Uptake of obesity surgery devices to rise as obese population increases

Today, obesity is considered a disease of epidemic proportions. The World Health Organisation (WHO) estimates that obesity has risen by nearly 10-40 per cent in most European countries over the past decade. At the same time, studies have indicated that rates of juvenile obesity and overweight children range from 10-20 per cent in northern Europe and are even higher in southern Europe.

Currently, obesity-related costs account for nearly 8 per cent of overall healthcare spending, creating a tremendous burden on the public exchequer. As the population of obese adults and children increases, there is an urgent need for solutions that can resolve the looming crisis.

“Although obesity is now a global problem with a significant presence in Europe, unsatisfactory treatment outcomes, poor reimbursement, low knowledge and awareness levels concerning obesity as well as a lack of seriousness shown by both the public and healthcare providers have resulted in low levels of effective and reasonable medical care for obese patients in Europe,” comments Frost & Sullivan Healthcare Analyst Kavitha Ravikumar.

Limited reimbursements remain a key challenge. Although hospitals have been practising obesity surgery in Europe for several years, the changing healthcare structures and reimbursement have diminished its appeal. Moreover, with most surgery expenses being privately borne, the high costs of surgery, particularly for severe obesity, have often deterred its adoption.

However, as governments gradually become more aware of the collateral costs related to obesity – in terms of the money spent in treating diseases associated with it (co-morbidities) as well as the loss of productivity and the negative social and psychological impact of obesity – reimbursement structures are expected to become more positive.

American reimbursement and insurance systems have recently recognised and proactively responded to the need for obesity treatment. Europe is likely to replicate such moves as no nation can disregard the tremendous toll obesity extracts on its population.

These positive trends will be reinforced as the European Union (EU) and various national healthcare organisations start acknowledging the increasing numbers of the morbidly obese and the danger of co-morbidities such as hypertension, type II diabetes and cardiovascular diseases, among others. Here, new obesity management initiatives are expected to bolster the acceptance of corrective surgeries.

Driven by these trends, the European obesity surgery devices market is projected to surge from $76.3 million in 2004 to $152.4 million in 2011. In 2004, adjustable gastric banding (AGB) emerged as the most popular procedure in Europe, registering the highest revenue growth in the market, followed by gastric bypass (GB). Even as demand for vertical banded gastroplasty (VBG) will rapidly diminish, gastric stimulator (GS) and intragastric balloon (IB) are poised to become increasingly popular.

“To support market growth, participants need to provide customers with long-term solutions and specialised medical support after obesity surgeries,” says Ms. Ravikumar. “Surgeon training to perform the procedures, provide follow-up and offer support in post operative weight maintenance has become a significant challenge in the provision of obesity surgery as an effective and life-enhancing solution. Success rates will also be linked to long-term clinical studies proving the efficacy of obesity surgery.”

The interest of venture capital firms in this market is indicative of its sizeable revenue potential. Recent years have witnessed funding for a number of start-ups, especially those catering to the moderately obese population where the risk of surgery is lower and technological innovations such as GS and IB devices can be effectively applied. Interest by venture capitalists has also translated into greater impetus for technological advances, more competition in the provision of solutions and eventually, an expansion of the market in terms of its scope and application.