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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