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Within the farmer space, Novo Nordisk the eight rs American depository seats down by double digits, in fact lower for fifth day, losing about sixteen percent today, and this is after its next generation obesity shot Cagri Semma delivered less weight loss than Eli Lilly's rival treatment. Let's bring in
Sam Fazzelli. He is our director of research for Global Industries and senior pharmaceutils analysts on what's happening here, and Sam, I mean, we've been keeping a close eye on Noah Nordous because it was a pioneer and weight loss drugs, but it appears that it has really fallen behind Eli Lilly and continues to fall behind even with this next gen obesity shot. The data shows a twenty point two percent weight loss after eighty four weeks compared with Eli
Lilly's twenty three point six percent weight loss. I mean that sounds like, it's pretty small differences. Is that an unqualified failure?
Well, the trial was set up Scarlett to test one drug against the other and it failed, right, So that's you. You know, when they start these trials, I have hypothesis, we think our drug is as good as this one, and they set the hypothesis up. They do the right number of patients to prove that agorisma is as good as tears appetite. It didn't prove that. What it does I mean, I don't really care about this. Twenty three percent,
twenty five percent. A lot of people are happy with the weight loss they get and they maintain the weight loss. That's what they care about. This rapid weight loss of very large weight loss may matter for much more Obeis patients potentially, But the reality is this is handed the gift to Eli Lilly. Now, once the date is published, they can go out there and say, well, look we've beaten b GOV, We've beaten the next generation drug. They've
got at least unweight loss on the surface. What happens to muscle laws and all that sort of stuff will come out, Oh for a fat versus visceral fat, et cetera. We've beaten them is the drug to take and they should be able to sell as much as they can make so, which is kind of what's been going on already.
All Right, thank you for explaining that it's the relative effectiveness and in this case giving Eilily an easy win. Why is it that Nova Noordisk has lost so much ground and its edge to Eli Lilly. Does it come down to the science of it or is there something culturally at the company that's led to this underperformance.
Yeah, I can't speak to the culture, to be honest with you. I mean, this has been a phenomenal story for years. Right, They were the pioneers in obesity, they in diabetes. With this class of drugs they brought for obesity. They have a lot to applaud for them. For the point, which is all these companies take calculated risks. Back in twenty fifteen sixteen, really took a calculated risk by this new molecule, a GLP one attached to it, a GOP. Let's forget what they are, but they are two different
ways of modulating the system. And nobody thought that GOP would do what it did. So they were lucky. They threw the dice and they got the right answer, or they just had a very clever biology person said I disagree with the rest the world, GP will do this. So they ended up with a supercharge product. And then of course no one never went down that road. Even since twenty eighteen when we all saw the first data went wow, there's a whole bunch of other companies who
did this. We have a list that we keep, not Novoe. They put their dice or they put their money on this combination amulin. A lot of people have too, but so it hasn't worked out. It's just the way that drug development goes. In six years time, you might find that some mechanism they've got starts to beat what Lily has, but we don't see that at the minute, and we haven't got any site on those things.
Karen from the Jersey Shore Rights in and says she's a huge fan of weg be worked just great, Yo, Sam, Here we go merk splitting its main pharmaceutical unit in two as it prepares for the approaching patent experty of its best selling drug.
What's going on here?
Yes, so there's one other company that does this since been one of the you know, you plot the share charts and you go, Wow, that's pretty cool. And that's ask Seneca as has for a long time had a division a personally responsible for oncology business and responsible for oncology drug development. That's always been there. I think they recognized they had assets and that on coology drug development is quite different to every other area. Here's Mark now
doing the same thing. Is it suggesting that they, because of the number of drugs that they've got coming some in on college or someone elsewhere, it's better to have two units that look after these two things, especially in the R and D side. I think doing the right thing. I don't think it tells us much about separating the reporting lines and all that sort of stuff, or the
P and L look of things. I think it's much more to do with making sure that they're going to get the best chance in the specialty farmer as they call and oncology, and I think that's the right call to make by them.
Does it lead to a formal spinoff where you might have two publicly traded companies or is this more like an internal division within the company.
Yeah, I doubt this is about a spin off. I mean, who knows. I'm not in the board of listening to the or even a fly on the wall. And the thing is, I don't think you need to go that far. I think this just reckly reorganizing the business in a
way that works best for the pipeline. And I think that's the right thing to do, especially if my colleague or Guessbacker and Vene Hamilton are right that actually the key truder that people think is going to expire in terms of their patents in twenty twenty nine has another extra three years of cash flow or four years of cash flow to twenty thirty three. Remember it's the bigest
drug in the world. If they're right in their patent analysis, you know, this really puts that on collegey business in super charge mode.
