To characterise Israel’s current activities in Lebanon as lacking strategy is premature, and probably inaccurate (FT View, October 1). On the contrary, it is arguably the first instance of a protagonist in the current conflict demonstrating strategic coherence.
Similarly inaccurate is the description of the conflict as a “cycle”. Terms such as “cycle of violence” have had some relevance for Israeli-Palestinian clashes over recent decades, but the current conflict is primarily one between major states, namely Israel and Iran (the latter having quasi-state allies or proxies).
Such actors do not engage in cyclical violence and fated escalation; their behaviour is considered, and influenced by perception of essential national interests. It is possible that the latter will cause Israel to strike Iran’s nuclear energy facilities in due course. If that were to happen, it would be a result of sufficient strategy, not a lack thereof; and it would follow a logical path — the same path that determines its current action against Hizbollah.
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
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Good morning. Hurricane Milton is hammering Florida. Conflict in the Middle East is still running hot. Fair to say we have already had several October surprises. Let’s hope CPI, out this morning, is not another. Email us with your fears: robert.armstrong@ft.com and aiden.reiter@ft.com.
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Is there a GLP-1 bubble?
AI gets a lot of attention. There have been thousands of think pieces on how it will transform society, and almost as many arguing that AI hype has driven tech stocks into bubble territory. Glucagon-like peptide-1 (GLP-1) obesity drugs get a lot of attention, too, for their impact on fashion, exercise and health. But almost no one seems to be wondering if there is a GLP bubble.
Eli Lilly and Novo Nordisk, which make the leading GLPs on the market, have wildly outperformed the S&P 500 for the past five years:
Eli Lilly has a price/earnings ratio almost as high as Nvidia’s:
Expectations for both companies are really high. Morningstar estimates the GLP-1 drug market will be worth $200bn by 2031, and analysts expect Eli Lilly and Novo Nordisk to take the lion’s share of it. Revenues are expected to nearly triple for Eli Lilly from now until 2031, largely driven by its GLP-1 blockbusters Zepbound and Mounjaro:
Novo Nordisk is on a similar trajectory, though Wall Street expects its GLP-1 revenues from Wegovy and Ozempic to start falling after 2029:
The free cash flow estimates for the two companies are even more astonishing, with both expected to pull in more than $35bn by 2031:
Are expectations set too high? There are several factors to consider.
Competition is fierce. Profitable drugs invite competitors with slightly different formulations or delivery methods. Here is a chart from Morningstar of aspiring GLP-1 market entrants. Novo Nordisk and Eli Lilly may both keep their edge for a while due to their own new products — Novo Nordisk already has an oral drug on the market, though it is not as popular as the injectables, and both companies are set to be first out of the gate on lower-dose oral GLP-1s. But Pfizer and Roche will follow soon after:
Then there are the patents. Novo is set to lose its US patent in 2032, while Eli Lilly is scheduled for 2036 (this partially explains its valuation premium over Novo Nordisk). But importantly for both, Novo Nordisk’s GLP-1 products lose their Chinese patents in 2026, potentially opening the US and European markets to trafficked generics.
The market will begin to discount the patent expirations years before they actually arrive. Shares in AstraZeneca traded sideways for years (at a single-digit price-to-earnings valuation) before the main patents on its blockbusters Nexium and Seroquel expired in the early teens. Pfizer launched its mega-blockbuster Lipitor in 1996. Its revenues peaked at almost $13bn in 2006 and were still about $10bn in 2010, the year before its US patent expired. But the stock had peaked by 2000 and traded at less than 10 times earnings from 2008 to 2011.
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It is also worth noting, in the context of competition, that while Lipitor was by far the best-selling of the cholesterol-fighting statin drugs, it was the fifth one to launch. Just because Lilly and Novo were the first in GLPs does not mean they will maintain their lead.
Price will also be a question going forward. The GLP-1s face Medicare price negotiations in 2027, and the CBO’s report from this week suggests that Medicare and other insurers may demand significant price reductions.
There is also uncertainty about future volumes. Here is Karen Andersen at Morningstar, one of the few analysts to express scepticism about the buy case for Lilly and Novo:
One of [the big questions] is how long patients will need to stay on therapy. So far from what we have seen, it is difficult to maintain weight loss when patients go off of therapy. Eli Lilly, Novo Nordisk and competitors are thinking of the best way to help patients stay compliant on a maintenance regimen. The answer may be to take the medication less frequently, or at a lower dose . . . That is going to have huge implications for the long-term revenue forecast of these companies, and for the potential health benefits of taking the drugs.
