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1、Citi is one of the worlds largest financial institutions,operating in all major established and emerging markets.Across these world markets,our employees conduct an ongoing multi-disciplinary conversation accessing information,analyzing data,developing insights,and formulating advice.As our premier

2、thought leadership product,Citi GPS is designed to help our readers navigate the global economys most demanding challenges and to anticipate future themes and trends in a fast-changing and interconnected world.Citi GPS accesses the best elements of our global conversation and harvests the thought le

3、adership of a wide range of senior professionals across our firm.This is not a research report and does not constitute advice on investments or a solicitations to buy or sell any financial instruments.For more information on Citi GPS,please visit our website at GPS:Global Perspectives&SolutionsOctob

4、er 2024Obesity and BeyondThe Surprising Reach of GLP-1s Citi GPS:Citi GPS:Global Perspectives&Solutions October 2024 Adam Spielman Head of Health and Consumer Citi Global Insights Filippo Falorni,CFA U.S.Beverages and HPC Citi Equity Research Thomas Palmer,CFA U.S.Food Manufacturers Citi Equity Rese

5、arch Heejin Lim Korea Consumer,Retail and MedTech Citi Equity Research Anjolaoluwa Odunsi Health and Wellness Citi Global Insights Diane Wehner,CFA Senior Portfolio Manager,Healthcare Citi Global Wealth Nathan Weinstein,CFA Global Healthcare Analyst Citi Global Wealth Jim Hollingshead CEO Insulet Pr

6、ashant Agrawal Founder and CEO Impact Analytics Mick Farrell CEO ResMed Carlos M Nunez,MD Chief Medical Officer ResMed October 2024 Citi GPS:Citi GPS:Global Perspectives&Solutions 2024 Citigroup 3 OBESITY AND BEYOND The Surprising Reach of GLP-1s GLP-1 wonder-drugs have crashed into the collective c

7、onsciousness in recent months.Claims about easy weight loss have clogged our social media feeds.A tribe of followers has emerged.A hype cycle has developed.Whats the substance behind the hype around these drugs-which have in fact been around for several years?And what impact could they have on the g

8、lobal battle against obesity and beyond,in places you might not have thought about yet?In this Citi GPS report well look at some of these questions,laying out the scale of the global obesity problem,describing how GLP-1 drugs work,and examining their potential to be part of the long-term solution.An

9、d well sketch out potential usage profiles and the resultant impacts across a range of sectors including healthcare,food and beverages and fashion.Well also hear from several experts to help present a rounded view of current thinking around GLP-1s and the way ahead.Its clear that GLP-1s also have ma

10、ny profound medical benefits beyond reducing obesity.There is evidence that they can help with a range of chronic diseases,including cardiovascular and kidney disease.There are also suggestions they could have a role to play in treating dementia,and addictive behavior such as alcohol and nicotine ab

11、use.The pharma industry is taking note,and the development pipeline of new drugs looks robust.At present,the impact of GLP-1 drugs on other industries is limited as only 25 million people take them.But that number will probably be hundreds of millions in a few years and the impact of this massive po

12、tential growth is another question at the heart of this report.Well look at how these new drugs will in fact increase demand for medical services and the treatment of obesity related diseases-partly because people who use them will live longer,and partly because theyre more likely to go to the docto

13、r.At the same time,they risk reducing demand for food and beverages companies,as users find they want to eat a lot less.For some the jury is out on the long-term viability and desirability of GLP-1 drugs.This report is designed to bring academic rigor and insight,with an eye on commercial implicatio

14、ns and impact,to this healthy debate.2024 CitigroupGLP-1s:Obesity&BeyondSource:PlosONE,Mar 21.Incremental Annual Healthcare Costs by BMI,US Extra cost per person,vs people with BMI of 22($in 000s)BMI=45 BMI=40 BMI=35 BMI=30$8$6$4$2$0510152025303540455055606570758085Source:Lancet,Feb 2024.Source:NEJM

15、.%of adults with obesity,2022Egypt46%42%37%29%28%13%NigeriaUKBrazilMexicoU.S.Obesity is a global problemGLP-1s cut calorie intake leading to weight lossObesity damages body over decadesGLP-1s help fight many diseasesDiabetesFatty LiverCardiovascularMany CancersKidneyDementia(According to preliminary

16、 evidence)-17%Single agonist-22%Double agonistCalorie consumption falls 25-35%Average reduction in body weightFuture anti-obesity drugs target 100+drugs under developmentSide effects Less bad gastro-intestinal effects Reduced muscle lossEffectiveness Greater weight loss Greater reduction in co-morbi

17、ditiesConvenience Less frequent injections Pill-basedSource:Lancet,Feb 2024.Global manufacturing capacity of GLP-1s20242034Manufacturing capacity limited but growing fast25 million people100s of millions peoplePossible Implications if GLP-1s Reach 100s of MillionsIndividuals Short-termIncreased life

18、 expectancy for people with obesity-related diseases.Individuals feel better about their bodies.Long-termMore years of healthy life;reduction in numerous chronic diseases.EconomyMid-to long-termIncrease in healthy middle-aged work force more tax revenue.Obesity cuts labor force output by 2%in many d

19、eveloped countries.0.5-1%of GDP could be reclaimed if GLP-1s cut obesity by a lot.Healthcare Short-termDemand is likely to expand.GLP-1s could slow the progression of chronic disease but dont cure it,and reduce risk of death.For existing patients,this means acuity will increase more slowly but deman

20、d is likely to last for more years.Some procedures will become possible that werent previously.Individuals likely to engage more with the health system.Long-termFewer patients will develop chronic diseases in the future.Ultra long-termIncreased expenditure on elderly owing to longer life spans.Medic

21、al aestheticsShort-to mid-termParticipants expect GLP-1s to boost the medical aesthetics marketing.Health plansMid-termGLP-1s prescribed for the co-morbidities of obesity are likely to increase life expectancy but thereby increase total medical expense.For younger patients,the dilemma is around fund

22、ing products that provide lifestyle benefits in the near-term,but with prospect of health benefits on a multi-decade view.Food&Beverages Short-to mid-termSwitch in consumption from quantity to quality.If 50%of obese Americans took GLP-1s,national calorie consumption reduces by 5%(=-$400bn in food sa

23、les).Tobacco&GamingShort-to mid-termReduction in addictive behaviors implies reduced demand.Apparel RetailShort-to mid-termIncreased demand with a move to smaller clothing sizes.Citi GPS:Citi GPS:Global Perspectives&Solutions October 2024 2024 Citigroup 6 Contents Main points 7 What do we mean by“ov

24、erweight”and“obese”?15 The problem of obesity 16 What will determine the number of people who benefit from GLP-1s?17 Scenarios for usage 24 Citi Investment Management view of GLP-1s 25 The science behind GLP-1s.27 GLP-1s drugs work by reducing the appetite 28 The side effects are mostly tolerable,if

25、 unpleasant 34 Large pipeline of drugs under development 35 Non-medical usage.36 The lifestyle motivations for taking GLP-1s are just as strong as the medical ones 37 Impact on the medical industry.40 Much of the damage from obesity evolves slowly but irreversibly 41 Case Study:Diabetes and GLP-1s 4

26、6 Interview with Insulet 50 Kidney disease and GLP-1s 52 Sleep Apnea and GLP-1s 54 Interview with ResMed 56 The Medical Aesthetics Market and GLP-1s 58 Impact on consumer companies.60 Weighing the impact on food,beverage and tobacco companies 61 Food&Beverages The view from Equity Research 65 GLP-1s

27、 and fashion 66 Interview with Impact Analytics 67 Conclusions 69 October 2024 Citi GPS:Citi GPS:Global Perspectives&Solutions 2024 Citigroup 7 Main points 1.Obesity Obesity is an increasingly serious problem globally.About 3 billion adults are overweight,of which 1 billion are obese,according to fi

28、gures from medical journal The Lancet.Roughly 75%of American adults are now overweight,of which more than 40%are obese.About 21%of American children are obese.Figure 1.Growth of obesity in selected countries,1990-2022 Source:Lancet,Feb 2024:Worldwide trends in underweight and obesity.Obesity gradual

29、ly damages all the tissues in the human body.The damage to the bodys organs-most importantly the heart,brain,pancreas and kidneys-accrues over decades,and is mostly irreversible.Obesity also causes musculoskeletal problems.The OECD estimates that in the next 30 years,obesity will cause nearly 60%of

30、all diabetes cases,18%of cardiovascular disease,11%of dementia and 8%of cancer.Figure 2.Healthcare Costs per American,by BMI category Annual healthcare costs for adults(aged 20-85),normalized for age,race,education etc Weight Category Annual Costs Rebased Underweight BMI18.5$4,420 105 Healthy Weight

31、 18.5BMI25$4,190 100 Overweight 25BMI30$4,810 115 Moderate Obesity 30BMI35$7,290 174 Based on 175,000 anonymized MEPS respondents,2011-16.Excludes pregnant women.Source:PlosONE:Mar 2021:Association of BMI with healthcare expenditures in the U.S.0%5%10%15%20%25%30%35%40%45%50%199019921994199619982000

32、20022004200620082010201220142016201820202022MexicoNigeriaEgyptU.S.BrazilUKMexicoNigeriaEgyptU.S.BrazilUKJapanWorldChina GLP-1s are a class of anti-obesity drugs that have been shown in large clinical trials to cut peoples weight,sometimes by 20%or more.GLP-1s have been used to treat diabetes since 2

33、005.Their use for weight-loss is much newer.Citi GPS:Citi GPS:Global Perspectives&Solutions October 2024 2024 Citigroup 8 Obese people not only have a lower life expectancy,they also live more of their life in ill-health.The healthcare costs for an American with a BMI of 35-averaged over a lifetime-

34、is almost 75%more than the costs for an individual deemed to be of healthy weight.Obesity is reducing economic output by about 2%in most developed economies,according to OECD modeling.This is due to a combination of reduced output and absence from work due to obesity related health issues.2.How GLP-

35、1s work and what they do GLP-1s cut peoples weight significantly.They have been used to treat diabetes since 2005 but have become much more significant in the past couple of years as their anti-obesity properties have become widely publicized.They mimic the hormones produced in an individuals gut th

36、at tell the brain that the person is full,among other things.People who take the latest generation of drugs reduce their calorie intake by about 25-35%,shifting away from calorie-dense food in particular.In a large-scale clinical trial,obese non-diabetics using semaglutide for 72 weeks lost about 15

37、-16%of their weight on average.In a separate trial for tirzepatide,non-diabetics lost an average of 22%of their weight.People with diabetes lost,on average,about 5%less in both trials.These drugs provide many additional medical benefits.These drugs slow the progression of many important chronic dise

38、ases,including cardiovascular,kidney and fatty liver diseases.Tirzepatide has been shown to reduce the risk of overweight individuals developing diabetes by more than 90%.Scientists do not fully understand the biological mechanisms that are driving these benefits,but plenty of trials show they are r

39、eal.GLP-1s can also reduce the risk of many cancers.There is also evidence they help to slow the development of Alzheimers and may even halt Parkinsons.In addition,they appear to reduce addictive behavior:many GLP-1 users say they drink less alcohol,for example,and it appears GLP-1s reduce nicotine

40、intake.The side effects appear to be generally tolerable,if unpleasant.The most frequent are gastro-intestinal problems like nausea.These drugs have been used by millions of people since 2005,so it seems unlikely that new side effects will emerge for the existing products.Another issue is the loss o

41、f reduced muscle mass.Away from clinical trials,many users stop taking GLP-1s after a few months.If users stop taking GLP-1s,they tend to regain most of the weight they lost.Only 7%of participants pulled out of the clinical trial that showed semaglutide is safe and effective for treating obesity bec

