Obese-Sized Opportunities

The global obesity epidemic presents an opportunity for companies in the healthcare, weight-loss and retail sectors

Mauro F. Guillén 14 November, 2012 | 6:00AM

This article is part of Morningstar's 'Perspectives' series, which features contributions from third parties such as asset managers, academics and investment professionals.

As far as epidemics go, the sharp increase in obesity rates around the world has been in the making for several decades. Unlike SARS or the swine flu, it is not the kind of unforeseen phenomenon manifesting itself suddenly and unannounced. What’s shocking about it is the sheer magnitude. According to official World Health Organization statistics, approximately one billion people suffer from this terrible condition, and it is one that affects women to a greater extent than men. In the United States, 44% of males and 48% of women over the age of 15 have officially crossed the threshold of a body mass index above 30, which is the official definition of obesity. In the UK, the figures are 24% and 26%, respectively. A large number of European and Latin American countries have witnessed obesity rates soar in recent years to reach 30% or even 40% of the population. The figures are similar across the Middle East, from Egypt to Saudi Arabia, and even Iraq and Iran. So far, only Asia seems immune, with rates as low as 2% in Japan, although they are rising fast in South Korea and China.

Rising Obesity Rates Affecting Our Global Economy
The economic consequences of obesity are likely to exceed those of tobacco smoking and AIDS, combined. Being obese is a major risk factor for a number of chronic conditions such as diabetes, cardiovascular diseases, cancer, and arthritis. Estimates indicate that as much as 30-40% of total healthcare expenditures in the United States go towards treating obesity-related health problems. Given that healthcare accounts for about 15% of Gross Domestic Product (GDP) in the US, that means a whopping 5% of GDP in the world’s largest economy is consumed by treating ailments associated with obesity.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
Arena Pharmaceuticals Inc65.50 USD0.17
Coca-Cola Co52.93 USD-0.54
PepsiCo Inc144.16 USD0.09
Pfizer Inc36.53 USD-0.19

About Author

Mauro F. Guillén

Mauro F. Guillén  is the director of the Lauder Institute and a professor of international management at the Wharton School at the University of Pennsylvania.

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