The lucrative weight-loss drug industry, valued at £25.2 billion, is drawing significant attention, particularly with a bold prediction from Goldman Sachs. The renowned US bank forecasts that 2026 will mark a transformative period for the obesity sector.

By 2030, global sales of GLP-1 injectable drugs—such as Ozempic, Wegovy, and Mounjaro—along with emerging jabs and pills, are expected to soar to $100 billion, or approximately £74 billion. This projection underscores the potential for even greater growth as more medications become available in convenient pill form, broadening their appeal.

Leading the charge are Novo Nordisk, the creator of Ozempic and Wegovy, and Eli Lilly, the company behind Mounjaro. Both are gearing up to introduce pill versions of their successful injectable treatments, hoping to capture a larger share of the market.

The excitement around these developments is palpable, as demonstrated by Pfizer’s recent acquisition of Metsera, a company developing an experimental obesity drug. Pfizer suggests that by 2030, the weight-loss drug market could swell to a staggering $150 billion (£111 billion).

As these appetite-suppressing drugs gain traction, their impact is expected to ripple across the food and beverage industries, potentially reshaping consumer habits and market dynamics.

Meanwhile, since weight-loss drugs tend to reduce appetite, the effects on the food and drink industries are also going to multiply.

Big business: By 2030, worldwide sales of the GLP-1 injectable drugs are predicted to reach $100billion, or £74billion

This week it emerged that McDonald’s is calculating that chicken will tempt the palates of those on weight-loss medication. More upmarket US restaurants are downsizing portions to win back customers put off by gigantic servings.

Here, supermarkets and bakers such as Greggs are already being affected, and brewers like Heineken must find a new business model.

Shares in Diageo, the Guinness and Johnnie Walker group, are down by 13 per cent over the past year.

Prominent sellers of the stock include Terry Smith, manager of the Fundsmith fund (in which I am a saver).

But Nick Train, manager of the Finsbury Growth & Income Trust, is relying on a turnaround of the Diageo empire under new chief executive Dave Lewis.

This difference of opinion between veteran investors sends a signal to the rest of us about the upheaval that could be caused by the fat-jab revolution. Does your portfolio need a new regime?

THE RIVALS FOR A SLICE OF THE PIE

The outlook for the fat-jab industry may be promising, but the names hoping to make it big (in the figurative sense) face substantial challenges.

These include alarming reports of the drugs’ side-effects – the appearance of more pancreatitis cases is being attributed to increased usage. At the same time, more of those who long to be slender are seeking cheaper generic or copycat versions of the best-known drugs.

Michael Leuchten, analyst at the brokers Jefferies, said: ‘That $150billion pie is gone, even if you’re very bullish on volumes.’

The belief that the sector may, even now, be too crowded helps explain why Pfizer is deemed a ‘hold’ by analysts, despite its acquisition of Metsera.

But another new entrant – UK giant AstraZeneca – is rated a ‘buy’ at 15,408p because it has just struck a £13bn agreement with the Chinese CSPC Pharmaceutical Group that gives Astra exclusive global rights, outside China, to CSPC’s once-a-month jab that’s about to go into early-stage clinical trials.

This deal highlights the need to monitor your fat jab holdings carefully. The long-term winners may not be today’s big names, especially as demand expands beyond America to Europe, China and other nations such as Brazil, India and Japan.

BETTING ON TODAY’S BIG PLAYERS

Against a background of surging competition, shares in Novo Nordisk have tumbled 49 per cent over the past year.

At the peak in June 2024, when the price hit 1,000 Danish krone (£116.80), the group was Europe’s most valuable company.

Now the price has slumped to 311 krone (£36.37), as it loses ground to Mounjaro from Eli Lilly, whose shares have jumped 16 per cent in the last year.

Note, however, that while Smith may have sold Diageo, Novo Nordisk continues to be a Fundsmith holding. Smith is hoping that new management can deliver, despite the burgeoning number of generics.

Earlier this month it managed to stop the sale of a generic Wegovy pill on the US Hims & Hers telehealth website.

The move is scarcely a long-term solution. Yet 10 of the analysts that follow Novo Nordisk rate it a ‘buy’, while another 11 see the shares as a ‘hold’.

Just two recommend that you should sell. Last week Deutsche Bank reiterated its ‘buy’ recommendation, albeit with a lower target price of 400 Danish krone. Its current share price is 311.

It seems that the former superstar is now seen as a reasonably-valued specialist, with recovery potential.

Deutsche also considers Eli Lilly to be a ‘buy’, but with a new higher target price of $1,285 (£951.60) against the brokers’ current $1,037 (£768).

The majority of other analysts, including Goldman Sachs, are equally keen on this drugs company, which represents an opportunity for diversification if you hold US stocks.

For, unlike Alphabet, Amazon and most of the other top names in the S&P 500 index, it is not engaged in the ruinously expensive artificial intelligence (AI) arms race.

The other reasons for cheer include the recent government-ordered price cuts under the US Medicare health insurance scheme. These should make Mounjaro (known as Zepbound in the US) more accessible, even if less profitable.

HOW TO PROFIT FROM CHANGING TASTES

If you own food and retail shares, you should keep a close eye on them to make sure they adapt to the new environment.

Clive Black of brokers Shore Capital, who saw the first evidence of the fat jab diet-suppressant phenomenon in supermarket Christmas sales, expects the impact on sales to be one of the most-watched aspects of their results for the first quarter of this year.

Black adds that clued-up clothing retailers will be appealing to slimmed-down customers who will either want or need to splash out on new wardrobes.

Fast-food restaurants will also be required to demonstrate ingenuity, or shed sales.

This week McDonald’s chief executive Chris Kempczinski, said that it is revising its menus – there will be more chicken. The shares – 8 per cent higher over a year at $326.54 – are rated a hold, as analysts wait to see if Kempczinki’s bet on leaner protein pays off.

By contrast, shares in US chain Wendy’s have slumped 46 per cent over the past year, as diners downsize their burger orders.

Again, the shares are a ‘hold’, as analysts await a strategy for the new era.

On this side of the Atlantic, Greggs shares have tumbled 23 per cent in the last year, as a result of predictions that its signature sausage rolls could be more resistible to clients ‘on the pen’, as weight-loss jabs have been described.

Once more, analysts are biding their time in the belief that Greggs can be innovative, as the number of Britons on jabs rises.

The brokers Jefferies are pessimistic. For the moment, the kind of people taking Ozempic and the rest will mostly not be members of the Greggs clientele.

But it is possible that more ‘higher-body mass index, higher-frequency consumers’ could be given weight-loss prescriptions, resulting in the loss of some of Greggs’ best customers.

Under scrutiny will also be brands like the Magnum Ice Cream Company. This business, recently split off from Unilever, also makes Ben & Jerry’s and Carte d’Or.

Magnum’s boss Peter ter Kulve sees an opportunity in premium treats with fewer calories but with ‘more nutritional density, real ingredients, and more proteins’. The 10 per cent drop in Magnum shares this month suggests doubt that this will be a sufficiently tempting premium treat for those on the pen.

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