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
The obesity market would appear to be a substantial opportunity for drug developers, with the CDC reporting 36% of U.S. adults and 17% of children and adolescents (12.5 million in total) meeting the clinical definition of obese (having a BMI greater than 30). No state has lower than a 20% obesity rate and the highest rates, generally clustered in the Southern United States, are closer to 30%.
In addition, NHANES data from 2009-2010 indicates breakdowns of the percentage of obese (BMI .30) by age and gender. NHANES provides evidence that overall obesity prevalence is higher in adults aged 60 years or older, and the general obesity percentage of Americans is around 36%. Among women, the obesity prevalence seems to increase with age, with 32% of females aged 20-39, 36% of females aged 40-59, and 42% of females aged 60 and older categorized as obese. Males range 33-37% with no clear trend by age.
With the 2010 U.S. adult population (adults 20 years old or older from the Census Bureau) estimated to be 226 million, the total obese population in the United States of around 80 million (36% of 226 million is 81.4 million).
In the United States, CDC reports obesity as the second most common contributing factor to heart disease (behind only "inactivity," a category that likely will elude biopharmaceutical therapies). In addition, CDC reports that 37% of the United States has more than one heart disease risk factor, reflecting, in part, the association between obesity and dyslipidemia, hypertension, and Type 2 diabetes.
Percent of U.S. Population with Heart Disease Risk Factors
Not surprisingly, anti-hypertensives and lipid regulators are the two largest categories of prescriptions dispensed in the United States, according to IMS Health. Anti-diabetics represent the sixth largest category (behind anti-depressants, narcotic analgesics, and anti-ulcerants). This puts the implied penetration at around the 50% mark.
It is this sort of math that could make the obesity category appear to be one of the last disease category frontiers ripe for prescription intervention (alongside perhaps Alzheimer's disease). However, the complexity of obesity as a disease, the difficulties of treating it, and the efficacy/safety profile of therapies (which also lack any sort of outcomes trials showing benefits) suggest that obesity, as a market, likely will fall short of these three prescription drug category leaders.
As a leader in both the prevalence of obesity and per capita spending on healthcare, the United States is likely to be the primary market for prescription treatments. By comparison, the prevalence of obesity in Europe is estimated to be 64 million (16% prevalence on a population of 394 million). Outside of United States and Europe, the reported prevalence ranges around 8-20%, with the median around 15%. As has been the case in the United States, obesity rates in other markets have been on the rise over the past two decades.
Obesity rates in the OECD and beyond
In a new report titled "Globesity -- The Global Fight Against Obesity," Merrill Lynch proposes a basket of stocks it sees making gains from the fight against global obesity. The report identifies specific segments of four key sectors for investors to watch:
- Pharmaceuticals and health care: companies taking on obesity-related medical conditions; companies that specialize in equipment for overweight patients, like bigger beds and wider ambulance doors.
- Food: companies trying to access the $663 billion health-and-wellness market.
- Commercial weight loss, diet management, and nutrition: companies trying to access this already $4 billion U.S. market and the growing global one.
- Sports apparel and equipment: companies in tune with the belief that governments and the general public will become increasingly aware that exercise is of paramount importance in taking weight off and keeping it off, and as such will do well selling the necessary equipment.
Pharma & Health Care
CAMPBELL SOUP CO
CONAGRA FOODS INC
GENERAL MILLS INC
HEINZ (H.J.) CO
ST JUDE MEDICAL INC
KRAFT FOODS INC
THE FRESH MARKET
Sports apparel & equip.
WHOLE FOODS MARKET
CHIPOTLE MEXICAN GRILL
Weight mgt, diet & nutrition
UNDER ARMOUR INC
MCap (US$ mn)
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.