(L) Obesity★ Featured Topics​Biotechnology & Healthcare

As Obesity Rates Near Tipping Point, MRP Adds New Investment Theme

Summary: Obesity as an epidemic is at a tipping point around the world. Health care companies and governments around the world are taking more action to fight obesity due to its association with chronic diseases, and the high societal and economic costs of managing those problems. Some companies are poised to benefit.

Faced with growing demand for improved delivery of health services at lower costs, the U.S. health care industry is transitioning away from a traditional fee-for-service (FFS) system towards more risk-based payment models. As such, managing the costs of chronic conditions has become high priority for health care providers and employers. After all, chronic illnesses are the biggest strain on the industry, accounting for more than 80% of the $3.5 trillion spent in annual health care costs. By 2026, U.S. health spending is projected to reach $5.7 trillion, with prescription drugs seeing the fastest annual growth during that time.

One area receiving greater attention from health care professionals and payers is the fight against obesity. That’s because of the many chronic (and expensive) diseases associated with it, including heart disease and stroke, high blood pressure, diabetes, some cancers, and the list goes on. In fact, the World Health Organization (WHO) deems obesity one of the leading preventable causes of death.

The world is seeing an escalation of obesity, which is the result of excess fat deposition in the body. Typically, a person with a body mass index (BMI) of 30 or higher is considered obese. Energy sparing technology, packaged or fast food, and the proliferation of desk jobs are partly to blame. Humans have become less active physically, and are consuming a lot more sugar, salt, additives, and processed foods than ever before.

In America, the obesity rate is on the rise again after briefly leveling off in recent years. At this point, more than a third of rural residents qualify as obese while the rate in metropolitan areas is about 28.7%. The highest obesity rates are in Southern states; in rural Louisiana and Texas, the number of obese residents approaches 40%. In general, 75% of men in the U.S. are overweight. The same is true for 69% of U.S. women. Things are not looking great for kids either. In 2016, the obesity rate for boys and girls was already 21% and 18%, respectively. If nothing changes, half of all U.S. teenagers will be overweight or obese by 2030 — as will one-third of kids between 6 and 11 years old. This is a major problem because a child with obesity is five to seven times more likely to be obese as an adult than one who is not obese.

It’s not just an American issue. Three in five Britons are overweight or obese, according to a 2017 report by the Organization for Economic Co-operation and Development (OECD). And just last month, the WHO reported that, about one in five boys (18%-21%) was found to be obese in Cyprus, Greece, Italy, Malta and Spain. The obestiy rate for girls was only slightly lower. The paradox is that the region gave birth to the Mediterranean Diet, a way of eating that is known to have positive effects on cardiovascular and metabolic health. Yet, childhood obesity in southern European countries was twice as prevalent than in northern European countries such as Denmark, Ireland and Norway, where rates of obesity in boys and girls ranged between 5% and 9%.

In Scotland, where almost 29% of children are at risk of being overweight and 14% are likely to become obese, the government has resorted to banning fruit juices and smoothies from school canteens across the country, with strict weekly portion limits also placed on unhealthy foods. Lower sugar limits on breakfast foods, snacks and baked products are also being proposed nationally.

A similar tactic is being adopted by some health care providers who are starting to advocate food-as-medicine, even in cases of a chronic disease. One example is US-based Geisinger Health Systems which launched its “Fresh Food Farmacy” on the rationale that a prescription for fresh food can help treat diabetes. Instead of relying solely on drugs to manage the disease, doctors are writing prescriptions for certain patients to enter the Fresh Food Farmacy program, which entails 15 hours of education about diabetes and healthier living, followed by 10 free nutritious meals a week for participants and their families.

After a year, patients in the program have seen their A1C levels drop to the point where diabetes medication usage was down 48%, and body weight was down 12%. With operational costs of $2,400 per patient each year, early findings show costs for patients in Geisinger Health Plan dropped by 80%: from an average of $240,000 per member per year, to $48,000 per member per year (even with free food!) The Geisinger model is replicable and other health systems are considering this approach to manage obese patients.

With obesity rates rising around the world, companies dedicated to treating and servicing obese patients are positioned to benefit. On that basis, MRP is adding Obesity as a Long Theme. Investor can get exposure to the theme via the Obesity ETF (SLIM).

SLIM invests globally in biotech, drug makers, health care and medical device companies whose businesses are focused on obesity & obesity related disease, as well as companies focused on weight loss programs, weight loss supplements, or plus-sized apparel. The fund invests at least 80% of its net assets in the stocks that comprise the Solactive Obesity Index.