Yeah, Sam, thanks so much for joining us. Appreciate it.
Sam Pazzelli, Director Research for Global Industries and senior Pharma analysts for Bloomberg Intelligence. He's based on London, where it's not snowing.
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One of the big.
Gainers in today's trade, or maybe Vegas an overstatement, but given that we're seeing sizable losses in the equity indexes, I'd say two point four percent move higher is kind of game, kind of.
Big, right.
Domino's Pizza DPZ is the ticker moving higher today. The company reported a bigger than expected rise in comparable sales. So let's bring in Michael Helen. He is our senior restaurant and food service analysts for Bloomberg Intelligence, and Michael, Domino's provides a lot of value to people. You see those ads for buy one, get one free, and they've added stuffed pizza crust to their repertoire. So people are getting value and they're getting something I guess in terms
of food value as well. Talk to us about Domino's Pizza and the strategy here.
Yeah, so you know, to your point, they are out performing the market pretty handily.
Today.
It was a pretty solid report. Saam store sales topped expectations. You know, they're doing it with a few different things. Yes, the food innovation stuff crust isn't groundbreaking, but it's something that their national competitors had already offered, right, and so they're trying to take a piece of that market here in the US value to your point, right, they're number
one pizza player here in the United States. They have more stores than anyone else, and they have that scale, so they are able to offer price points that their competitors really can't match and and keep it profitable for the franchisees.
You know.
And then another big part of the strategy here has been the door Dash and Uber Eats expansion, right, So they're still delivering the food themselves, but they're posting their their food on the third party aggregator sites and that's been been a big boost to their business as well.
What's the difference in economics might using one of their own drivers versus a third.
Party like a door Dash. Yeah, it's a big difference, Paul.
It's it probably costs a big player like Dominoes, it would probably you know, for them to deliver it themselves.
It probably costs them.
Half of what it would cost, maybe even less than half of what it would call. So it makes a huge difference on the delivery economics, you know. So for the chains that already have a delivery network like Dominoes.
It's really a no brainer.
One thing that Dominoes did over the last quarter was make more money by selling more food to its stores, charging higher prices for ingredients, collecting more fees from the franchise operators for advertising and royalties. That's good for the bottom line, But does it sour relationships with franchise operators? I mean, how does that? How does Dominoes manage that going forward?
Yeah, that's that's a good question, Scarlett.
You know, franchise ze relationships is crucial in this business because they're going to be the ones, you know, forking up the capital to build new stores, right, So you want to keep them happy with strong same source sales, you know, at three percent plus almost four percent. Game keeps them happy, you know, in terms of the supply chain,
so you know, Domino's owns the supply chain. They want to make sure that their franchisees aren't skimping on quality, right, and so what they do to make this palatable for their franchisees is they actually split the revenues on a monthly basis via checks with their franchisees, right. And so, yes, prices are going up expected to go up low single
digits this year for commodities and in the supply chain. Right, but they give back half of that half of their profit increase back to their franchises and a sharing agreement.
All right, Mike, thanks so much for joining us as always our go to voice on all things in the restaurant business. Mike Kaitlin covers the restaurants for Bloomberg Intelligence.
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A pair of retailers, retailers, they win some tailor relief, teriff relief on Supreme Court ruling.
So how about that?
So maybe some of these are pair of retailers that get a little bit of a break here as they've been bearing some of the brunt of the terror here. Mary Ross Gilbert joins his senior equity analysts.
She covers the.
Retail space for Bloomberg Intelligence. She's out there in La where it is not snowing. I can tell you that Mary, thanks so much for joining us here. Supreme Court ruling striking down some of those I reciprocal tariffs. What's it mean for the retailers that you cover?
Yes, so, Paul, what this means is that we're going to get some relief. We're not getting complete relief from tariffs. So when you think about it, just before Trump over the weekend on Saturday, I mean, first, on Friday, he said he was going to exercise his ability to enforce Section one point twenty two of the nineteen seventy four Tariff Code, and you can go up to about fifteen percent.
So on Friday he announced ten percent immediately or actually it was in three days, and then Saturday said immediately fifteen percent. So really, what that means is you're going to get about a twenty five percent savings from the tariff rates that these apparel retailers were paying just prior to this news that came out on Saturday. And so we estimate that the savings could be anywhere from twenty to fifty basis points, maybe a little more than that.
