Abbott Laboratories Is the Latest Company to Get Involved in the Weight Loss Market. Here's How.

One of the biggest themes in the healthcare industry right now is the rise of effective new obesity and diabetes medications. Novo Nordisk and Eli Lilly are dominating the space with blockbuster drugs including Ozempic, Rybelsus, Wegovy, Mounjaro, and Zepbound.

As demand for these glucagon-like peptide-1 (GLP-1) agonists continues to surge, other pharmaceutical companies, including Hims & Hers Health and start-up Ro, are looking to make inroads with their own versions.

But savvy investors understand that other opportunities exist alongside the hype around GLP-1 agonists.

Among the better-known products of Abbott Laboratories (ABT -0.55%) are its nutrition drinks such as Ensure and Pedialyte, and its baby formula brand, Similac. The company’s newest protein shake, Protality, might just be a much-needed complement to the new diabetes and obesity medications for some people. Protality could also be an interesting new source of revenue for Abbott.

An important distinction

Novo Nordisk develops Ozempic, Rybelsus, and Wegovy. While the active ingredient in each of these treatments is the peptide semaglutide, it’s worth noting that only Wegovy is approved by the Food and Drug Administration (FDA) as a treatment specifically for adults seeking to lose weight. On the other hand, Ozempic and Rybelsus are GLP-1 drugs prescribed to patients with diabetes.

This same dynamic applies to Lilly’s Mounjaro and Zepbound. Both are formulations of the GLP-1 agonist tirzepatide, but only Zepbound is FDA approved for weight management.

Although diabetes treatments such as Ozempic, Rybelsus, and Mounjaro are not approved for weight loss, per se, losing weight can be a byproduct of taking the injections and thus patients taking them are also potential buyers of Abbott’s Protality.

Filling in the gaps

When taking these diabetes or obesity medications, patients typically experience reduced appetite. By consuming less food, people can unintentionally miss out on important vitamins, minerals, and nutrients, not to mention calories. This can result in reduced muscle mass, which can negatively impact health.  This dynamic is where Abbott sees an opening for its nutrition drinks.

In late January, Abbott launched a new brand of protein shake called Protality. The purpose of the drink is helping patients pursuing weight loss be able to maintain muscle mass — all while keeping calorie intake relatively low. According to the company, an appropriate balance of micronutrients and protein can help preserve muscle mass.

The company says each 11-ounce Protality shake includes

  • 30 grams of protein
  • 8 essential B vitamins
  • 4 grams of “comfort fiber” for digestive health
  • 1 gram of sugar
  • 150 calories
  • 25 vitamins and minerals

Abbott isn’t trying to dethrone Ozempic, Mounjaro, or their sibling treatments. Rather, the company is smartly attempting to carve out a unique niche in the weight loss industry.

Does Protality make Abbott stock a buy?

Given the staggering popularity of Ozempic, Wegovy, Mounjaro, and Zepbound, Abbott’s latest formula may be of interest to a lot of people. But Abbott investors need to put the Protality market in prospective. In 2023, the company generated $40 billion in revenue, with nutrition products accounting for about 20%. Sales from medical devices is, by far, Abbott’s largest revenue stream.

I see Protality as an interesting concept, and one that could very well spur growth in an established portfolio of nutrition products. However, Abbott’s pursuit of this angle of the weight loss market is unlikely to generate returns commensurate to a weight loss drug.

Nevertheless, the stock could be worth putting on your radar. It will be interesting to see if the company’s nutrition segment experiences any noticeable growth, and more importantly, where that growth is coming from. While Protality might appear to have some encouraging prospects, it is going to take a lot to make a significant change in Abbott’s overall operation.

Adam Spatacco has positions in Eli Lilly, Hims & Hers Health, and Novo Nordisk. The Motley Fool has positions in and recommends Abbott Laboratories. The Motley Fool recommends Novo Nordisk. The Motley Fool has a disclosure policy.

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