We’ve also summarized the following articles related to this topic…


Obesity: Rural America struggles with obesity epidemic

Americans living outside of large metropolitan areas are much more likely to be obese than those who live in cities and suburbs, a public health challenge that could be shortening the lives of rural residents. New data from the Centers for Disease Control and Prevention find more than a third of rural residents, 34.2%, qualify as obese, while the obesity rate in metropolitan counties is significantly lower at 28.7%. The highest obesity rates are in rural counties in Southern states; in Louisiana and Texas, the number of obese residents approaches 40%.

Public health experts said the higher rates of obesity in rural areas is a long-term trend that highlights the socioeconomic differences between urban areas, where density means better access to higher quality food and parks, and rural areas, where residents are more likely to spend a greater percentage of their time in the car.

African Americans in rural communities, 44%, are most likely to be obese, the new CDC data finds, while Asian Americans in urban communities are the least likely to be obese. Obesity rates are much higher among lower-income households than among high-wage earners, a reflection of the sometimes-prohibitive cost of fresh produce. And those who have a college degree are far less likely to be obese than those who did not complete high school. The Hill


Obesity: Plus-size clothing and overweight models are normalising obesity, warn experts

The normalisation of “plus-size” clothing and overweight models could be fuelling the obesity epidemic because it leads people to underestimate their own weight, a new study has shown. Many companies now have plus-sized ranges which caters for women sized between 18 and 32.

The plus-size movement may help promote body positivity but it is having the unintentional consequence that people start believing they are a healthy weight. Sociologists from the University of East Anglia said it could undermine efforts to tackle the obesity epidemic where more than three in five Britons are overweight or obese.

The study published in the journal Obesity warned weight misperception has increased in England. An analysis of almost 23,460 people who are overweight or obese found those who underestimate their weight had risen from 48.4 to 57.9% in men and 24.5 to 30.6% in women between 1997 and 2015. Overall, those underestimating their weight are 85% less likely to try to lose weight compared with people who accurately identified their weight status. Telegraph


Obesity: Kallyope and Novo Nordisk announce collaboration to discover novel therapeutics for obesity and diabetes

Kallyope, Inc and Novo Nordisk A/S today announced that they have entered into a research collaboration and option agreement to discover novel peptide therapeutics to treat obesity and diabetes. Kallyope will receive an upfront payment and research support for activities conducted in the collaboration.

Under the terms of the agreement, Novo Nordisk has an option to license exclusive worldwide rights to develop and commercialise up to six products discovered in the collaboration. Kallyope will receive a license fee if Novo Nordisk chooses to exercise an option to a therapeutic discovered and validated in the joint research plan and potential research, development and sales milestones. In addition, Kallyope will receive royalties on worldwide product sales of licensed products.  WorldPharmaNews


Obesity: Omada Health launches new programs for obesity-related diseases 

In a recent Willis Towers Watson survey, 76% of employers said they plan to invest in diabetes support tools and solutions in 2019, in an effort to improve employee health and lower costs. Nearly 85% said managing chronic conditions across their workforce is a priority. Digital therapeutics startup Omada Health is making the move from prevention to condition management with new programs for type 2 diabetes and hypertension.

The San Francisco-based company is offering integrated chronic condition management programs for business and health plan customers. It is also offering personalized interventions for people living with or at risk for obesity-related chronic medical problems.

Omada was one of three digital health tools selected by Blue Cross Blue Shield of Massachusetts for its new software platform, Emerging Solutions. Several tech giants have also jumped into the diabetes space. Alphabet’s life science unit, Verily, has a joint venture with French pharma company Sanofi called Onduo that is developing diabetes management tools. Another project, Sugar.IQ, combines IBM Watson Health’s artificial intelligence know-how with Medtronic’s diabetes expertise to identify patterns in diabetes data that can help improve a diabetic’s health status and inform actionable steps. HCDive


Obesity: How new fresh-food prescriptions are beating pricey drugs 

Spending on diabetes drugs in the U.S. reached $53.7 billion last year, more than double what it was in 2013. Now, instead of relying solely on drugs to manage the disease, doctors are writing prescriptions for certain patients to enter its Fresh Food Farmacy program: 15 hours of education about diabetes and healthier living, followed by 10 free nutritious meals a week for participants and their families.

The program targets people with diabetes and food insecurity, those for whom it’s not always clear where the next meal will come from. The program, started 18 months ago, is a partnership with the Pennsylvania Food Bank. So far, it’s enrolled 150 patients, feeding a total of about 450 people a week.

On average, patients in the program have seen their A1C levels drop from a pre-enrollment level of 9.6 percent to 7.5 percent, Feinberg and colleagues wrote in an April article in NEJM Catalyst that they called “Prescribing Food as a Specialty Drug.” CNBC

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