Last week, the Trust for America's Health and the Robert Wood Johnson Foundation released their annual report (link opens a PDF to a 116-page report) on obesity trends in the U.S., known as F as in Fat -- and the results weren't very encouraging.
According to their findings, a staggering 68.7% of Americans are now either overweight or obese, with differences in age, education, and income playing a role in obesity rates. For instance, baby boomers were found to have a considerably higher obesity rate than seniors (aged 65 and up), while young adults are by far the least obese. Similarly, those who didn't graduate high school, and clearly have fewer job opportunities available to them, are 64% more likely to have higher obesity rates than people who graduate from college. What's more, those with incomes below $25,000 per year were 22% more likely to be obese than those with incomes over $50,000 per year. On average, Americans are 24 pounds heavier now than they were in 1960.
Here's what's really scary
These results are disturbing, but nothing is scarier than what I think is the top-line statistic: Amercia's most obese people are growing by leaps and bounds. Between 1976 and 1980, the number of extremely obese adults -- quantified as those with a body mass index over 40 -- totaled 1.4% of the population. According to the latest study figures, the number of extremely obese adults has climbed 350% to 6.3%!
If there is one bright spot in this data, it's that childhood obesity appears to be leveling off its uptrend, suggesting that changes being made at the school level to supply more nutritious foods, and in getting kids to be more physically active, just might be paying off. For adults, however, the trend doesn't appear to be getting any better.
According to the U.S. Department of Health and Human Services, its realistic goal is to reduce adult obesity rates between now and 2020 by 10%. That seems like a reasonable expectation given the push toward visible calorie counts on many menus, and ongoing obesity awareness campaigns by the Centers for Disease Control and Prevention, but the results have thus far been severely lacking. Instead, it's looking more and more like the true beneficiaries here are going to be pharmaceutical companies that cater to chronic weight-management issues and symptoms.
The only real winners here
Sales since the launch of FDA-approved chronic weight management drugs Belviq from Arena Pharmaceuticals (NASDAQ:ARNA) and Qsymia from VIVUS (NASDAQ:VVUS) have been nothing short of disappointing, given the magnitude of this disease. However, my explanation for the weakness in anti-obesity drug sales is that few insurance companies thus far have been willing to latch onto these drugs as coverable. That could be about to change, though, with the American Medical Association declaring obesity an official disease in late June. Once insurance companies begin covering Belviq and Qsymia, sales of the two drugs could soar. While neither is incredibly expensive, consumers are just that insistent on not paying for either drug with out-of-pocket cash.
What's really intriguing is that while debates continue to rage over which anti-obesity pill will be more successful -- Qsymia delivered a higher percentage of average weight-loss in trials while Belviq offered the more favorable safety profile -- the market for these medications now spans at least 6.3% of the U.S. adult population (what I would estimate is somewhere between 12 million to 14 million people) and arguably could include some of the remaining obese individuals with a BMI over 30. In other words, there's absolutely no reason both drugs couldn't be widely successful!
Symptom maintenance is just as important
More so than just an issue of controlling a person's weight, being obese has been proven to put people at a considerably greater risk of developing certain diseases. Two months ago I examined the five most common diseases directly caused by obesity, and here were the results:
- Type 2 diabetes
- Cardiovascular disease
- Nonalcoholic fatty liver disease
One way as an investor that you can potentially put yourself ahead of the curve is to think like a physician. If you were dealing with an obese patient exhibiting one or more of the aforementioned symptoms, the last thing you'd want to do is prescribe a symptom maintenance medication that could possibly cause them to gain even more weight. Therefore, if you dig deeply enough, you can probably locate a few drugs that are poised to outperform.
The immediate standout would be revolutionary new type 2 diabetes treatment Invokana, which the FDA approved in late March. Made by Johnson & Johnson (NYSE:JNJ), Invokana is an SGLT-2 inhibitor that works through a completely different pathway than most glycemic balance-restoring drugs. Rather than focusing its mechanism of action in the pancreas or liver, Invokana works in the kidney to suppress glucose absorption and allow excess glucose to be flushed out in a patient's urine to maintain glycemic balance.
What's truly unique about Invokana is that unlike some of the type 2 diabetes treatment currently on the market (not including DPP-4 inhibitors like Merck's (NYSE:MRK) Januvia) that cause weight gain, Invokana actually caused moderate weight loss and blood pressure improvement in type 2 diabetes patients in trials. Make no mistake about it: Invokana is in no way indicated for weight loss, so let's not take this extrapolation that far. But if you were a physician prescribing a type 2 diabetes medication to an obese individual, Invokana would be looking like a really smart choice right now.
Another drug I've admittedly beaten the table on a few times in recent months that I think has a chance to become a monster is Pfizer (NYSE:PFE) and Merck's shared LDL-reducing drug, Liptruzet, which the FDA approved in May. Liptruzet is actually a combination of Pfizer's now generic Lipitor, a statin and previously the best-selling drug in the world, with Merck's Zetia, which is a cholesterol absorption inhibitor. Not all cholesterol is bad, so what Liptruzet does is focus on lowering low-density lipoproteins, the bad kind.
In individual trials, Lipitor reduced LDL levels by 37% to 54% -- a respectable figure that easily explains why it's racked up $131 billion in sales over its lifetime. Zetia, by contrast, reduced LDL levels by only 20%. Combining the two, however, into Liptruzet caused LDL reduction to spike to 53% to 61%. This drug looks like a solid long-term solution to controlling primary or mixed hyperlipidemia.
A lot of work awaits
As this data shows, clearly a lot of work still needs to be done to get through to baby boomers about the seriousness of rising obesity rates. The problem is that obesity isn't just an individual issue -- it has the potential to affect your friends and family, as well as the entire health-care system and the economy.
Obesity-related treatments cost between $147 billion and $210 billion each year, which correlates to roughly 10% of all annual medical spending. Obesity was also shown to cost employers an average of $506 in productivity per obese employee each year, with medical claims costs running almost 10 times higher for obese employees relative to healthy-weight employees.
It isn't just the figures that are scary from a businesses' perspective, but the sheer fact that our health-care system may not have enough physicians capable of dealing with a dramatic rise in diseases caused by obesity as baby boomers grow older.
A greater effort is certainly needed to make a dent in the American psyche on obesity. In the meantime, though, expect weight-control management and obesity-related symptom maintenance drugmakers to flourish.
Editor’s Note: A previous version of this article suggested that Liptruzet lowers the chance of having a heart attack, stroke, and heart disease. However, this new drug has not demonstrated benefits to cardiovascular morbidity and mortality over atorvastatin.