Investopedia is a Forbes company. They have some insight on how to make a few dollars from the obesity epidemic.
…rather than fret about a problem with no clear solution, investors can do what they do best – figure out a way to make a buck off the situation.
At least they’re honest about it. And their business is to guide their readers in making more money.
So, what do they recommend? They consider market leaders Weight Watchers and NutriSystem.
Both of these companies have exceptional returns on capital, strong brand value, asset-light business models and huge addressable markets. Unfortunately, that is hardly a secret on the Street, and both stocks carry valuations that do not suggest ample appreciation potential.
In other words, they don’t think that these stocks are going up. They’re already priced high enough. And therefore even though the companies make money, they’re not recommended.
So where else can we make some money? Well, how about medication? There are non-prescription products, but apparently they don’t sell enough to make them attractive as an investment.
GlaxoSmithKline markets Roche’s drug Xenical as Alli in the U.S. and U.K. over-the-counter markets, but sales here have been largely disappointing, with less than $300 million in sales last year.
The other products in the non-prescription market — like MetRx and Power Bar — are again not big enough players for investors to be interested in.
The real financial potential is in the prescription drug market. But there are some potential problems.
Most experimental drugs have shown too little efficacy for consideration, while those that managed to show efficacy came with side-effect profiles ranging from the unpleasant to the lethal.
This sums up the problems with drugs for obesity. They don’t work too well, and they have a lot of side effects.
It turns out that the drugs with fewer side effects have minimal if any effect on obesity. That stands to reason. The less powerful the drug, the fewer the side effects, until they do nothing at all.
There are several new drugs being prepared for marketing.
Contrave is a mixture of two other drugs, naltrexone and bupropion. Clinical trials of Contrave have shown about a 7% average weight loss, with mild nausea as the primary side-effect.
Any drug that makes you nauseated will help with weight loss. Who wants to eat when they are sick to their stomach? On the other hand, if a medication is making you feel nauseated, that should be a warning sign.
Vivus has developed Qnexa for obesity. Qnexa is a once-daily oral formulation of phentermine and topiramate; both previously-approved drugs known to have efficacy in weight loss. Studies of Qnexa have shown weight loss of 10-15% over a year with common side effects of paresthesia (“pins and needles” on the skin), dry mouth and constipation.
Paresthesias are signs of nervous system involvement. If there should be any red flag when taking a medication it is something that causes problems with the nervous system.
Today it’s “pins and needles.” But what about in a few weeks or months or years after taking this medication? The long term effects are just not known.
Arena Pharmaceuticals (Nasdaq:ARNA) is hoping to get FDA approval for its drug Lorcaserin. Lorcaserin has not been shown to be as effective as Qnexa, as the average patient lost about 8% of his or her body weight…
The concern about Lorcaserin is that it is chemically related to fenfluramine. Fenfluramine was one half of the deadly fen-phen that was pulled from the market after it was shown to cause damage to heart valves and many deaths.
The drug also has been shown to cause dizziness and nausea, and based on the chemical makeup it would also be expected to affect the nervous system and endocrine system.
So, is there a wise investment decision in this group? Probably not.
And if you are overweight and concerned about your health it’s best to steer clear of medications. You want to lose weight to improve your health. And you can’t do that by taking drugs with their side effects and unintended consequences.
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