Tackling obesity could lead to investment opportunities

City Editor

Tuesday 17 July 2012

GLOBAL obesity represents an investment "megatrend" that could run for the next 50 years, according to Bank of America Merrill Lynch.

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TIM SHARP CITY EDITOR

The investment bank has identified the key sectors it thinks will benefit from the phenomenon including pharmaceutical companies, food producers, those behind weight loss products and sports goods retailers.

Sarbjit Nahal, equity strategist at BofA Merrill Lynch Global Research, said: "Global obesity is a mega-investment theme for the next 25 years and beyond.

"Obesity may be the most pressing health challenge facing the world today and efforts to tackle it will shape thinking by policy makers and in boardrooms around the world."The BofA Merrill Lynch Global Research report Globesity – The Global Fight Against Obesity estimates that 500 million people are obese and 1.4 billion are overweight. The report noted that it was not just a trend in the West, but is growing rapidly in emerging markets as people adopt increasingly westernised diets.The team suggested that, as happened with smoking, the growing cost burden of obesity on governments and companies was likely to spur collective action and greater regulation. BofA Merrill Lynch expects wider scrutiny of areas including food and drink and work environments and greater encouragement of physical activity.It also noted the costs of tackling obesity. In May 2012, the Institute of Medicine in the United States estimated the annual cost of obesity-related illness was more than $190 billion (£121bn), or 21% of the country's annual medical spending.In the pharmaceutical and healthcare sector, BofA Merrill Lynch said it was looking for companies that could benefit from government support for obesity drug development, as well as those tackling medical conditions such as diabetes and kidney failure.In food the institution was looking at those companies that could access the health market and considering how they were responding to pressure such as fat taxes to reduce sugar and fat levels.It estimates that up to 50% of the population in some western countries was dieting, benefiting firms in the weight loss and nutrition sector.The sports clothing and equipment space is a longer-term play the bank said but argued that promoting physical activity would become a priority for more government health policies.Among the companies identified by BofA Merrill Lynch is UK retailer Sports Direct, which it said could benefit from Government policies aimed at raising participation in sport.

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Tackling obesity could lead to investment opportunities

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