Obesity Epidemic in Emerging Markets Opens Investment Opportunity

Obesity in epidemic proportions in Emerging Markets (EM) , FDA’s openness to new medical technologies for obesity has translated in a investment frenzy amongst investors. Private investors are the most benefited by such investments. Investors are drooling over the potential for multiple returns in the obesity space.
It is unfortunate that emerging markets seem poised to inherit the unwanted side effects of economic progress. Yet if they follow the trends we've seen in the developed world, there will be far-reaching implications for economies and markets. As a result, we think investors should pay close attention to OBESITY as an important indicator of consumer and health-related trends in emerging-market countries. According to a physician entrepreneur “This is a tremendous investment opportunity for private and institutional investors”

 
Following the West Trend
The average calorie consumption in the US rose steadily from approximately 2,000 calories a day in the early 1960-1970s to 3,800 in 2006, according to UN statistics. About two-thirds of Americans are overweight today, based on the World Health Organization's definition.

China: From Lean to Fat
Today, China seems to be following American patterns. Rapid urbanization and modernization have prompted a sharp decline in physical activity. People are consuming more processed and packaged foods-and more calories.
It’s no surprise that obesity is on the rise. A study published in Obesity Reviews reported that 11.4% of Chinese men were obese in 2009, compared with 2.9% in 1993, and obesity is rapidly rising among women and children, too..

India: From Malnourished to Obese
India was malnourished a 2 decades ago. The obesity index in the urban population has grown over 300%. Patients who are obese are seeking immediate treatment and are ready to pay out of pocket. Patients are looking for the technologies that are made in the US ( it did not matter if the technology was approved or in clinical trial).
Despite strong weight loss data shown by Sleeve Gastrectomy and Gastric Bypass. The patients are looking for something else. They are demanding less invasive procedure and are more assertive in their request. If their request are not met, the patients are shopping for new doctor.  The demand for gastric banding is returning, particularly when US and international experience suggest that almost all Gastric bypass and Sleeve Gastrectomy  offer weight loss only until 5-7 yrs. "SO WHY CUT THE GUT?" .

GASTRIC PRESERVATION: The demand of medical device treatment that can offer a minimally invasive, reversible and offer decent weight loss is growing. According to a patient who was 150 Kg and BMI of 40 said " I was recommended Gastric Surgery, I dumped my doctor, I don't want my stomach to be cut and portions of my gut be removed, when I can get a good procedure and be able to upgrade it later if I need it" ," I am only 30 yrs old and don't want to worry about bone loss and other complications because of gastric bypass and Sleeve gastrectomy-go to youtube and see how many people have leaks, bleeds and problems! I don't want that to happen to me" . This individual shopped for a surgeon and got a gastric band like device at another weight loss clinic, lost 50 Kgs in the first year and has kept it off for 30 months.
Investors should take note. If the pattern follows that of developed countries, we would expect to see increasing demand for medical devices like the gastric bands in emerging markets from Johannesburg to Jakarta and  Brazil to China

Opportunity:  Medical  device and drug makers that offer solutions and treatments for obesity should grow rapidly, in our view. California has been a hub for medical technology innovation and had given strong return on investments. These could include companies that develop medical devices or laparoscopic treatments targeting bariatric surgeon users in the US, and devices targeting diabetes.
China & India is already home to the largest number of diabetics in the world-11.6% in China and 14% in India, versus 1% in 1980, according to the Journal of the American Medical Association . In the US, 10.9% of the population suffers from diabetes, reports the International Diabetes Federation ((IDF)).
Investors interested in obesity technologies,  should research carefully using key words “innovations” “obesity” “laparoscopic” “minimally invasive” “reversible” “diabetes”. Contact companies directly to explore investment opportunities..

Is Chinese investment in American medical device start-ups a recent phenomenon?

The value of the Chinese yuan was reduced against the US dollar three time last week—on three successive days—by China’s central bank, the People’s Bank of China. US stocks fell sharply when the first reduction was effected on August 11.

The primary reason for the fall was concern that the Chinese economy is slowing down more than expected even by Chinese authorities.

But, is America resuming its economic leadership of the world in the late days of the Obama presidency?
China appears to be in retreat for now — its currency, the yuan, is taking a tumble and in the process causing ructions across Asia. So, while US VCs and investors sit on the side lines, China investors are finding ways to get their investments into the US. The perception is that the US is poised to resume its economic leadership. The ultra rich in China are counting on US development and the appreciation for their investments in the US.

