16 Aug 2022 | 5 minutes read
Kunal Valia
Assistant Portfolio Manager


What is Obesity?

The term obesity refers to an excess of fat. However, the methods used to directly measure body fat are not available in daily life and hence obesity is usually assessed by the relationship between weight and height. Obesity is a chronic disease that is increasing in prevalence in adults, adolescents, and children, and is now considered to be a global epidemic.

Why does obesity matter and how is it measured?

Obesity is measured through the Body Mass Index (BMI) which is calculated by dividing the weight of the person by the square of the body height (expressed in units of kg/m²).

Based on classifications from the US Centers for Disease Control and Prevention (CDC) government agency, people with a BMI of 30 and above are classified as obese by and those with a BMI of above 40 are classified as severely obese.

Obesity is associated with a significant increase in morbidity (including diabetes mellitus, hypertension, dyslipidemia, heart disease, stroke, sleep apnea, and cancer) and mortality. Weight loss is associated with a reduction in obesity-associated morbidity.

Body mass index and the risk of disease

According to CDC estimates from 2020, around 42 per cent of all US adults are obese and the prevalence of obesity has increased from 30 per cent to 42 per cent in the last two decades. The estimated annual medical cost of obesity is $173 billion in the US. It is estimated that half of the US adult population will be obese by 2030. Additionally, in 2016 the World Health Organisation estimated that globally 39 per cent of adults were obese.

What are the treatment options for obesity?

The most common cause of obesity is a sedentary lifestyle and increased calorie intake. Genetic and hormonal diseases can also play a role in some people.

The initial treatment includes comprehensive lifestyle management consisting of dietary therapy, exercise and behavior modification. Health benefits have been reported with weight loss of as little as 5 per cent of body weight. For patients who are unable to achieve weight loss goals with a comprehensive lifestyle intervention alone, options include pharmacological therapy, the use of medical devices, or bariatric surgery. Several surgical approaches, collectively referred to as “bariatric surgery”, have been used to treat obesity. Bariatric surgical approaches can achieve as much as a 40 per cent weight loss at 12 to 18 months post-procedure, with better long-term weight loss maintenance than non-surgical approaches.

Bariatric surgical treatments are recommended for people with BMI above 40. There are significant barriers to access as most health systems do not cover the cost of treatment.

What are the therapeutic drug options for obesity?

Historically, obesity drug development has been challenging as many approved drugs were found to cause serious side-effects (e.g. fenfluramine) and were prone to abuse (e.g. phendimetrazine). As a result, most drugs that were approved were ultimately withdrawn from the market. However, two new drugs have recently been approved by regulators in the US and Europe and another has reported encouraging trial results that could upend the treatment paradigm1.

GLP-1 is a hormone produced in the body when a person eats. The hormone stimulates the pancreas to secrete insulin to reduce blood glucose levels as well as causing a sense of fullness.

Drugs that mimic the action of GLP-1 (called GLP-1 analogues) have been approved for diabetes treatment. The annual revenues of these GLP-1 analogues are over $10 billion.

Saxenda is a GLP-1 analogue developed by Novo Nordisk and launched in the US in 2015. It is injected daily and trial results have shown that most patients lose 5-10 per cent of their body weight in a year. The drug has minimal side-effects but has not been widely adopted due to cost and limited weight loss benefit.

Wegovy is Novo Nordisk’s long acting GLP-1 analogue. It is injected once a week. It was initially approved in 2021 and can be used for patients with a BMI above 30. Trial results were impressive with the majority of patients losing 15 per cent of their body weight.

Eli Lilly has reported impressive trial data for its next generation GLP-1 analogue, tirzepatide, with patients losing more than 20 per cent of their body weight. The drug is expected to be approved in 2023 and has already been touted by some in the industry as a game changer for obese patients.

Mean change in body weight (%) from week 0 to week 68

Who are the major players and how big is the market?

Novo Nordisk and Eli Lilly are the major players in the GLP-1 analogue market.

Novo’s Saxenda and Wegovy have been approved for use in obesity. Eli Lilly plans to approach the US Federal Drug Administration (FDA) for approval of tirzepatide in 2023. The obesity market and potential use is enormous considering the $170 billion spent on obesity treatments in the US alone2.

Obesity has become a global pandemic due to a variety of reasons like cheap, calorie dense food, lower physical activity, excessive intake of sugar and food affordability pressures. This results in myriad of diseases that sustain the pharmaceutical and biotech industries as they look for solutions and treatments to deal with this disease and its resultant ailments.

The Orca Global Disruption portfolio invests in companies like Illumina that produce products to advance disease research into conditions like obesity, and drug development, particularly at the human genome level. Additionally, Intuitive Surgery (also in the portfolio) produces intelligent laparoscopic staplers that offer patients who suffer from obesity, a solution to manage or overcome it.

Another stock in our portfolio, Apple, is working to change how people think about, talk about, monitor, and focus on their health. Apple believes that technology can play a role in improving health outcomes and encouraging people to live a healthier day. Some of the ways Apple is applying technology to promote health via devices (i.e. Apple watch) includes storing all your health data in one place, fueling innovative third-party health and fitness apps and equipping researchers to make new scientific discoveries.

According to the World Obesity Federation, 800 million adults live with obesity. By 2025, the estimated annual cost of treating the negative effects of obesity is projected to be over $1.2 trillion3. The WHO estimates that, in Europe, 25% of adults and 80% of adolescents are insufficiently active. Insufficient activity is estimated to lead to 500,000 deaths per year in Europe.

As you can see form the numbers, this is a significant global challenge to which significant resources are being applied across big pharma, biotechs and technology companies to address it.


  1. Wolters Kluwer, UpToDate, 2022
  2. Association of body mass index with health care expenditures in the United States by age and sex, Z. Ward et al, 2021
  3. Global Obesity Epidemic to Cost US$1.2 Trillion Annually by 2025,” Food Tank, October 2017.

This document has been prepared and issued by Orca Funds Management Pty Limited (Investment Manager) (ACN 619 080 045, CAR No. 1255264), as investment manager for the Orca Global Disruption Fund (Fund) (ARSN 619 350 042). The Trust Company (RE Services) Limited (ABN 45 003 278 831, AFSL 235150) is the Responsible Entity of the Fund. For further information on the Fund please refer to the PDS and Target Market Determination which is available at orcafunds.com.au.

This document may contain general advice and should not be considered as medical advice. Any general advice provided has been prepared without taking into account your objectives, financial situation or needs. Before acting on the advice, you should consider the appropriateness of the advice with regard to your objectives, financial situation and needs. This document may contain statements, opinions, projections, forecasts and other material (forward-looking statements), based on various assumptions. Those assumptions may or may not prove to be correct.

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