Drugmakers Novo Nordisk and Eli Lilly have been making headlines in recent times, thanks to their sought-after weight loss drugs. In fact, the products have become so popular that demand has surpassed supply -- and the companies have been ramping up production to try to keep up.
Novo Nordisk's Ozempic and Eli Lilly's Mounjaro are approved for type 2 diabetes, but doctors also have prescribed them for weight loss. And the companies sell the same molecules specifically approved for weight loss under different brand names: Novo Nordisk's Wegovy and Eli Lilly's Zepbound. These weight loss portfolios have been bringing in billions of dollars in revenue and, considering demand, that's likely to continue.
But these two pharma giants may not be the only ones to benefit from this growing market in the coming years. Healthcare-powerhouse Abbott Laboratories(NYSE: ABT) just entered the space -- but isn't launching a new weight loss drug or a surgical solution. Instead, it's focusing on nutrition.
Could Abbott be the next big winner in this billion-dollar market? Let's find out.
Image source: Getty Images.
Abbott's new Protality brand
Abbott announced its new Protality brand, a line of high-protein nutrition shakes to help those taking weight loss drugs maintain muscle as they shed pounds. People taking weight loss treatments, following a low-calorie diet, or undergoing weight loss surgery lose fat -- but they also could lose 11% to 50% muscle, Abbott says, citing nutrition research.
People taking weight loss drugs often experience decreased appetite, meaning they may not be tempted to eat -- and therefore won't take in enough protein on a daily basis. The new Protality shakes include both fast and slowly digested proteins to power muscles for as long as seven hours. And Abbott plans to continue building on this theme by developing additional nutrition products for people on the weight loss journey.
Abbott isn't new to the area of nutrition. The company already has a nutrition business that sells many well-known products from Ensure shakes to baby formula and already has the infrastructure to manufacture and sell Protality. The nutrition business brought in more than $8 billion in sales last year as part of Abbott's total of $40 billion. The company also has diagnostics, medical devices, and established pharmaceuticals units.
Another plus is Abbott's experience in quickly ramping up new product lines, as we can see in its recent past. Early in the pandemic, the company brought a series of coronavirus tests to market to become a testing giant. In 2021, COVID-19 test sales totaled $7.7 billion. These tests joined Abbott's existing diagnostics business because Abbott already had the infrastructure to quickly grow this new platform.
Working with Wegovy
Now let's consider the opportunity ahead. Abbott isn't competing with these top Novo Nordisk and Eli Lilly drugs like Wegovy or Zepbound but, instead, aims to work alongside them. The company's new shakes technically could suit almost every person who takes those treatments. Abbott's products, as mentioned above, could also appeal to those with other weight loss strategies like diet or surgery.
Abbott says about half of U.S. adults have tried to lose weight in the past year, which means about 129 million people. If even half of those people try Abbott's shake, the product could bring in hundreds of millions of dollars. And this considers just one purchase of a pack of shakes.
On top of this, the weight loss drug market is growing at a phenomenal pace. Goldman Sachs Research predicts it will increase by more than 16x to reach $100 billion by 2030.
Abbott's shakes probably won't make it into the hands of every person on the weight loss path. But thanks to the company's commercial experience, there's reason to be confident about the company's ability to grow sales here. That means Abbott could be another big winner in the weight loss market -- and that equals a win for investors in this top healthcare company, too.
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Adria Cimino has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Abbott Laboratories. The Motley Fool recommends Novo Nordisk. The Motley Fool has a disclosure policy.