42、ause of the side effects.Real world behavior seems quite different,however,with more than half of new GLP-1 patients stopping use within a year.We think this is partly due to their cost and limited availability,and partly due to the side effects of the current generation of GLP-1s.More than 100 new

43、GLP-1s are being developed,with the aim of reducing the side effects,making variants that are more convenient to take(for example as pills),or making them more effective,for example by further reducing the risk of particular diseases.This doesnt mean,however,that 100 new anti-obesity drugs will be a

44、pproved,still less reimbursed.October 2024 Citi GPS:Citi GPS:Global Perspectives&Solutions 2024 Citigroup 9 3.Factors that will determine the scale of their impact Demand for GLP-1s is driven as much by people wanting to look and feel better as by strictly medical factors.GLP-1s are unique because t

45、hey have compelling lifestyle motivations and compelling medical ones.According to a Citi survey-summarized in Figure 15 on page 18-more Americans take GLP-1s to lose weight because they want to look or feel better than they do to treat a specific medical issue.Figure 3.The continuum of motivations

46、for taking GLP-1s Source:Citi GPS At the moment GLP-1s real-world impact is limited as global manufacturing capacity is enough for only about 25 million people.Partly as a result,prices are high,and it is often hard to get reimbursement.In America,Wegovys list price is currently about$16,000/year,fo

47、r example.More than 100 million adults there are obese.If half started using GLP-1s,with an average discount of 50%vs.the list price,the total cost would be roughly$400 billion,equivalent to about 8%of the national healthcare budget.However,we believe global capacity will be in the hundreds of milli

48、ons in the coming years,and prices for some GLP-1s will become much more accessible.The main manufacturers are increasing capacity as rapidly as they can,and new competitors are likely to enter the market.One firm said it would sell vials(without injector pens)at half price to uninsured individuals.

49、Generic versions of semaglutide are due to become available in China in two years and in Europe and the U.S.in 7-8 years.Liraglutide(an older GLP-1 which is injected daily)has just gone off-patent,and the first generics are entering the market.Citi GPS:Citi GPS:Global Perspectives&Solutions October

50、2024 2024 Citigroup 10 Figure 4.Citi GPS Scenarios for global GLP-1 usage in 5-10 years Note:These scenarios are around number of people who might lose a substantial amount of weight thanks to GLP-1s.They do not all have to be taking GLP-1s at any one time.Source:Citi GPS Figure 4 sets out what we r

51、egard as plausible scenarios for global usage of GLP-1s over the next 5-10 years.One of the biggest uncertainties is around pricing:How far will manufacturers lower prices on the existing generation of GLP-1s as improved versions become available?How will they balance public health vs revenue maximi

52、zation?Will all the planned manufacturing capacity actually get used?In addition,there is the question of how long the average user will continue to take the drugs for.We expect the market will bifurcate,with some products focused on the lifestyle/self-pay market,and others aimed at the medical/reim

53、bursement market.We expect the self-pay products to compete mainly on enabling consumers to achieve a target weight with minimal side effects,and the reimbursement products to focus more on reducing co-morbidities.We expect more price competition in the self-pay segment.There is already data suggest

54、ing GLP-1s are lowering obesity rates in America.In September,the CDC published data that showed that the overall rate of adult obesity had fallen for the first time.Figure 5.%of American adults with obesity(BMI30)Source:National Center for Health Statistics ScenarioDescriptionAssumptionsLow growthG

55、LP-1s grow,but modestly50-100 mln people reduce weight significantly globallyUnlikely Consistent growth 100-300 mln people reduce weight significantlyMeaningful change in obesity trends in the rich worldMost likely scenarioWidespread adoptionMore than 300 mln people lose meaningful weightObesity fal

56、ls in many countriesPossible,but assumes everything goes rightNo reduction in prices so most of the incremental capacity goes unused.Current generation of clinical trials/new products are mostly disappointing.Lifestyle demand fades as GLP-1s become unfashionable.Assumes capacity increases at incumbe

57、nts as planned and new entrants add further capacity,along with generics in China in 2026 and Europe/Japan/US in 2031/32.Prices fall for current generation of GLP-s as better products get approved.More reimbursement.Capacity increases as planned,then further expansion on top.Clinical trials live up

58、to expectations.Pill-based GLPs become widely available,increasing demand and making manufacturing easier.Prices for some products drop significantly,reflecting intense competition and then generics25%30%35%40%45%October 2024 Citi GPS:Citi GPS:Global Perspectives&Solutions 2024 Citigroup 11 4.How di

59、fferent industries are likely to be affected GLP-1s are likely to make waves in many areas,but the effects are likely to develop over decades.It would be easy-but wrong-to say that lower levels of obesity will rapidly solve the problems of obesity-related diseases-for example for type 2 diabetes,chr

60、onic kidney disease and fatty liver disease.Clinical trials show GLP-1s dont cure such diseases-rather they slow progression and reduce mortality.On a human level:For people with serious obesity-related diseases,for example late-stage kidney disease,GLP-1s extend life expectancy in large part due to

61、 lower risk of heart attacks and stroke.Long-term there could be an increase in the years of healthy life,to the extent that GLP-1s reduce obesity in the population.People using GLP-1s for life-style reasons are likely to feel better and look thinner,which in turn is likely to help many individuals

62、mental well-being1.Long-term,GLP-1s will probably increase the years of healthy life of many individuals.Figure 6.Summary of possible implications for selected sectors Sector Time Horizon Summary impact Individuals Short-term Increased life expectancy for people with obesity-related diseases Individ

63、uals feel better about their bodies Long-term More years of healthy life;reduction in numerous chronic diseases Economy Mid-to long-term Increase in health middle-aged work force more tax revenue.The OECD estimates obesity cuts labor force output by 2%in many developed countries.If GLP-1s can reduce

64、 obesity meaningfully,maybe 0.5%-1%of GDP could be reclaimed.Healthcare Short-term Demand is likely to expand.GLP-1s can slow the progression of chronic disease but dont cure it and reduce risk of death.For existing patients,this means acuity will increase more slowly but demand is likely to last fo

65、r more years.Some procedures will become possible that werent previously.Individuals likely to engage more with the health system.Long-term If GLP-1s reduce total obesity,then fewer patients will develop chronic disease in future years&decades.Ultra long-term Increased expenditure on elderly owing t

66、o longer life spans.Health plans Mid-term GLP-1s prescribed for the co-morbidities of obesity are likely to increase life expectancy but thereby increase total medical expense.For younger patients,the dilemma is around funding products that provide lifestyle benefits in the near-term,but with prospe

67、ct of health benefits on a multi-decade view.Food&Beverages Short-to mid-term GLP-1s cut calorie consumption by 25-35%within months,implying that if half of obese Americans took GLP-1s,national calorie consumption would fall by 5%.Reduction in calorie consumption implies a switch in consumption,from

68、 quantity to quality.Tobacco&Gaming Short-to mid-term Reduction in addictive behaviors implies reduced demand.Apparel Retail Short-to mid-term Increased demand with a move to smaller clothing sizes.Source:Citi GPS,Citi Global Insights Economy:In a scenario where GLP-1s benefit a large number of peop

69、le,there could be a gradual increase in the available labor force in their late middle age due to reduction in musculoskeletal issues and chronic diseases,boosting both GDP and tax revenue.We estimate that if GLP-1s achieve the Consistent Growth scenario or better,they could boost GDP by 0.5%-1%.1 T

70、here is a strong(two-way)association between obesity and poor mental health(Source:CDC).GLP-1s are likely to have an effect on lifestyle,the global economy,the healthcare system and consumer companies.Citi GPS:Citi GPS:Global Perspectives&Solutions October 2024 2024 Citigroup 12 Figure 7.Average Ann

71、ual Healthcare Costs by Age and by BMI(USA,2011-16.$in 1,000s)Figure 8.Incremental Annual Healthcare Costs by BMI(USA.$in 1,000s,relative to average costs for people with BMI=22)Based on 175,726 individuals health records,2011-16 Based on 175,726 individuals health records,2011-16 Source:PlosONE:Mar

72、 2021:Association of BMI with healthcare expenditures in the U.S.Source:PlosONE:Mar 2021:Association of BMI with healthcare expenditures in the U.S.Demand for healthcare provision(1 to 4 years):We think demand for therapeutics in most obesity-related areas will actually increase in the short-to medi

73、um-term as GLP1-s become more widespread.GLP-1s slow the progress of obesity-related disease,keeping people alive for longer,but they dont repair whatever damage has already been done.However,demand in any particular therapeutic area will depend on the balance between negative and positive factors:P

74、atients on GLP-1s are likely to move up the acuity curve more slowly,and this will reduce demand and expense.Treating a patient with stage 3 CKD,for example,is easier(and cheaper)than treating a patient with stage 4 or 5 CKD.On the other hand,patients are likely to live for longer,which means they w

75、ill require more cumulative treatment.In the example of CKD,the patient may well still advance to stage 4 and then 5,just more slowly than before.In addition,some treatments-for example knee replacements-that were previously ruled out due to excessive weight may become possible.There is increasing e

76、vidence that obese people are more likely to interact with the healthcare system if GLP-1s are an option.Many companies that supply products for obesity-related conditions say that so far,GLP-1s have actually been a positive.Insulet supplies insulin pumps,and when we spoke to the CEO,Jim Hollingshea

77、d,he said:“We were somewhat surprised but what we see in the claims data people who start on a GLP-1 are more likely to also initiate insulin within a 12-month period compared to the group who are not on GLP-1s.Its counter-intuitive,but very clear.And if they stop the GLP-1,they are even more likely

78、 to start insulin.”Demand for healthcare provision(long-term):The greatest promise of GLP-1s is for people who havent developed chronic diseases.If people can either shed excess weight before they have become ill,or never become obese in the first place,then those people are much less likely to deve

79、lop obesity-related diseases.But these are long-term savings.Figure 8 implies that if someone in their 20s loses weight-and keeps the weight off-then the greatest savings are likely to occur about 30 years later.$0$2$4$6$8$10$12$14$166 10 14 18 22 26 30 34 38 42 46 50 54 58 62 66 70 74 78 82BMI=4540

80、3530BMI=22$0$2$4$6$8510 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85BMI=45BMI=303540October 2024 Citi GPS:Citi GPS:Global Perspectives&Solutions 2024 Citigroup 13 For health plans/insurance-There is the question of who is going to pay for the drugs.These drugs are(currently)expensive,and users need

81、to take them indefinitely.And as weve said,we believe that in the near term,GLP-1s are likely to increase the costs of treating obesity-related diseases,not reduce them.In the long-term,the main savings from reducing obesity will occur when the individuals are in their late middle age.Plans for indi

82、viduals who are younger than this will therefore to find ways of funding the increased cost,without necessarily seeing any of the savings.Employers.Will employers seek to attract employees by offering to pay for GLP-1s?But at what cost?Employers may be able to ensure some(mostly middle aged)people s

83、tay in the work force who may otherwise have to leave.One issue is that obesity is most prevalent in less educated parts of the workforce,implying many people most likely to use this benefit would be in less value-added roles.For food,beverage and tobacco companies.Clinical trials show that obese ad

84、ults without diabetes who use of the current generation of GLP-1s reduce their calorie intake by about 25-35%for within a few months of starting.The scale of impact is therefore determined by how many people actually use the drugs.More than 100 million American adults are obese currently,and a furth

85、er 80 million are overweight,according to CDC.If you took a scenario in which 55 million took these drugs and lowered their calorie intake by an average of 30%,total calorie consumption in the U.S.would fall by about 5%.2 GLP-1 users seem to avoid calorie-dense foods,while increasing consumption of

