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    Healthy Returns: Novo Nordisk, Eli Lilly are tackling weight loss drug supply woes

    JOIN US FOR HEALTHY RETURNS SUMMIT ON MARCH 29 2023. REGISTER BELOW

    Good afternoon! All eyes are on Novo Nordisk and Eli Lilly again as Wall Street looks for signs that they can address one of the biggest hurdles they faced last year. Neither company has enough supply to meet the insatiable demand for their weight loss and diabetes drugs. 
    One month into 2024, the two drugmakers still haven’t fully resolved those supply issues. They don’t expect to soon. Still, Eli Lilly and Novo Nordisk appear to be making some encouraging progress.

    Eli Lilly achieved its goal of doubling its capacity for producing injectable incretin drugs by the end of 2023, the company’s Chief Financial Officer Anat Ashkenazi said during an earnings call Tuesday. Incretin drugs, such as Eli Lilly’s weight loss treatment Zepbound and diabetes injection Mounjaro, mimic hormones produced in the gut that suppress a person’s appetite and regulate blood sugar.
    Ashkenazi added that Eli Lilly will try to increase capacity with “equal urgency” this year. The company expects the most significant production increases to occur in the second half of 2024. 
    By that point in the year, Eli Lilly expects its production of sellable doses of incretin drugs to be at least 1.5 times the production of those doses in the second half of last year, Ashkenazi added.
    Among the company’s efforts to expand production is its new manufacturing facility in North Carolina. Ashkenazi said that the plant will start producing incretin drugs as early as the end of 2024, with products available to ship in 2025.
    The company still expects demand for incretin drugs to outstrip supply this year as it works to increase production, Ashkenazi noted. 

    Eli Lilly wasn’t the only weight loss drug producer to see positive supply developments in the last week. Novo Nordisk did, as well.
    Novo Holdings, which owns almost 77% of the voting shares in Novo Nordisk, said Monday it will acquire drug manufacturer Catalent in a $16.5 billion deal. 
    Catalent is critical to Novo Nordisk because it’s the main supplier of fill-finish work, which involves filling and packaging syringes and injection pens, for Wegovy. 
    Novo Nordisk will then buy three of Catalent’s manufacturing plants from Novo Holdings for $11 billion. Novo Nordisk said that purchase will gradually increase its filling capacity beginning in 2026.
    “Overall, we think this will further unlock supply, which is the key bottleneck for this market,” Yuri Khodjamirian, chief investment officer at Tema ETFs, told CNBC in reaction to the Catalent deals Monday. Tema in November launched an ETF whose key holdings include companies benefiting from the hype around weight loss drugs.
    The deal also means Novo Nordisk can better control the quality of Wegovy supply, which has previously been an issue at Catalent’s facilities, Khodjamirian added. 
    For example, Catalent’s factory in Brussels that fills Wegovy injection pens suffered several lapses in recent years and had to shut down twice, Reuters reported in July, citing FDA inspection documents. 
    The deal comes as Novo Nordisk tries to make broader strides toward improving supply this year.
    Last week, the Danish drugmaker also said it had more than doubled its supply of lower-dose versions of its weight loss injection Wegovy in January compared to previous months. Supply shortages forced Novo Nordisk to restrict the availability of those lower doses in the U.S. since May. 
    But why are those lower doses important? It’s because people are supposed to start Wegovy at a low dose and gradually increase the size over time to mitigate side effects such as nausea. So, more of those low “starter” doses means more new patients can begin treatment with Wegovy. 
    The company plans to “gradually” increase the overall supply of Wegovy throughout the rest of the year, executives added on the company’s fourth-quarter earnings call Wednesday.

