Fight against obesity is major investment trend

LONDON (Reuters): The fight against obesity will be a major investment trend for the next 25-50 years, a report by Bank of America/Merrill Lynch said, listing 50 companies in areas from healthcare and pharmaceuticals to food and sports that could benefit.

Worldwide obesity has more than doubled since 1980 to over 500 million people and keeps increasing, according to the World Health Organization. The related costs to public health and the economy are skyrocketing.

A study funded by the Centers for Disease Control and Prevention has said that about one-third of American adults are obese and another one-third overweight.

“Obesity may be the most pressing health challenge facing the world today and efforts to tackle it will shape thinking by policymakers and in boardrooms around the world,” said Sarbjit Nahal, equity strategist at BofA Merrill Lynch Global Research. “Global obesity is a mega-investment theme for the next 25 years and beyond.”

The world’s biggest insulin producer Novo Nordisk and U.S companies including orthopedic device makers Zimmer Holdings Inc and Stryker Corp are among those in the pharmaceuticals and healthcare sector that are best placed to benefit from the fight against obesity, based on an estimate of current sales and how this could drive growth, the report said. In the food sector, the report ranks some 20 companies on the basis of how they could access a global “health and wellness” market it estimates at $663 billion, and how they are prepared to respond to increasing pressure to reduce sugar and fat levels in food products.

France’s Danone and U.S. firms Dole and Seneca Foods Corp. make the top of the BofA list in this sector, with the highest exposure to the fight against obesity.

“Although it is difficult to accurately gauge the link between such exposure and share price performance ... we still consider fighting obesity exposure an important positive point to track,” the report said.

With diets and related products a $4 billion market in the United States, the report said, companies such as Weight Watchers also made the list together with nearly 20 sports apparel and equipment stocks including Nike and Adidas.

The sports sector “is the longer-term play, but we believe that promoting physical activity will become a key priority for more government health policies,” the report said.

Obesity is defined as having a body mass index - a measure of height to weight - of 30 or greater. Overweight means a BMI of 25 to 29.9.

The percentage of Americans who are obese has tripled since 1960 to 34 percent, while the incidence of extreme or “morbid” obesity has risen six-fold, to six percent.

The price tag of obesity has also soared, with the condition contributing an additional $190 billion a year in healthcare costs, or one-fifth of all healthcare spending.