Written By: William Plovanic
Eighty-four million adults in the US struggle with obesity: The prevalence of obesity as a percentage of the US adult population in the last 25 years has grown to 35% (approximately one in three), or 84M people, from approximately 23% or 40M people. Globally, there are over 500M obese adults.
Near-term $1B+ US market opportunity: Using what we believe to be an extremely conservative average ASP of $2,000 per device, we derive a $1.3B US market estimate for obesity devices in 2025. We assume increasing procedure volumes driven by new, safer, less invasive options combined with improving reimbursement.
US regulatory environment for obesity companies — a truly positive situation: Our conversations with industry (executives and physicians) lead us to believe that FDA is very supportive of advancing new technologies to the commercial markets for obesity-related devices/procedures. We would also point to FDA’s actions with the formation and publication of a guidance document in December 2012, “Benefit-risk paradigm for clinical trial design of obesity devices: FDA proposal.”
Improving acceptance of obesity as a medical issue: Obesity was officially classified as a disease by CMS in 2004 and the AMA in 2013, thus removing a major barrier to access to medical treatment for obese patients. In 2006, and again in 2012, CMS expanded coverage to include more types of devices and procedures, further improving patient access to care. While CMS pays for only 20% of bariatric procedures for obesity, it sets the bar for insurers to follow.
Multiple technologies on the cusp of US FDA PMA approval — positions the market for significant growth: We believe there will be more than one winner in the obesity space as different devices/procedures achieve weight loss by different mechanisms of action. From a timing perspective, we highlight that there are three PMA devices that have been submitted within the past 12 months, and four more companies with products in US pivotal trials. Given the plethora of new devices on the near-term horizon (next two years), unmet clinical need in the market today, and low penetration of existing products/procedures, we believe the obesity market is poised for significant growth.
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Josh and William,
Great to see your report synopsis. According to AMA, CDC and WHO the number of obese individuals in developing countries is very disturbing.
I think the calculation on the obesity market opportunity is off.. according to experts from Cleveland Clinic suggested 15 Million individuals are super-obese and qualified to get surgery in US. Assuming the avg selling price of medical device of $4000 ( not $2000) the market is $60Billion. This is near term! World wide there are equal number over 17Million qualified for surgery (Mexico, Brazil, Australia, UK, Italy, Spain, Saudi Arabia, Kuwait, UAE, India, China, NZ, Greece, Turkey, Poland, Belgium, Germany, Portugal, Russia)
Assuming a Avg selling price of approx $2500- $3000 that market translates to approx $50 B.
In the US about $500,000 procedures were reported at ASMBS meeting it was up from 350,000 procedures in 2012. Also, it was mentioned that outside US procedures increased 30% from 400,000 in 2012 to over 500,000 procedures. On an average a bariatric practice performed over 300 procedures a year. Avg procedure cost was between $15,000 to $20,000 worldwide.
I am not suggesting that all the 500 Million people worldwide need treatment. Also, I believe that there needs to be a focus on prevention.
I strongly believe that the technology companies targeting obesity must go public and raise a boat load of capital to do everything they need to do to get worldwide approval. I thing the companies that will be stars if public or private.
1) http://www.onciomed.com 2) http://www.reshape.com 3) http://www.obalon.com 4) http://www.giDynamics 5) http://www.baranova.com