    The latest in health-care technology

    The brain as the next frontier
    The implantable neurotechnology field is heating up. 
    Last week, Elon Musk announced that his startup Neuralink implanted its brain-computer interface into a human patient for the first time. Musk said the recipient is “recovering well,” according to a post on his social media site X, but the famously secretive neurotech company did not share any other details publicly. 
    Neuralink is developing a brain implant, called a brain-computer interface, or a BCI, designed to help patients with paralysis control external technologies using only their mind. It sounds like something out of a science fiction movie, but several companies like Synchron, Precision Neuroscience, Paradromics and Blackrock Neurotech have developed systems with these capabilities. 
    “Imagine if Stephen Hawking could communicate faster than a speed typist or auctioneer,” Musk wrote. “That is the goal.”
    Musk’s announcement marks a major milestone for Neuralink, but it’s not unexpected. Neuralink began recruiting patients for its first in-human clinical trial in the fall after it received approval from the U.S. Food and Drug Administration to conduct the study in May, according to a company blog post.
    The road to market is long for medical device companies. Neuralink will have to carry out more trials that prove the safety and efficacy of its BCI before it can clinch the final stamp of approval from regulators.
    Many competing BCI companies like Synchron are also working toward bringing products to market. On Thursday, Synchron announced it has acquired a minority equity stake in the German manufacturer Acquandas, which will help the company ramp up production of its flagship BCI to prepare for commercial demand. 
    Synchron’s stent-like BCI is delivered to the brain via the patient’s blood vessels. The company has implanted six patients in the U.S. and four patients in Australia so far.
    “There are millions of people with paralysis who we think are in need of this technology, and we’re preparing to produce in high volumes,” Synchron CEO Tom Oxley told CNBC in an interview.
    Feel free to send any tips, suggestions, story ideas and data to Annika at [email protected] and Ashley at [email protected] More

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    Eli Lilly says weight loss drug shows promise as treatment for fatty liver disease

    Eli Lilly said its highly popular drug used for weight loss and diabetes, tirzepatide, showed promise as a treatment for fatty liver disease in a midstage trial. 
    The results add to a long list of potential health benefits of the treatment besides helping patients shed pounds and regulate blood sugar under the drug’s brand names, Zepbound and Mounjaro. 
    The pharmaceutical giant said in its fourth-quarter earnings release that tirzepatide succeeded in a phase two trial as a treatment for a serious form of liver disease called MASH. 

    An injection pen of Zepbound, Eli Lilly’s weight loss drug, is displayed in New York City, U.S., December 11, 2023. 
    Brendan McDermid | Reuters

    Eli Lilly on Tuesday said its highly popular drug used for weight loss and diabetes showed promise as a treatment for fatty liver disease in a midstage trial. 
    The initial study results add to a long list of potential health benefits of the treatment, known as tirzepatide, besides helping patients shed significant pounds and regulate blood sugar under the drug’s brand names, Zepbound and Mounjaro, respectively. Those additional benefits could potentially expand the limited insurance coverage for weight loss drugs, most of which cost close to $1,000 per month. 

    The pharmaceutical giant said in its fourth-quarter earnings release that tirzepatide showed positive results in a phase two trial as a treatment for a serious form of liver disease called metabolic dysfunction-associated steatohepatitis, or MASH.
    There are currently no cures or medicines available to directly treat MASH. The condition is characterized by excess fat buildup and inflammation in the liver and can lead to liver scarring, also known as fibrosis. An estimated 3% to 5% of adults in the U.S. are affected by MASH, according to some studies. 
    The trial followed around 190 adults with MASH with severe stages of liver scarring, Eli Lilly executives said on an earnings call Tuesday.
    At all dose sizes, tirzepatide met the trial’s main goal of helping patients become free of the disease with no worsening of liver scarring compared with people who did not receive the treatment, according to the company’s earnings presentation. 
    For example, around 74% of patients who received the highest tirzepatide dose of 15 milligrams became free of MASH with no worsening of liver scarring after a year, compared with around 13% of those who received a placebo. 

    It was less clear how much the drug reduced liver scarring, which was the second aim of the trial. Eli Lilly did not disclose whether tirzepatide met that goal, but the company said the drug’s effect on decreasing liver scarring was “clinically meaningful” across all dose sizes. 
    Eli Lilly is “equally encouraged” by tirzepatide’s results in reducing liver scarring, the company’s chief scientific officer, Dan Skovronsky, said on the call. 
    “There’s nothing bad in the data that would stop us from going to phase three,” he added. “I think having a positive phase two trial here with really meaningful data in MASH obligates us to think about next steps.” 
    He noted that adverse events were consistent with other studies on tirzepatide in patients with obesity and diabetes, without providing further details. Previous trials on Zepbound showed that patients experienced diarrhea, nausea and vomiting, among other symptoms.
    Eli Lilly will present the full results from the phase two trial at a medical conference later this year.