86、fresh and healthy food.Citis Innovation Lab conducted a survey of almost 500 American adults who were using GLP-1s to reduce their weight.Figure 9 shows that,on balance,users said they had increased their consumption of fruit and veg and bottled water,but reduced their consumption of chocolate,cooki

87、es,ice cream,sweet snacks and carbonated soft drinks.There is also evidence that GLP-1s help curb addictive behaviors-whether that is abuse of nicotine,opioids or even compulsive shopping3.It is estimated that about 1%of Americans are addicted to gambling.If GLP-1s do become widespread,it is therefo

88、re quite possible that the tobacco and gaming industries will also be affected to an extent.2 About 22%of the U.S.population is under 18.This calculation assumes none of them take GLP-1s That said,21%of American 5-to 19-year-olds are also obese.3 NIH,28 Aug 2022;NIH,16 Jul 2013 GLP-1 cuts users calo

89、rie in-take quite rapidly and reduce addictive behaviors;in contrast the health benefits take years to accumulate.See page 62 for a summary of the clinical trials that quantify the reduction in calories consumed by users of the latest generation of GLP-1s Citi GPS:Citi GPS:Global Perspectives&Soluti

90、ons October 2024 2024 Citigroup 14 Figure 9.Change in Consumption Reported by GLP-1 users N=499.Survey in November 2023.CSDs:Carbonated Soft Drinks Source:Citi Innovation Lab Clothing retail:Overall we expect GLP-1s to increase demand.As individuals become happier with their bodies,we believe they a

91、re more likely to buy more clothes.Some high-end fashion retailers simply do not make XL sizes.However,retailers will have to adapt their ranges to smaller size.GLP-1s are already changing the average size of womens clothing bought in Manhattan.“Getting this right or wrong likely will be the differe

92、nce between profit and loss for many companies,”Prashant Agrawal,CEO of Impact Analytics,told us.Figure 10.Sizing Curve for Womens Fashion,Madison Avenue,2022 vs 2024YTD Product:Womens button front long-sleeve shirts Source:Impact Analytics 23%23%41%58%59%57%49%23%36%41%48%55%42%25%20%20%18%14%50%25

93、%21%22%60%40%20%0%20%40%60%Fruit&Veg.FishRed MeatSweet SnacksChoc.&CookiesIce CreamFast Food Rest.Bottled WaterCoffeeBeerCSDsConsumedMoreConsumedLess orStoppedFoodBeverages0%5%10%15%20%25%30%35%40%45%XX&X SmallSmallMediumLargeX&XX Large%of sales20242022October 2024 Citi GPS:Citi GPS:Global Perspecti

94、ves&Solutions 2024 Citigroup 15 What do we mean by“overweight”and“obese”?Throughout this report we use the standard medical definitions for terms like“healthy weight”,“overweight”and“obese”.These are based on the Body-Mass Index,or BMI.=()2 The cut offs for the various terms are shown Figure 11-in s

95、imple terms,an adult is“overweight”if their BMI is above 25,and obese if its above 30.4 Figure 12 translates BMIs and the various cutoffs into terms which may be easier to understand,using both the metric system and traditional U.S.measures.It illustrated the relevant weight ranges for someone of 1.

96、75m or 5 ft 9(which is the height of the average American man)and 1.63m or 5 ft 4(which is the height of the average American women).It shows that if someone is 1.63m/5 ft 4,they would be classified as overweight if they weighed more than 66kg/146 lbs,and obese if they weighed more than 79kg/175 lbs

97、.No-one we have spoken to believes BMI is a perfect measure of obesity,but the ease of calculation does mean its useful for population-level analysis.Figure 11.Definition of under-,healthy,and over-weight,and obesity for adults by BMI used by CDC BMI Underweight 30,or 27 with a co-morbidity.Average

98、weight at start=105 kg/232 lbs.Excludes diabetics.Source:NEJM:March 2021 and July 2022 -25%-20%-15%-10%-5%0%04812 16 20 24 28 32 36 40 44 48 52 56 60 64 68 72Av.reduction in weightWeeks after start of trialPlaceboSemaglutide(GLP-1)Tirzepatide(GLP-1+GIP)The latest weight-loss drugs are much more effe

99、ctive than previous generations.Citi GPS:Citi GPS:Global Perspectives&Solutions October 2024 2024 Citigroup 30 Figure 19 shows the average decline in body weight for people taking high doses of GLP-1s.However some people in the trials took lower doses,and some were much less(or more)responsive than

100、others.In the Surmount 1 trial,of the participants who were on 15mg of tirzepatide,90%lost at least 15%of their initial body weight,including 40%who lost at least 25%.Another way of looking at the same data is that 10%of participants on this high(15mg)dose lost less than 10%of their initial body wei

101、ght.Of the participants who were on 5mg tirzepatide,only 50%lost 15%of their body weight.GLP-1s help with a wide range of chronic diseases In addition to helping drive weight-loss,there is a significant amount of evidence that GLP-1s help with several other important diseases.They were originally ap

102、proved for type 2 diabetes because GLP-1s help stimulate glucose production(as well as reducing the appetite).In addition,there is growing evidence they help with many other obesity-related diseases.Cardiovascular disease:The Select trial showed impressive evidence that semaglutide improves the outl

103、ook for individuals with serious cardiovascular risk.18.This was a large trial(about 17,600 people)over a reasonably long period of time(average of 34 months of treatment and 40 months of follow up).The participants receiving the drug had 20%fewer major cardiovascular events,like heart attacks and s

104、trokes,than the participants receiving a placebo,and 19%fewer deaths.Figure 21 shows that the gap in death rates steadily increased over time,which implies that if individuals with these risks continue to take semaglutide for more than four years the reduction in fatalities would increase steadily.D

105、iabetes:GLP-1s have been approved to treat type 2 diabetes.On top of this,the Surmount trial showed that for adults who are overweight or obese and who have pre-diabetes,those who took a double agonist are more than 90%less likely to develop full-blown diabetes than people using a placebo.Figure 20.

106、Major Events During the SELECT trial,including deaths and non-fatal CV events like strokes and heart-attacks Semaglutide Placebo Hazard Ratio Participants(n)8803%8801 Death from any cause 375 4.3%458 5.2%81%Death from CV 223 2.5%262 3.0%85%Heart failure1 300 3.4%361 4.1%82%Major CV events 873 9.9%10

107、74 12.2%80%Fatal 223 2.5%262 3.0%85%Non-fatal heart attack 234 2.7%322 3.7%72%Non-fatal stroke 154 1.7%165 1.9%93%Coronary revascularization 473 5.4%608 6.9%77%Other non-fatal CV events 262 3.0%325 3.7%81%Source:NEJM:Semaglutide and Cardiovascular Outcomes in Obesity without Diabetes,Nov 2023 18 NEJ

108、M Nov 23:Semaglutide and Cardiovascular Outcomes in Obesity without Diabetes There is growing evidence that GLP-1s help with many obesity-related diseases as well as weight loss.It appears that only part of these benefits are directly due to weight loss researchers dont yet fully understand the biol

109、ogical method by which these benefits accrue.GLP-1s have been used to treat diabetes since 2005.Its now known they can also prevent diabetes.October 2024 Citi GPS:Citi GPS:Global Perspectives&Solutions 2024 Citigroup 31 Figure 21.Percent of participants dying during SELECT-semaglutide arm vs placebo

110、 arm Source:NEJM:Semaglutide and Cardiovascular Outcomes in Obesity without Diabetes,Nov 2023 Chronic kidney disease:The Flow trial shows that semaglutide also helps with CKD.19 Flow had 3,500 participants,who had CKD and type 2 diabetes(but were not necessarily overweight).The trial showed that sem

111、aglutide slowed down the deterioration in kidney function and reduced the overall death rate by about 20%.MASH/fatty liver disease:In a Phase 2 trial,survodutide(which is being developed by Boehringer Ingelheim)demonstrated strong results against MASH.After 48 weeks,up to 83%of people receiving the

112、drug achieved a significant improvement(depending on the dose),vs 18%of people on the placebo.Parkinsons:Lixisenatide is an old GLP-1,approved only for diabetes.However,in a recent Phase 2 study,it stopped the progression of Parkinsons in early-stage patients.Alzheimers and Dementia:There is also ev

113、idence that GLP-1s can also help with dementia.For example,a retrospective study20 of 130,000 diabetes patients published in July found that semaglutide was associated with a lower risk of the cognitive issues(such as memory loss)that are often an early sign of dementia.Novo is spending something in

114、 the order of$100 million sponsoring two Phase 3 trials to see if semaglutide delays Alzheimers.19 NEJM June 24:Effects of Semaglutide on CKD in Patients with Type 2 Diabetes 20 Retrospective studies work by studying health records after the event;they are considered much less robust than prospectiv

115、e,randomized controlled trials.Early evidence suggests GLP-1s can also help prevent dementia getting worse.Citi GPS:Citi GPS:Global Perspectives&Solutions October 2024 2024 Citigroup 32 GLP-1s and cancer There is also early evidence that GLP-1s do reduce the number of people getting cancer,according

116、 to a 10-year retrospective study of people with BMIs above 35,some of whom had bariatric surgery,and some took GLP1s.21 Those with bariatric surgery saw greater weight loss in the first 2 years,but those on GLP-1s had a lower risk of cancer and lower overall risk of death.Relative to no interventio

117、n:People who had been given GLP-1s had a 39%lower risk of one of 13 obesity-related cancers and 50%lower risk of all-cause mortality over the 10-year period.(n3,200)For people who had had bariatric surgery,the risk of cancer was only 22%lower than people who had had no treatment.(n11,100)People on G

118、LP1s had a 14%lower risk of all-cause mortality than those with bariatric surgery,even though the people who took GLP-1s had lower weight loss.GLP-1s may also reduce addiction On top of the evidence that GLP-1s reduce peoples weight and slow the progression of many chronic diseases,there is evidence

119、 that they may reduce addictive or compulsive behavior,whether that be abusing alcohol,nicotine,illegal narcotics,gambling,or even biting ones nails.It appears that GLP-1 and GIP can affect dopamine secretion in the so-called“pleasure”or“reward”center of the brain,inhibiting addictive behaviors.Alco

120、hol Probably the best evidence around the impact of GLP-1s on addictions concerns alcohol:Studies in rodents and monkeys show that GLP-1 can reduce alcohol drinking,in some cases by as much as 50%.22 A study based on about 68,000 Reddit posts from(human)GLP-1 users found 71%of people who said they d

121、rank alcohol had reduced cravings.A sample of individuals(n=158)reported reduced drinking and binge drinking.23 The Citi Innovation Lab survey of GLP-1s users showed about 40%were drinking less.21 J.of Clinical Oncology May 2024.Comparative risk of cancer risk in GLP-1s vs bariatric surgery.22 https

122、:/www.ncbi.nlm.nih.gov/pmc/articles/PMC6428196 23 Nature,28 Nov 2023 There is evidence that GLP-1s reduce the risk of developing obesity-related cancers.There is some evidence that GLP-1s may inhibit addictive or compulsive behavior.October 2024 Citi GPS:Citi GPS:Global Perspectives&Solutions 2024 C

123、itigroup 33 Theres really been a large number of clinical and anecdotal reports coming in suggesting that peoples drinking behaviors are changing and,in some instances,pretty substantially while taking semaglutide,according to Prof.Christian Hendershot,an addiction researcher at the University of No

124、rth Carolina.24“These reports,for the most part,are anecdotal.at the same time,it does seem like theres a pretty strong signal here.Nicotine Theres evidence GLP-1s also help with control of smoking.For example,a large retrospective study published in late July analysed the health records of more tha

