GLP-1 drug demand rising, but not all packaged foods companies in the crosshairs

Investing.com —  As signs emerge that demand for GLP-1 drugs is stronger than expected, many are fearing the worst for packaged-food companies, but Bernstein believes that some companies are likely to fare better than others as patients on these weight-loss drugs shift appetite in favor of more protein-based foods.

“While we cannot categorically determine how big the compounding market is for GLP-1 drugs in the U.S. today, there are several indicators that suggest the market may be larger than we previously thought,” analysts at Bernstein said in a Thursday note.

While official data from IQVIA suggests only about 1.4% of U.S. adults are currently taking branded GLP-1 drugs like Ozempic and Wegovy, there are signs that demand is stronger than  expected/

Survey data indicates that as much as 12% to 13% of U.S. adults have taken or are currently taking GLP-1 drugs, analysts at Bernstein said, with approximately 8% currently using them for either diabetes or weight loss.

This discrepancy between the survey and IQVIA data point to a potentially larger market for compounded GLP-1 drugs than previously thought.

Evidence suggests that compounding pharmacies, which create custom-made medications for individual patients based on prescriptions and can produce versions of certain drugs during shortages, could be “reaching a larger number of GLP-1 patients than are captured in the official branded drug data.”

While the signs of increased demand are expected to dent appetite for packaged foods, Bernstein believes that some companies such as Campbell Soup Company (NYSE:) could fare better than others as GLP-1 patients are shown to have an increased appetite for protein-based foods.

Bernstein upgraded Campbell Soup Company (NYSE:) from Market-Perform to Outperform, and its price target raised from $55 to $58 as evidence shows that GLP-1 users favor more protein rich foods and beverages.

Hershey Co (NYSE:), however, was downgraded from Outperform to Market-Perform and its target price cut from $230 to $205 on worries volume recovery will struggle as GLP-1 demand appears to be on the up and up.