Weight boss? Competition for Novo Nordisk

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0:38The Economist

0:45Hello and welcome to The Intelligence from The Economist. I'm your host, Rosie Bloor. Every weekday, we provide a fresh perspective on the events shaping your world.

1:00What was the first word humans ever uttered? It's impossible to know for sure, but a warning here to listeners who don't like profane language, according to a man who compiled a giant dictionary of slang, it may not have been a polite one. And in medieval England, profits from wool sales helped build towns and churches. Now, after a very long decline, the price of wool in Britain is at its highest for a decade. our correspondent finds out what the flock is going on.

1:37But first...

1:45Eating as much high-calorie food as possible made sense for our hunter-gatherer ancestors. And even in times of plenty, we've just kept on eating, creating an obesity crisis of global proportions. Then along came Novo Nordisk, a Danish company that in 2021 launched a drug which meant people no longer had to use willpower alone to suppress their appetite. Have you always had trouble with your weight? Me too. Discover the power of Wegovy. With Wegovy, I lost 35 pounds. Consumers loved it. And for over two years, Novo Nordisk effectively had a monopoly on weight loss drugs. But now it risks losing that prime position to a competitor.

2:29The weight loss market is one of the biggest markets in pharma history ever. Shalas Chitnis is our global business writer. In 2023, Eli Lilly launched a rival drug to Novos called ZepBound. And very quickly, ZepBound reached sales of nearly 5 billion, which is almost three quarters of what Novo had that year. This year, ZepBound is actually going to pull ahead of Vegowe. And in response, Novo's market value has dropped almost by two thirds from its peak in June 2024. And this year alone, its stock is down 50%. At the same time, Lilly's market value is up by more than a quarter. And it's within striking distance of being the first trillion dollar pharma company.

3:12So if Nova Nordisk had the first mover advantage, it sounds like they really blew it. How did that happen? Novo had a few missteps. The first is they underestimated how big the market for weight loss is going to be. And to be fair, there was no reference point before that. This was a completely new market. And when we talked to the boss, he mentioned that they were preparing for something like three times what a previous generation drug, which is not as effective, could be. So they were expecting that. In reality, it turned out to be almost 30 times that. So that was the first underestimation of the market size.

3:47The second is since Novo did not have enough capacity to meet the demand, there's a loophole in American drug market which allows pharmacies called compounders to make copies of these drugs while they're in shortage. So immediately, Novo was exposed to these cut price versions that it had no way of defending against. And the third thing, which I think is more important for its long term, is it underestimated how quickly this market became consumer driven. Traditionally, drugs are sold through a network of insurers and doctors, things like that. Whereas in weight loss, it is the consumers themselves that are driving demand, frequently paying for it out of pocket.

4:25So what has Novo done to try and reclaim its role? So quite a few things have happened at the company in the last six months. Firstly, in May, they replaced their CEO with Maziar Mike Duster. Then sometime in October, the entire board was shaken up. So all the independent directors resigned and Novo Nordisk Foundation, which essentially owns more than a quarter of Novo Nordisk, the pharma company, it essentially reasserted itself and took a greater control. And its chairman also became the chairman of Novo Nordisk. At the company level, the new CEO did a bunch of changes. So first in September, he announced layoffs, which is almost 9000 employees, which is more than a tenth of the workforce.

5:07and that included around 5 ,000 employees in Denmark. So at the time, it was the largest layoff in Danish history. He moved to kind of right-size the company as he would call it in terms of what it needed to be. And then he also said that he wants to focus Novo specifically on only obesity and diabetes. He felt that the company was kind of drifting a little bit away from its core focus areas. So a few changes there, mostly to focus and right-size the company to take advantage of the market ahead of it. But it sounds like it also had a problem with its marketing. I think that's a big part of it.

5:41Particularly in America, a lot of the demand for weight loss is directly driven by consumers. Even if they are not covered by the insurers, they would pay out of pocket for it through various channels. And this is something that Novo just was not set up for. Eli Lilly grasped that very quickly and had a few direct-to-consumer channels where he could go on the website, get a prescription from a telehealth doctor and buy the drug yourself. And Novo was very late to react to that. And so when I spoke to the CEO, he actually talked about making Novo think less like a pharma company and more like a consumer business.

6:14Pricing of a consumer goods with its seasonality is very different than pricing insulin. With our value chain and supply chain, we have to not plan our activities around a rigid forecast like we did with insulin again that never moved. But think more like Amazon, where you buy a goods today and then five seconds later you say, oh, I don't need it and you cancel it. And this is a very new area for pharmaceutical companies going direct to consumers. And is that going to be enough, Shailesh? I don't think it's going to be enough. It's definitely something that it needs to do quickly to at least not lose any more market share.

