Ozempic and Saudi Sportswashing

A drug to cure obesity and legal bribery

Author

Will Caplan
December 31st, 2023 • Reading Time: 7 minutes

Have we cured obesity?

What happened?

In the middle of 2021, the FDA (Food and Drug Administration) approved WeGovy to treat obesity in the US. A similar drug called Ozempic had been helping with weight loss for diabetics previously.

Ok, I know what some of you are thinking “Drugs to treat being overweight? Just exercise and eat less” and you would be right. But these drugs aren’t for your Dad who ate too much Christmas pudding. This is a drug prescribed to a demographic of people that cost the UK economy 3% of its GDP (~£58bn) treating the externalities Obesity causes.

WeGovy and Ozempic are in a category of drugs called Semaglutides and they work by essentially suppressing your appetite. These drugs are some of the most effective weight loss drugs in history and the data exists to show it.

This is Wegovy flagship trial showing its effectiveness against a placebo. It has taken a while for these drugs to reach notoriety because they need to filter into clinics after approval.

Why does this matter?

Obesity is a diagnosable condition and like all diseases it has co-morbidities. A co-morbidity (co-morbid) is another disease you are more likely to get as a result of your existing condition. Obesity has a lot of co-morbids. You are essentially more likely to be diagnosed with all the other major diseases that kill people, including cancer, heart disease, stroke, diabetes, and depression. 

As a result of being obese, patients go and get diagnosed with these co-morbids which cost the government an eye-watering amount of money. 

Curing obesity would be one of the great achievements of the medical generation because you can prevent deaths from 100s of other diseases.

Yet I sense there will be some readers recoiling at the concept of “curing obesity with medication” as it is an entirely self-inflicted condition. I can empathise with this feeling but I don’t think treatments are mutually exclusive; in medicine, we call this longitudinal care. We can and should treat multiple parts of the same condition - we can medicate people whilst also teaching them new habits. 

Imagine spending £58 billion a year on infrastructure, or maybe better for the readership of this newsletter, tax breaks, entrepreneurial incentives, or subsidies.

What does the future look like?

Novo Nordisk share price YTD

I am yet to speak about the business opportunity here. These drugs matter because they are set to make pharma companies billions. Obesity is even more of a problem in the US, the home of this stupid 2600-calorie drink. Due to the nature of the remarkably problematic healthcare system, drug companies can charge huge fees for drugs there.

WeGovy in the US costs a patient $16,188.24 per year (their insurance company will likely pay for it) and there are 14 million obese people, which is a ~$230bn revenue opportunity. As a result of this massive business opportunity, Novo Nordisk is now the most valuable company in Europe and is up 51% year to date.

Pharma have been looking for their post-COVID money maker and I think they just found it.

Jack

Saudi Arabian Sports Washing

What has happened?

Earlier this month Golf’s Jon Rahm (former world number 1 and 2-time major winner) announced he would be leaving the PGA Tour and heading to the new LIV Tour.

Obviously, from a golf perspective, this is a massive deal (not least for Rahm's bank account where he reportedly got over $450 million) but what I think is potentially more noteworthy is the much larger geopolitical levers at play.

It’s widely known that the LIV Tour is really an extension of the Saudi Arabian government. The Saudi Public Investment Fund (PIF), is worth over $700 billion and - interestingly holds stock in companies like Uber (owns 5%!) - is behind the LIV Tour with the goal of promoting The Kingdom as a place of tourism, hospitality and commerce, or what might be called ‘sportswashing’.

They have spent over $7 billion on sports to date and show no signs of slowing down. A huge number of elite sports now have Saudi owners (Newcastle United), new leagues (LIV Golf Tour) or hosted events (F1 race if Riyadh).

Rahm with Greg Norman (CEO of LIV Golf)

Why does it matter

Indeed, this investment is part of the much larger 2030 Vision to shift their economy from a dependency on oil and gas, as quite naturally they can see countries shifting from fossil fuels to renewable energy. This could be disastrous as so much of their economy is driven by exporting fossil fuels. So the government is seeking to restructure their economy to be less dependent on this waning industry.

What is interesting is that it seems to be working.

Not only are sporting stars leaping to the Saudi’s (very deep) pockets, but it seems geopolitically that it’s working too. Joe Biden made a notable visit in 2022, giving Mohamed Bin Salem (MBS) - The Crown Prince - a now famous fist-bump, they will almost certainly host the 2032 Football World Cup and their tourism numbers are slowly climbing.

The narrative also seems to be shifting. When the initial tranche of PGA Tour golfers left to join the LIV Tour there were calls that they were taking blood money and that they were complicit in heinous humanitarian crimes. Now when Jon Rahm moved the negative press was centred around his sport rather than the political significance.

What does it say about the future?

The Kingdom’s human rights record is at very best dubious and at worst deplorable, but if they keep pouring money into the hands of the right people it seems very plausible the 2030 Vision might become a reality. So in a few years when booking your holiday in Spain, you might consider going to Saudi Arabia instead. 

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