    More CNBC health coverage

    Leerink Partners analyst David Risinger called the initial trial results “positive” in a research note Tuesday. He said a larger and longer phase three study could increase the odds of tirzepatide causing a statistically significant decrease in liver scarring.
    Tirzepatide works by activating two naturally produced hormones in the body: glucagon-like peptide-1, known as GLP-1, and glucose-dependent insulinotropic polypeptide, or GIP.
    The combination is said to slow the emptying of the stomach, making people feel full for longer and suppressing appetite by slowing hunger signals in the brain.
    Several other drugmakers are trying to develop treatments for MASH. 
    They include Eli Lilly’s main rival Novo Nordisk, which is studying semaglutide, also known as Wegovy for weight loss and Ozempic for diabetes, in a late-stage trial in MASH. But a midstage trial on semaglutide in MASH patients had mixed results, according to data released in 2022. 
    Unlike tirzepatide, semaglutide only targets GLP-1.
    Don’t miss these stories from CNBC PRO: More

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    Toyota investing $1.3 billion in Kentucky to build all-electric, three-row SUV

    Toyota Motor is investing $1.3 billion in a Kentucky plant to produce a new all-electric, three-row SUV for the U.S. market, the company said Tuesday.
    The vehicle is expected to go into production between late 2025 and early 2026.
    The announcement comes as consumer adoption for EVs has been slower than many expected, causing some automakers to delay or cut investment plans for all-electric vehicles.

    Akio Toyoda, Chairman of Toyota Motor Corporation.
    Yoshikazu Tsuno | Gamma-rapho | Getty Images

    Toyota Motor is investing $1.3 billion in a Kentucky plant to produce a new all-electric, three-row SUV for the U.S. market, the company said Tuesday.
    The vehicle is expected to go into production between late 2025 and early 2026, according to a company spokeswoman. It is part of previously announced plans by the Japanese automaker to invest $35 billion in battery-electric vehicles, or BEVs, through 2030.

    A company spokesperson declined to provide additional details for the upcoming vehicle, which will likely compete with current vehicles such as the Rivian R1S and Kia EV9.
    The announcement comes as consumer adoption for EVs has been slower than many expected, causing some automakers to delay or cut investment plans for all-electric vehicles.
    Toyota, the world’s largest automaker, is among the most prominent automakers to say that while EVs are a solution to reach carbon neutrality, they’re not the only one. The automaker continues to invest in hybrids, plug-in hybrid vehicles and other technologies such as hydrogen fuel cells.Don’t miss these stories from CNBC PRO: More

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    How to reduce — or avoid — airline fees for checked bags

    Most airlines charge travelers who opt to check a bag.
    Passengers paid about $6.8 billion in total baggage fees in 2022, according to the Bureau of Transportation.
    There are several strategies travelers can consider to reduce or avoid fees for checked bags, experts said.

    Izusek | E+ | Getty Images

    Checking a bag at the airport has gotten pricier for travelers — and harder to avoid.
    A checked bag is one stored in a plane’s cargo hold during a flight. While that service was free in years past, it’s now standard for major airlines to charge for checked bags, experts said.

    Major U.S. airlines started doing so in 2008, levying around $15 a bag, said Katy Nastro, travel expert at cheap flight alert platform Going.

    Today, it’s about double: $30 to $35 for one checked bag, Nastro said. That means travelers who check a bag on each leg of a round-trip itinerary can add an extra $60 to $70 to the total cost of their basic fare. Rates generally increase for each additional checked bag.
    Passengers paid about $6.8 billion in total baggage fees in 2022, the last full year for which data is available, according to the Bureau of Transportation. That’s up 17% from roughly $5.8 billion in 2019, even though fewer passengers flew on U.S. carriers in 2022, Bureau of Transportation data shows.
    More from Personal Finance:4 big ways to save on your next tripDon’t let this passport quirk upend your next vacation2024 is the ‘year of globetrotting,’ travel expert says
    “Unless baggage is included in a higher-class (premium economy, first, business class, etc.) ticket, passengers should expect to pay a fee,” Eric Napoli, vice president of legal strategy at AirHelp, which helps passengers file claims for airline compensation, explained in an email.