6:50In addition, I think the pipeline of drugs is also going to be very important. And with weight loss, initially there were a certain class of weight loss drugs that were only targeting total weight loss. But now as the market is evolving, the quality of the weight loss is also becoming important. So you don't lose as much muscle mass. You end up losing more fat. So that's one. Patients would like that. The other is fewer side effects as well, because a lot of these drugs also can induce nausea or vomiting in some patients. So the market is now evolving into the quality of the weight loss as well, not just the absolute number.

7:24And so it will need to have a portfolio of drugs to suit all these different needs. So what's your assessment? The two are neck and neck. Who's going to win? I think at this point, Elalili is a bit ahead. And its advantages are quite big in terms of both its product, which seems to show a higher weight loss, as well as its kind of commercial channel. And so it's going to be a bit difficult for Novo to catch up. Now, having said that, when I spoke to Mr. Dosteyer, it was very clear that he wanted Novo to be shaken up in a sense and have more of a focus. It's not clear whether he'll be able to manage that.

7:57but I think that's something we'll have to watch and see. Shalash, thank you very much. Thank you for having me.

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9:28In the beginning was the word, but what was it? Lane Green writes about language for The Economist. For Christians, it was the divine logos through which God created the world. But linguists think that language is possibly hundreds of thousands of years old. The first word that humans might have said when they realized they could use their voices to communicate is unknown.

9:57But for the world's leading expert on English slang, Jonathan Green, the first word is arse, or perhaps bollocks. The first example of arse you get is in a Latin Anglo-Saxon glossary called Volume of Vocabularies by Abbott Ailsprick. The actual entry is nartes, and it's an arse leer, and it's like bae lucas for testiculi. Oh, right now. Bay Lucas is bollocks. Yeah. You can't escape it. I went to visit Jonathan Green at his home in Marseille, where he works continually on his monumental dictionary of slang. He tells me that the English have been talking bollocks for at least a millennium. It's one of the first words attested in his dictionary, and indeed most common slang words concern things like body parts or sex, drunkenness, money, drugs.

10:50But he doesn't think that slang is trivial.

10:57In 2010, his dictionary came out in a door-stopping three-volume hardback edition. And since then, it has lived for free online. It's been expanded continually since then, too, with new meanings for existing words, entirely new words, and new earliest known citations. These are the Holy Grail, or if you like, the dog's bollocks for historians of slang. In the medieval era, the relative scarcity of writing makes it hard for us to know too much about Middle English slang. But slang lexicography becomes more straightforward in the early modern period, after the rise of printing. The first books on slang were not exactly scholarship.

11:40They were called beggar books. In the Middle Ages, the destitute relied on Christian charity, and this led some chancers to try various wheezes to seem needier than they were to raise money. But in 1538, Robert Copeland published The Highway to the Spittle House, a book that was meant to decode the grifter slang used in the underworld. It's one of the first mentions of the word booze, one of the slang words that has been with us the longest. Then it was spelled bouse, B-O-U-S-E. Of course, now it's B-O-O-Z-E.

12:19The first true scholarly attempt to make a slang dictionary comes in 1785 at the hands of Francis Gross. He's a former militia captain, said to be so fat that he had to be tied to his bed to stop him rolling off. But he also gave us the classical dictionary of the vulgar tongue. Now, this wasn't Judgmental, vulgar for Gross meant common, not rude. But he was writing about slang that allowed people to get round taboos. In Gross' era, the old names for the body parts had become quite unmentionable. And in his slang dictionary, for example, bottomless pit is defined only as the monosyllable. If you look under his entry for the venerable monosyllable, then you'll find pudendum muliebre, which is Latin for a woman's shameful thing.

13:07I'll leave it to you to guess what the monosyllable was. One of the purposes of slang was in an increasingly squeamish society to find ways to talk about sex and the body. Two slang lexicographers in the Victorian era, John Camden Houghton and John Farmer, were actually both said to write pornography on the side. Common slang can bind groups of people together. Eric Partridge showed this by collecting soldiers' vocabulary during the First World War. He said his intent was not to portray the men as supermen or as whiners, as sots or as saints, but just as they actually were. They coined terms like pip squeak and whiz bang for different kinds of shells that might kill them.

13:50They were bored and then suddenly terrified, so soldiers used ironic detachment to deal with the constant danger of death. For a young Jonathan Green, Eric Partridge was a challenge to do better.

14:06Partridge apologizes for including sexual terms. Green, who came up through the 1960s counterculture, embraces them. He's terrified. Although he's got sex, he's not really very keen on it. He follows Oxford, so we're taking the word shit. Oxford does not, of course, have fuck in 1937, but it has certain instances of shit. when it comes to some of the compounds and the phrases shit stir, then back comes the asterisk. After Oxford, he worked in underground magazines and even for a short time in what he calls top shelf, which is to say pornographic. Various writings on popular culture led to him being commissioned to write a short slang dictionary in the early 1980s.

