Drugmakers could also see a sizable move to the upside as preventative and reactionary medicine takes off in lower-income metros. Because of poor health habits and food choices in many areas ranked among the lowest in the Well-Being Index, drugs that counter obesity or treat the most common obesity-caused disease — type 2 diabetes — could be in for a sizable jump in orders.
The market for weight-control management drugs is a hotly contested race between two drugs currently approved by the Food and Drug Administration: Belviq by Arena Pharmaceuticals, Inc. (NASDAQ:ARNA) and Qsymia by VIVUS. Each drug possesses its own unique advantages with Qsymia delivering a higher percentage of weight loss in clinical trials, while Belviq presented the more favorable safety profile. If I had to choose, I’d bet on physicians preferring the safety profile on Belviq above all else, but there’s also enough room here for both drugs to succeed.
Let’s not forget about Johnson & Johnson (NYSE:JNJ)‘s Invokana, either, which could become the new staple in treating type 2 diabetes. Approved earlier this year, Invokana is an SGLT-2 inhibitor that works out of the kidneys as opposed to the liver or pancreas for most other diabetes medications. In addition to providing for better glycemic balance, Invokana also has this incredible side effect of inducing weight loss and lowering blood pressure in patients, which is a welcome reversal of the weight gain most often witnessed with many types of diabetes medications.
The not-so-obvious beneficiaries But, there are more beneficiaries than meets the eye if you dig a bit deeper.
I certainly wouldn’t fault you for associating Xerox Corporation (NYSE:XRX) with copy machines and other print services, but the company has moved the majority of its revenue into information technology and services. Specifically, Xerox Corporation (NYSE:XRX) has become a gigantic processor of Medicaid claims in the state of California… which also happens to be WellPoint’s biggest market opportunity to pick up new Medicaid-based members. In California alone, 1.4 million new people (nearly 10% of the expected 16 million) are expected to be included under its expanded Medicaid program. With Xerox being the exclusive processor of Medicaid payments in the state, it could be in line for a huge pick-up in business.
Also, don’t discount the idea that Medicaid-expansion patients won’t go to their doctor and take their physicians’ advice to heart. This doesn’t exactly mean that organic grocers like Whole Foods Market will necessarily see a bump in sales because their doctor says to eat healthier, but it could mean a rise in traffic for fresh-Mex casual diner Chipotle Mexican Grill, Inc. (NYSE:CMG). Chipotle’s “Food With Integrity” promise ensures the use of meat that’s been free of antibiotics and hormones. Chipotle Mexican Grill, Inc. (NYSE:CMG) also uses local organic produce at many of its locations. Although organic food may not always be price-practical for lower-income households, Chipotle’s prices are currently very comparable to many less-healthier fast food restaurants, and it has locations in many of the states where Medicaid-expansion will see the biggest rise in new members.
The article Does This Data Overwhelmingly Prove That We Need Obamacare? originally appeared on Fool.com and is written by Sean Williams.
Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong. The Motley Fool owns shares of, and recommends, Chipotle Mexican Grill, Johnson & Johnson, WellPoint, and Whole Foods Market.
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