    Here’s some advice from travel experts on how to reduce those fees, and perhaps avoid them altogether.

    Fly with certain airlines

    Daniel Garrido | Moment | Getty Images

    There are a few airlines that still don’t charge for a checked bag.
    Southwest, for example, is the one outlier in the U.S., experts said. The carrier allows two free checked bags.
    The “Big Three” Gulf Airlines — Qatar Airways, Etihad Airways and Emirates — still offer free baggage, as does Air India, according to Aiden Higgins, senior editor of The Broke Backpacker website.
    These carriers may have certain restrictions, including for luggage size and weight.
    Of course, just because they may not charge for bags doesn’t mean their fares are cheaper than others when assessing overall cost. They also may not fly routes that work for travelers’ itineraries.

    Combine bags

    Travel partners may also consider combining suitcases.
    A family of four may be able to condense four bags into two, potentially cutting checked-bag fees in half, experts said.

    Unless baggage is included in a higher-class (premium economy, first, business class, etc.) ticket, passengers should expect to pay a fee.

    Eric Napoli
    vice president of legal strategy at AirHelp

    There is one caveat, though. Passengers need to consider airlines’ weight requirements for bags and whether consolidating suitcases could trigger additional fees.

    Skip checking a bag

    Traveling light — only with a personal item and/or carry-on bag, depending on what your airline and fare class permit for free — is “the only fool-proof way” to avoid paying a checked-bag fee, Napoli said.
    Of course, this won’t be possible for everyone.
    But passengers “can sneak quite a bit into the cabin” within airline limits, especially with a well-packed backpack — aided by packing cubes — combined with a sling bag and/or a tote bag, Higgins said.
    Passengers with softer, duffel-bag-type luggage that’s more pliable may have an easier time meeting carry-on size requirements versus those with a hard case, Nastro said.

    Consider a fare upgrade

    Even the major carriers generally charge for carry-ons on basic economy fares, experts said.
    A higher-tier ticket for a higher cost might include a baggage allowance, in which case passengers may wind up paying the same total price compared to a lower-cost fare while also getting some additional benefits such as the ability to choose a seat or make flight changes, experts said.
    “If you are using an aggregator like Skyscanner, it can sometimes work out cheaper to go with the 2nd or 3rd most expensive flight if the airline is [also] offering baggage,” Higgins said.
    Travelers should read the fine print to discern what baggage is included in their ticket, which varies from airline to airline and ticket class, Napoli said.

    Add bags early

    Whether you’re checking a bag or carrying one on for a fee, declaring that early can save you money.
    For example, a standard passenger flying Spirit Airlines from New York to Los Angeles this week would pay $39 for a carry-on, according to the carrier’s price chart. A checked bag is cheaper at $34.
    But these prices assume passengers add their bags during the initial online booking process. Those who wait to pay until arriving at the gate, for example, would pay $99 for a checked bag or carry-on, the chart indicates.

    For those who know they’ll need to add a bag, “nine times out of 10 it’s always cheaper to do it upon booking” instead of deferring until later, Nastro said.
    Relatively high fees for “add ons” such as bags mean a budget carrier may not be the cheapest option when assessing total cost and value, she said.

    Buy a luggage scale, lightweight bags

    Buying and using a luggage scale before traveling can help travelers avoid surprise fees at the airport due to exceeding a weight limit on checked bags.
    “At least weigh your suitcase before you even book the flight,” Higgins said. “Once upon a time, airlines might have turned a blind eye” to additional weight, but not anymore, he said.

    Travelers can also invest in ultralight luggage, Higgins said.
    “You can easily save 1 or 2 [kilograms] by buying specially designed ultralight travel gear,” he said. However, such bags can be pricey and may not be as durable as sturdier packs, he said.

