The war against obesity knows no boundaries. 

On Tuesday, Novo Nordisk scored approval to sell its Wegovy weight loss drug in China. That’s a big win for the Danish pharmaceutical giant — though the company has precious little time before competitors flood in, too. With shortages already widespread, can Novo Nordisk make the most of the opportunity?

The Weighting Game

Novo Nordisk is already making big money in China. Ozempic — its drug for treating diabetes, which also uses semaglutide as a core active ingredient — has been available in the country since 2021. Last year, Ozempic sales in China doubled to around $698 million. But China’s market for the general weight loss drug Wegovy is far bigger than its market for diabetes treatment — in fact, it’s the biggest in the world. Nearly half of the nation’s 1.4 billion citizens are overweight or obese, according to a 2023 report, a figure that’s only expected to grow in the coming years (the prevalence of diabetes among Chinese adults, for reference, is around 11%).

Unfortunately for Novo Nordisk, plenty of competitors have also realized the market potential for weight loss drugs in China. Meanwhile, the window for Wegovy’s prime exclusivity is already starting to slip shut:

• Novo Nordisk’s patent for semaglutide in China will sunset in 2026, opening the door to generic versions: In Europe and Japan, its patent isn’t set to expire until 2031, while it lasts until 2032 in the US. An ongoing legal fight at the Beijing Intellectual Property Court could bring about the expiration even sooner.
• Meanwhile, Reuters reported earlier this month that clinical trial records show at least 15 generic versions of the drug are already in development in China. And in May, Eli Lilly gained Chinese regulatory approval for its diabetes drug Mounjaro, likely clearing the way for general weight loss drug Zepbound, which shares the same active ingredient, tirzepatide, as Mounjaro.

Still, excitement over the news further fueled Novo Nordisk’s unending share price climb, with shares increasing another 3% by end of day Tuesday.

Boom or Bust: The initial launch of Wegovy in China will be volume-capped, available only to patients with a comorbidity who are willing to pay out of pocket. Even so, the new market will add to the company’s acute supply problem. Wegovy has remained on the FDA’s official shortages list for over a year — clearing the way for a market of “compounded” versions in the US. On Monday, the company announced it was investing $4.1 billion to build a 1.4 million-square-foot production facility for both Ozempic and Wegovy in Clayton, North Carolina. The plant, however, won’t be completed until sometime between 2027 and 2029, so an even bigger crunch may be coming soon.

LVMH Moët Hennessy Louis Vuitton showed impeccable timing: On Monday, the French luxury house acquired Spiza, the parent of high-end Swiss watchmaker L’Epée 1839, as it seeks to right-side a year of mediocre stock performance.

High-End Slowdown

“It’s not like you have to drink the ocean” — ce n’est pas la mer à boire — is the French expression for when something shouldn’t be that hard. And selling the world’s nicest things — LVMH owns Bulgari, Christian Dior, and Hublot, among others — to the world’s richest people doesn’t seem like it ought to require imbibing the Pacific. Nevertheless, Bain forecasts flat global luxury sales this year, worsening the trend from last year, when sales grew a modest 4% to €362 billion ($388 billion). By comparison, from 2021 to 2023, sales rose 24% from 2019 levels.

Bain wrote in a report earlier this month that beyond the obvious factors — uncertainty in the US and Chinese economies —  a “self-inflicted” “creativity crisis” and price hikes are contributing to the slowdown. LVMH, which reported just 3% sales growth to €20.7 billion ($22 billion) in Q1, can at the very least count the Spiza acquisition as a potential jolt to creativity and prestige:

• L’Epée 1839 is renowned for its elaborately engineered watches and clocks, like the Time Machine, which are essentially mechanical sculptures that (unsurprisingly) cost around $30,000 apiece. The terms of the acquisition were not disclosed, but the deal follows in the footsteps of one leading competitor.
• LVMH’s Swiss rival Richemont has seen its stock rise around 24% since the start of the year, outperforming LVMH (up just .44%) and France’s Kering (down 18%) on the strength of its jewelry and watch brands Cartier, Van Cleef & Arpels, and Piaget, which have helped it weather the year better than the competition.

If You Can’t Beat ‘Em, Rejoins-les: Not to be outdone, LVMH’s CEO — Europe’s richest man, Bernard Arnault — has also taken a stake in Richemont, according to a Bloomberg report (the stake is too small to require public disclosure). A decade ago, Arnault and LVMH previously surprised design house Hermès when he built up a 23% stake through a web of intermediaries.

Expensive Chick: And as if obscenely priced handbags, watches, jewelry, and champagne weren’t enough, last week LVMH acquired a majority stake in 100-year-old Parisian bistro Chez L’Ami Louis, a Mecca for gourmands with wallets as fat as their guts. According to an image of the eatery’s menu, posted on Tripadvisor, a single roast chicken will set you back a whopping €94 ($100) — we’ll stick to the Costco poulet roti.

Much like newspapers and malls, the casual dining industry has been on the brink of destruction for what feels like forever. But now, many in the sector are starting to fall off the edge. 

Let’s Stay in Tonight

This week, Hooters — the chain known for its chicken wings and definitely not anything else — abruptly shuttered dozens of underperforming locations. This comes on the heels of Red Lobster filing for bankruptcy and Cracker Barrel CEO Julie Felss Masino calling the country store chain “just not as relevant as we once were.” Meanwhile, TGI Fridays, Applebee’s, and Outback Steakhouse have all cited underperformance for restaurant closures this year. 

Rick Cardenas, CEO of Olive Garden parent company Darden Restaurants, recently told investors the industry is seeing “a little bit of a shift” with fast-food customers opting for casual dining for a better value — “a little bit” being the optimal phrasing. Inflation pains are weighing heavily on Americans, especially when it comes to food costs:

• A survey from market researcher Vericast found that 67% of patrons said the increased cost of restaurant meals is pushing dining out of reach — an uptick from 64% the previous year. And the National Restaurant Association suggested consumer resiliency is starting to wane as restaurant sales reached $93.6 billion, marking a 0.4% decrease from April and the lowest monthly sales volume since October.
• Those high-cost pressures don’t seem to be bothering the wealthy, though, and dining out has become a bit of a luxury. According to Circana data reported by MarketWatch, only diners from households earning more than $200,000 a year visited restaurants more often in 2023 than they did in 2019.

Out With the Old: So how’s a casual, budget chain to stay competitive when diners want value but are also willing to spend more? Perkins — the 66-year-old chain whose previous parent company twice filed for bankruptcy — is rolling ahead with an extreme makeover. This week, the diner announced its rebranding as “Perkins American Food Co.” In addition to remodeling for a more modern look, company president Toni Ronayne told CNN the chain “will continue to evolve and explore pricing in our restaurants.” A fresh coat of paint might be all the sector needs.