Recently, one of the medical device provider of advanced proton therapy systems, announced that it has entered into an investment agreement with a China firm where up to $200 million will be invested  to accelerate its development of its technology.  Chinese investors are finding ways to invest in technology companies in the US. They are betting on young medical technology companies working on chronic diseases like obesity, cardiovascular disease, diabetes, orthopedic sector.  $6 billion – that is the amount of money that Chinese companies have committed to investing in U.S. technology firms in the first quarter of this year, according to a report this month by the Asia Society and Rhodium Group. This was no small jump, given that the peak annual transaction value in this category in the past eight years was only $1.5 billion.

We know that Chinese investment in U.S. technology isn’t news, but is Chinese investment in American med device start-ups a recent phenomenon?It’s kind of step-by-step. the investor first tries to buy a house, as usual. Then he buys commercial real estate, strip mall, golf courses, shopping centers. Then he starts to think about start-up companies that he can partner with and improve his business in China, or just for financial return.

China's spending on healthcare has increased 40%, this means a sharp rise in use of medical devices made in the US. Medical products made in China or anywhere in Asia are less desirable, than the ones designed and made in the US. Thanks to the Apple product phenomenon. Chinese consumer believes in the quality of US made product, particularly when it comes to healthcare.

The aging Chinese population is concerned about obesity and aging related problems. They are open to get surgical treatments for obesity, plastic surgery, dentistry, women's health, weight loss treatments drugs or devices.

Chinese investors are now competing with the US- VCs and institutional investors. For them the next step is to go beyond biotech and pharma, they are eying on the med device boom on wall street in the form  of IPOs. They believe the life science sector is not done yet, the med device and diagnostic sector is very much untapped. Experts believe that the recent surge of med device IPOs is an indicator of more IPOs in 2016 -2017 leading to more M&A transactions, higher valuations and takeouts. U.S. life science start-ups have always been in the leading position in innovation, delivering the next generation of technology and business models, so it’s natural for Chinese investors and companies to look there.

10 Reasons to be optimistic about Medtech IPOs in 2015

In 2014: Medical Device IPO Revitalized!  Predicting: 2015-2018 as Medtech IPO wave
 

Revitalized medical technology IPO market has captured the imagination of many new issuers and venture backed med-tech sector. The there were as many completed medtech IPOs in the last six months

as in the prior five year.

As we approach the beginning of 2015, the medical technology IPO market is showing signs of life following a six-year coma. This long-anticipated development is a result of the following:

1.     FDA has approvals  more medical devices in the last year. Medtech sector has a more predictable regulatory path than biotech and pharma.

2.     Increased demand of US made medical devices in the emerging markets.

3.     International investors are understanding the business of life sciences and it value in the IPO market place.

4.     Unrealistic valuations of IT sector. 

5.     Medical Device IPOs are more value as they can generate more milestone fairly quickly. Outside US market for medical devices is growing.

6.     IPO market of 2010 to 2014 has been so heavily weighted toward biopharma. In the last six years, biopharma IPOs have outnumbered medtech IPOs by a factor of 10 to 1. Institutional investors have expressed an interest in rebalancing their portfolios with new medtech companies targeting variety of diseases. Obesity, Diabetes, Metabolic Syndrome, Cardio-vascular, ENT, Women’s health, Spine and Orthopedics.

7.     With many existing public companies coming off of spikes in their stock price and looking richly valued at higher-than-normal trading multiples, investors are pleasantly surprised by the return potential of this new wave of medical device IPOs.

8.     Many top-notch, emerging-medtech IPO candidates have overemphasized M&A as “Plan A,” believing that the acquisition valuations and back-end earn out structures would be far more attractive than the corresponding public values. Besides, it takes a certain conviction to be the guinea pig who lines up first to go public. That hurdle has been overcome.

9.     The return of the medtech IPO market arguably could have been started in 2012. Many believe that the public markets were ready and willing to invest in medtech IPOs for quite a while. However, as often is the case, it is difficult for private companies to control their M&A destiny and a subset of these companies are now embarking on “Plan B,” the IPO.

10.  The there were as many completed medtech IPOs in the last six months as in the prior five years.The medical device valuations are strong and realistic.

