The Rise of GLP-1 Drugs for Weight Loss, and Their Impact on Med-tech
Type 2 diabetes also have the side effect of driving meaningful weight loss. Two of these drugs are FDA approved for this indication. Our sources tell us that the demand is overwhelming, and pharmacies are on allocation as they cannot fill all the prescriptions. These magic bullets for weight loss have brought a bevy of questions as to how they will impact the medical technology world as many conditions treated with devices are related to obesity. These obesity related conditions include diabetes, high blood pressure, heart disease and orthopedic problems.
Glucagon-like peptide (GLP-1) is a type of hormone known as an incretin that is lower than normal in people with type 2 diabetes. By mimicking the effects of GLP-1, the medications have several favorable effects. In the brain, they reduce appetite. In muscle, they stimulate the uptake of glucose to lower blood sugar. In the stomach they slow digestion and increase the sense of fullness, reducing food intake. And in the pancreas, they increase the secretion of insulin. The net effect is that they significantly lower A1C, a measure of blood glucose and as a side effect induce substantial weight-loss.
That weight loss is significant. Patients on Lilly’s Mounjaro for 88 weeks demonstrated a 26% weight loss. And the drug is recommended for people with a body mass index (BMI) of 27. For a 5’ 10” man that would be a weight of greater than 188 pounds and for a 5’ 3” female that would be a weight of 153 pounds. The average BMI in the US is approximately 26.6, so there are huge populations who fit the suggested user profile.
The specifically labeled weight loss drugs may be expensive today. However, there are a variety of GLP-1 medications in the field and a host of on-line pharmacies available to facilitate off-label access at significantly lower price points. Additionally, our healthcare system finds a way to pay for almost every new advance and this tool is not likely to be an exception. Virtually everyone will have access to the GLP-1 medications.
Noteworthy points to consider include the following.
The drug is injected, which could reduce adoption.
The weight-loss effect does not continue if the GLP-1 is discontinued.
There are significant side effects with the most common being nausea that affects about 5%.
A recent societal shift towards more acceptance of larger body sizes has reduced the associated stigma of obesity and motivation to lose weight.
For med-tech investors it begs the question as to how will this impact the med-tech environment? My view is the following.
This is not a cure-all. This is not the end of XXL sweatshirts or even XXXL sweatshirts. Remember that 20% of prescriptions are not filled. And 50% of chronically ill patients fail to comply with prescribed drug regimens. GLP-1 drugs are injections, not pills so compliance may be lower. This impressive medical advance will be no exception to the non-compliance conundrum.
GLP-1 drugs may bend the growth curves of certain procedures and diseases. Already there is talk of lower bariatric surgery growth. This makes sense, as most physicians would recommend trying the meds before sending an obese patient for a risky surgery. Will it eliminate the need for bariatric surgery? No. Other affected areas include treatments for Type 2 Diabetes and liposuction. If a patient has a choice of losing twenty pounds or starting the Type II diabetes regimen, most will choose the GLP-1. The GLP’s may slow the growth in these areas for a time. But like the cost of healthcare, the inexorable growth will eventually continue.
GLP-1s may increase the need for other procedures. For example, after massive weight loss the patient has excess flabby skin as it does not shrink down after weight loss. Plastic surgery can remove that excess tissue.
Over a very long time, the medications may trim the growth of weight related orthopedic procedures of the hips, knees and spine as a portion of those patients developing conditions may delay their onset, or in a portion of cases, obviate the need. It also may affect the number of patients on CPAP machines for obstructive sleep apnea.
But the drugs will not significantly affect certain age-related conditions such as cardiac arrhythmias (atrial fibrillation), cataracts, osteoporosis, and arthritis. Technology for treating trauma and imaging equipment will also be unaffected.
All in, the GLP-1’s add a nuance to the med-tech sector by affecting the obesity driver. But the macro trends of aging and international growth will be untouched. And, if the drugs do extend lifetimes, that longevity will have a long-term offset in adding more patients to the aging pool.
While the new medications will not affect the medical device markets to a significant degree, they can cause investor angst. A few stocks in the type 2 diabetes and obesity arena, may see an overhang as “show me” stocks with investors waiting for proof that their business has not been impaired. Like the quadrennial discussion around government policy in election years, there will be a good deal of talk, but almost no change.