Finally, weight-loss drugs have a rocky history. Some readers may remember the rise and fall of Fen-Phen, or how Sanofi’s much-hyped Acomplia was withdrawn in Europe and never won approval in the US. There have been rumblings about muscle loss and other issues with GLP-1 drugs. As the population of people being treated increases, new issues may emerge.
We don’t know if Lilly and Novo are overvalued. If other drug companies do not develop good alternatives in the next couple of years, no worrisome side effects emerge, most patients are happy to stay on the drugs for the long run, and pricing negotiations go well, the two companies should print money for years to come. What worries us is that no one in the market seems to be taking the bearish side of the GLP-1 trade. In markets, unanimity is dangerous.
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Making its return since its debut last autumn is the Toffee Apple Pie.
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The popular crispy pastry will be filled with the same spiced apple compote, toffee sauce and toffee pieces as last year.
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Fans of the Toffee Apple Pie will be thrilled that it returns to menus this month
It will be available for £1.99 at McDonald’s restaurants.
There are also two McFlurrys returning to menus this month.
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The fan-favourite Halloween M&M’s McFlurry is back and will be topped with Halloween sugar shapes, Galaxy chocolate sauce and M&M’s.
Meanwhile, the Galaxy Caramel McFlurry is also returning and will be swirled with Galaxy Caramel sauce and chocolate pieces.
Both will be available in store for £2.19, or £1.59 for the mini version.
Lovers of the McCrispy will be thrilled to see the McCrispy Deluxe joining menus next week.
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The sourdough style bun will contain a 100% chicken breast fillet in a crispy coating and will be topped with hot and spicy mayo, caramelised onion compose, lettuce, bacon, red onions and a cheddar cheese slice.
It will cost £5.99, or £7.79 for the Medium Meal.
Does McDonald’s often change its menu?
It is not uncommon for McDonald’s to make changes to its menu, which is sold across its 1,400 stores.
“In our journey of life, we pass pleasures and pain. There will be sunshine and rain; there will be loss and gain. But we must learn to smile again and again.” -RT
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Taiwan’s President Lai Ching-te has urged Beijing to co-operate with Taipei and the international community to maintain peace and tackle shared challenges as he seeks to build support at home and abroad in the face of Chinese threats.
In his first National Day address since taking office in May, Lai asserted that the People’s Republic of China had “no right to represent Taiwan” but said he was willing to work with China to protect peace and prosperity for people on both sides of the Taiwan Strait.
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“Countries around the world have supported China, invested in China and assisted China in . . . promoting China’s economic development and enhancing its national strength,” Lai said. “This was done out of the hope that China would join the rest of the world in making global contributions . . . and that externally it would maintain peace.”
Making reference to the wars in Ukraine and the Middle East, he added: “We hope that China will live up to the expectations of the international community . . . that it will take up its international responsibilities and, along with Taiwan, contribute to the peace, security and prosperity of the region and the globe.”
Foreign diplomats in Taipei said Lai’s speech was more restrained than his inaugural address, which Beijing called provocative and reacted to with “punishment” exercises. China claims Taiwan as part of its territory and has threatened to annex it with military force if Taipei refuses to submit under its control indefinitely.
China has not previously responded to a Taiwan president’s national address with military moves, and Beijing has not announced new drills. But national security officials in Taiwan and two other democratic countries who wished not to be named said there were indications that the Chinese military was prepared to stage a sequel to the May drills.
Taiwan’s defence ministry said it observed 27 Chinese military aircraft, nine Chinese warships and five other official Chinese vessels participating in joint combat patrols in the vicinity of its waters and airspace in the 24 hours to Thursday morning. Fifteen of the military aircraft entered Taiwan’s air defence identification zone, a self-declared early-warning buffer zone.
Taiwanese officials said Lai’s speech was meant to be consistent with his inaugural address, in which he promised to “neither yield nor provoke, and maintain the status quo” across the Taiwan Strait.
However, he put a stronger emphasis on the Republic of China, the state founded in China in 1911 following the first Chinese revolution, which was brought to Taiwan by the nationalist Kuomintang after the end of Japanese rule in 1945. The ROC was overthrown in China by the Communist revolution in 1949 but has continued to exist in Taiwan.
