The $76 Billion Diet Industry Asks: What to Do About Ozempic?
Weight-loss businesses, which long pushed calorie-counting and willpower, are grappling with the surging popularity of new drugs
Annick Lenoir-Peek, a lawyer from Durham, N.C., has struggled with her weight since adolescence. She has tried Atkins and keto and spent thousands of dollars over decades on weight-loss efforts and programs such as Noom, Nutrisystem and WeightWatchers.
Since starting Ozempic in late November, she has lost around 30 pounds. Her cholesterol and glucose levels have improved, and she can eat far fewer calories without feeling hungry, she says. She has felt few side effects and has more energy than when she tried calorie-restricted diets. Currently on a trip through Eastern Europe, she says she is doing more tours than she would have at a higher weight.
People such as Ms. Lenoir-Peek—among the diet business’s most reliable customers—are sparking an existential crisis for the industry, which rang up $76 billion in sales in 2022 from weight loss and medical programs, diet soda and low-calorie frozen food, gym memberships and other categories, according to research firm Marketdata LLC.
Drugs such as Ozempic, Wegovy and Mounjaro have upended the business of losing weight in America. They are shaping up to be blockbusters for Novo Nordisk, which makes Ozempic and Wegovy, and Eli Lilly, which makes Mounjaro. The drugs are also ripping up long-held beliefs that diet, exercise and willpower are the way to weight loss.
“I think they [the new drugs] are going to transform the industry of weight loss in a pretty big way,” says Alex Fuhrman, senior research analyst at Craig-Hallum Capital Group LLC. “The traditional approach to weight loss has been the only game in town for a very long time except for more drastic surgical interventions. The behavioral approach to weight loss is going to be under pressure now.”
Some big players, including WeightWatchers, are embracing the drugs, sometimes referred to as GLP-1s, and betting on them as a critical part of the industry’s future. Others are positioning their diet and exercise programs as a natural alternative to pharmaceuticals, championing the notion that there is no quick fix. Some are noting the medications’ downsides: Side effects such as nausea and diarrhea, and the prospect of having to be on them long-term to keep the weight off. At stake for companies are their business models; for consumers, their health.
“Most of my clients have been on a ton of different diets. They’ve been on everything,” says Alix Turoff, a registered dietitian and personal trainer. “No one can follow them because they’re so insanely restrictive.”
An industry shift
Companies have profited off Americans’ weight-loss dreams for decades. WeightWatchers, founded in 1963, brought its promise of weight loss through food-tracking and lifestyle changes to generations of Americans. In the ’80s, Jane Fonda told Americans to feel the burn; Atkins later surged to popularity urging people to cut carbs.
Weight-loss drugs have come and gone, often felled by links to health problems. The fen-phen diet-drug combination was thought to be a miracle treatment in the 1990s but was taken off the market when some users developed heart issues. Dexatrim, a once-popular over-the-counter pill, was linked to an increased risk of strokes.
And still the country got heavier, with about 42% of American adults having obesity, according to data collected between 2017 and March 2020 by the Centers for Disease Control and Prevention. That is up from about 31% in 1999-2000.
What is striking about Ozempic, Wegovy and Mounjaro is that they do lead to significant weight loss, according to research, doctors and patients. Ozempic and Mounjaro are approved to treat Type 2 diabetes, but patients also take them off-label for weight loss. Wegovy is approved for weight loss for people who are obese, or overweight with a related condition. Ozempic’s list price is about $892 for a roughly one-month supply, without insurance. Wegovy’s is about $1,350.
For weight-loss companies, the question now is whether to embrace the drugs, stick with pushing diet and lifestyle changes, or find a middle ground.
No moment better illustrates the industry shift than WeightWatchers’ decision to buy Sequence, a telehealth company that connects members to doctors who can prescribe Ozempic, Wegovy, Mounjaro and other drugs used for weight loss.
WeightWatchers has spent the past 60 years telling members they can lose weight by tracking the food they eat, doing frequent weight checks and making other lifestyle changes. But fewer people are banking on that promise: The company’s membership declined to 3.5 million at the end of 2022 from 4.2 million a year earlier and down from its record high of 5.03 million subscribers at the end of the first quarter of 2020.
Now, WeightWatchers sees an opportunity to market access to the new drugs to its former members.
