New drugs as a chance to defeat the global epidemic of obesity

Currently, as much as 57 percent Poles live with obesity or overweight. This is part of the ongoing global obesity epidemic, the annual costs of which can reach up to 3% of GDP. global GDP. New drugs introduced to the market by pharmaceutical concerns are the hope for overcoming it. It is also an opportunity for their shareholders to earn additional profit.

Obesity is a global problem

Obesity is currently one of the biggest global health challenges. Average BMI in the world is approaching 25, which is the borderline between normal weight and overweight. According to the Central Statistical Office data from 2019, as much as 56,6 percent. Poles are overweight or obese (BMI over 25). Overweight people (BMI 25-30) account for 38,1 percent. of the population (an increase from 36,6 percent in 2009), and those with obesity (BMI over 30) are 18,5 percent. (increase from 16,7% in 2009). It is estimated that over 2,6 billion people worldwide now have a BMI over 25. This number is expected to rise to 4 billion over the next decade. This, in turn, could generate an economic cost of $4 trillion, equivalent to 3% of GDP. global GDP.

One of the important tools in the fight against obesity is a new generation of effective slimming drugs. Pharmaceutical companies Novo Nordisk and Eli Lilly, taking advantage of their leadership in diabetes drugs, were the first to register GLP-1 antagonists as drugs for obesity. Novo Nordisk sells its drug in the US under the brand name Wegovy (the drug is available in Poland under different trade names), and Eli Lilly under the brand name Mounjaro (it is registered in the EU but not yet available for purchase in Poland). These drugs are injected weekly and slow down the transmission of hunger signals to the brain. They are effective in weight loss, especially when combined with diet and exercise. Other major pharmaceutical companies Amgen, AstraZeneca, Pfizer and Sanofi are also gearing up to launch similar products. Drugs from this group will constitute an increasingly important source of revenue for pharmaceutical companies, just with the introduction of new products and the probable reimbursement of these drugs by governments and insurers.

Drugs are a huge market

Health care is the second largest sector in the framework the S&P 500 index. It has recorded a decrease this year, but it is not as large precisely due to the very good results of the largest pharmaceutical companies in 2022. However, there are concerns on the market about their revenues in the near future, related to the regulations introduced by Congress forcing the US government to regulate the prices of Medicare financial drugs. Currently, the price-to-earnings (P/E) ratio for this industry is 16x, which is close to the broad market. However, these companies have very good balance sheets and prospects for dividend payments.

About the author

Pawel Majtkowski - analyst eToro on the Polish market, which shares its weekly commentary on the latest stock market information. Paweł is a recognized expert on financial markets with extensive experience as an analyst in financial institutions. He is also one of the most cited experts in the field of economy and financial markets in Poland. He graduated from law studies at the University of Warsaw. He is also the author of many publications in the field of investing, personal finance and economy.