In 2014: Medical Device IPO Revitalized! Predicting: 2015-2018 as Medtech IPO wave

1)      In 2014: Medical Device IPO Revitalized!  Predicting: 2015-2018 as Medtech IPO wave

Revitalized medical technology IPO market has captured the imagination of many new issuers and venture backed med-tech sector. The there were as many completed medtech IPOs in the last six months

as in the prior five year.

As we approach the beginning of 2015, the medical technology IPO market is showing signs of life following a six-year coma. This long-anticipated development is a result of the following:

1.     FDA has approvals  more medical devices in the last year. Medtech sector has a more predictable regulatory path than biotech and pharma.

2.     Increased demand of US made medical devices in the emerging markets.

3.     International investors are understanding the business of life sciences and it value in the IPO market place.

4.     Unrealistic valuations of IT sector. 

5.     Medical Device IPOs are more value as they can generate more milestone fairly quickly. Outside US market for medical devices is growing.

6.     IPO market of 2010 to 2014 has been so heavily weighted toward biopharma. In the last six years, biopharma IPOs have outnumbered medtech IPOs by a factor of 10 to 1. Institutional investors have expressed an interest in rebalancing their portfolios with new medtech companies targeting variety of diseases. Obesity, Diabetes, Metabolic Syndrome, Cardio-vascular, ENT, Women’s health, Spine and Orthopedics.

7.     With many existing public companies coming off of spikes in their stock price and looking richly valued at higher-than-normal trading multiples, investors are pleasantly surprised by the return potential of this new wave of medical device IPOs.

8.     Many top-notch, emerging-medtech IPO candidates have overemphasized M&A as “Plan A,” believing that the acquisition valuations and back-end earn out structures would be far more attractive than the corresponding public values. Besides, it takes a certain conviction to be the guinea pig who lines up first to go public. That hurdle has been overcome.

9.     The return of the medtech IPO market arguably could have been started in 2012. Many believe that the public markets were ready and willing to invest in medtech IPOs for quite a while. However, as often is the case, it is difficult for private companies to control their M&A destiny and a subset of these companies are now embarking on “Plan B,” the IPO.

10.  The there were as many completed medtech IPOs in the last six months as in the prior five years.The medical device valuations are strong and realistic.

Small, rich and overweight: How Abu Dhabi is tackling its obesity problem

ONE OF THE most ambitious plans to combat chronic diseases is being introduced in Abu Dhabi, the biggest state in the United Arab Emirates. Nearly one in five of the UAE’s population is diabetic. Abu Dhabi is small enough and rich enough to tackle the problem comprehensively. A top-down political system helps.
In 2006 the emirate recruited Oliver Harrison, a psychologist and then a consultant at McKinsey, to its new health authority to help tackle chronic disease. When the government launched a health-insurance scheme in 2008, all adult Emiratis were offered a comprehensive health screening. By May 2010 some 92% of them had enrolled in the programme. The results were alarming.
Thirty-five per cent of those screened were obese and a further 32% were overweight. These figures were similar to those in America, but, worryingly, Emiratis were fatter at younger ages. Some 18% of those screened had diabetes and a further 27% were at high risk of developing it.
Patients are asking for less invasive surgery as treatment options. Surgeons are looking at less invasive solutions like the treatment from USA. Like the Onciomed, Gastric Vest System (GVS  system). GVS system is in clinical trials in Asia and Latin America.
Also, there are request for gastric balloon in younger patients who are in late teens. GVS request are from patients who are over 18 and up to 60 years. This product is in clinical trial and already there are patients wanting to get this procedure. For more details go to: www.onciomed.com
More Emiratis are looking for investment opportunity in obesity and diabetes. Typically, companies tackling large healthcare needs tend to be very lucrative.

MedTech Fund

Medtech Fund is an investment outfit created for physician and life science entrepreneurs, The fund's goal is to register over 1000 accredited physician investors. The analyst at Medtech fund explores the deals and offer up to 3 deals to the registered physicians.  All phyicians act as independent investors. Medtech Fund is an enabler, to bring new cutting edge technology descritely to its exclusive members in for a small fee. No management fees are associated with the fund.

Kara Reed is the key medical technology analyst associated with the fund.

Medtech fund has successfully invested in 8 deals to date. The deals range from $2M to $10M.

The process: Entrepreneurs  are requested to send non-proprietary information such as:
a) Executive summary
b) Current sales and future sales projections
c) If company is revenue +ve. Then sales numbers and details.
d) Team and their profiles
Medtech fund is very descrete and does not share information with anyone until the interest is developed and all due diligence is done. This is what makes the fund special for the investors and members. The fund is not a venture capital firm and act like a special family office and offers its exclusive members the privilege of discrete investment  does not post details on the web.

