The More Americans That Take Ozempic, the Faster the US Economy Will Grow, Says Goldman Sachs
In a recent note, Goldman Sachs made a bold claim: the more Americans that take GLP-1 weight loss drugs like Ozempic, the faster the US economy will grow. The bank estimates that if 60 million Americans take these drugs by 2028, US GDP could grow by an extra 1%. This prediction is based on the belief that poor health is a burden on economic growth, as it can lead to missed workdays, early death, and informal caregiving that takes people out of the workforce.
Goldman Sachs economist Jan Hatzius explains, “Combining current losses in hours worked and labor force participation from sickness and disability, early deaths, and informal caregiving, we estimate that GDP would potentially be over 10% higher if poor health outcomes did not limit labor supply in the US.” This suggests that a drug like Ozempic, which has shown promise in improving various health outcomes for patients, could have a significant impact on the broader economy.
Hatzius further elaborates on the economic costs of poor health, stating, “The main reason we see meaningful upside from healthcare innovation is that poor health imposes significant economic costs. There are several channels through which poor health weighs on economic activity that could diminish if health outcomes improve.” This highlights the potential for GLP-1 drugs to not only improve individual health but also contribute to overall economic growth.
GLP-1 drugs, such as Ozempic and Mounjaro, are currently used to treat type 2 diabetes and obesity. These drugs have seen a surge in sales due to their ability to result in drastic weight loss, around 20% of body weight. Additionally, they have shown promising results in improving sleep apnea symptoms and reducing the occurrence of cardiac events like strokes and heart attacks. Considering the high obesity rate in the US, which hovers around 40%, it is likely that a significant number of Americans will be taking these drugs in the coming years.
Goldman Sachs estimates that anywhere from 10 million to 70 million Americans will be taking a GLP-1 drug by 2028. This wide range is influenced by factors such as supply, insurance coverage, and clinical trial outcomes. Hatzius emphasizes the potential spillover effects of increased GLP-1 usage, including increased productivity. Studies have shown that obese individuals are less likely to work and less productive when they do work. Addressing obesity-related health complications could lead to a 3% increase in per capita output and a 1% boost to total output when combined with the high incidence of obesity in the US population.
Furthermore, improved health outcomes could have a significant impact on GDP growth. Hatzius cites historical data that shows health advancements have lowered the number of life years lost to disease and disability by 10% per decade in developed economies. A 10-year step forward in health progress beyond current trends could raise the level of US GDP by 1%.
Goldman Sachs’ analysis highlights the potential economic benefits of widespread adoption of GLP-1 drugs like Ozempic. By improving health outcomes and addressing obesity-related complications, these drugs could contribute to increased productivity and overall economic growth. As the US grapples with high obesity rates and the associated costs, investing in healthcare innovation may prove to be a wise economic decision.
