The Global Fight Against Obesity

The statistics are alarming, but the tide may be turning. And investors could play an important role, says Sarbjit Nahal of BofA Merrill Lynch Global Research.

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First, the bad news: "The obesity epidemic may be the most pressing health challenge facing the world today," says Sarbjit Nahal, head of Thematic Investing for BofA Merrill Lynch Global Research, "because of both its direct impacts and ripple effects on chronic diseases, such as diabetes." And recent historical data is not encouraging. Globally, 2.1 billion people are overweight and 671 million are obese, according to The Lancet. In the U.S., almost one-fifth of all deaths are associated with being overweight or obese, and the annual cost of obesity-related illness is estimated at $190 billion, or nearly 21% of the country's annual medical spending.

Encouraging signs of progress

Now, here's the good news: Bold and widespread action could actually have a direct and positive impact on the obesity epidemic. "As was the case with smoking and second-hand smoke," Nahal believes, "the growing cost burden of obesity – on governments, corporations, and both the obese and non-obese – will spur collective action to fight obesity, including greater regulation."

He notes that we are already seeing this in the U.S., with increasing awareness of the problem and openness toward new treatments. Restaurants and food and beverage companies are also making a difference by focusing more on health and wellness in their products, leading to healthier choices for consumers.

For real, tangible gains to take hold, however, Nahal suggests that a long-term, broad-ranging "systems perspective" may be needed – targeting multiple sectors, industries and groups. "It should go beyond health to include the food and food retail, beverage, advertising and insurance industries, schools, work environments, tackling sedentary lifestyles, and increasing physical activity."

Four areas of opportunity

For those who are interested in investing in the global fight against obesity, Nahal suggests looking at opportunities in four different areas:

1. Pharmaceuticals, Health Care and Medical Technology
2. Food, Food Retail, Quick Casual Restaurants and Beverages
3. Commercial Weight Loss, Diet Management and Nutrition
4. Sports Apparel & Equipment.

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