Obesity Crisis Costs US $200B Annually, But Arrival Of Treatments Signal Declining Surgery Demands

With an annual toll of $200 billion due to health complications like diabetes and heart disease, the surging obesity crisis has adversely impacted Americans regarding health and the economy.

However, the tide might be turning with the advent of a new class of weight-loss drugs, spelling concern for industries that profit from America's indulgence in sugary and fatty products.

Companies like Eli Lilly And Co LLY and Novo Nordisk A/S NVO are leading the charge in the weight-loss medication arena with their drugs Mounjaro and Ozempic, respectively. 

Together, they command a market valuation nearing $1 trillion. In comparison, Pfizer Inc PFE, which played a pivotal role during the pandemic, is valued at $200 billion.

Historically, industries related to obesity management remained largely unperturbed. But with recent studies showing the potential of drugs like Wegovy to prevent heart issues, manufacturers of medical equipment related to obesity complications have seen their stocks dip. 

The success of these drugs has even led analysts to predict a possible decline in demand for junk food and snacks, Wall Street Journal noted.

Drugs like Ozempic and Mounjaro, developed initially for Type 2 diabetes, suppress appetite by mimicking gut hormones. As a result, the craving for unhealthy snacks decreases. 

Long-term usage of such drugs can deter health issues like diabetes, impacting sales of related medical equipment and applications.

Currently, funding the treatment for millions of obese Americans would strain Medicare due to the high drug prices. But as long-term benefits are proven, insurance coverage might widen.

Medical device companies mostly downplay the effect of these drugs. However, Intuitive Surgical Inc ISRG, a key player in bariatric (tummy tuck) surgery, has raised concerns over decreasing demands for surgeries due to the success of these drugs.

In the wake of these drugs, industries directly correlating to obesity, such as sleep apnea and Type 2 diabetes treatments, might see a significant impact.

The diet industry is not immune to these changes. With the rise of weight-loss drugs, many are pivoting to integrate them into their offerings, leading to shifts in stock values.

For the food sector, changes might be slower and less drastic. But companies that focus on single unhealthy items could be at risk. Analyst Brian Harbour suggests that many restaurant chains will adapt to consumer preferences over time.

While new obesity treatments aren't set to eliminate businesses, their emergence hints at a possible decline in obesity rates, pushing several industries to adapt to the new landscape.