And many of these apparel companies have been putting in mitigation measures, and of course the number one being well first of all diversifying away from China so they have a lot less exposure there, and then also their suppliers absorbing let's say, about half of the tariff impact, and then of course price increases and that's being passed on to the consumer, and it's done very selectively, and so that's why the savings, the net savings is going to
be somewhere around twenty to fifty basis points. And just to give you an example, what companies have disclosed is on an annual basis, they were looking for a net tariff impact again net of these mitigation measures to be somewhere in that sort of one hundred to two hundred basis points in that range.
So I guess it's interesting here because some of these retailers have in fact been right kind of in the crosshairs of the tariff debate. Have any of the companies that you covered they talked about whether they would even think about getting tear rebates if that's a possibility, Paul, that's.
A really good question. It's I can't imagine that a rebate process could actually go into effect. It would be a nightmare to try to go back and recover these funds. It just seems I don't know, I think it's too complex. I think we just have to let whatever tariffs were
already enforced and the funds received. I certainly hope that doesn't happen because that could turn out to be a very expensive nightmare trying to recover those funds, and then the idea would be, well, should it go back to the consumer once, you know, if companies were to recover it.
So, yeah, it's very cool. So given that, I mean we've had, you know, roughly a year of these tariffs. Is there a kind of a ballpark that you've arrived at, or the companies have disclosed about how much they took into their margin versus maybe how much the importer took into its margin the consumer took into its margin.
There.
Yeah, it's very it's complex to say specifically, but I think what we were trying to allude to earlier, that one hundred to two hundred basis points is what these companies are effectively taking in on an annual basis based
on commentary from the third quarter earnings call. So they might have gotten hit more or less depending on the retailer that we're talking about and goods that were sourced during various times, right, because if you had some retailers that sourced fall and winter during that time when China had a tariff that was well over one hundred percent, then that merchandise and their margin was affected very much so because they had already taken delivery of that product.
So really it depends on the retailer. And then you have a couple of retailers, for example, Aritzia and Ralph Lauren. Both of those companies have been posting margin increases all year and so they've been able to benefit from strong sales. What that means is that they're able to leverage fixed costs and get incremental benefits there and also pass on
price increases. And so even though they've been negatively impacted by tariffs, you're not seeing that net effect, whereas most of the other retailers you have seen margins dented, and they've disclosed every quarter what the tariff impact has been net mitigation measures, and also they'll provide sort of the gross impact. So like I said, I would say the
net one hundred to or two hundred basis points. Think about gap Abercrombie gaps at the lower level, they set annual impact about one hundred to one hundred and ten basis points, Abercrombie and Fitch about one seven, and American Eagle they were sort of harder two hundred to two hundred and twenty five basis points.
All right, very good, Mary Ross Gilbert, thank you so much for joining us.
Mary ros Gilbert.
She's a senior ecodanaly she covers the retail space for Bloomberg Intelligence, and she's located out there in La California office.
Stay with us. More from Bloomberg Intelligence coming up.
Fire for this.
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Friday, we had the Supreme Court strike down some of President Trump's reciprocal tires. We've got some new ones. They're back ten no, fifteen percent coming back.
Are these things going to be litigated? I have no idea.
Holly from she's a Bloomberg Intelligence litigation analyst. Holly, thanks much for joining us here. We had the Supreme Court ruling here, what's left to be gated? If any because there's still lots and lots and lots of tariffs out there.
So what's left to be litigated probably is what happens with all the tariffs that have been collected, Like, do do the importers have to go who want refunds have to go to the Court of International Trade to see refunds? Do they have to file lawsuits or can they just file some kind of application with the Customs with Worder
Protection Agency. So that's a question that's still outstanding. It doesn't affect the tariffs that Trump imposed via Section two thirty two, which work on things like aluminium, steel and auto and autoparts, and it doesn't affect through one tariffs that were imposed in twenty eighteen.
Okay, So that's that's where it stands. Well on the main tariffs. What about the deminimous exemption. Explain to us how that works and whether that's affected by the Supreme Courts ruling.