14:57He knew nothing of lexicography at the time, But in the late 1990s, an inheritance and a publisher's commission allowed him to dedicate himself completely to his magnum opus. As I visit him, one volunteer is sending in slang called from the papers of a 19th century politician, such as rum touch for an eccentric or a Cyprian for a prostitute. Green was also expanding his lexus of gay terms by drawing on the work of Gary Symes, an Australian scholar who died before completing his dictionary of sexuality and slang. A lot of his stuff he takes from his collection of gay pornography from the 70s. And while in no way would I seek to belittle that, I wonder to what extent these were made up by the hacks when they were knocking them out.

15:47I mean, the things I like best about that is the wonderful titles they have. This includes the first known citation for bone queen, also known as a philator. For all its richness, many people equate slang with language thoughtlessly spoken by those who haven't mastered the standard language. But slang is not only not less than real language, arguably it's even more. Many of the words in a standard dictionary have only very specific referential meaning. name. Lanthanum points to a chemical element, but doesn't say much else. Slang words may refer to a much smaller range of things, but they also carry other channels of meaning.

16:29Who the speaker is, such as a Gen Z TikToker or a rapper or a Cockney. How they see the things they're describing, maybe with affection or fear or desire or contempt. And it even tells you how they want to be seen themselves.

17:14At its peak in medieval times, the wool trade was basically the beating heart of the English economy. Bella King works on The Economist's news desk. The trade of wool made up nearly all of England's export earnings. It made towns, it created small pockets of wealth in an otherwise poor island. But since those highs, the industry has been in decline. However, recently there has been a small uptick in demand for wool and prices have risen a little bit. Some are even talking of a wool renaissance. So how did wool come to play such a central role in Britain's economy? People in Britain have been breeding sheep for their fleeces since the Romans invaded.

18:02If you go back far enough in history, people basically just wore wool or linen. and English wool was considered the best in the whole of Europe and British sheep were known to be the most superior. The levy on the wool trade bankrolled wars, it made kings and abbots and lords rich. It was said that abbots and lords counted their wealth in sheep. So when did things all go wrong then? Since then, the industry has suffered a series of blows. After the Industrial Revolution, people started wearing a lot more cotton and then after the second world war synthetic fibers were invented and then when china entered the global market that was the final blow for the wool industry and yet you say that wool prices have gone up presumably that means demand for wool has gone up again it does mean that demand has gone up but the story is slightly more complicated than that the two big reasons why the price has been increasing.

19:01One is demand. There's been a surge in pent-up demand and the other is supply. So supplies have dwindled. So if we take demand first, because British sheep grow a specific kind of wool, it's not fine and soft like merino wool. It's coarser, it's better suited to our chilly climate. The core market for this type of wool is the global hospitality industry. When the pandemic hit that industry ground to a halt the problem with sheep is that they just keep growing wool no matter what the market wants so stockpiles grew those stockpiles have since cleared and at the same time the global hospitality industry they're back up and running again after the pandemic that's pushed prices up a second part of that equation is tastes may be changing.

19:54People are falling out of love with these cheap synthetic fabrics and they want natural fabrics that are biodegradable. Okay, so that's the demand side. And then you said there's also a supply issue. Around the world, sheep flocks are contracting. In England, sheep numbers have basically been falling since foot and mouth in 2001. Things really started picking up when Britain left the EU after Brexit and subsidies changed. The government has introduced new schemes. They are both less generous and they have more conditions attached to them. So farmers are generally less well-off than they were before Brexit but especially those farmers that keep a lot of sheep.

20:41We're at this sort of sweet spot where demand is rising and supply is falling. Another thing that's happening is sheep are feeling happier and they are producing better coats. Okay, Bella, I was along with you for the journey, but now you're telling me that happier sheep produce better wool. If you think about humans when they have acute periods of stress, like a breakup or bereavement, their hair often breaks, their nails become brittle. This happens for sheep as well. In 2018 there was this severe snap of winter weather that came quite late in the season. It hit in March. March is when most of the ewes were pregnant with lambs and so it was extremely stressful for the sheep and then that year the clip had this tender spot where it broke very easily.

21:36What we're seeing this year is the opposite of that. The weather is warmer, sunnier, sheep are feeling better and they're producing more shiny coats. So where does all of this leave the wool industry? The wool industry is still in a pretty dismal state. I don't think that we'll ever get back to the glorious days of the wool trade in Britain. Hopefully the price rise is sustainable and farmers will start to see more for their clip. But behind this good news is really just a story of an industry in decline and the struggles that farmers are facing. Bella, thank you so much for talking to me. Thanks for having me.

22:34That's all for this episode of The Intelligence. See you back here tomorrow.

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