125、n 220,000 American smokers with type 2 diabetes.Those who used semaglutide to treat their diabetes where 32%less likely to need medical attention for smoking,relative to other smokers who used insulin.25 The findings were consistent for regardless of BMI and occurred within 30 days of taking semaglu

126、tide.The authors said report that the The fact that semaglutide(and other GLP-1 receptor agonists)leads to weight loss becomes particularly relevant because smoking cessation is associated with weight gain,which contributes to relapse,particularly in women.24 https:/www.npr.org/sections/health-shots

127、/2023/08/28/1194526119/ozempic-wegovy-drinking-alcohol-cravings-semaglutide.25 Annals of Internal Med,Jul 24:Association of semaglutide with tobacco use disorder.Citi GPS:Citi GPS:Global Perspectives&Solutions October 2024 2024 Citigroup 34 The side effects are mostly tolerable,if unpleasant All dru

128、gs have side effects,and the GLP-1s are no exception.The most common ones are gastro-intestinal problems,for example diarrhea.In addition,the drugs cause the loss of lean muscle mass,which is particularly concerning for the elderly.Figure 22 shows the proportion of people on one of the main GLP-1s t

129、rials suffering from various side effects,and Figure 23 does the same for the main double agonist trial.They show:Many more individuals on the GLP-1s had gastro-intestinal problems,for example nausea,diarrhea and vomiting,relative to those people on the placebo;There was little substantive differenc

130、e for other types of side effects-for example around psychotic issues.Overall,7%of participants who were receiving these drugs pulled out of the trial because of the side effects,vs.3%for the placebos.As we say,the side effects are often unpleasant,but they are tolerable.Figure 22.Proportion of Step

131、1 participants suffering from various side effects Figure 23.Proportion of Surmount1 participants suffering from various side effects Semaglutide(GLP-1)Placebo Gastrointestinal 74%48%Nausea 44%17%Diarrhea 32%16%Vomiting 25%7%Constipation 23%10%Dyspepsia 10%4%Abdominal pain 10%6%Psychotic Disorders 1

132、0%13%Cardiovascular Disorders 8%11%Nasopharyngitis 22%20%Headache 15%12%Respiratory infections 9%12%Any adverse event 89%86%Serious adverse event 10%6%Adverse event leading to discontinuation 7%3%Tirzepatide(GLP-1+GIP)Placebo Gastrointestinal Nausea 32%9%Diarrhea 22%7%Vomiting 11%2%Constipation 14%6

133、%Dyspepsia 11%4%Abdominal pain 5%3%Decreased appetite 10%3%Eructation 5%1%Severe GI Events 3%1%Major depression/suicidal ideation 0.3%0.0%Cardiovascular Disorders 0.4%0.8%Any adverse event 80%72%Serious adverse event 6%7%Adverse event leading to discontinuation 7%3%Source:NEJM:March 2021 Source:NEJM

134、:July 2022 But many people do stop taking GLP-1s Away from clinical trials,many individuals find GLP-1s more burdensome than these numbers imply.Several sources have reported that fewer than half of Americans who start on GLP-1s continue for more than 12 months.For example,an analysis of 4,000 comme

135、rcially insured individuals who were prescribed GLP-1s for weight loss in 2021,and who didnt have diabetes,found only 32%were continuing to take GLP-1s at after 12 months.26 The 1-year persistence rate was higher for semaglutide(47%)than liraglutide(19%).However,Novo has said the average duration of

136、 GLP-1 usage for diabetes patients is about 4 years.26 Journal of Managed Care&Specialty Pharmacy May 2024.Real-world persistence to GLP-1 RAs among obese commercially insured adults without diabetes.The most common side effects of GLP-1s are gastro-intestinal problems and muscle loss which are gene

137、rally tolerable.October 2024 Citi GPS:Citi GPS:Global Perspectives&Solutions 2024 Citigroup 35 Large pipeline of drugs under development Beyond the existing GLP-1s,like semaglutide,tirzepatide and liraglutide,about 100 other drugs are under development.The companies behind them hope to improve on th

138、e current generation,by creating drugs are that more convenient to take(for example by making them pill-based),reduce muscle wastage or nausea,or that are simply more effective.As weve said,the existing generation of drugs all mimic GLP-1 and one mimics GIP as well.However,there are several other ho

139、rmones that play similar roles in the body,and which drugs could potentially harness to encourage weight loss,including amylin,glucagon,peptide YY and GLP-2.Most of the other 100-or-so drugs that are under development target some combination of these as well as(or instead of)GLP-1.The existing GLP-1

140、 drugs all consist of large molecules,which break down in the stomach,which is why they have to be injected.Furthermore,they are hard to combine with other small-molecule treatments,for example for cardiovascular diseases.And as weve said,they come with important side effects.There is,therefore,plen

141、ty of room for improvement:Greater power:Some of the drugs currently being tested promise either greater weight or are targeted at certain obesity-related conditions.For example,Novos CagriSema product looks likely to cut peoples weight by at least 25%in a year.Survodutide has shown promising result

142、s in treating MASH.Anti-obesity drugs might also be combined with other types of drugs to cut cardiovascular risk,for example statins or PCSK9 inhibitors(which both lower LDL,or“bad”,cholesterol in the blood).Less muscle wastage:Several companies are developing anti-obesity drugs that include elemen

143、ts to promote muscle growth,for example Versanis Bio,CinRx,and Regeneron.Less nausea:Zealand Pharma is an example of the company working on a drug that mimics amylin to trigger weight loss but with noticeably less nausea than the existing GLP-1s.Greater convenience:It looks likely that solutions wil

144、l become available in the next 5-10 years that either allow monthly injections,or(even better)move to a pill-based solution-at least 27 of the drugs under development are pill-based.One example is danuglipron,a small-molecule,pill-based GLP-1,made by Pfizer.Amgen has a(large)molecule in phase 2 tria

145、ls,which is interesting because(1)it requires monthly injections only,and(2)management hopes that users will continue to have a lower weight even after the treatment ends.A small number of these drugs may obtain approval in late 2025,for example CagriSema,assuming their Phase 3 clinical trial data f

146、ulfills the early promise.However it will be several years before others come to the market,and many are likely to fail in their trials.We dont believe there will be 100 anti-obesity drugs on the market,all getting reimbursed.We do,however,think it is reasonable to look forward to a time when many m

147、ore GLP-1s are available from more companies,providing greater competition and more capacity.This will allow prescribers and users to tailor their treatment,depending on their individual situation,goals,and tolerance.Expect GLP-1s that are more effective,more convenient or have fewer side effects.Ci

148、ti GPS:Citi GPS:Global Perspectives&Solutions October 2024 2024 Citigroup 36 Non-medical usage October 2024 Citi GPS:Citi GPS:Global Perspectives&Solutions 2024 Citigroup 37 The lifestyle motivations for taking GLP-1s are just as strong as the medical ones The previous section of this report showed

149、that GLP-1s reduce peoples weight significantly and also seem to help with a wide range of chronic diseases.But we think this analysis is half the story,because GLP-1s are at least as much about things like well-being and looking good as they are about specific medical issues.Figure 24.The continuum

150、 of motivations for taking GLP-1s Source:Citi GPS The“lifestyle”motivations to lose weight can be extremely strong One of the most fundamental drivers of behavior is the desire to look attractive.Global sales for personal care and beauty products easily exceed$600 billion,and sales for apparel top$1

151、.5 trillion.The global market for medical aesthetic procedures is about$200 billion,according to Frost and Sullivan,and is growing at about 11%annually.About 40%of Americans are unhappy with their weight and body image,according to YouGov.The number is slightly higher for women than men and for the

152、middle-aged,as Figure 25 shows.Last year 45%of Americans said they would be interested in taking safe and effective weight loss drugs.27 27 KFF Health Tracking Poll,July 2023.Many people are interested in using GLP-1s to improve their physical appearance.About 40%of Americans are unhappy with their

153、body weight.Citi GPS:Citi GPS:Global Perspectives&Solutions October 2024 2024 Citigroup 38 Figure 25.Happiness with body weight,and image American adults In general,how happy,if at all,would you say you are regarding your own weight and body image?n=1,016.Feb 2024 Source:Citi GPS Citi survey shows l

154、ifestyle motivations are as important as traditional medical ones The point that lifestyle motivations for taking GLP-1s to lose weight are at least as important as medical ones,was encapsulated by Jimmy Kimmel at the Oscars ceremony last year when he joked:“Everybody looks so great.When I look arou

155、nd this room,I cant help but wonder Is Ozempic right for me?”28 This argument is backed up by a survey of 1,000 Americans,conducted by the Citi Innovation Lab in November last year.Half of the participants were using GLP-1s to lose weight,and half were using other methods,for example special diet pl

156、ans.One of the questions was around the main motivations for using the GLP-1s(or other weight-loss methods);Figure 26 shows the results.For the GLP-1 users,29%of respondents said they were taking the GLP-1s for a specific medical condition,34%said they wanted to improve their overall health,but more

157、(37%)said they were doing so to feel or look better-with younger Americans more likely to do so.28 https:/ 11%8%14%4%13%13%8%10%5%10%15%9%29%28%30%37%30%36%26%20%19%25%35%37%42%43%41%16%20%13%0%20%40%60%80%100%Dont knowVery happyFairly happyNot very happyNot happy at allIn a survey,more people were

158、taking GLP-1s to look or feel good than for strictly medical reasons.October 2024 Citi GPS:Citi GPS:Global Perspectives&Solutions 2024 Citigroup 39 Figure 26.Main motivations for taking GLP-1s n=1,000.Universe=American adults who wish to lose weight,either with GLP-1s or other methods Source:Citi In

159、novation Lab 29%11%34%45%20%25%17%19%0%20%40%60%80%100%All GLP-1FemaleMale18-3435-4445-5455-6465+Look betterFeel betterImprove generalhealthManage a specificmedical conditionOther weight loss programs Citi GPS:Citi GPS:Global Perspectives&Solutions October 2024 2024 Citigroup 40 Impact on the medica

160、l industry October 2024 Citi GPS:Citi GPS:Global Perspectives&Solutions 2024 Citigroup 41 Much of the damage from obesity evolves slowly but irreversibly To understand how GLP-1s are likely to affect the medical industry,it is necessary to understand how obesity is linked to disease.Obesity isnt a d

161、isease in itself:no-ones dies of obesity.However there are a large number of obesity-related diseases,for example type 2 diabetes,chronic kidney disease and fatty liver disease.These develop through the slow build-up of what is usually irreversible damage to various systems in the body.With type 2 d

162、iabetes,the body becomes progressively less able to regulate blood sugar properly;with kidney disease the body becomes progressively less able to filter the blood.Figure 27.Number of people suffering from main chronic diseases associated with obesity Condition Population Affected(Mlns)Chronic Kidney

163、 Disease 700 Type 2 Diabetes 540 Cardiovascular Disease 520 PAD(Peripheral Arterial Disease)200 Alzheimers 85 Heart Failure 65 MASH(Fatty Liver Disease)25 Source:Novo Nordisk CMD,March 2024 Figure 28.Overlap between obesity,diabetes,cardiovascular disease and late-stage chronic kidney disease within

164、 the U.S.Source:Novo Nordisk CMD,March 2024 Citi GPS:Citi GPS:Global Perspectives&Solutions October 2024 2024 Citigroup 42 We emphasize the word slow because it can take several decades for the damage to be done.The damage is usually irreversible because no organ in the human body can repair itself,

165、except the liver.As we have highlighted,the Select and Flow trials showed semaglutide is effective in fighting(for example)cardiovascular and chronic kidney disease.However,it doesnt actually cure people-it slows down the deterioration.The relationship between age,obesity and medical costs The point

