“Everyone complains about the weather, but nobody does anything about it.”
That observation credited to Mark Twain might also be applied to the obesity epidemic. The big difference is that a lot of companies are trying to do something about it. Will they succeed? Fat chance, at least in the near term.
Nothing on the horizon appears to be an answer to the “growing” problem facing Americans and others across the globe: the need to shed excess weight. How big is the issue? Huge. It’s estimated that In the U.S. alone nearly two-thirds of adults are now overweight and half of these –more than 72 million people — are obese.
The big problem is the associated health costs of treating morbid obesity. The current estimate is $120 billion a year, making it comparable to the economic cost of smoking.
There’s a huge opportunity out there for the pharmaceutical company that can come up with an effective treatment. The global market is expected to reach more than $13 billion in 2014.
Unfortunately, the field has been plagued by product recalls and withdrawals, denials of approval, drugs with serious side effects and disappointing results for patients. It also has been held back by the reluctance of insurers to pay for obesity treatments unless they address an accompanying health condition such as diabetes.
Recent news on a number of potential treatments in late-stage clinical testing also hasn’t been good:
In February, Orexigen (Nasdaq:OREX) saw its share price hammered down when the FDA expressed concerns about the side effects of the company’s anti-obesity candidate Contrave; the agency asked for a new study. Vivus (Nasdaq:VVUS) still hopes to get approval for Qnexa, even though the FDA asked the company to run additional tests over concerns that children of women who have taken the drug may be born with birth defects. And speculation exits that there is a good chance Arena Pharmaceutical (Nasdaq:ARNA) will abandon its anti-obesity drug lorcaserin because of tumor reports.
Maybe the answer will eventually come from Big Pharma. For instance, Pfizer (NYSE:PFE) and Bristol-Myers Squibb (NYSE:BMY) have a collaborative effort looking into “DGAT-1 inhibitors”, compounds that seek to restraining an enzyme critical to fat creation and storage. But any resulting product is a long way off.
So despite all the activity underway, the only true anti-obesity drug in use today is orlistat. The prescription version is marketed by Roche Pharmaceuticals, while a lower dose OTC version is a product of GlaxoSmith Kline (NYSE:GSK).
The expanded availability of the Lap-Band from Allergan (NYSE:AGN) could step into the breach. The FDA recently approved broader use of the device, which helps shrink the size of the stomach, thus reducing the individual’s appetite. The FDA’s actions not only made patients happier but put a big smile on the face of Allergen investors. Johnson & Johnson’s (NYSE:JNJ) Ethicon-Endo unit competes with Allergan with its Realize Gastric Band. Neither company was probably heartened by the results of a recent study showing the long-term effects of laparoscopic adjustable gastric banding (LAGB) are relatively poor.
If in every cloud there is a silver lining, the paucity of effective anti-obesity drugs and the uncertainty surrounding surgery are encouraging to at least two companies: Weight Watchers International (NYSE:WTW) and Nutrisystem (Nasdaq:NTRI), which dominate the weight management control market.
