Big Gains for This Losing Industry
A bulging $150 billion business opportunity you should know about
Ric Edelman: It's Wednesday, July 19th. In the United States, 42% of adults are obese. 47% of Mexicans, 46% of Iranians, 46% of South Africans, 42% of Malaysians. In other words, obesity is a global problem. Obesity causes diabetes, heart disease, high blood pressure, stroke, gout, cancer; Covid is more likely to kill you if you're obese.
And there's also the stigma associated with being fat. And that stigma harms children the most. The cost of obesity to global GDP is $4 trillion. That's how much money we spend on health care to deal with obesity. That's how much money we fail to produce in productivity due to sick leave and premature death.
And so there's a huge industry designed to cure our obesity. It's the diet industry, and it's a $76 billion business: Weight loss and medical programs. Diet soda. Low-calorie frozen food. Gym memberships. Jane Fonda workout videos. The Atkins Diet. Noom. Nutrisystem. Weight Watchers. Jenny Craig, Herbalife. Canyon Ranch. This is a huge business.
And now we have something totally new available. Ozempic, Wegovy and Mounjaro. These are drugs and they make you lose weight 20% of your weight. These drugs cost $900 to $1400 a month. That's what, 17 grand a year or 25% of median income. That's as much as most people's mortgage payments. Now, not only do you spend $17,000 a year, once you start taking these drugs, you've got to keep taking them for life because if you quit, the weight will come back. And these are new drugs. Side effects they know are diarrhea and nausea.
But they don't yet know what the long-term side effects are because it might take years for those to identify themselves. But already there are so many people. Moving toward these drugs because they work at losing weight and keeping the weight off, that it's having a huge impact on the diet industry. Jenny Craig is out of business. They have closed all 600 of their stores. $76 Billion Industry is exploding. It's being replaced by a new industry that isn't $76 Billion. It's $150 Billion. That's the projected sales of these drugs by the end of the decade. But oh, by the way, these new drugs generating $150 Billion in sales, that is of benefit to three drug companies. The current diet industry, which employs thousands of workers, is all going away.
So there's a big new revenue and profit stream, but not the attendant employment that goes with it. This is an illustration of the impact of evolving technologies or curing obesity. We're solving a major health crisis, but there are disruptive impacts on the existing status quo. Consider this when you look at your investment strategy.
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