Lifestyle Diseases

Banking on obesity


Increasing efforts to tackle obesity over the coming decades will form an important new investment theme for fund managers, according to a new (Bank of America) BofA Merrill Lynch Global Research report called “Globesity - The Global Fight Against Obesity.”

“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,” said Sarbjit Nahal, equity strategist at BofA Merrill Lynch Global Research.

BofA Merrill Lynch has identified a Global Fighting Obesity Exposure Stocklist-50+ centring on four areas: Pharmaceuticals & Healthcare; Food; Commercial Weight Loss, Diet Management & Nutrition; and Sports Apparel & Equipment.

The report by the BofA Merrill Lynch ESG (Environment, Social, and Governance) and Sustainability team identifies that efforts to reduce obesity is a “megatrend” with a shelf-life of 25 to 50 years. It charts the rise of obesity globally and the ballooning costs. BofA Merrill Lynch analysts across several sectors have collaborated to identify the sectors and companies developing longterm solutions. Earlier this year, the firm’s biotech team highlighted in “The Skinny on Obesity” the growing potential for development of new drugs to combat weight gain. “The FDA has historically had little risk tolerance for weight loss drugs, but recently has shown increased support for their development,” said Steve Byrne, biotechnology analyst at BofA Merrill Lynch Global Research.

Globally, 500 million people are obese and 1.4 billion are overweight. Obesity is the fifth greatest cause of death, leading to 2.8 million fatalities each year. Worldwide prevalence of obesity doubled between 1980 and 2008, according to the World Health Organisation. By 2030, 65 million more Americans will be obese if current trends continue. While its impact is well-known in the West, obesity is rising quickly around the world. Obesity in Europe has tripled in 30 years. It is growing rapidly in emerging markets as diets Westernise. Brazil, where 16% of the population is obese, is on track to match US obesity levels by the 2020s. Obesity has reached levels of up to 20% in Chinese cities. A quarter of Russian women are obese.

Growing costs

The costs of managing obesity are much greater than previously believed. In May 2012, the US Institute of Medicine estimated the annual cost of obesity-related illness in the US alone is more than US$190 billion – equal to 21% of annual medical spending. Previous studies estimated 10%.

Medical costs for treating obese patients are 40% higher than for non-obese patients. Treating obese patients comes at a higher premium than treating smokers. Obesity adds 50% to annual medical costs, while smoking adds 20%. High levels of global childhood obesity and growing obesity in emerging markets will further increase global costs. As happened with smoking, it is likely that the growing cost burden of obesity on governments, corporates and wider society will spur collective action and greater regulation. BofA Merrill Lynch expects widespread scrutiny of lifestyle aspects associated with obesity including food and drink, schools, work environments, insurers, tackling sedentary lifestyles, and encouraging increasing physical activity.

Investment ideas for fighting Globesity

Investors should take a long term view and a broad perspective in selecting stocks as part of the Globesity theme, recommends BofA Merrill Lynch Global Research. They have has identified more than 50 global stocks across four key entry points:

- Pharmaceuticals & Health Care – look at companies taking advantage of the FDA’s increased support for obesity drug development. Also look companies tackling related medical conditions and needs including diabetes, kidney failure, hip and knee implants. Also worth considering considering are medical equipment companies for things such as patient lifts, bigger beds and wider ambulance doors.

- Food – Look at companies based on their efforts to access the $663 billion “health and wellness” market, as well as on how they are reformulating their portfolios to respond to increasing pressure such as “fat taxes” to reduce sugar and fat levels.

- Commercial Weight Loss, Diet Management & Nutrition – Up to 50% of some Western populations pursue dieting, targeted nutrition and behavioural change making it a $4 billion market in the US and growing globally.

- Sports Apparel & Equipment – This is the longer-term play, but BofA Merrill Lynch Global Research believe that promoting physical activity will become a key priority for more government health policies.

168,000 diabetics at risk of limb amputation in the UAE

More than 168,000 diabetic individuals in the UAE risk the possibility of amputation if they sustain injuries on their limbs, a recent study indicates, triggering an urgent call to launch a ‘Save the Feet’ programme in the country.

The study undertaken in Al Ain on diabetic patients randomly selected over two years, showed the 12% prevalence of peripheral vascular disease.

Peripheral vascular disease is a condition similar to what happens to the heart blood vessels, causing narrowing of the blood vessels. The disease refers to the narrowing of the blood vessels of the entire circulation except those of the heart. As a result of this narrowing the patients are vulnerable to non-healing wounds, gangrene, infections and ultimately amputation, said Dr Amit Kumar, Consultant, Surgery at Burjeel Hospital and a Clinical Assistant Professor, Department of Surgery, Columbia University, New York, USA.

Poor circulation contributes to diabetic foot problems by reducing the amount of oxygen and nutrition to the body tissues, causing poor healing in case of injuries. What makes the problem more serious is that treatment procedures for diabetics often ignore the cardio vascular issues, he says.

Taking into consideration the grim situation, Dr Amit has called for an effort to raise awareness and encourage preventive measures through a ‘Save the Feet’ programme. He was speaking at a recent Continuous Medical Education (CME) seminar hosted by Burjeel Hospital in Abu Dhabi.


Dr Kumar has presented more than 65 such talks at various national and international meetings in an effort to increase awareness of PVD.

“Preventing complications related to injuries on the foot is important for diabetic patients because poor circulation impairs healing process and can lead to infection and other serious foot conditions. Many doctors focus only on the wounds and try to control diabetes but don’t pay enough attention to poor blood circulation on the feet and related problems which could lead to the possibility of amputation. That is why the nation requires a strong campaign such as ‘Save the Feet’ to increase awareness about this issue,” he said.

In addition, there are modern treatment methods using minimally invasive means that enable medical practitioners to deal with the problem of reduced circulation in such a way that most patients don’t require any cuts or even general anesthesia.

“Minimally invasive treatment helps open long blockages under local anesthesia, and most often the patient can return home the same day. These treatments are the standard of care in the United States,” Dr Kumar pointed out.

Dr Kumar has performed more than 50 such limb salvaging procedures in the UAE and is on the world body (TASC III) for delineating methods of treatment for such problems related to circulation.

21% by 2025

The UAE has the second highest prevalence of diabetes in the world at 19.5%, and it is estimated that this figure will go up to 21% by 2025, according to the International Diabetes Federation (IDF).
|The IDF estimates suggest that one in five people in the Middle East are now living with diabetes, a number expected to increase to 1 in every 3 by 2030. Studies from the IDF show that diabetes accounted for 10.3% of the total number of fatalities in the Middle East and North Africa region in 2011.

Increased prevalence of diabetes in the UAE could also mean spiraling healthcare spending as diabetes related diseases rise sharply. The region already spends US$5.5 billion annually on diabetes, accounting for 14% of its total healthcare expenditure and this can be expected to increase. Families with diabetic members spend as much as 15% to 25% of their income on diabetes treatment, according to the IDF. 

 Date of upload: 20th Nov 2012


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