded. “We have been powerless,” said Jonathan Engel, a historian of medicine and health care policy at Baruch College in New York, in regard to the impact of past obesity solutions.[2]

Until now. You’ve surely heard the names Ozempic and Wegovy, both from the drugmaker Novo Nordisk. These are already FDA-approved and available in the US. They are both GLP-1s (glucagon-like peptide-1 receptor agonists), contain the same basic active ingredient (semglutide), but are formulated differently for use by different types of patients. [3]

The third is Mounjoro (tirzepitide) from Eli Lilly, which is a dual agonist for both glucose-dependent insulinotropic polypeptide (GIP) and GLP-1 receptors. Mounjaro has shown signs of being even more effective than Ozempic for weight loss.[4] These drugs have even shown promise for reducing heart attack and stroke risk.[5]

“Game changers,” is how the same Dr. Engel describes the new drugs (New York Times).

With the admission of prescribed usage by Elon Musk, Chelsea Handler, Amy Schumer, and others people seem to care about, these drugs have made their way to the center of public conversation.

Though these drugs are not a panacea…they do come with risks.

Increasing reports of uncontrolled vomiting and other negative side effects have the potential to be canaries in the coal mine as these drugs penetrate the broader population over increasing timespans.

Amy Schumer was among the many who experienced negative side effects and had to stop Ozempic.[6]

Last week, Kalshi launched a market on total prescriptions for novel weight loss drugs that use Tirzepatide and Semaglutide in a given month.

The increased use of these drugs has the potential to impact many areas of society and economy.

Fitness centers and gyms offer workout facilities, training programs, and classes geared toward weight loss, muscle building, and overall physical health. If weight loss drugs become a popular and effective method for weight management, some individuals might opt for this ‘easier’ route of injectables over regular gym workouts.

Owners of these establishments can use Kalshi's event contracts to hedge against potential membership losses. If prescriptions rise, indicating a decline in traditional weight loss methods like working out, payouts from the contracts could offset lost revenues from membership and class sign-ups.

The same can be said for dietitians and nutritionists who may lose business if large numbers of patients find these drugs work for them.

“Natural” weight loss supplements, health and wellness coaches, manufacturers of fitness equipment (e.g. Peloton), fitness apps and software (e.g. Noom, Fitbit, or Apple Watches), may all be impacted.

There’s also the medical-industrial-complex, which is practically encouraging you to eat that donut.

The contract’s price represents a market-based probability that prescriptions for weight loss drugs will be above a given threshold in a given month. This information could be used to help price other assets, services, commodities, and/or financial contracts.

For example…healthcare sector equities and debt instruments: if there's a projected increase in the number of prescriptions, the value of pharmaceutical companies producing weight loss drugs could potentially rise. Conversely, businesses negatively impacted by this trend (like gym chains or dietary supplement companies) might see their value decline.

Another example...health insurance companies might adjust their premiums based on the expected costs associated with covering these weight loss drugs. If these drugs lead to fewer complications related to obesity, it might impact the pricing of health insurance plans in the long term.

Are drugs like Ozempic, Wegovy, and Mounjaro the shot in the arm society didn't know it needed? Or will they be a fad that soon passes?

One thing is clear, medicine is getting better. As we navigate the winding road of healthcare advancements, this wave of innovation isn’t going away. The future is ripe with uncertainty.

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The opinions and perspectives presented in this article belong solely to the author(s). Kalshi does not provide investment or trading advice or make any other claim to the veracity of the contents described herein and provides this article solely for the convenience of its members.