Healthcare firms making money from treating overweight or obese patients are trying to persuade investors that strong new medications used for weight loss will not negatively influence their operations.
Due to the success of Wegovy from Novo Nordisk and other comparable medications, the worldwide obesity therapy market could reach a value of up to $100 billion within ten years.
These forecasts have caused a sell-off in a number of companies, from those manufacturing equipments for bariatric surgery to those providing solutions for health problem caused by obesity, such as diabetes and sleep apnea.
Danish drug firm Novo Nordisk's stock has risen by 28% over the past three months. Eli Lilly, which is scheduled to debut its weight-loss medicine called Mounjaro soon, has risen by 25%, driving its market worth to reach over $550 billion and making it the most valuable healthcare firm in the world.
Injectable medications used to treat obesity, well known as GLP-1 receptor agonists, are believed to be very effective but also quite costly, with monthly costs exceeding $1,300. The potential commercial reach of GLP-1 has been questioned by certain competitors.
Kenneth Stein, global chief medical officer at Boston Scientific, told investors that they expect it would take a decade or more for these treatments to reach peak penetration in indicated group of people. He also added that only a small percentage of obese patients in the US will use the drug. Boston Scientific said that there would be very little impact on its heart devices.
Medical technology analyst of William Blair, Margaret Kaczor Andrew, says she did not anticipate a big impact on devices such as glucose monitors, which are used to assist in managing diabetes. She pointed out that while the prevalence of cardiovascular illness has decreased due to the advent of new drug classes like statins, the need for heart devices had not decreased. Ultimately, she claimed that it had no effect on device usage.
Michael Farrell, the chief executive officer of Resmed, a firm that manufactures sleep apnea treatment devices, stated on a investor call on Thursday that the company is monitoring a large number of patients using GLP-1 and that adherence is being maintained. And also, resupply programs are being maintained.
A number of investors expressed optimism that the medications will lessen the need for invasive methods for losing weight such as bariatric surgery.
Portfolio manager of Gabelli Funds Jeff Jonas stated that it is very reasonable for people to take the medicines, see how much weight they lose and how long it will last, and then postpone or forego bariatric surgery.
According to Johnson & Johnson, a decline in sales of medical devices for bariatric procedures caused sales of third-quarter medical devices to fall short of projections by analysts.
However, based on an examination of pharmacy claims data, only about one-third of patients who were given a weight-loss medication such as Wegovy were still using it after one year.
Myriam Curet, the chief medical officer of Intuitive Surgical, stated on the company's earnings call on October 19 that the expectation is that a large number of them will not remain on the medication for more than one year or two, and at that point, they will think about bariatric surgery. In general, there will be a rise in demand for bariatric surgery, but it will take time.
The expensive cost of drugs and patients' being not sure about whether using those drugs will improve their long-term health and reduce medical expenses could limit the expansion of insurance coverage in the near term, according to Ann Hynes, an analyst of healthcare services from Mizuho Securities.
She just spoke with two health insurers and provided investors with information about corporate health insurance.
In '24, nothing will change, and she believes that if anything, access to insurance will become stricter. It might change in 2025 or 2026, according to Hynes.