166、 that obesity slowly damages the body becomes clearer once one considers the relationship between age and obesity,and healthcare expenditure.The best data we have seen comes from an analysis of the U.S.Medical Expenditure Panel Survey(or MEPs)and controls for potentially confounding effects in the r

167、elationship with BMI.The headline data is summarized in Figure 29 and it shows the unsurprising results that both the cost of healthcare increases with age(after about 30),and that overweight individuals require more healthcare dollars.Figure 29.Av Annual Healthcare Costs by Age and by BMI($in 1,000

168、s Figure 29 provides detailed averages of healthcare expenditure,by age and by BMI Figure 30 show the incremental cost relative to those with BMI=22,in relative and absolute terms These charts are based on the medical records of almost 176,000 Americans The data comes from 2011-16,so the absolute ex

169、pense is likely to be materially higher now,but the conclusions are likely to be unchanged They do not attempt to show what would happen if someones BMI dropped,say from 40 to 22.Source:PlosONE:Mar 2021:Association of BMI with healthcare expenditures in the U.S.Figure 30.Relative Healthcare Costs by

170、 BMI(Rebased.BMI of 22=100)Figure 31.Incremental Annual Healthcare Costs by BMI ($in 1,000s relative to average costs for people with BMI=22)Source:PlosONE:Mar 2021:Association of BMI with healthcare expenditures in the U.S.Source:Citi GPS,PlosONE:Mar 2021:Association of BMI with healthcare expendit

171、ures in the U.S.$0$2$4$6$8$10$12$14$16510 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85BMI=45403530BMI=22100125150175200225250510 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85BMI=45403530BMI=22$0$2$4$6$8510 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85BMI=45BMI=303540October 2024 Citi GPS:Citi GPS:Glob

172、al Perspectives&Solutions 2024 Citigroup 43 We think the bottom two charts-which show the incremental cost of(long-term)obesity-are much more interesting.For people below the age of about 30-35 the incremental healthcare needs of even severely obese individuals is really quite modest,especially when

173、 measured in absolute terms.This reflects the point that obesity harms the body only very gradually.For people between the ages of 45 and 75,the incremental medical needs of the severely obese are very large.By middle age the harm created by obesity frequently results in diseases that few healthy-we

174、ight individuals face.In old age,obese individuals continue to require more healthcare,but as a percentage of the cost of healthy-weight individuals this is much less pronounced than at age 55.On average,a 55-year-old with a BMI of 40 requires the same medical expenditures as a 85-year-old with a BM

175、I of 22.In old age,the cell structures of even healthy-weight individuals have deteriorated,so the difference that high BMIs make is reduced.The charts do not show what happens if individuals lose weight It is vital to remember,however,that these charts compare the historic cost of people with diffe

176、rent BMIs.They cant be relied on to show what would happen to healthcare expenditure if someone moved from a BMI of 45,say,to 30 or 22.There has been no historic research on the medical needs of people who were obese or severely obese,and then dropped to a lower BMI.This rarely happened before GLP-1

177、s were invented.On the other hand,the clinicals trials we discussed earlier in the report do show what happens when someone takes a GLP-1.Both the Flow trial-which focused on people with type 2 diabetes and kidney disease-and the Select trial-which focused on overweight people with cardiovascular di

178、sease-showed that for people in these categories,taking semaglutide reduced death rates by about 20%.However,there was no sense or expectation that GLP-1s would actually cure these diseases.Theres a critical distinction between those who have developed chronic disease and those who havent The two po

179、ints we have made-that the problems accrue slowly,but that they are generally irreversible-means there is a vital distinction between those obese individuals who have already developed chronic,obesity-related diseases,like type 2 diabetes,and chronic kidney disease,and those who havent.People who ha

180、ve already developed a chronic disease:The fact that GLP-1s slow the progression of obesity chronic diseases means treatment can be delayed,but it likely to last longer.People who havent yet developed chronic disease:The greatest promise of GLP-1s is for people who havent developed chronic diseases.

181、If GLP-1s mean that people can either shed excess weight before they have become ill,or never become overweight,then the risk of these diseases falls very,very significantly.These charts are based on historic data.They dont show what would happen if someones BMI fell,say from 45 to 30.Citi GPS:Citi

182、GPS:Global Perspectives&Solutions October 2024 2024 Citigroup 44 What this all means for healthcare companies Short-to mid-term:demand is likely to increase In the short-to mid-term(say 1 to 4 years),we believe demand for medical care for people with obesity-related diseases will increase,although t

183、here are puts and takes:Factors that will reduce demand for medical care Patients using GLP-1s are likely to move up the acuity curve more slowly.For kidney patients,for example,semaglutide may delay the need for dialysis by two or three years,according to Dr Sagar Nigwekar,a professor at Harvard.29

184、 Factors that will increase demand for medical care Patients are likely to live longer,which means both that they are more likely to live long enough that their symptoms reach a stage when intense medical intervention is required,and also are likely to require more cumulative treatment.To continue w

185、ith the kidney disease example:under the current treatment pathways(which dont include GLP-1s),of the people who reach stage 3 CKD,more than 90%die before they reach stage 5,when dialysis or a kidney transplant is always necessary.Some treatments which were previously ruled out due to excessive weig

186、ht may become possible,for example in knee replacement surgery.Obese patients using GLP-1s are more likely to interact with the healthcare system it seems.ResMed-the largest company focused on sleep apnea-says its data shows patients with a GLP-1 prescription are more likely to initiate and continue

187、 with therapy.In the coming pages,we analyze three areas of healthcare in detail diabetes,kidney care and obstructive sleep apnea,including an interview with a sector-leading CEO.The CEOs of Insulet and ResMed,companies in automated insulin delivery and devices for sleep apnea,both say that GLP-1 ar

188、e boosting demand.Long-term:demand may fall On a 5+year view,there may well be a reduction in spending in some categories.If there are fewer obese individuals,then(with a multi-year lag)we would expect fewer people to suffer from many chronic diseases,including cardiovascular disease,chronic kidney

189、disease,and diabetes.(Obese people are prone to many chronic diseases in middle age-for example CKD.Figure 31 showed that if someone in their 20s loses weight-and keeps the weight off-then the greatest savings are likely to occur about 30 years later.)Furthermore,the Surmount showed that for adults

190、who are overweight and have pre-diabetes,those taking a double agonist reduce their risk of full-blown diabetes by more than 90%.On a multi-decade view,demand may rise again On a multi-decade view,costs might rise again,as people live longer.A reduction in obesity will both reduce healthcare spend o

191、n each individual in middle age,but also increase average longevity,which will tend to increase spending.29 See page 54 for a further discussion If GLP-1s mean that people can either shed excess weight before they have become ill,then the risk of these diseases falls significantly in the following d

192、ecades.October 2024 Citi GPS:Citi GPS:Global Perspectives&Solutions 2024 Citigroup 45 Most research on the subject suggests these two effects will roughly balance.One recent academic paper attempted to model the healthcare costs in England,where the obese population to move to BMI below 25-and the c

193、onclusion was that the two effects would roughly cancel out.30 GLP-1s for lifestyle usage vs GLP-1s for medical indications We have argued that the GLP-1 market may well become increasingly bifurcated.If this does occur in practice,the impact on the rest of the health industry is likely to be counte

194、rintuitive.Medically-focused GLP-1s are likely to increase health spending because they will prolong the lives of individuals who need expensive therapies.Lifestyle-focused ones offer the best chance of reducing medical expense in the long term because they offer the hope of reducing or eliminating

195、obesity in individuals before it causes significant tissue damage.Case studies We illustrate these points in the following sections examining how GLP-1s have impacted care in three common obesity-related conditions:(1)type 2 diabetes;(2)chronic kidney disease;and(3)obstructive sleep apnea.The T2D an

196、d CKD are similar in some ways because they both result from irreparable damage to one of the bodys main functions,and this usually has been made much worse by obesity over many years.In both cases,GLP-1s help both indirectly(by reducing obesity)and directly.In the case of diabetes,its because GLP-1

197、s help trigger insulin production in the pancreas;in the case of CKD,its because GLP-1s slow the deterioration of kidney function,presumably by reducing inflammation in the kidney31.Sleep apnea is rather different because it doesnt result from a deterioration in the bodys biochemical processes.It is

198、 generally triggered by a narrowing of the airway,which in turn is usually related to the buildup of fat.Sleep apnea can be cured by slimming,unlike diabetes and CKD.In each case,one might expect GLP-1s to reduce demand for services related to these issues.However in each case,the main companies inv

199、olved say-rather unexpectedly-that if anything GLP-1s are increasing demand,at least for now.30 Diabetes Obes.Metab.April 2024:Counting the lifetime cost of obesity:31 The Flow trial showed this effect kicked in for semaglutide users,regardless of weight loss.Citi GPS:Citi GPS:Global Perspectives&So

200、lutions October 2024 2024 Citigroup 46 Case Study:Diabetes and GLP-1s Type 2 is the most common type of diabetes,accounting for about 90%of cases.Its also the type where GLP-1s are highly relevant,partly because it is usually triggered by excess body weight,and partly because GLP-1s can be used to t

201、reat it.T2D occurs when the body progressively produces less insulin,or stops responding properly to insulin,or both.T2D is often associated with obesity,a poor diet and physical inactivity.Its usually managed through lifestyle changes,drugs,and insulin therapy.Diabetes is an increasingly important

202、public health issue:about 415 million people globally have the disease,and the total is increasing with obesity.In the U.S.,about 38 million people(=12%of the population)have diabetes,of which 30 million have been diagnosed.A further 98 million adults(=38%)have pre-diabetes,which means their glucose

203、 levels are higher than they should be,but not high enough to be classified as diabetic.Excess weight is the main driver of type 2 diabetes:90%of people diagnosed with T2D worldwide are overweight or obese.Each 5-point increase in BMI increases the risk of developing T2D by 2.5 times.32 If fat build

204、s up in the pancreas,the beta cells can gradually loss the ability to produce insulin.Furthermore,fat appears to release“pro-inflammatory”chemicals that make the body less sensitive to insulin by disrupting insulin-responsive cells.However other factors can also be important,including age,sex and an

205、cestry.According to research carried out in the UK,people of South Asian heritage are up to 6 times more likely to have T2D than the average of the local population.33 How is it treated?Treatment goals for diabetes typically include achieving and maintaining target blood sugar levels(measured by“HbA

206、1c”34)and preventing or delaying further complications(for example cardiovascular or kidney disease).HbA1c is the average blood glucose level for the last 2-3 months.People with a figure above 6.5%are classified as diabetic.People with an HbA1c of 5.7%-6.4%are classified as pre-diabetic.Beyond life-

207、style changes(in other words losing weight and increasing physical activity)there are several therapeutic approaches:The first-line drug is usually metformin.This works by lowering glucose production in the liver and improving insulin sensitivity.Its cheap and well-tolerated.Second line drugs includ

208、e SGLT-2 or DPP-4 inhibitors35,or GLP-1s,depending on the patients specific conditions.In severe cases,people with type 2 diabetes will use insulin,which requires both monitoring glucose levels,and injecting insulin.In rich countries,this is increasingly done with continuous glucose monitors and ins

209、ulin pumps.32 https:/ 33 https:/www.diabetes.co.uk/south-asian/34 HbA1c stands for glycated hemoglobin.Its sometimes shortened to A1c.35 SGLT-2:Sodium-glucose transport protein 2.DPP-4:Dipeptidyl peptidase 4.October 2024 Citi GPS:Citi GPS:Global Perspectives&Solutions 2024 Citigroup 47 What has the

