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Merck & Co., Inc. (MRK), Pfizer Inc. (PFE): Alarming New Obesity Data Points to a Scary Trend

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Last week, the Trust for America’s Health and the Robert Wood Johnson Foundation released their annual report (link opens a PDF to a 116-page report) on obesity trends in the U.S., known as F as in Fat — and the results weren’t very encouraging.

According to their findings, a staggering 68.7% of Americans are now either overweight or obese, with differences in age, education, and income playing a role in obesity rates. For instance, baby boomers were found to have a considerably higher obesity rate than seniors (aged 65 and up), while young adults are by far the least obese. Similarly, those who didn’t graduate high school, and clearly have fewer job opportunities available to them, are 64% more likely to have higher obesity rates than people who graduate from college. What’s more, those with incomes below $25,000 per year were 22% more likely to be obese than those with incomes over $50,000 per year. On average, Americans are 24 pounds heavier now than they were in 1960.


Source: Centers for Disease Control and Prevention.

Here’s what’s really scary
These results are disturbing, but nothing is scarier than what I think is the top-line statistic: Amercia’s most obese people are growing by leaps and bounds. Between 1976 and 1980, the number of extremely obese adults — quantified as those with a body mass index over 40 — totaled 1.4% of the population. According to the latest study figures, the number of extremely obese adults has climbed 350% to 6.3%!

If there is one bright spot in this data, it’s that childhood obesity appears to be leveling off its uptrend, suggesting that changes being made at the school level to supply more nutritious foods, and in getting kids to be more physically active, just might be paying off. For adults, however, the trend doesn’t appear to be getting any better.

According to the U.S. Department of Health and Human Services, its realistic goal is to reduce adult obesity rates between now and 2020 by 10%. That seems like a reasonable expectation given the push toward visible calorie counts on many menus, and ongoing obesity awareness campaigns by the Centers for Disease Control and Prevention, but the results have thus far been severely lacking. Instead, it’s looking more and more like the true beneficiaries here are going to be pharmaceutical companies that cater to chronic weight-management issues and symptoms.

The only real winners here
Sales since the launch of FDA-approved chronic weight management drugs Belviq from Arena Pharmaceuticals, Inc. (NASDAQ:ARNA) and Qsymia from VIVUS, Inc. (NASDAQ:VVUS) have been nothing short of disappointing, given the magnitude of this disease. However, my explanation for the weakness in anti-obesity drug sales is that few insurance companies thus far have been willing to latch onto these drugs as coverable. That could be about to change, though, with the American Medical Association declaring obesity an official disease in late June. Once insurance companies begin covering Belviq and Qsymia, sales of the two drugs could soar. While neither is incredibly expensive, consumers are just that insistent on not paying for either drug with out-of-pocket cash.

What’s really intriguing is that while debates continue to rage over which anti-obesity pill will be more successful — Qsymia delivered a higher percentage of average weight-loss in trials while Belviq offered the more favorable safety profile — the market for these medications now spans at least 6.3% of the U.S. adult population (what I would estimate is somewhere between 12 million to 14 million people) and arguably could include some of the remaining obese individuals with a BMI over 30. In other words, there’s absolutely no reason both drugs couldn’t be widely successful!

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