So the dominimus exemption is not necessarily affected. It's an exemption. It's not a terriff, so it's an exemption to a terriff. So we don't know if this if the ruling means that the that the Court that he cannot remove an a terror he cannot remove an exemption to a teriff. So it's not necessarily the case that that So the Supreme Court didn't answer that question. In other words, that
ruling doesn't answer the question. But I think there's a case that's playing out now UH at the International Trade Court. That ruling was that that case case was stay pending appeal of the of the Supreme Court ruling. And so what I think happens is I think that the court will say that he probably can't remove that exemption via executive order. It probably has to be some kind of regulation. And it's not even clear that that that his his
Trade secretary can promulgates. And it's not even clear that he can remove it at all, because there's some question as to whether that exemption is mandatory based on the language of the statue.
You if I want to get a refund to some terroriffts that I've paid, how do I do that?
So normally what you do is what happens is the goods come in you, you ask to me what you think you owe. The Customs Order Protection Agency decides whether that's correct. That's called liquidation. If that amount is finalized and it liquidates, you have one hundred and eighty days to protest what the Customs Agency says you owe. So
that's normally how you get a refund. You file a protest, and they think that that might be the procedure used here, but nobody really knows because this has never happened before.
Well, if I'm if I'm Nike or something like that, I mean, do I say you owe me hundreds of millions of dollars or something like that? Is that how we think it's going to go?
Or are they are? They actually are people?
Actually our companies actually go through that the work of doing this.
Well, you know, it probably depends on the amount that they think that they're overpaid, and there are also you know, other issues that they may take into account. So you know, it's not clear whether all companies will see refunds. There are probably some companies that say it's not worth it for them to try, so they're going to weigh their right to do that. Some of them may be time barred from doing that by virtue of the deadline super protest.
So we don't expect the full amount that's been collected to be refunded.
Holly what will you be watching for and listening for when the President speaks in his State of the Union tomorrow When it comes to tariffs, I mean, he's going to say a lot of things, and we know that a lot of what he says he doesn't necessarily it's more in the spirit of what he wants. But specifically when it comes to the legality of some of this stuff, what will you be listening for, Well, we.
Want to see what he like what you said, We want to see what he says because what he wants has to be justified by some kind of legal authority, and so we want to see, you know, what he's aiming to do, and then we'll try to figure out how he's going to do that. And so there are various tariffing tools that he has, and he's already imposed terrorist via Section one twenty two, but those are time limited for one hundred and fifty days, so we'll probably
he'll probably use other authorities. And so that's something where we're going to look at, is you know, what is he trying to do? Can he use the other authorities to do that?
Holly, was there anything or I guess what was most notable to you from the Supreme Court ruling on Friday.
I think that was what was really striking was that that they said that this statue doesn't allow terriffs at all. So any tariff that he is imposed via this statute are probably going to be struck. So teriffs on India
and Brazil are going to be struck. And what they said was a tariff is a tax, and so only Congress has the power to tax, and if they are going to delegate that power, they have to be very very clear when they do that, and you know, using this vague language and the statue you know, wasn't enough.
And so that I think that was very interesting. And the other thing to note is that you know, they did talk about other tariffing powers he has, so it may be the case that you know, and we think that those tariffing powers rest on you know, better legal footing.
So the challenges will be harder to the new terriffs the imposes if he's going to use you know, well settled authorities like Section two thirty two or the Trade Expansion Acts or Section three oh one or the Trade Act, which both of which he's used before, so challenges will probably be harder.
All right, good stuff. Holly from Thank You So Much, Bloomberg Intelligence litigation analysts on how President Trump's fifteen percent tariff will likely stick, but if it doesn't, he is going to have several options. Holly mentioned section two thirty two. There's section two h one. There's section three h one. There's Section one twenty two, there's section three thirty eight. All of these things take time, so they can't be
imposed instantly. They require investigation. And in the case of Section two thirty two, I believe, oh no, section one twenty two, there's like a you know, a time span, a time limit of only fifteen months, which seems like a lot of work to get a temporary terror Yeah.
And I guess my question I asking a lot of folks, particularly on the political side, like Henrietta Trees. Clearly, this is pulling tariffs in general, is pulling very poorly. Affordability broadly defined, is polling as a very key issue. It's almost mind bogging that the president continues to double down and triple down on this whole terrorf issue. But it is certainly key to his trade policy, to parts of his economic policy.
His geopolitical policy.
Yep.
But I would just if I were his advisor.
I'm saying, but it's coming at a big cost, mister President, in terms of and we've got the midterm elections coming up, and we've got some people that are nervous. But I'm sure those discussions are being had.
But well, he's the second term president, so maybe it's their problem, someone else's problem, not his problem.
Exactly right.
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