by Marion Nestle
Jul 31 2012

Obesity: global public health challenge or investment opportunity?

Worried about the potential personal and economic costs of obesity?  Never mind.  It’s time to view obesity as a business opportunity.

As the press release for a new research report from Bank of America Merrill Lynch, Globesity—The Global Fight Against Obesity, points out:

Increasing efforts to tackle obesity over the coming decades will form an important new investment theme for fund managers…Global obesity is a mega-investment theme for the next 25 years and beyond…The report…identifies that efforts to reduce obesity is a “megatrend” with a shelf-life of 25 to 50 years…BofA Merrill Lynch analysts across several sectors have collaborated to identify the sectors and companies developing long-term solutions.

Given the worldwide increase in obesity, its high prospective costs, and the ever-present threat of government regulation, the report identifies more than 50 global stocks that provide investment opportunities for fighting “globesity.”  These fall into four categories:

  • Pharmaceuticals and Health Care: companies taking advantage of the FDA’s increased support for obesity drug development; tackling related medical conditions and needs including diabetes, kidney failure, hip and knee implants; making equipment such as patient lifts, bigger beds and wider ambulance doors.
  • Food: companies accessing the $663 billion “health and wellness” market and reformulating portfolios to respond to increasing pressure such as “fat taxes” to reduce sugar and fat levels.
  • Commercial Weight Loss, Diet Management and Nutrition: companies pursuing dieting, nutrition and behavioral change—a $4 billion market in the U.S. and growing globally.
  • Sports Apparel and Equipment: “This is the longer-term play, but we believe that promoting physical activity will become a key priority for more government health policies.”

Well, that’s one way to look at it.  Public health, anyone?  

  • brad

    Well, it’s not much different from advising investors to put their money into disaster risk management firms or renewable energy companies due to global warming. If the world has a big problem that will take decades to solve, investors can get some assurance of long-term growth if they invest in the businesses that are dedicated to solving the problem. And heck, if it helps those businesses raise more capital so they can solve the problem more quickly, so much the better.

  • http://nEquals1Health.com Howard

    Business opportunity, indeed.

    To Big Pharma, if you are fit and healthy, and taking no prescription meds, you are totally worthless.

    OTOH, if you are fat and chronically ill (or even just have the fictitious disease called “high cholesterol”), you are worth a FORTUNE! The only real challenge is prolonging your misery for as long as possible without actually killing you (which cuts of the money flow).

  • Anthro

    @Brad

    “…the businesses that are dedicated to solving the problem.”

    But they are not “solving the problem”–they are simply making money off some very questionable responses to an actual problem. The one possible exception is pharmaceutical research–which so far hasn’t produced much.

    @Howard
    I happen to be both fit (weight appropriate) and healthy, but use one or two drugs to manage my GENETIC heart disease. Lifestyle isn’t always enough. The drugs I use are cheap, time-tested, and effective. I’d likely be dead or incapacitated without them.

    Some sources please for your absurd claim about cholesterol.

    You confuse the excesses of “BigPharma” with its TV ads and related promotion of lifestyle drugs with the plethora of useful and lifesaving therapies developed over the last century or so that have greatly increased our life spans. If people are spending their extra years fat and unhealthy, blame “big food” not the pharmaceutical industry. Docs tell them to lose weight, but few listen and even fewer actually do so–even fewer maintain the loss.

  • http://ccofk.blogspot.com Philippe

    What about a Bloomberg Initiative to reduce obesity along to the Bloomberg Initiative to Reduce Tobacco Use? You seem well situated to argue for it :)
    I have explained the similarities on my blog From Tobacco Control to Obesity Control…

  • brad

    Anthro, you’re right, “solve” wasn’t the right word. Maybe “address” would have been better. But I don’t think most of the solutions described in the investment opportunity report are necessarily “questionable.” If obesity is a growing problem you know that more people will need treatment for diabetes, plus you know that people will seek diet management and nutrition services, and you know that more people will be told to exercise more by their physicians. If you’re an investor, it seems like a fairly safe bet to invest in companies that work in these areas, since their business is likely to grow.

    I don’t see anything ethnically wrong with that in and of itself, it’s more a sign of the times.

  • John Ranta

    I think that Pfizer should merge with Archer Daniels Midland. The resulting agri-pharma conglomerate can develop a new version of high fructose corn syrup that includes statins. This is a sure fire winner! Get me Bain Capital on the phone…

  • Cathy Richards

    This just amplifies to me the inherent problems with non-publicly funded health care. Remember when cigarette companies joined forces with food companies? Their income from one vice was jeopardized — our appetite for cigarettes, so they bought into companies that could nurture a different vice — our appetite for food. And nurture it they have.

    I’m curious as to how many food companies have shares in HMOs and medical related companies. What an awesome opportunity – get paid to help us get fat, then get paid to help us deal with being fat.

    On the other hand, when health care is tax funded (yes, Canadians pay for their health care, we just amortize it over our lifetime and let the government deal with it), then the government has to deal with the costs, with no potential for profit. This should theoretically lead to better healthier environments and restrictions on cash-grabbers that contribute to poor health like tobacco, alcohol, and food.

    Food needs to be regulated.

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  • john

    I guess just eating less doesn’t pay any dividends.

  • Suzanne

    My obesity problem was treated with a High Fat Low Carb way of eating. So was my “food obsession” and “compulsive eating”. So was my “hyperlipidemia”. So were my eczema outbreaks. Along with my high blood blood sugar falling to non-diabetic levels. I didn’t eat less, and I didn’t move more. And I didn’t need any medication to improve my satiety – my Leptin and Ghrelin levels corrected themselves. And the 80 pounds I lost didn’t require an appetite suppressant or any other prescribed medication to impact my metabolic processes to facilitate weight loss.

    Dr. Peter Attia and Adele Hite have a web presence and are excellent sources of data on successful management of metabolic syndrome through ketogenic and HFLC nutrition.

  • http://www.viagusta.com Corey

    Well, sure, they’re right, and their conclusions are obvious. It’s still frustrating and a little blind that Bank of America’s report doesn’t seem to acknowledge that creating the obesity epidemic already HAS been big business.

    It would be refreshing to see corporations (and not just Big Pharma and Big Ag) begin to transparently acknowledge responsibility for the problems to which they have contributed, change their behavior accordingly, and innovate new solutions. (ADM: why are you still fighting for higher corn subsidies? Put that lobbying money toward developing a client base of smaller food companies that can afford to be more responsive and responsible.)

    Naive as this may seem, it would go a long way toward building trust on the part of consumers.

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