For Physicians:
The medtech fund selects investors based on their interest and their appetite for risk. Investors typically invest $250,000 to $500,000 per deal. The minimum investment can be $100,000.
Fund focuses on Medical devices, life science IT and healthcare IT.
Companies range from start ups to revenue positive companies.

Bariatric Surgeries Increased by 300% in 2012-2013

The number of bariatric surgeries performed on obese Canadians rose by 300 per cent in recent years, a new report suggests.

The number of these surgeries performed in 2012-2013 across the entire country was just under 10,000 according to an obesity expert.
With one million Canadians meeting the eligibility criteria for bariatric surgery, the number of surgeries performed is a drop in the bucket. Dr Freedhoff suggested that while the surgery counts will continue to rise, bariatric surgeries cannot solve the country's obesity problem. Currently, the lap band is a popular procedure. Newer procedures are awaited. One such technology is GVS from Onciomed, Inc. Onciomed has a technology called the gastric vest system that imitates gastric surgery without cutting and removing portions of the stomach. The number of bariatric surgeries are expected to double by 2015. Once technologies like the GVS system from Onciomed  and the endo barrrier from GiDynamics is introduced in Canada the number of procedures will increase exponentially. The primary reason is these technologies can be minimally invasive and yet have the opportunity to lose weight.

"We clearly will never have the capacity in Canada to help all of those who would qualify for bariatric surgery with bariatric surgery," say Freedhoff, an assistant professor of family medicine at the University of Ottawa and founder of Ottawa's Bariatric Medical Institute, a nutrition and weight management centre.
"We are not going to cut this problem away.". The answer to this problem is to bring less invasive technologies. Endobarrier is for Gastro-enterologist while Onciomed'd GVS system is for bariatric surgeons.

The figures were contained in a report on bariatric surgeries released Thursday by the Canadian Institute for Health Information. It covers the seven-year period from 2006-2007 to 2012-2013.
The report only captures surgeries performed by provincial health-care programs. So gastric bypass surgeries that were paid for by individuals or which were done outside of Canada would not be included.
Figures on three main types of gastric surgeries were included in the report: gastric bypass, where the size of the stomach is reduced and part of the small intestine is bypassed; sleeve gastrectomy, where 80 to 85 per cent of the stomach is removed; and adjustable gastric banding, where a band is placed around the upper portion of the stomach, limiting its capacity. Of the three, gastric bypass is the most commonly performed. Surgeons are requesting the government to approve newer technologies quicker to make it available for patients who do not want to be subjected to cutting and removing portions of the stomach and the intestines. Some of these private companies get acquired by larger firms for a very large premium and it takes forever for the large medical technology companies to introduce the product to the market.
Most of the increase in procedures occurred in Ontario, which went from 297 operations at the beginning of the study period to 2,846 in 2012-2013.

In fact, about 80 per cent of the 2012-2013 surgeries were performed in Ontario and Quebec. The provinces with the highest obesity rates -- the four Atlantic provinces, Manitoba and Saskatchewan -- performed less than eight per cent of the bariatric surgeries recorded in Canada in 2012-2013.
Women made up nearly four out of five people who got bariatric surgery in Canada, with the typical patient being a woman in her 40s with obesity and related conditions such as diabetes, high blood pressure or sleep disorders.
Freedhoff believes bariatric surgery should be part of the "constellation of care" used to deal with obesity. But he said it is not the most pressing issue related to obesity in this country.
"Really, what we need to look to is: Why are so many Canadians struggling with their weight?"
Canadian life is like a perfect storm for inciting weight gain, he suggested. Food advertising is ubiquitous, and foods are engineered to appeal to the taste buds rather than simply nourish.
"The 'bet you can't eat just one' phenomenon is a very real and engineered phenomenon," he said, referring to the tag line of a commercial for a popular snack food.
"It is not a personal choice. People aren't going to bed wanting and hoping and planning to continue to gain weight or not to lose. Quite the opposite. ... This is not something people desire or strive for. And if guilt and shame and desire were sufficient to lead people to sustainably lose weight, the world would be thin."

Technologies mentioned in the article: Gastric Banding, Onciomed's GVS system, Endobarrier by GiDynamics, Sleeve Gastrectomy uses J&J & COVIDIEN (Now Medtronic) staplers.