Weight-loss treatments not yielding fat profits

Nov 16 2013, 10:22 IST
Comments 0
SummarySteam rises from pipes at a giant industrial complex on the edge of the Baltic Sea.

Steam rises from pipes at a giant industrial complex on the edge of the Baltic Sea whose success is a testament to the world's diabetes and obesity epidemic.

Novo Nordisk's Kalundborg factory, 100 km west of Copenhagen, makes half the planet's insulin for diabetics, putting it on a list of global sites the US sees as vital to its interests, according to a WikiLeaks cable in 2010.

Soaring diabetes rates, driven by increasing obesity, have fuelled profits at the Danish company for two decades.

But now the company wants to tackle obesity head on by launching a treatment specifically to help patients lose weight.

It would seem to be a no-brainer. Obesity rates suggest a booming market. Yet it is proving surprisingly difficult for both drugmakers and food companies to develop businesses directly addressing the problem.

In a global economic downturn, modestly effective weight-loss drugs and special diet foods are turning out to be a tough sell when a cheaper alternative is to eat less — or do nothing.

The first new prescription diet drugs to hit the US market in more than a decade, from Vivus and Arena Pharmaceuticals, have registered disappointing sales and food companies' diet lines are struggling.

Switzerland's Nestle has all but given up on the diet business, agreeing to sell the bulk of its Jenny Craig weight-loss unit last week to US private equity firm North Castle Partners.

And as Unilever reviews its portfolio of underperforming food assets, analysts say its Slim-Fast brand is one that could come up for sale. Bernstein Research estimates Slim-Fast had 2012 sales of 300 million euros ($402 million), 34% lower than when Unilever agreed to buy it in 2000 for $2.3 billion.

“The need for the services is increasing, unfortunately, but there are a lot of companies that have not done well,” said Jon Canarick of North Castle, which also bought the firm behind the Atkins diet from its post-bankruptcy lenders in 2007. “I credit most of that to a combination of the economy and the influx of competition.”

Weak economies have curbed demand for pricey, specialist dieting schemes just as competition has exploded from a host of electronic apps that count calories for free — and securing insurance reimbursement has been an uphill fight for new drugs that cost around $160-200 a month in the US.

Obesity prevalence has increased by more than 40% across the OECD industrialised countries and half of US adults are now forecast to

Single Page Format
Ads by Google
Reader´s Comments
| Post a Comment
Please Wait while comments are loading...