Photo: Don Hankins on flickr
Nearly two billion people are overweight or obese in the world. This is remarkably bad for our health, but, as with all things, great for few groups.
Case in point this week the FDA approved the first obesity pill in 13 years. Shares of drugmaker Arena surged 30 per cent after the announcement, boosting the company’s market cap by around $500 million.
And drugs are just the tip of this large iceberg. Someone has to feed and take care of all of those fat people.
Fast, cheap and delicious, fast food restaurants are more popular than ever. McDonald's U.S. sales are up 26 per cent over the 5 years; Wendy's U.S. sales are up 9 per cent and Subway's U.S. sales are up 48 per cent.
And international growth is even hotter.
All these enormous fast-food chains have suppliers that sell beef, eggs, vegetables and other similar raw materials at a retail price and it's a gigantic industry that goes, for the most part, under the mainstream radar. McDonald's, for example, spent at least $10 billion on food in 2011.
Chronic disease accounts for around two-thirds of rising US health care costs; and obesity is the fastest growing chronic disease.
Rising health care costs needs have boosted health care pay and employment.
For-profit hospitals are making hay too, with industry leader Community Health Systems running an up to 53 per cent profit margin.
And then there are the risky and expensive obesity-related surgeries. The average gastric bypass surgery cost $20,000 in 2009 and there were 220,000 of those operations in that year alone, according to Reuters.
One of the predominant complications of obesity is diabetes, and the major drug companies are making big money through their sale of popular diabetes drugs. Merck, the makers of Januvia and Janument, saw first quarter profits rise 67 per cent this year according to the AP. Januvia and Janumet, made just over $1.3 billion in sales of the two drugs in 2011, according to Bloomberg.
A recently published article in The Economic Times reports that India's diabetic population is expected to soar from 40 million to 70 million people and that $700 million in diabetes drugs were sold in the country last year.
How profitable is the market for cholesterol medications and drugs? Well, Pfizer's patent on popular drug Lipitor expired last year and the company's net income fell by $1.45 billion, more than 50 per cent as the AP reported in January. Lipitor is the top selling drug ever, according to the article, and Pfizer made $10.7 billion in sales in 2010 alone from the drug.
New pill Belviq is expected to be big business, boosting shares for drugmaker Arena by 30 per cent when it received FDA approval this week.
But there are plenty of other unapproved weight-loss drugs that have and will continue to generate big sales.
Popular diet company Medifast, which has diet pills and a small chain of weight loss centres, took in $88.9 million in first quarter revenue, according to AOL Daily Finance. That's an increase of 20 per cent over the same quarter in 2011.
A lot of these pills aren't regulated, so it's hard to quantify the full scale of how much money is spent on these pills every, but it's safe to say that hundreds of millions of dollars are spent each year on pills that are far from a guarantee.
P90X, the unbelievably popular diet and exercise regimen from parent company Beachbody, has had millions of users who pay hundreds of dollars in videos and equipment to get that perfect body. They made over $200 million in revenue in 2010 and have over 500,000 Facebook likes. This is a shining example of a company benefiting from an image conscious society.
There is also a clear link between obesity and physical inactivity: and inactive people love watching TV.
Indeed, studies have shown that people who watch more TV are more likely to be fat.
Obesity has also provided an exciting new subject for reality shows.
Over 7.2 million people watched this past season finale for NBC's reality hit The Biggest Loser, a show where the person who loses the most weight wins $250,000. It just completed its 13th season on the network. The franchise has expanded to international versions of the show, video games and a weight loss resort.
More inactivity among Americans is causing us to spend more time indoors. And more time spent indoors almost always means increased energy use.
What's more, obese Americans are weighing down airlines and boosting fuel costs. They are also taking up extra seats or extra-big seats on airlines and other transportation, also contributing to fuel costs.
Obese people need bigger things. This concept has birthed whole corporations like the Casual Male Retail Group--owner of Big & Tall--which generates half a billion dollars in annual sales.
And that's just the start. Environmental Nutrition reports:
No question, Americans are getting fatter. Nearly two-thirds of us are overweight or obese. In response, companies are accommodating us with larger furniture, oversized umbrellas and towels, clothing with roomier fits. Is this new marketing niche a help or hindrance to the people to whom it caters?
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