“There are probably people we could have served better,” says Sima Sistani, the company’s chief executive. “For some, these medications can help them adhere to a program like WeightWatchers.” Many current members are potential candidates for the medications, too, she says.
WeightWatchers’s embrace of the drugs has upset some within its own community, with some members expressing disappointment and even a sense of betrayal. Ms. Sistani, who has received some angry member messages, says she is surprised by the backlash.
“There are parts of our community that believe because I did it the hard way, quote unquote, that that’s what everybody else should do,” she says.
WeightWatchers also plans to create programs geared to members who are using the GLP-1 medications, since when people lose weight quickly they often lose important muscle mass. The drug can cause people’s appetite to change dramatically, so they may need additional guidance to get adequate nutrition.
Noom Inc., which has an online dieting program that color-codes foods based on calories, quietly launched a program offering GLP-1 drugs to clients last fall, hiring its first medical director to manage the service in December. Noom’s main weight-loss program can cost from $70 a month to $209 a year depending on the plan. (Novo Holdings, the controlling shareholder in Ozempic and Wegovy maker Novo Nordisk, is an investor in Noom.) Clients who sign up for Noom’s core dieting and coaching program can sign up for weight-loss drugs if they qualify. For now, there is no mention of the service on Noom’s website and it isn’t advertising the program.
Linda Anegawa, Noom’s new medical director, says the program is in pilot mode. “We feel treating weight loss from a medical standpoint is a natural complement to Noom’s behavioral-change tool that’s been in development for over a decade,” Dr. Anegawa says.
Noting the downsides
Other weight-loss companies are pointing out the drawbacks of the new drugs.
“The early side effects are massive nausea and diarrhea. The more concerning parts are the unstudied side effects,” says Dan Chard, chairman and chief executive officer of Medifast, whose company’s Optavia program generated $1.6 billion in revenue in 2022.
Mr. Chard notes that a medication’s long-term side effects may take years to fully emerge. He also says that the drugs’ off-label prescribing is a concern.
Mr. Chard says he sees Optavia as an alternative or a complement to the medications. On Optavia’s most popular plan, users consume between 800 and 1,000 calories by eating five “fuelings” a day, Medifast products such as shakes, bars and soups, and one home-cooked “Lean and Green” meal.
Users are paired with coaches, most of whom started as Optavia users, who earn a commission on sales of the company’s products and provide support and information on healthy habits. “We feel confident with our approach,” says Mr. Chard.
Herbalife, a global direct-selling company that offers products including meal-replacement shakes and bars and nutritional supplements, sees its role as both an alternative and adjunct to the new drugs, says Kent Bradley, the company’s chief health and nutrition officer. He says that long-term, sustainable change requires a lifestyle shift.
Dr. Bradley rejects the notion that the medications may make his company’s meal-replacement products obsolete. His brother is an optometrist, and Dr. Bradley likens the introduction of the GLP-1s to what happened in the eye-care field with the introduction of Lasik surgery. When Lasik came out, his brother’s ophthalmologist colleagues speculated that optometrists, who prescribe glasses but generally don’t do surgery, would soon be out of business, Dr. Bradley says.
Instead, his business increased, he says, due to patients seeking screening for surgery and needing glasses after the procedures.
Simply Good Foods Co. ’s Atkins brand, which sells products based on its protein-rich, low-carbohydrate diet, says its program may be a “good partner” for the drugs, according to Colette Heimowitz, the company’s vice president of nutrition and education.
Protein can prevent the loss of lean muscle mass, she says, and the high fiber in the Atkins approach can help reduce some of the side effects of GLP-1s such as diarrhea. Ms. Heimowitz says the healthy fats in the Atkins method can potentially reduce the risk of what has been dubbed “Ozempic face,” a haggard, aged appearance that can sometimes occur with rapid weight loss. Ms. Heimowitz also sees Atkins as an off-ramp for people who need to stop the medications.
At Canyon Ranch, longtime medical director Stephen C. Brewer says he is hoping the craze over new drugs for weight loss subsides. He has prescribed the drugs to some guests who had diabetes and were overweight and for whom it made sense but is reluctant to do so for others who haven’t exhausted other avenues for weight loss. While being overweight puts people at higher risk for chronic disease, he notes that there are other aspects of a person’s health to consider, as well.
“I’m always hoping that there are places like us that are the voice of reason,” Dr. Brewer says.