- The rise in obesity is having a massive impact on the global economy, according to Goldman Sachs.
- The bank estimates that obesity will drag down the world's GDP by $4 trillion in 2035.
- But a new class of weight-loss drugs could change all of that, and represents a big opportunity for investors.
Obesity is prevalent throughout the US, and that's having a massive impact on the economy, according to Goldman Sachs.
The bank estimates that obesity is costing the US healthcare system $170 billion per year. And by 2035, Goldman Sachs estimates that the consequences of the chronic health condition will drag down global GDP by $4 trillion.
That's equivalent to Germany's GDP in 2022, making it the world's fourth-largest economy.
But a new class of GLP-1 weight-loss drugs has the potential to change that, and it represents a big opportunity for investors.
That's because the weight-loss drug market has "historically been limited," according Goldman Sachs portfolio manager Jenny Chang, and that leaves the market completely wide open for this new crop of promising drugs.
Popular drugs include Ozempic and Wegovy from Novo Nordisk, and Mounjaro from Eli Lilly. They have helped obese patients lose more than 20% of their body weight by producing proteins that stimulate the feeling of fullness, leading to patients eating less food.
A one-month supply of the GLP-1 injections cost patients upwards of $1,000, partly driven by the insurance industry's reluctance to offer coverage for the medications. But that could change soon after recent studies showed the drugs improved overall health, resulting in big savings for the healthcare system over time.
"Clinical trials show the drugs reduce the risk of heart attack and stroke," Chang said. "By fighting obesity, these drugs seem to be fighting heart disease, which is the leading cause of death. This puts the onus on insurer to rethink their approach."
A recent study from Novo Nordisk showed that its Wegovy drug reduced the chance of heart attacks, strokes, and cardiovascular deaths by 20%. It has also showed promise in eliminating sleep apnea and helping with addiction habits, though those potential benefits have not yet been proven in clinical trials.
Chang sees the weight-loss drug market expanding from just over $5 billion this year to $44 billion by 2030, and that growth should help supercharge sales for Novo Nordisk and Eli Lilly's drugs.
Novo Nordisk became the biggest European company, as measured by market value, earlier this week, so investors are starting to catch on.
"We see anti-obesity drugs as one of the biggest drug classes to be created," Chang said.