Obesity has become a health emergency worldwide, as more than 4 million adults die each year as a result of being overweight or obese, according to the World Health Organization. Obesity is also a threat to economies as it’s increasing healthcare costs for countries. While at global level we are living in an era with increased life expectancy, obesity is one of the factors that threatens this dynamic as it increases risk of heart disease, diabetes and cancer. However, new treatments promise relief for obese individuals and open up new opportunities for investors.
The latest Eurostat data shows that Romania is the least obese country in the EU in 2019, with 10.5% of the population in this category, followed by Italy, Bulgaria and Norway, writes eToro analyst for Romania, Bogdan Maioreanu.
. On average, 16% of the EU’s population is classified as obese, defined as a Body Mass Index (BMI) of over 30 kg/sqm. On the other end of the spectrum, Malta and Hungary are the most obese countries in the EU with 28% and 24% of the population. Unfortunately 48% of the adult Romanians are pre-obese (BMI between 25 and 29 kg/sqm), the highest rate in the EU and the situation is about to get worse.
Every country is affected by obesity, with some lower income countries showing the highest increases in the last decade, according to the 2023 World Obesity Atlas. No country has reported a decline in obesity prevalence across their entire population, and none are on track to meet the World Health Organization’s (WHO) target of ‘no increase on 2010 levels by 2025’. The Atlas suggests that, on current trends 1 in 5 adults worldwide are expected to have obesity by 2025 and overweight and obesity will cost the global economy over US$4 trillion of potential income in 2035, nearly 3% of current global gross domestic product (GDP).
For specific countries the impact is even bigger. In calculating the costs are taken into consideration the healthcare and other health expenditures, the absenteeism and presenteeism – expenses with loss of productivity – and premature death.
For Romania the Atlas estimates that overweight people with BMI of over 25 kg/sqm will have an impact of 3.2% of the GDP by 2025 and over 3.6% by 2035. This means healthcare costs of almost $1.2 billion and total costs of almost $9.3 billion by 2025 and over $1.68 billion in healthcare and over $13 billion total costs by 2035. The estimates are that by 2035 Romania will increase its adult obesity with 2.1% per year and its child obesity with 5.6% per year. By that year 35% of the adult population will be obese.
But the statistics for the US are even more dire. By the end of 2035 it is estimated that 58% of the population will be obese with a 4% of the GDP and $1.2 trillion costs. This is posing a difficult problem and in the meantime is creating some opportunities.
While the healthcare sector has lagged the broader market this year the obesity drug stocks thrived. The recent outperformance in this area of the market can be attributed to excitement around the long-term potential of a class of drugs known as glucagon-like peptide 1 (GLP-1) agonists.
One product that’s already on the market is Novo Nordisk’s Wegovy. This drug — which has been shown to help patients lose about 15% of their body weight — received US FDA approval in June 2021. Novo Nordisk has also developed Ozempic but this drug has only been approved by the FDA for the treatment of diabetes, despite the fact that it has the same active ingredient as Wegovy (Wegovy is considerably stronger than Ozempic).
Meanwhile, Eli Lilly’s Mounjaro (which is already approved for diabetes treatment) could be approved for obesity treatment by the FDA later this year. It has helped patients lose up to 16% of their body weight in trials. Eli Lilly is also working on new products.
On the back of Wegovy’s recent success, other pharma companies like Pfizer and Amgen are scrambling to develop their own obesity products. With the number of people around the world with obesity currently standing at over 1 billion according to the WHO, there should be enough room for multiple players.
