The fight against obesity whets investor appetite

The fight against obesity whets investor appetite

Communications

Obesity is a disease that affects 500 million people; the fifth highest cause of mortality worldwide. A major problem for which governments, institutions and private companies are seeking solutions. Although the impacts will be seen in the medium and long term, the fight against obesity involves many sectors of the population.

Obesity could have its days numbered. Or rather its years. A good bit of news whose origin must be sought in medicine. To understand this, and develop this optimistic assertion, we must look at the various European and American pharmaceutical companies who are developing drugs that have proven to be an ally in combating obesity. A disease that in 2016 already affected 650 million adults worldwide and 340 million children, according to the World Health Organization (WHO). This data confirms that since 1975 overweight or obese people have tripled in number.

However, if this exponential growth of the past 35 years is already alarming, the future could be even more so. According to the Atlas 2023 of the World Obesity Federation, over the next 12 years, 81% of the global population –more than 4 billion people– will suffer from excess weight or obesity. Currently, the USA already has 40% of its population affected by this disease, making it the country with the highest rate in the world. It is followed by China, Brazil, India and Mexico. Interestingly, among the ten countries with the highest obesity rate in the world, the only European nation is Germany.

To talk about obesity is to talk about health, but also about economy. This disease has a strong impact on the economic accounts of different countries. In the USA alone it represents a direct cost of 149 billion dollars. If this trend is maintained worldwide, by 2035 the global economic impact would be 4 billion dollars per year, 3% of global GDP. Figures, summarised by the Global Obesity Observatory, which are forcing governments to take various measures, both fiscal and diet-related, to punish those products most harmful to health.

Weight-loss drugs: A light at the end of the tunnel?

In the last five years, medicine has made progress in its fight against obesity thanks to the creation of various drugs that have been shown to reduce the body volume of patients by 20%, as confirmed by the Hospital Clínic of Barcelona itself. Progress that has captured the interest of investors due to the apparent usefulness of these drugs and the large financial outlay that could be made by different healthcare systems around the world. The best proof of this has been shown on the stock market by two companies, Novo Nordisk and Eli Lily. The first of them has become the largest company in the whole of Europe exceeding 446 billion dollars in market capitalisation. Meanwhile, the second has skyrocketed 80% in just twelve months.

Currently, the FDA (US Food and Drug Administration government agency) has approved five drugs to treat obesity. However, the side effects caused by some of them make them not recommended for all types of patients. Furthermore, although these drugs have demonstrated some effectiveness, they could be dethroned by more effective and less harmful ones in future. 

Presently, work is being carried out to find a new medicine that achieves a balance with intestinal hormones, that targets specific genes that increase the risk of suffering from obesity, that allows the loss of only fat and not muscle mass and, finally, that changes the intestinal bacteria.

Thus, the fight against obesity must be seen as a future trend in which several actors may be involved.

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Fitness industry

In line with this investment trend in solutions for obesity, concern about health has also increased. The market that incorporates the health, wellness and fitness sector grew by 30% between 2009 and 2019, going from 67 billion dollars to 96.7 billion dollars ten years later. Forecasts indicate that this upward trend will continue and increase in the coming years. For example, the projected compound annual growth rate for the fitness industry between 2021 and 2026 is 7.21%.

Sports nutrition companies would enter this market, as well as those that manufacture sports equipment or the gym chains themselves. In fact, in the first pillar alone, the whey protein market reached 13.5 billion in 2020, compared to 9.2 billion in 2015. Thus, companies that manufacture sports equipment achieved almost 9 billion euros in turnover in 2022, while gym chains are still continuing to recover from the damage caused during the pandemic.

Millennials, the generation of change

Millennials seem to be the most aware and concerned about their health: 79% of this generation in the USA places health as the second most important aspect in their life, behind family. This generation represents the highest use percentage of gymnasiums and sports clubs, with 35% in the USA. Generation X and baby boomers are the next age groups that frequently attend gymnasiums and health clubs (22% and 21%, respectively).

Projected rates of obesity until 2030

Source: OECD