    Get a credit card or join a frequent flier program

    “Many credit cards, especially airline-branded cards, offer free checked bags as a perk,” said Napoli.
    Of course, travelers shouldn’t necessarily open a credit card account just for this perk, experts said. Some cards might also carry an annual fee, though travelers might come out ahead if their annual benefits (e.g., savings on bag fees) eclipse that expense.
    “It varies credit card to credit card and airline to airline,” Nastro said.
    Joining an airline’s frequent flier program may also come with perks for travelers such as free or extra baggage, Higgins said.Don’t miss these stories from CNBC PRO: More

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    Eli Lilly results blow past estimates on strong Zepbound launch, surging Mounjaro revenue

    Eli Lilly reported fourth-quarter revenue and adjusted earnings that topped expectations on the strong launch of its new weight loss drug, Zepbound, and higher prices for its blockbuster diabetes treatment, Mounjaro.
    The quarterly results are the first to include sales of Zepbound, which won FDA approval in early November. 
    Eli Lilly will hold an earnings call with investors at 10 a.m. ET on Tuesday.

    An injection pen of Zepbound, Eli Lilly’s weight loss drug, is displayed in New York City, U.S., December 11, 2023. 
    Brendan McDermid | Reuters

    Eli Lilly on Tuesday reported fourth-quarter revenue and adjusted earnings that topped expectations on the strong launch of its new weight loss drug, Zepbound, and higher prices for its blockbuster diabetes treatment, Mounjaro.
    Zepbound, which won approval from U.S. regulators in early November, raked in $175.8 million in sales for the fourth quarter.

    The quarterly results are the first to include sales of Zepbound, which some analysts say could post more than a billion dollars in sales in its first year on the market and eventually, become the biggest drug of all time. 
    Shares of Eli Lilly were up about 5% in premarket trading Tuesday.
    Here’s what Eli Lilly reported for the fourth quarter compared with what Wall Street was expecting, based on a survey of analysts by LSEG, formerly known as Refinitiv:

    Earnings per share: $2.49 adjusted vs. $2.22 expected
    Revenue: $9.35 billion vs. $8.93 billion expected

    Eli Lilly posted net income of $2.19 billion, or $2.42 a share, for the fourth quarter. That compares with a profit of $1.94 billion, or $2.14 a share, a year earlier. 
    Excluding one-time items associated with the value of intangible assets, among other adjustments, the company posted a per-share profit of $2.49 for the fourth quarter of 2023.

    The pharmaceutical giant booked fourth-quarter revenue of $9.35 billion, up 28% from the same period a year ago.
    Eli Lilly also issued its full-year forecast for 2024, which was generally in line with expectations.
    The company expects full-year adjusted earnings of $12.20 to $12.70 per share. Eli Lilly also forecast 2024 revenue of $40.4 billion to $41.6 billion.
    Analysts surveyed by LSEG expected full-year adjusted earnings of $12.43 per share and sales of $39.38 billion.
    Shares of Eli Lilly jumped almost 60% last year as weight loss drugs skyrocketed in popularity despite hefty price tags, mixed insurance coverage and a handful of unpleasant side effects. With a market cap of roughly $673 billion, Eli Lilly is the largest pharmaceutical company based in the U.S. 

    Mounjaro sees higher demand, prices

    Higher prices for older drugs, particularly Mounjaro, helped drive up Eli Lilly’s revenue, the company said. Mounjaro booked $2.21 billion in sales for the fourth quarter, up from just $279.2 million in the same period a year ago. 
    Analysts had expected the drug to bring in $1.73 billion in worldwide sales, according to estimates compiled by FactSet.
    That increase reflects heightened demand but also “higher realized prices” in the U.S. due to decreased use of Eli Lilly’s savings card programs as access to the drug continued to expand during the quarter, the company said. The savings card programs aim to help lower the out-of-pocket costs for drugs like Mounjaro for patients.
    Revenue growth was also driven by sales of Eli Lilly’s breast cancer pill Verzenio, which rose 42% to $1.15 billion for the quarter due to increased demand and higher prices.
    That result came in under analysts’ expectations, however, which called for $1.18 billion in sales for the period. 
    Sales of Jardiance, a tablet that lowers blood sugar in Type 2 diabetes patients, climbed 30% to $798.1 million for the fourth quarter. Analysts had expected $771.8 million in sales from Jardiance. 
    Jardiance, which Eli Lilly shares with Boehringer Ingelheim, is among the first 10 drugs selected to face price negotiations with the federal Medicare program. Those price talks heated up last week after Medicare sent its initial price offers for each drug to the manufacturers. 