210、impact of GLP-1s been so far?GLP-1s have been used for T2D for a long time:the FDA approved the first-exenatide(which is sold as Byetta)-back in 2005.However,the class received a lot of extra publicity in June 2020 when Novo Nordisk said that semaglutide resulted in an weight loss of 15%over 68 week

211、s,implying it was an effective treatment for obesity.There was more publicity in August 2023 when Novo announced that semaglutide also substantially reduces the risk of heart attacks and stroke.GLP-1s have taken share within the market for diabetes drugs In some senses,GLP-1s are just another(partic

212、ularly effective)class of drugs for diabetes,which have the side effects of weight loss and protection from heart disease,and where new products have become steadily better over time.They are often used in combination with other drugs,most often SGLT-2s.GLP-1s have also increased adherence.Figure 32

213、.Anti-diabetes drugs sales($in blns)Figure 33.Anti-diabetes drugs volume share Global.Branded drugs only.Global.Includes generics.Based on prescriptions Source:Citi GPS Source:Citi GPS As a result,GLP-1s have steadily been taking share from other drugs,in an expanding market.GLP-1s have increased de

214、mand for MedTech products Despite GLP-1s success in treating type 2 diabetes,the most important MedTech companies in the space say that if anything their business has been boosted.Continuous Glucose Monitors Abbott and Dexcom are two of the makers of continuous glucose monitors,and both say that eve

215、n if a diabetic patient is using a GLP-1,they will get a better reduction in HbA1c if they also use a CGM.They say that in addition,demand for CGMs increase when patients switch to GLP-1s.Clinical results Abbott says that in the U.S.more than 40%of diabetic patients using its most popular CGM-the Fr

216、eeStyle Libre-also use GLP-1s.We dont think this is particularly surprising given the increasing use of GLP-1s by people with diabetes.0204060202120222023GLP-1DPP-4SGLT-2Insulin20%18%14%13%8%15%3%6%55%49%0%20%40%60%80%100%20212023GLP-1DPP-4SGLT-2InsulinTraditional Oral AntiDiabetesFrom a clinical pe

217、rspective,GLP-1s and CGMS are mutually reinforcing.Citi GPS:Citi GPS:Global Perspectives&Solutions October 2024 2024 Citigroup 48 The company emphasises that GLP-1s and CGMs are mutually reinforcing in terms of clinical results.Abbotts research shows:People with Type 2 diabetes who use GLP-1s and ha

218、ve an HbA1C 8%,and then start using an Abbot FreeStyle Libre CGM,see a significant improvement in their HbA1C after six months,irrespective of GLP-1 duration,GLP-1 type or insulin therapy type.(The average decline was 1.5%.)36 Diabetics had a greater reduction in HbA1c when using GLP-1 and FreeStyle

219、 Libre technology together(-2.4%),compared to using GLP-1 alone(-1.7%).Figure 34.Glycemic control for GLP-1 users with and without CGMs Source:Dexcom Dexcoms data-illustrated in Figure 34-also shows better A1c reductions for people with T2D who use GLP-1s and CGM,rather than GLP-1s alone.Business im

220、pact From a business perspective it is equally important that GLP-1s usage appears to increase demand for CGMs,and vice versa.According to Abbotts data:Diabetics who use GLP-1s wear their CGM on more days per month than people who dont use GLP-1s.Diabetics who use a CGM take their GLP-1s more regula

221、rly than those who dont use CGMs.“What we discovered was that people who were using the FreeStyle Libre continuous glucose monitors and GLP-1s were using more of both of the products,”CEO Robert Ford said in an interview.37 36 https:/ 37 https:/ 77.47.88.28.699.49.8HbA1cBaselineFollow Up+0.5 improve

222、mentGLP-1+CGMN=1,562-1.0-1.5GLP-1 OnlyN=5,840They are also mutually reinforcing in terms of sales.October 2024 Citi GPS:Citi GPS:Global Perspectives&Solutions 2024 Citigroup 49 Dexcoms CEO,Kevin Sayer,has also said that prescriptions for CGMs increased when patients started using GLP-1s,as these dev

223、ices provide valuable real-time data that helps in personalizing and adjusting treatment plans.This integration can lead to better glycemic control and more informed decisions regarding lifestyle and medication adjustments.38 Insulin pumps Insulet specializes in insulin pumps,and it too has said tha

224、t even though GLP-1s help the body produce insulin,the growth of usage has turned out to be beneficial to the company.The CEO,Jim Hollingshead,told us:“We were somewhat surprised but what we see in the claims data is that people who start on a GLP-1 are more likely to also initiate insulin within a

225、12-month period compared to the group who are not on GLP-1s.Its counter-intuitive,but very clear.And if they stop the GLP-1,they are even more likely to start insulin.”But GLP-1s are likely to reduce demand in the long-term As we have said,GLP-1s appear to have increased demand for diabetes services

226、 so far.However,in the long-term it seems unlikely that will continue to be the case.As we have mentioned,the Surmount trial showed that for obese and overweight individuals with prediabetes,those who used tirzepatide were more than 90%less likely to develop full blown diabetes than those using a pl

227、acebo.We think this is a highly significant finding,given that 75%of American adults are overweight or obese,and 38%have prediabetes.38 https:/ Citi GPS:Citi GPS:Global Perspectives&Solutions October 2024 2024 Citigroup 50 Interview with Insulet We interviewed Insulets CEO,Jim Hollingshead,recently.

228、The full interview is here but we have included edited highlights below.If a diabetes patient is using GLP-1s,how do products like CGMs or insulin pumps help?Both Abbott and Dexcom have published data that show using CGMs in the context of GLP-1 therapy is beneficial.Thats because CGMs allow you to

229、see your blood glucose and how it is progressing over time.When physicians prescribe CGMs in parallel with GLP-1s,its terrific because they show both patients and physicians the data,so they can manage the condition better.You can see in the clinical data and in the claims data that a lot of people

230、on GLP-1s do not have well controlled glycemia so CGMs can really help.We have just published the results of the largest ever trial for automated insulin delivery in the type 2 space.Were really proud of it,partly because it was representative of the actual insulin market for type 2 in the U.S.The c

231、linical results were fantastic.We had an average A1C reduction of 0.8 in the population of people with A1C of 7 and higher.The worse your baseline A1C,the more improvement you got.More than half of the sample,55%,were on a GLP-1.Those patients got the same benefit.So what that says is insulin delive

232、red through Omnipod 5 benefits people with or without a GLP-1.Dont GLP-1s reduce the number of people using insulin therapy?Counter-intuitively,its the over way around.Weve just published a big study in conjunction with Optum Health based on insurance claims and we found that people on GLP-1s were m

233、ore than twice as likely in the next 12 months to also initiate insulin therapy.That finding was really counter to market expectation,but its clear and robust result in the data.And we also found that if patients discontinued GLP-1 in the first three months,they were even more likely to initiate ins

234、ulin.Why do GLP-1s actually increase the use of automated insulin delivery?Im speculating here,but I think physicians understand that insulin and GLP-1s are good companion therapies,and when somebody reaches a level where their blood glucose is out of control,they need to escalate down that down.Mor

235、e and more were seeing GLP-1s and insulin being initiated in roughly the same time period.In the past,one of the reasons why doctors have avoided prescribing insulin is that people living with type 2 diabetes are usually heavy.Theyre trying to manage their weight and insulin therapy usually increase

236、s your weight.And so to docs,its sort of like“I dont want to put you on insulin because Im telling you to manage your weight,and its a countervailing effect.”Jim Hollingshead,CEO,Insulet Insulet develops,manufactures and distributes insulin management systems for diabetic patients.Their award winnin

237、g OmniPod is a tubeless,waterproof automatic insulin delivery system.October 2024 Citi GPS:Citi GPS:Global Perspectives&Solutions 2024 Citigroup 51 Do GLP-1s bring patients into the healthcare system that might otherwise have avoided it?Theres a lot of shame that people feel with obesity;theres a lo

238、t of shame people feel about their diabetes.I dont have any stats for it,but I think its very plausible that the shame barrier has kept people out of clinic,yes.People ought not to feel that way.If shame is the barrier to getting appropriate care,then we have to break that down.Type 2 diabetes is bi

239、ochemical condition;people need therapy;and we want to be a big part of providing that.Thats why were so focused on ease of use and discretion with our wearable disposable patch pumps.What happens if GLP-1s reduce obesity and hence lower demand for Insulet?The first thing I would say is that would b

240、e a huge benefit to society.Everybody working at Insulet gets out of bed every day to help people with diabetes.But its the scale of the issue that makes it really daunting.Globally theres more than 500 million people living with diabetes and itll be 1 billion soon.More than 30 million people have b

241、een diagnosed with Type 2 diabetes in the U.S.,and people think theres about 9 or 10 million who have Type 2 diabetes and dont know it.They havent been in the clinic so theyre undiagnosed.If they slide through that progression and they end up on insulin,itll be like an avalanche.Theres just a pile o

242、f snow on the top of the mountain thats slowly sliding downhill.If there was a silver bullet,it would definitely be better.But none of the current therapies actually repair the pancreas.How have GLP-1s changed Insulets strategy?Actually,we havent changed our strategy at all.It was surprising to our

243、investors in the fall when we came out and said that GLP-1s are not impacting our business.Ill point to three things which gave us confidence back in the fall.The first thing is demand for our products are very high.Second,when you look at claims data in the U.S.,you see GLP-1s have gone up like a h

244、ockey stick but insulin demand is flat.Third,when you look at statistics on control and A1C levels across the population over the whole span that GLP-1s have been on the market,the number is just pegged at 14%of people who have an A1C over 9.So GLPs havent improved the high-end control,and thats the

245、 population that will definitely be prescribed insulin.So weve said GLP-1s havent impacted us.Citi GPS:Citi GPS:Global Perspectives&Solutions October 2024 2024 Citigroup 52 Kidney disease and GLP-1s Chronic Kidney Disease,or CKD,is another area where healthcare professionals think GLP-1s could have

246、an impact,particularly in delaying its progression.Roughly 37 million American adults have CKD,most of whom are unaware they have it.CKD is the term used when kidneys function less well than they should-it lumps together about 60 different specific diseases.If left untreated,CKD generally progresses

247、 over time,going up the five stages.(Stage 5 kidney failure-is also known End Stage Renal Disease,or ESRD.)Unfortunately,there is no cure for CKD-once a kidney is damaged,it cant be repaired.Diabetes,high blood pressure,obesity and heart disease are the main risk factors.However excess body weight i

248、s also very important:each 5-point increase in BMI results in about a 50%increase in the risk of developing CKD,according to a study of roughly 280,000 participants in the UK Biobank.39 However,the vast majority of patients who reach Stage 3 die before they get to Stage 5-most frequently from cardio

249、vascular diseases.What has the impact of GLP-1s been so far?So far GLP-1s have been relevant for CKD because they reduce obesity,help with obesity and reduce cardiovascular risk.However,the Flow trial showed that semaglutide directly reduces risk in CKD too-so we believe that(some)GLP-1s will be use

250、d directly for CKD patients in future.It is important to note however that semaglutide has NOT yet received approval for treating CKD.The Flow trial showed GLP-1s can help with CKD Novo Nordisks Flow trial40 is the first dedicated kidney outcome trial for GLP-1s.Just over 3,500 people with type 2 di

251、abetes and CKD were injected with 1mg of semaglutide or a placebo,with a median follow-up of 3.4 years.The study shows patients treated with semaglutide experienced a 24%relative risk reduction in a composite measure of kidney-disease related events.For the participants using semaglutide:The risk of