Lai hailed the ROC founders’ dream of establishing “a democratic republic . . . a nation of freedom, equality and benevolence”. But he lamented that their project was “engulfed in the raging flames of war” and “eroded under authoritarian rule”, a reference to Taiwan’s decades of military dictatorship under the KMT.
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Taiwanese officials argue that Lai’s focus on the ROC robs Beijing of the opportunity to label him a “Taiwan independence separatist” because it acknowledges the Chinese roots of the state that survives in Taiwan today.
But he also made a strong appeal to his Taiwanese compatriots to unite in defending their de facto independent nation.
“The Republic of China has already put down roots . . . And the Republic of China and the People’s Republic of China are not subordinate to each other,” he said.
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“Regardless of what name we choose to call our nation — the Republic of China, Taiwan or the Republic of China Taiwan — we must all share common convictions. Our determination to defend our national sovereignty remains unchanged.”
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Good morning. EU interior ministers will today discuss a possible delay to the continent-wide rollout of a new digital border system, on fears that it isn’t yet ready for action, as the FT revealed last month.
Today, our finance correspondent reports on a warning from the EU’s auditor that billions of euros are being misspent, and I explain why Ursula von der Leyen is in Moldova.
Dodgy expenses
Auditors have found that EU funds are increasingly being misspent, just as discussions start on an ambitious overhaul of the bloc’s next common budget, writes Paola Tamma.
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Context: Each year the European Court of Auditors reports on how the EU’s more than €100bn-a-year budget is spent. The vast majority is in payments to member states, for instance to fund infrastructure, regional development projects or agricultural subsidies.
The increased misspending was largely a result of time pressure, the auditors said, as the period for countries to spend certain leftover funds from the previous budget period ended in 2023. In addition, countries have to spend hundreds of billions in post-pandemic recovery funds by 2026.
“Some of it is down purely to the capacity of the body to control expenditure in an orderly fashion, and they’re just overwhelmed,” Tony Murphy, ECA head, told the FT ahead of today’s publication of its yearly budget report.
Last year, nearly €11bn out of €191.2 in budget payouts was misspent, the auditors estimated, including because of accounting errors. That amounts to 5.6 per cent — up from 4.2 per cent in 2022 — continuing an increase over the past three years. Auditors also detected 20 cases of suspected fraud.
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Cohesion funds, which are dedicated to regional development and make up a third of the EU budget, accounted for the bulk of the misspending, with errors up 45 per cent compared with last year.
Auditors also reviewed €53.5bn in post-pandemic recovery payouts, which countries receive once they implement pre-agreed reforms. But auditors found that in 16 out of 452 examined cases, payouts were granted even though the countries hadn’t met the requisite conditions.
That is problematic, especially for those countries that are net receivers of EU funds. The European Commission is planning a budget overhaul that would link all payouts to reforms and pre-agreed investments — much like under the recovery fund — something those countries are wary of.
It also complicates Brussels’ plans to ask net budget contributors, such as Germany, to inject more cash into the next EU budget, due to start in 2028.
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The commission said that it “agrees that improvements are needed, and it is acting accordingly”.
Chart du jour: Dark side
An FT investigation has tracked down how Russia built its “dark fleet” of oil tankers, acquiring at least 25 vessels via London and Dubai to evade western sanctions.
Brussels bearhug
European Commission president Ursula von der Leyen will meet Moldova’s Maia Sandu today bearing gifts — and moral support.
Context: Moldova is an EU candidate country and began formal accession talks in June. The country applied for membership in response to Russia’s war against neighbouring Ukraine, a conflict that has imperilled its security and economic stability.
Von der Leyen will use the visit to lay out an EU “growth plan” for Moldova. The initiative, which has already been launched for western Balkan countries, involves increased financial assistance and trade benefits, in exchange for reforms to integrate their economies into the EU’s single market, and prepare them for eventual membership.
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Moldova’s package will be “significant and substantive”, according to a person involved with the preparations.
A Moldovan official said it would “provide the economic leap Moldova urgently needs to overcome the consequences of the war next door, push forward with reforms, and improve the lives of all Moldovans”.
The EU’s economic bear hug isn’t just about economic growth, however. Brussels is also striving to keep Moldova on a pro-EU path, and not see Sandu and her pro-western government toppled by a destabilisation campaign orchestrated and funded by Moscow.
Russia is seeking to influence a double-headed ballot in 10 days time when Moldovans will be asked to choose their next president, and vote in a referendum on enshrining EU membership in its constitution.
