The Blubber

Goldman Sachs, $GS, has forecasted that US GDP would jump by 1% if 60 million Americans took a GLP-1 drug, pe BI.


A Goldman Sachs analyst stated in a note on Thursday that the US economy could see accelerated growth with an increased uptake of GLP-1 weight-loss drugs.

According to Jan Hatzius, the chief economist at Goldman Sachs, if 60 million Americans were to take GLP-1 drugs by 2028, the US GDP could grow by an additional 1%.

Hatzius emphasized that health-related issues often hinder people from participating in the labor force, ultimately impeding economic growth. Obesity, in particular, is linked to serious health risks such as heart attacks, strokes, and diabetes.

He noted, "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."

Thus, drugs that have demonstrated potential in improving various health outcomes in patients could have a significant impact on the overall economy.

Hatzius explained, "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."

GLP-1 drugs such as Ozempic and Mounjaro from Novo Nordisk and Eli Lilly and Company are used to treat type 2 diabetes, and as Wegovy and Zepbound for obesity.

Sales of these drugs have surged, with some users experiencing dramatic weight loss of up to 20%. A study published in August revealed that patients taking Wegovy for weight loss reduced their risk of heart attacks, strokes, and cardiovascular death by 20%.

Given the US obesity rate of around 40%, tens of millions of Americans could be prescribed GLP-1 drugs in the coming years. However, the actual number will depend on the outcomes of clinical trials and insurance coverage.

"If GLP-1 usage ultimately increases by this amount and results in lower obesity rates, we see scope for significant spillovers to the broader economy," Hatzius said.

One potential spillover effect could be an increase in productivity, as obese individuals are less likely to work and tend to be less productive when they do.

Hatzius referred to academic studies indicating that obesity-related health issues lead to a reduction of over 3% in per-capita output, implying a total output hit of over 1% due to the high incidence of obesity in the US population.

Furthermore, if improved health outcomes lead to more productivity gains, GDP growth could exceed its current trend by between 0.6% and 3.2%.

"Historically, health advancements have lowered the number of life years lost to disease and disability by 10% per decade in DM economies, and we estimate that a 10-year step forward in health progress in excess of current trends could raise the level of US GDP by 1%," Hatzius concluded.