Follow the Need: The Global Fight Against Obesity

July 27, 2012
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A recent Bank of America Merrill Lynch Global Research report called, “Globesity – The Global Fight Against Obesity”, examines the subject of obesity as a global need driving business across a range of sectors. As opportunistic and “exploitive” this may be, one need recognize that, in free market economies, businesses are compelled to focus on unmet need.

A recent Bank of America Merrill Lynch Global Research report called, “Globesity – The Global Fight Against Obesity”, examines the subject of obesity as a global need driving business across a range of sectors. As opportunistic and “exploitive” this may be, one need recognize that, in free market economies, businesses are compelled to focus on unmet need.

“Global obesity is a mega-investment theme for the next 25 years and beyond. Obesity may be the most pressing health challenge facing the world today and efforts to tackle it will shape thinking by policy makers and in boardrooms around the world,” said Sarbjit Nahal, equity strategist at BofA Merrill Lynch Global Research. (See link.)

The “need” associated with obesity can be viewed from a broad standpoint as any type of demand for products and services stemming from the growing incidence and prevalence of obesity, from products that enable that demand (fast food and other high caloric foods) to the clinical management of obesity and its sequellae (i.e., diabetes, heart disease, etc.).

(The Merrill Lynch report focuses on obesity as a business investment focus with medium and long term potential, considering the major categories of Pharmaceuticals and Health Care, Food, Commercial Weight Loss, Diet Management and Nutrition, and Sports Apparel and Equipment.)

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From a clinical perspective, obesity is a major opportunity for new treatments due to the direct and indirect costs it creates.  The indirect costs arise from the health-related complications of obesity, often referred to as “co-morbidities”:

Obesity Co-Morbidities

    • Metabolic syndrome
    • Immune system effects
    • Type 2 diabetes
    • Hypertension
    • Cardiovascular disease
    • Dyslipidemia
    • Depression
    • Gastroesophageal reflux disease (GERD)
    • Osteoarthritis
    • Non-alcoholic fatty liver disease
    • Cancer

Source: MedMarket Diligence Report #S835.

It is the mandate of the medical product industry to develop, introduce and market products that may competitively address healthcare need to the benefit of company shareholders. As an economic driver, obesity can be clearly seen one of the most compelling for the fact that obesity prevalence is increasing dramatically and the evidence that obesity’s costs, both direct and indirect, are rising steadily at a time when healthcare costs are already under intense scrutiny.

The allure of the industry’s interest in obesity is bluntly reflected in the business of managing obesity (see Report #S835):

“The global market for treatment of obesity is predicted to reach $5,159.6 million by 2019, exhibiting a compound annual growth rate (CAGR) for 2010-2019 of 17.4% The largest sector in revenue terms by 2019 is likely to be combination drugs, reaching $1,844.0 million in global revenues. Almost all device- and drug-based treatment categories will reach strong double-digit CAGRs by 2019.”

One might argue, at least from the cost standpoint, that by pursuing advanced medical technology solutions (complex new devices and drugs) the obesity management industry is simply exacerbating the problem.  Looked at narrowly, this argument is easy to defend.  However, a fundamental force underlying medical technology development is that new products that offer the defensible (i.e., marketable) potential to reduce the costly complications of healthcare conditions will be met by support in the payer side of healthcare.

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MedMarket Diligence has published “Products, Technologies and Markets Worldwide for the Clinical Management of Obesity, 2011-2019″, Report #S835.