252、 a drop in the eGFR41 of 50%or more was 27%lower The slope of eGFR was less steep,indicating a slower worsening of CKD Initiation of kidney replacement therapy(e.g.dialysis or transplant)was lowered by 16%All-cause mortality was 20%lower.This was driven by a 29%reduction in the risk of death from ca

253、rdiovascular causes,which is the main risk;the reduction in the risk of death from kidney causes was only 3%.In summary,Flow implies that semaglutide will be extremely useful for treating CKD,first because it slows the rate of progression,and second because it reduces the 39 J of Am Soc Nephrology:2

254、021 Conventional and Genetic Evidence on the Association between Adiposity and CKD.40 NEJM 2024:Effects of semaglutide on chronic kidney disease in patients with type 2 diabetes.41 eGFR(estimated glomerular filtration rate)is one of the main measures of kidney function.Flow showed semaglutide helps

255、with CKD,well beyond what could be driven by the reduction in body weight.October 2024 Citi GPS:Citi GPS:Global Perspectives&Solutions 2024 Citigroup 53 risk of death of CKD patients.The Flow trial looked at a fairly high risk group of patients.During the trial,in the placebo group,almost 2.8 times

256、more participants died(16%)than started kidney replacement therapy(6%).Our colleagues in Citi Equity Research recently hosted a call42 to analyse the data with Dr.Sagar Nigwekar,who specializes in kidney care at Massachusetts General Hospital and is Assistant Professor of Medicine at the Harvard Med

257、ical School.He predicts that when semaglutide is approved for CKD,it will become an important treatment option,but only for certain patients.Impact on dialysis We expect that in the next few years,the effects of GLP-1 that increase the usage of dialysis will if anything more than offset the effects

258、that decrease usage.On the negative side,GLP-1s are likely to delay dialysis.“I would expect the average age of dialysis in the U.S.will go up by 2 or 3 years”for patients using GLP-1s,Dr.Nigwekar said in the Citi call.But he also emphasized the data in Flow that showed patients are likely to live l

259、onger.Furthermore,he said GLP-1s are likely to ensure that the patients that do start dialysis are generally slimmer and healthier.42 Discussion with US nephrologist on GLP1s post detailed FLOW data-Video Webcast Citi GPS:Citi GPS:Global Perspectives&Solutions October 2024 2024 Citigroup 54 Sleep Ap

260、nea and GLP-1s What is sleep apnea?Obstructive sleep apnea-or OSA-is another important condition that is linked to obesity,and where GLP-1s could make a big impact.OSA occurs when there are repeated interruptions in breathing during sleep.These happen when excessive relaxation of the throat muscles

261、causes the airway to become too narrow or collapse completely,blocking the flow of air into the lungs.Sleep apnea can lead to daytime tiredness,cognitive impairment,and worsening cardiovascular and metabolic health.The severity of sleep apnea is measured using the Apnea-Hypopnea Index(AHI),which is

262、the average number of apnea(pauses in breathing)and hypopnea(shallow breathing)episodes per hour of sleep.Sleep apnea is diagnosed where the AHI reaches 5 or more events per hour.Sleep Apnea is classified as severe when there are more than 30 episodes an hour.Figure 35.Sleep Apnea Severity Classific

263、ation by AHI Index AHI Index Normal 30 Source:CDC Sleep apnea affects very roughly 1 billion people worldwide,and the number is growing.43 Being overweight or obese is an important risk factor for obstructive sleep apnea,because extra fat deposits around the neck can narrow the airway,contributing t

264、o airway collapse.However,we have seen many different estimates of exactly how tight the link is:According to one recent study,around 34%of adults with mild OSA;43%with moderate OSA and 54%with severe OSA are obese.44 However,other studies give higher and lower numbers.An analysis of the insurance c

265、laims of almost 8 million Americans with OSA,showed that 80%were obese at time of diagnosis,of which 34%were severely obese.(See Figure 36.)Among individuals with severe obesity,estimates for the prevalence of OSA range from 55%to 90%.45 43 Global prevalence and burden of obstructive sleep apnea:a l

266、iterature-based analysis 44 Sleep May 24:Prevalence of Obesity in Obstructive Sleep Apnea 45 Obesity Surgery May 2003:Obstructive Sleep-Related Breathing Disorders in Patients Evaluated for Bariatric Surgery October 2024 Citi GPS:Citi GPS:Global Perspectives&Solutions 2024 Citigroup 55 Figure 36.OSA

267、 Patients by BMI at time of diagnosis N=7.97 million Source:Discovery Healthcare via Inspire Medical As with type 2 diabetes and chronic kidney disease,sleep apnea has no cure but lifestyle changes such as weight management are recommended to treat the symptoms.Weight loss is strongly linked to impr

268、ovement in OSA in people who are overweight or obese.46 On average every kilogram(=2.2 pounds)of weight loss leads to a reduction in AHI of 0.8 events/hour.47 What about GLP-1s?The Surmount OSA clinical trial provides the most detailed evidence.48 It enrolled individuals with moderate to severe slee

269、p apnea,with most at the severe end,and most were significantly obese.At the start of the trial the average AHI was about 51 events/hour,and the average BMI was 39.After 52 weeks:Patients taking tirzepatide but not using CPAP saw an average reduction of about 25 AHI events an hour(or 51%)from 52 eve

270、nts/hour to 26,vs.an average reduction 5 AHI events/hour for the placebo group;Patients taking tirzepatide and using CPAP,saw an average reduction of about 29 AHI events an hour(or 59%)from 50 events/hour to 20,vs an average fall of 6 AHI events/hour for the placebo group.In short,the average patien

271、t using the GLP-1 moved from really severe sleep apnea to moderate sleep apnea-an important improvement but not a complete solution.Nonetheless the largest company in the sector ResMed-argues that GLP-1s are actually driving demand up,partly because more obese individuals who were reluctant to inter

272、act with the healthcare system now have a reason to do so.46 See Interactions Between Obesity and Obstructive Sleep Apnea and Weight Loss Is Integral to Obstructive Sleep Apnea Management 47 Ibid.48 For the full results,see NEJM June 24:Tirzepatide for the Treatment of Obstructive Sleep Apnea 5%15%3

273、0%17%34%BMI 25BMI:25-29OverweightBMI:36-40ObeseBMI:40+Severely ObeseBMI:30-35ObeseSurmount OSA showed a double agonist is very helpful,as it cuts the AHI events/hour by around 50-60%but doesnt totally cure sleep apnea.Citi GPS:Citi GPS:Global Perspectives&Solutions October 2024 2024 Citigroup 56 Int

274、erview with ResMed We recently interviewed ResMeds CEO,Mick Farrell and Dr.Carlos Nunez,chief medical officer.The full interview is here.Below are edited highlights.Whats the relationship between obesity and obstructive sleep apnea?Carlos M.Nunez:There are often numbers that are thrown around that m

275、ake you believe that the majority of patients with obstructive sleep apnea also have obesity,but thats not the case.The latest,and actually the largest,epidemiologic study looking at the question:“What is the percentage of patients with obstructive sleep apnea who have obesity”was presented a few mo

276、nths ago at the American Academy of Sleep Medicine.It showed that even in severe sleep apnea,less than half of the patients also have obesity.There is tremendous overlap between obesity and sleep apnea that we cannot ignore,but we have to keep it in perspective.The two are different:ones a disease;a

277、nd ones a condition.They both deserve to be treated because they are different things.How important is losing weight in treating OSA?Carlos M.Nunez:Losing weight is an important part of managing sleep apnea.There is absolutely a connection between the two,and they have to be treated at the same time

278、.If you look at the literature when patients are treated with both CPAP therapy for their obstructive sleep apnea and you actively manage their weight,they have the best chance of having the best outcomes.Mick Farrell:When you look at the Surmount OSA trial in detail,it showed very few of the patien

279、ts using the GLP-1 drug got to an AHI below 5.Bariatric surgery is far more effective at lowering weight than these new drugs,and 95%of patients that had sleep apnea before bariatric surgery,still have it afterwards.A weight loss drug or a surgery for bariatric surgery does not change your DNA.It do

280、es not change your gender,and it doesnt change the distance genetically that you have between your tongue and your uvula.Whats the impact of GLP-1s on demand for sleep apnea solutions?Mick Farrell:We have been tracking 811,000 subjects,over 12 months,and now over 24 months,and were going to continue

281、.And were seeing that those who use GLP-1s have a 10.7%higher start rate on positive airway pressure PAP therapy.After one year,we see patients using GLP-1s are 310 basis points higher,when it comes to buying masks,accessories,tubing,humidifiers.And at 24 months,demand for resupply separates even fu

282、rther its 530 basis points higher for a GLP-1 patients resupply rates than for OSA patients who dont use GLP-1s.Mick Farrell,CEO,ResMed Carlos M Nunez,MD,Chief Medical Officer,ResMed ResMed is a medical devices company specialising primarily in the obstructive sleep apnea market.October 2024 Citi GP

283、S:Citi GPS:Global Perspectives&Solutions 2024 Citigroup 57 Look at the real evidence.Look at our last four to eight to twelve quarters of growth.And by the way,watch us the next four,eight or twelve quarters.Why do people takings GLP-1s use more OSA therapy?Carlos M.Nunez:The primary care physician

284、is most likely to see these patients.Some are showing up for the first time in years,saying I hear about these miracle new drugs.Help me out,Doc.What can I do here?”Well,the doctors going to treat the entire patient.No physician in their right mind is going to say;“Im going to put you on a GLP-1 and

285、 hopefully in a year you will have lost enough weight that your other issues will have gone away.Mick Farrell:They GLP-1s are bringing patients into the funnel.These patients are getting some treatment for their diabetes,their obesity and other aspects.Their residual apnea is so high theyre motivate

286、d patients.I think in the long run,GLP-1 drugs will be a very useful drugs.I think theyll bring more patients into the funnel,because theres this aesthetic improvement like Botox had,that you have this physical reduction in how you look.You feel fitter,look fitter.And thats a motivation.We have been

287、 trying for 35 years to motivate the billion people who suffer from sleep apnea to come into the channel.Our biggest competitor,for 35 years since the company was started,was lack of education and awareness and the fact that the person suffering is in a subconscious state.What happens if,in future,G

288、LP-1s grow to such an extent that obesity rates start to fall?Mick Farrell:The TAM in 2050 might be slightly lower maybe by single digit percentages-but the flow of patients for every year between now and 2050 is going to improve because this class of medicines brings people into primary care.They g

289、et these prescriptions and they get diagnosed with other diseases including sleep apnea and insomnia.Weve run the numbers on this.Were sort of data nerds here.We took a forecast,a very conservative forecast,of aging and the increase of obesity.And then we put the maximum impact of GLP-1 drugs and th

290、e conclusion was that in 2050 there will be between 1.2 billion and 1.4 billion patients with obstructive sleep apnea assuming GLP-1s are free to everybody who wants them.Im optimistic the GLP-1 drugs,because of the aesthetic improvement that they bring,will bring more patients into the healthcare f

291、unnel than high blood pressure meds.I think theres a tailwind coming for ResMed from GLP-1s.Citi GPS:Citi GPS:Global Perspectives&Solutions October 2024 2024 Citigroup 58 The Medical Aesthetics Market and GLP-1s The global market for medical aesthetics is worth around$200 billion currently,according

292、 to Frost&Sullivan,and is growing at about 11%compound.In 2023,about 56%of the procedures were non-surgical which includes injectables and energy-based procedures,but they accounted for only about 27%of the dollar value.We estimate the non-surgical medical aesthetics segment will grow at a 3-year CA