    More CNBC health coverage

    Meanwhile, Eli Lilly said higher prices were offset by lower prices of its other diabetes medicine Trulicity and insulin product Humalog.
    Trulicity reported $1.67 billion in revenue, down 14% from the same period a year ago. Analysts had expected Trulicity to get $1.77 billion in sales for the quarter. 
    Humalog saw $366.6 million in revenue for the quarter, down 33% from the year-ago period. Analysts had expected the medicine to book $438 million in sales, according to FactSet.
    That decrease isn’t a surprise: Last year, Eli Lilly said it would cut prices of Humalog and another commonly prescribed insulin by 70% and cap monthly out-of-pocket costs at $35 at certain retail pharmacies for people who have private insurance starting May 1, 2023.
    Eli Lilly will hold an earnings call with investors at 10 a.m. ET on Tuesday. 
    Executives will likely be asked about whether the company has made more progress in addressing the supply issues plaguing its weight loss and diabetes drugs. 
    There may also be questions related to the timing of the FDA’s decision on Eli Lilly’s experimental Alzheimer’s drug, donanemab, which significantly slowed the progression of the memory-robbing disease in patients at the early stages of it.
    The company did not mention the drug in its earnings release.
    This is breaking news. Please check back for updates. More

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    UBS beats earnings expectations, announces up to $1 billion share buyback

    The group posted a net loss attributable to shareholders of $279 million for the quarter. Analysts polled by LSEG had expected a net loss attributable to shareholders of $372 million.
    After that third quarter report, the market chose to focus on the bank’s strong underlying operating profit before tax, which was well ahead of expectations. For the fourth quarter, that came in at $592 million.

    Fabrice Coffrini | Afp | Getty Images

    Swiss banking giant UBS on Tuesday narrowly beat fourth-quarter earnings expectations and announced that it would recommence share buybacks worth up to $1 billion in the second half of the year.
    The group posted a net loss attributable to shareholders of $279 million for the quarter, its second consecutive loss due to the costs of integrating fallen rival Credit Suisse. However, analysts polled by LSEG had expected a wider net loss of $372 million.

    Along with the share buybacks, UBS plans to propose a dividend per share of $0.70, up 27% year-on-year.
    In the third quarter, UBS had posted a bigger-than-expected net loss attributable to shareholders of $785 million — which factored in $2 billion in expenses related to the integration of fallen rival Credit Suisse.
    After that third quarter report, the market chose to focus on the bank’s strong underlying operating profit before tax, which was well ahead of expectations. For the fourth quarter, that came in at $592 million, below a company-compiled consensus of $762 million.
    “I’m very pleased that, on an underlying basis, we saw actually good profitability, and we saw also good momentum with clients. We had $22 billion of inflows in net new assets and also saw very good inflows in deposits across both wealth management and the P&C (personal and corporate banking), we have managed down exposure in non-core and legacy,” UBS CEO Sergio Ermotti told CNBC on Tuesday.
    “We also made further improvements in our targets to deliver cost savings by achieving a $4 billion exit rate in cost savings in 2023, so all that contributed to good results, and this gives us the confidence to now tackle the next phase of our restructuring and integration.”

    UBS has so far reported a quicker than expected return of client inflows to Credit Suisse’s wealth management business since the takeover, which it completed in June 2023.
    The integration of its stricken rival continues, with UBS embarking on a process of cutting around 3,000 Credit Suisse jobs as part of the wider restructure.
    UBS announced on Tuesday that it had completed the first phase of the strategic integration, and that the full merger is expected to be completed by the end of the second quarter.
    Here are some other highlights:

    Total group revenues were $10.86 billion, down from $11.7 billion in the third quarter.
    CET1 capital ratio, a measure of bank liquidity, was 14.5%, compared to 14.4% the previous quarter.
    Net new assets in the flagship Global Wealth Management were $77 billion, while net new deposits across GWM and the personal and corporate banking division also totaled $77 billion, since closing the Credit Suisse acquisition in 2023.
    For the fourth quarter, GWM net new assets were $21.8 billion.

