Gold Rush In Weight Loss Industry Impacts Retailers With Pharmacy Businesses

Retailers with pharmacy businesses, including major players like Walmart Inc WMT, Kroger Company KR, and Rite Aid Corp RAD, are also seeing a boost in sales due to increased demand for prescription weight loss drugs. 

However, while this surge in popularity has the potential to drive foot traffic into stores, citing analysts CNBC points out that the profitability of these blockbuster treatments is rather minimal for retail pharmacies, and in some cases, they might even come with margin challenges.

Among the trending weight loss drugs are Novo Nordisk A/S's NVS Wegovy, an obesity injection, and Ozempic, a diabetes treatment. 

Over the past year, their popularity has surged, with even high-profile figures like Elon Musk reportedly using them.

Considering that about 40% of U.S. adults are classified as obese, the weight loss drug market presents a substantial opportunity for pharmaceutical companies. 

This has led to significant interest from other drugmakers like Eli Lilly And Co LLY and Pfizer Inc PFE, who are developing their versions of GLP-1s to capitalize on this potentially lucrative market. 

Analysts project that the weight loss drug market could reach a staggering worth of $200 billion by 2030.

However, the soaring demand for GLP-1s has a ripple effect throughout the entire drug supply chain, impacting drug manufacturers and pharmacies that dispense these prescription medications. 

Retailers like Walmart, Kroger, and Rite Aid are now discussing how these drugs contribute to their sales growth.

However, the impact of GLP-1 drugs extends beyond the pharmacy business of these retailers. 

Walmart and Kroger, for example, may indirectly benefit from the increased sales of these drugs, as they often lead to additional purchases in various categories. 

Analysts suggest that the margin challenges in the pharmacy division might be offset by increased foot traffic and subsequent purchases across other departments.