Obesity Epidemic Worldwide Has Created a Turf Battle Between Doctors, Pharma & Medcial Device  Manufacturers-May Lead to a M&A Frenzy

Over 400 Million people suffer from obesity Worldwide. The market may reach $139 Billion for medical devices in the US. 

US represents half of the world market. EU, Australia and Latin America are the hot beds for obesity.  

As the rest of the world worries about heart disease and Ebola. Obesity is killing over 300,000 people every year. Obesity is #1 preventable cause of death and causes heart disease, diabetes and 20 + morbidities.

Obesity treatments will be soon be treated by 3 specialist.

1) Bariatric Surgeon or Obesity Surgeon

2) GI Doctors

3) Bariatric Physicians.

Bariatric Physicians: Will be using drugs, exercise and counseling to treat obesity. New drugs are known to help patients lose 10% of extra weight. Probably not enough for patients who want to lose 50lbs. Popular companies in this catagory are Arena Pharma, Vivus Pharmaceuticals and Orexigen.

When diet, exercise and pills dont work, patients will try products that are inserted via mouth into the stomach by a GI doctor. The products can be intra-gastric balloon which is a glorified breast implant stuffed in the stomach to fill the stomach. Patients can lose up to 20 lb to 30 lb in period of 6 months. This implant has to be removed after 6 months. Patients typically gain the weight back.

The makers of the balloon include: Reshape Medical, Obalon and Apollo.

Other technologies include a plastic liner that lines the intestines called endobarrier. A Gi doctor is trained to insert this product. One of the popular procedure is called endo-barrier which is made by GiDynamics. 

Bariatric surgeons are not trained GI doctors so conducting procedure via mouth can put their practices at risk in the US. Outside US doctors can cross train, but respective medical specialty associations want to reserve the technique for themselves.. triggering a turf war.

Gi doctors are not laparoscopic surgeons so cannot insert a gastric band.

Similarly, plastic surgeons are not qualified bariatric surgeons or obesity surgeons and therefore cannot treat obese patients with gastric band technology. Gastric band is reversible technology that acts like a speed breaker for food consumption. Gastric band is approved by the US FDA  for bariatric surgeons. The device is a silicone implant that is tied around the top portion of the stomach.  Patients are known to lose weight over time and if not complied to, can lead to weight regain. The companies that make a gastric band is: Apollo and J&J

There are some versions of this technology called the Minimizer ring.

Bariatric surgeons or obesity surgeons are also qualified to use a device called endo-stapler. This device staples and cuts tissue at the same time.

Staplers are made by two companies: J&J and Covidien. Both companies are leaders in obesity space.

A surgeon will cut portions of the stomach and intestines and remove it permanently. The procedure is called Gastric bypass and Sleeve gastrectomy. "tomy" means "CUT". It sounds terrible, but believe it or not, bariatric surgery is the most effective form. Also the most lucrative for surgeons. 

Recently, new reversible technology promises to imitate gastric surgery without cutting portions of the stomach is gaining popularity. Product is called Gastric Vest System made by a company called Onciomed.  Typically, technologies like the gastric band and the GVS are taken over by one of the large companies even before it can hit the market. The GVS product is in clinical trials in Latin America.

As the turf battle for obesity patients increases between GI doctors and Bariatric Surgeons. There is another quite battle raging between the large players wanting to be in the obesity space. These large companies are waiting for the oven to bake new technologies, ready or not these technologies will be acquired at a large premium. These new technology products are acquired to refresh the pipeline and capture market share or make a new entry into the obesity market.

Surprise players in this space could be: Medtronic and Boston Scientific . Medtronic has recently announced purchase of Covidien which is a maker of stapler technology, laparascopic instruments and has history of distributing gastric bands. Medtronic can play a big role in acquiring new technologies. It spends Billions of dollars to acquire new technologies.

Boston Sci recent history of swift acquisitions suggest that its aggressive acquisition strategy can lead them to become leaders in innovative technologies. Something J&J needs to worry about. Other nimble players can be Bard, Teleflex, Gore and even drug companies. 

Allergan a drug manufacturer purchased the maker of Lap Band and did well.

Obesity was recently identified as a disease by AMA and since them the large and small players in the drug, device industry are scrambling to take a spot in the innovation space.  Even FDA and international regulatory agencies are easing the approval process for such product that can help patients and reduce the burden on the health care system.

VCs and investors who were on the sidelines are starting to jump in. Several VCs were burnt with poor performance of Satiety and Vibrynt, Inc. Both technology had limitations and adoption issues. 

VCs are putting that experience behind them, some VC firms have raised new money and are looking to invest in obesity.  Suddenly, investors realize that obesity companies can offer multi X returns.

Several companies have lined up new products. My favorite amongst obesity innovations are:

Obesity Drug: Vivus Pharmaceutical Inc

Obesity Device for GI doctors: GiDynamics, Inc

Obesity Device for Bariatric Surgeons: Onciomed, Inc

Disclaimer: I do not have financial interest in any of the above companies. I independently evaluate companies that can help patients.