    Ermotti told CNBC’s Silvia Amaro on Tuesday that delays are the biggest risk to the Credit Suisse integration, given the tight targets UBS has set for itself.
    “2024 is a pivotal year in that sense, because we are merging in the first half of the year our two parent companies, we are merging the U.S. operation, we are merging the Swiss operations, and this will allow us then to start to realize the synergies,” Ermotti said.
    “The IT migration is the second major potential problem but we have a very concrete plan. If you think about it, we have 6,000 deliverable tasks that we need to execute, so we are planning very carefully and also in a way that doesn’t create concentration risk in the execution.”
    UBS shares have made an indifferent start to 2024, and were down 3.3% in early trade on Tuesday.
    Market to look past ‘accounting noise’ in coming years
    Given the various costs associated with the integration, the market will look past the headline figures in UBS earnings and focus on more fundamental indicators for the next few years, according to Morningstar Equity Analyst Johann Scholtz.
    “UBS has guided that they are looking only towards 2027 before we are really going to arrive at the situation where all of the accounting noise will be out of the results, but I think there are some other numbers that we can look at that give us a good indication of the underlying health of the business,” Scholtz told CNBC’s “Capital Connection” on Tuesday.

    He suggested the key number to focus on is net new money growth in the wealth management division, particularly the Credit Suisse legacy portion of that business.
    “The reason why net new money is really that important is because assets under management obviously includes market movement, so it really gives you a good indication of whether the combined entity manages to hold onto clients, and even possibly gain back some of the clients that Credit Suisse lost in its wealth management division due to concerns about the health of the Credit Suisse business,” Scholtz explained.
    “It’s also important to take note that the Credit Suisse portion of the wealth management business has actually been close to a breakeven, slightly loss-making position, so it’s really vital for that division that it gets some new assets under management to improve its fee income and return to profitability.” More

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    McDonald’s and Starbucks blame the Israel-Hamas war for slower sales — and the recovery might take a while

    McDonald’s and Starbucks both said the Israel-Hamas war and related boycotts hurt their sales in the latest quarter.
    Starbucks saw traffic to its U.S. stores fall as occasional customers stopped visiting.
    McDonald’s said the war hurt its Middle Eastern sales, as well as demand in majority Muslim countries and France.

    People dit at McDonald’s outdoor seating after going out on a Saturday night along Rothschild Street on June 11, 2022 in Tel Aviv, Israel. 
    Alexi Rosenfeld | Getty Images

    McDonald’s and Starbucks, two of the biggest U.S. restaurant companies, both said the Israel-Hamas war hurt their sales at the end of last year.
    Shares of McDonald’s fell nearly 4% on Monday, after it reported that a sales slowdown in the Middle East contributed to its fourth-quarter revenue miss. Starbucks’ stock has fallen roughly 2% since Tuesday, when the company reported that the war dented its U.S. sales in the final three months of the year, too.

    The two restaurant giants became some of the largest U.S. companies to say the Middle East conflict hurt their sales — and will likely hit demand in future quarters, as well. It is unclear whether other restaurant companies will see a similar downturn.
    Starbucks became a target of boycotts when Starbucks Workers United, which represents hundreds of the chain’s unionized cafes, posted in support of Palestinians, leading to backlash from conservatives. Starbucks sought to distance itself from the tweet, which the union deleted, and sued Workers United for trademark infringement.
    Starbucks CEO Laxman Narasimhan said Tuesday that the company’s sales in the Middle East struggled, but boycotts also hurt its U.S. cafes. The chain’s U.S. same-store sales rose 5% in its fiscal first quarter ended Dec. 31, but foot traffic fell.
    The lag in U.S. foot traffic largely came from customers who only visited occasionally, according to Narasimhan. Starbucks is looking to revive demand by offering more targeted promotions and introducing new drinks.
    For its part, McDonald’s saw fourth-quarter sales slip in the Middle East after its Israeli licensee offered discounts to soldiers, prompting some boycotts from customers who oppose the country’s offensive in Gaza. The Middle East typically accounts for about 2% of McDonald’s global sales and 1% of its global earnings before interest and taxes, according to TD Cowen analyst Andrew Charles.