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Officials in both Brussels and Chișinău are fearful of either Sandu — who is running for a second term — being replaced by a pro-Russian rival or the referendum failing.
Brussels’ growth plan “will help Moldova become stronger, more resilient, and deeply integrated with Europe as we advance towards EU membership”, the Moldovan official added.
“It will also demonstrate that democracy, even under pressure from Russia, brings real progress and improves lives across the country.”
Nato secretary-general Mark Rutte meets UK Prime Minister Sir Keir Starmer in London.
Ukrainian President Volodymyr Zelenskyy travels to London and Paris.
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A LUCKY player who scooped a life-changing Postcode Lottery prize refused to believe she had won – until a key sign revealed it was fate.
Sanna Babar, from West Yorkshire, was stunned when she discovered the eye-watering £111,111 windfall after entering the weekly Millionaire Street prize on Monday.
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Sanna Babar refused to believe her incredible £111,111 win until a key sign told her it was ‘meant to be’Credit: People’s Postcode Lottery
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The mum-of-two and her husband Tahir revealed their spending plansCredit: People’s Postcode Lottery
The whopping draw saw nine thrilled neighbours on Shann Crescent, Keighly, share £1million after their postcode BD21 2TN hit the jackpot.
Mum-of-two Sanna told the Postcode Lottery she couldn’t believe her win.
“Wowee! That’s not real. Oh my God, is this real?,” she said.
But she later said it was “meant to be” as her birthday is coming up.
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She added: “I’m going out-out! I was going to go to Bradford, but I think I can go a bit further than that now.”
Her and overjoyed husband Tahir Mehmood are also planning on whisking their family away on a holiday to Disneyland.
Sanna said: “We were thinking of going to Disneyland Paris in August next year, but it could be Florida now!
“I was trying to save up money, but I don’t need to do that now and I could bring my mum and dad too.
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“It was a sort of fantasy before, but I’m going to do it.”
The mum-of-two said how she can’t wait to ring my mum” and spread the incredible news.
Meanwhile, another winner on the street nearly missed out on collecting his £111,000 prize.
Michael Whitaker, from Keighley, had to beg his boss for the day off – and colleagues weren’t impressed.
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The self-confessed adrenaline junkie rang up his boss to ask for the day off so he could be given the huge cheque.
He said: “I rang my boss and told her Postcode Lottery are here. But I had a design and compliance finance meeting at 11am and I had all the figures.
“Luckily, my boss was ecstatic for me and said she wouldn’t tell anyone in the meeting as to why I couldn’t make it.”
Michael hopes to use his jackpot towards a “once-in-a-lifetime” tour around the Norweigan Fjords.
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“When I saw the cheque, I thought £11,000 and then… I processed it and there was six digits! It’s incredible,” he said.
He also dreams of taking his new motorbike, a Triumph Tiger 900, on a road trip.
“I’ve got to an age where I want to see more, and I recently bought the motorbike to go adventure riding.” he said.
He added: “You have dreams but they’re not dreams anymore now. This brings them into reality.”
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The clerk landed the massive cash prize along with eight of his neighbours in Shann Crescent, Keighly, after their postcode BD21 2TN landed the weekly Millionaire Street prize on Monday.
Every cheque was worth £111,111.
How to play the People’s Postcode Lottery?
For just £12 a month, players can sign up through the official website to have a chance of winning millions of pounds.
Once signed up, players are automatically entered into every draw and prizes are announced every day of each month.
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Tickets play for the Daily Prize, worth £1000 and revealed every single day.
Tickets could also win a jackpot of £30,000 for Saturday and Sunday’s Street Prize draws.
People’s Postcode Lottery also offers a £3million Postcode Millions draw each month – where your ticket plays for a share of the cash prize fund.
Winners are notified by email, text, post, or phone call, depending on the prize they win.
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Jackpot winners are visited by the lottery team in person.
Leyla Eaton’s jaw dropped after discovering she’d scooped the life-changing prize.
The mum-of-two entered when she was struck by a “strong feeling” a huge windfall was coming her way.
Meanwhile, one winning couple who scooped £142,000 in the raffle revealed their plan – but it may surprise you.
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The whopping draw saw nine thrilled neighbours on Shann Crescent, Keighly, share £1million after their postcode BD21 2TN hit the jackpotCredit: People’s Postcode Lottery
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