293、GR of 17%,to$71 billion by 2026E,driven by anti-aging and fat reduction.GLP-1s likely to boost the medical aesthetics market We recently surveyed 320 medical practitioners in the non-surgical sector in the four most important markets the U.S.,China,Korea and Brazil to see how they expect the industr

294、y to develop.The doctors told us that on,balance,they expect GLP-1s will have a positive spillover impact on medical aesthetic practices.Partly this is because rapid weight loss increases patients needs for non-surgical skin tightening.There is some evidence this is already happening in the U.S.for

295、example.Last year non-invasive fat reduction grew 9%and skin tightening procedures rose 7%.In addition,the doctors believe the weight-loss theme will create a virtuous cycle of continued demand.Figure 37.Medical Aesthetic Market Growth,2023 Source:ASPS,Citi Research In our survey,60%of the doctors a

296、greed that weight-loss-related drugs or supplements have had a positive impact on business(vs.10%who disagreed).The Korean doctors were the most positive.5%7%0%2%4%6%8%Total surgicalproceduresTotal non-surgicalprocedures2023 y/y growth9%8%4%9%7%5%6%5%0%2%4%6%8%10%Botulinum toxinsAcid fillersLipaugme

297、ntationNoninvasive fatreductionNoninvasiveskin tighteningSkin resurfacing Skin treatment(combinationlasers)SclerotherapyInjectablesEBDOthersNon-surtgical procedures:2023 y/y growth by segmentsHeejin Lim Korea MedTech Citi Equity Research October 2024 Citi GPS:Citi GPS:Global Perspectives&Solutions 2

298、024 Citigroup 59 Figure 38.Do you agree weight-loss drugs are having a positive impact on business?Figure 39.Av.Expectation(0%=very negative,100%=very positive)Source:Research Innovation Lab Source:Research Innovation Lab Agree60%Disagree10%Neutral30%75%74%70%69%65%70%75%KoreaBrazilChinaUSA Citi GPS

299、:Citi GPS:Global Perspectives&Solutions October 2024 2024 Citigroup 60 Impact on consumer companies October 2024 Citi GPS:Citi GPS:Global Perspectives&Solutions 2024 Citigroup 61 Weighing the impact on food,beverage and tobacco companies Whereas we believe that GLP-1s are likely to boost demand for

300、many healthcare companies,some potential negatives for food,beverage and tobacco companies should be examined.The latest generation of GLP-1s cut calorie consumption for non-diabetic obese adults by 25-35%within a few months,clinical trials show,which implies lower food and drink volumes.GLP-1s also

301、 seem to reduce addictions,which means they may also hurt nicotine and gaming.So far only about 3%of American are using these drugs for weight loss,Figure 14 shows,implying about a 1%of reduction in calorie consumption,assuming each of these people have reduced their calorie intake by 30%.However,if

302、 the number of GLP-1 users does increase significantly,then the impact is likely to be material.When GLP-1s are used for diabetes,they are given in much lower doses,implying a much smaller decline in calorie consumption.Currently more than 85%of GLP-1 prescriptions are for diabetes.We expect,therefo

303、re,that as the use for weight loss increases,the impact on food and beverage companies is likely to greater(per GLP-1 user)than in the past.Currently volume trends for food,beverage and tobacco in the U.S.are compatible with a hit from GLP-1s.For example,total food volumes fell by about 1%in America

304、 in the 12 months to July 27,Nielsen reported.The main companies blame this principally on the increase in the cost of living,but a GLP-1 impact cant be ruled out.There are some positives for the food industry of course.GLP-1s users say they eat more fresh vegetables,fruit and fish.And some companie

305、s are developing products especially for GLP-1 users.Herbalife,for example,has said it will make a range of high protein products targeted at GLP-1 users.Mattson,a food development consultancy,has conducted research focusing on how large companies should adapt their offerings for GLP-1 users.It conc

306、ludes that users want products that offer:Smaller portions Hydration Increased protein(to address the loss of lean muscle)Soothing for nausea and gastric discomfort Justin Shimek,CEO of Mattson,said:“I think these medicines are both a risk and opportunity for the food industry,but clearly we believe

307、 that this is going to be a time of disruption.”49 49 https:/www.ift.org.May 2024 The latest generation of GLP-1s have been shown to cut calorie consumption for non-diabetic obese adults by about 25-35%.Food companies can adapt by offering products with smaller portion sizes but more protein and fib

308、er.GLP-1s users also want hydration and products that help soothe gastric discomfort.Citi GPS:Citi GPS:Global Perspectives&Solutions October 2024 2024 Citigroup 62 The latest generation of GLP-1s cause a cut in calorie consumption by 25-35%within months Two clinical trials show that the latest gener

309、ation of GLP-1s cuts energy consumption by about 25-35%after a few months in non-diabetic obese adults.50 Figure 40 summarizes the headline results of the first trial which excluded people with diabetes.Figure 40.Average calorie consumption during buffet style lunch 20 weeks after using semaglutide

310、or a placebo 2.4mg semaglutide vs placebo,after 20 week use.n=72 Source:Diabetes Obes Metab.2021:Effect of semaglutide once weekly on energy intake,appetite,&control of eating.The historic real-world impact of GLP-1s may understate their future impact It is important to remember that this research e

311、xplicitly excluded people with diabetes.We suspect the calorie reduction for diabetics would be considerably lower for two reasons,although we dont have any hard clinical data:GLP-1 prescriptions for diabetes use smaller doses.For example,when semaglutide is prescribed for diabetes,its sold as Ozemp

312、ic,and comes in a 1.0mg dose;when its sold for weight-loss,as Wegovy,and comes in a 2.4mg dose.Diabetics typically lose very roughly 5%less body-weight than non-diabetics for the same dose.50 Diabetes Obes Metab.2021:Effect of semaglutide once weekly on energy intake,appetite,&control of eating.And

313、Diabetes Obes Metab.2017 Effects of once-weekly semaglutide on appetite,energy intake and control of eating.2676173605001000150020002500PlaceboSemaglutideEnergy intake(kJ)35%reductionOctober 2024 Citi GPS:Citi GPS:Global Perspectives&Solutions 2024 Citigroup 63 Currently,fewer than 15%of people taki

314、ng GLP-1s are receiving prescriptions for weight loss.As capacity increases,we expect this percentage to increase significantly,implying the average weight loss per user will probably increase.Figure 41.Attitudes to eating and food 2.4mg semaglutide vs placebo,after 20 weeks.n=72 Source:Diabetes Obe

315、s Metab.2021:Effect of semaglutide once weekly on energy intake,appetite,&control of eating.GLP-1s may increase demand for fresh food GLP-1s reduce the appetite by mimicking the hormones that tell the body it has just eaten.It is therefore unsurprising that users report fewer food cravings.However,i

316、t also appears that GLP-1s help users eat more healthy food.In both the trials we just mentioned,the participants were asked about their attitudes toward eating-and in both the participants taking semaglutide said they were less hungry,had fewer food cravings,and were more able to control their food

317、 intake.So far,so expected.However,people on GLP-1s were less interested in savory food than sweet food,and if anything,they were more interested in consuming fruit and juice,as Figure 41 shows.This finding is supported by a survey we commissioned of nearly 500 American adults who were using GLP-1s

318、to lose weight.Figure 42 shows that many more said they had increased their consumption of fresh fruit and vegetables and water as a result.-40-30-20-100102030How difficult has it been to control your eating?How hungry have you felt?How full have you felt?How often have you had food cravings?How str

319、ong were any food cravings?How often have you eaten due to cravings?How often have you had cravings for.Sweet foods?Savory foods?Fruit or juice?How happy have you felt?How anxious have you felt?How alert have you felt?More for GLP-1 usersLess for GLP-1 users Citi GPS:Citi GPS:Global Perspectives&Sol

320、utions October 2024 2024 Citigroup 64 Figure 42.GLP-1 users mostly say they consume more fresh fruit&vegetables,and bottled water,but less unhealthy food Since taking GLP-1s have you consumed more or less of each item?N=499.Survey conducted Nov 2023.CSDs=carbonated soft drinks.Fast food restaurants=

321、restaurants with drive thru.Source:Citi Innovation Lab 23%23%41%58%59%57%49%23%36%41%48%55%42%25%20%20%18%14%50%25%21%22%60%40%20%0%20%40%60%Fruit&Veg.FishRed MeatSweet SnacksChoc.&CookiesIce CreamFast Food Rest.Bottled WaterCoffeeBeerCSDsConsumedMoreConsumedLess orStoppedFoodBeveragesOctober 2024 C

322、iti GPS:Citi GPS:Global Perspectives&Solutions 2024 Citigroup 65 Food&Beverages The view from Equity Research For the Packaged Food&Beverage sector,the peak of market worries around the impact of GLP-1 drugs was reached in the second half of 2023.During the period,the market became increasingly worr

323、ied about the impact of GLP-1 drugs used for weight loss on consumer purchasing behaviors in the Food&Beverage space.Market concerns were heightened by a Walmart comment on October 5th reported by several news articles,indicating GLP-1 users were buying less units and less calories,which drove large

324、 declines in Food&Beverage stocks on the day and in the following months.Worries around GLP-1 impacts coincided with a general slowdown in Food&Beverage volumes for public companies,which we believe were mainly driven by other factors,including:(a)a general slowdown in U.S.consumer conditions,partic

325、ularly among lower-income cohorts after several years of high price increases from CPG companies;(b)the impact of the year-on-year reduction in SNAP benefits among lower income cohorts;and(c)consumer trade-down leading to a shift in volumes from branded players to private label options.In February 2

326、024 we published a note titled“Market Not Yet Losing Appetite for GLP-1 Impacts,Should It?”including a Citi Innovation Lab survey of 500 GLP-1 users,compared it to a sample of 500 consumers under other weight loss regimens.As discussed in the note,we view the near-term impact on calorie consumption

327、and food&beverage volumes as manageable amounting to 100 bps per year over the next 5 years and building to 1.5%by 2035.If the pace of adoption of GLP-1 were to be faster than expected and broader across the globe,we would expect CPG companies to more aggressively focus on changing their portfolios

328、to adapt to the new consumer environment(similar to what many Beverage companies did with zero-sugar product offerings as sugar reduction became front-and-center in the minds of consumers).While the longer-term potential on consumption is still unclear and likely several years out,we expect stock pe

329、rformance to potentially still be impacted by news on GLP-1 in the near-term.Specifically,we believe two areas of news could potentially have negative impacts on Food&Beverage stocks:(1)advancements on the development of a pill format for GLP-1 drugs by drug manufacturers;and(2)updates on health ins

330、urance coverage of those drugs for weight loss and/or lowering of the cost of the drugs for consumers.At a sector level,in the Packaged Food space we see particular risk for categories with already low underlying consumption trends because even an incremental 1-2%volume decline over the next decade

331、could mean eventual industry oversupply and erode pricing power(e.g.,center store meals).We see more risk for companies that derive the majority of their sales from the U.S.and have elevated exposure to snacks and/or prepared meals.We see lower risk in the Beverage space as we view beverage consumpt

332、ion as more tied to social interactions,less reduction in consumption and spending levels by consumers on GLP-1 drugs relative to food/snacking based on our survey results,and more international exposure of beverage companies.(We see lower risk in emerging markets.)Filippo Falorni,CFA U.S.Beverages,

333、HPC Lead Analyst Citi Equity Research Tom Palmer,CFA U.S.Beverages,HPC Lead Analyst Citi Equity Research Citi GPS:Citi GPS:Global Perspectives&Solutions October 2024 2024 Citigroup 66 GLP-1s and fashion We think that if GLP-1s usage does become substantially more widespread as we expect,it could be a positive for overall clothing sales.Partly this is because people will need to buy new clothes as