    McDonald’s CEO Chris Kempczinski said Monday that the company saw weaker sales in the Middle East and majority Muslim countries, like Malaysia and Indonesia, as a result. France, which has the largest Muslim population in Europe, also saw weaker sales, although executives said pricing backlash also contributed to softer demand.
    McDonald’s doesn’t expect its Middle Eastern sales to recover until the war ends.
    “The ongoing impact of the war on these franchisees’ local business is disheartening and ill-founded,” Kempczinski told analysts on the company’s conference call.
    Unlike Starbucks, McDonald’s did not note any effect on its U.S. sales.
    Besides McDonald’s and Starbucks, some activists have also called for boycotts of Domino’s Pizza, Papa John’s, Restaurant Brands International’s Burger King and Yum Brands’ Pizza Hut.
    Yum Brands is scheduled to report its quarterly results on Wednesday, while Restaurant Brands is slated to share its earnings on Feb. 13. Domino’s and Papa John’s are not expected to release their fourth-quarter earnings until the end of the month.
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    Novo Nordisk parent to buy Catalent for $16.5 billion to expand Wegovy supply

    Novo Nordisk’s parent company said it will acquire drug manufacturer Catalent in a $16.5 billion deal that could help boost the supply of the highly popular weight loss injection Wegovy and diabetes shot Ozempic. 
    Catalent is the main supplier of fill-finish work, which involves filling and packaging syringes and injection pens, for Wegovy. 
    Novo Nordisk will then buy three of Catalent’s manufacturing sites from its parent company for $11 billion.

    Boxes of Novo Nordisk’s weight-loss drug Wegovy in Oslo, Norway, Nov. 21, 2023.
    Victoria Klesty | Reuters

    Danish drugmaker Novo Nordisk’s parent company, Novo Holdings, on Monday said it will acquire drug manufacturer Catalent in a $16.5 billion deal that could help boost the supply of the highly popular weight loss injection Wegovy and diabetes shot Ozempic. 
    Catalent is the main supplier of fill-finish work, which involves filling and packaging syringes and injection pens, for Novo Nordisk’s Wegovy. 

    Novo Nordisk will then buy three of Catalent’s manufacturing sites from Novo Holdings for $11 billion. Novo Holdings owns almost 77% of the voting shares in Novo Nordisk.
    Novo Nordisk and Novo Holdings said they expect the acquisition of the plants and the broader deal to buy Catalent to close at the end of 2024. 
    Novo Nordisk added that it expects its purchase to gradually help increase its filling capacity beginning in 2026. The company already contracts the three plants, which are located in Italy, Belgium and Bloomington, Indiana. 
    Catalent shares closed more than 9% higher on Monday after the deal announcement. The company has a market value of roughly $10 billion. Novo Nordisk’s stock closed around 4% higher, for a market value of about $407 billion.
    Shares of Novo Nordisk jumped almost 53% last year as Wegovy and Ozempic soared in popularity — and slipped into shortages — for their ability to help patients lose significant weight over time.

    The Catalent deal is the company’s latest effort to boost manufacturing capacity for its drugs as it faces competition from Eli Lilly and other emerging competitors in the weight loss drug market.
    Last year, the company announced plans to invest in new production facilities in Denmark and France. Novo Nordisk also said last week that it has more than doubled the number of Wegovy starter doses it’s shipping to the U.S., which allows more patients to begin the treatment.
    Under the terms of the deal, Novo Holdings will buy Catalent for $63.50 a share in cash, a premium of 16.5% to Catalent’s closing price on Friday.
    The deal to buy Catalent has the backing of activist investor Elliott Investment Management, which has a stake in the U.S. company, according to Novo Holdings. 
    Notably, some of Catalent’s factories that manufacture Wegovy have been linked to regulatory problems in the past. Reuters reported in July that Catalent’s factory in Brussels that fills Wegovy pens had repeatedly breached U.S. sterile-safety rules in recent years and that staff had failed to perform required quality checks.
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