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Weight management is booming

Illustration of two feet on a foot scale shaped and colored like a leather briefcase

Illustration: Annelise Capossela/Axios

Weight management is a booming corner of the digital health industry despite an overall deal slowdown, per a recent PitchBook report.

Driving the news: Rising U.S. obesity rates have underwritten record sales of blockbuster weight loss drugs targeting the GLP-1 receptor.

  • Updated medication guidance on childhood obesity from the American Academy of Pediatrics could contribute to higher future sales.

By the numbers: Roughly 42% of Americans were categorized as obese as of 2020, per the CDC, up from less than a third in 1999, while the prevalence of severe obesity nearly doubled in the same time period.

  • Enter GLP-1 drugs: Last year, clinicians wrote more than 5,000 prescriptions for medications including Wegovy, Ozempic and Mounjaro, a rise of more than 2,000% from 2019, per a report from Komodo Health.
  • Between 2021 and 2022 alone, GLP-1 prescriptions rose by 259%, the report found.
  • The drugs' potential market size is $100 billion, per the Wall Street Journal.

State of play: While biotech companies such as Novo Nordisk (maker of Wegovy) and Eli Lilly (maker of Mounjaro) are cashing in on weight loss drugs, other companies are virtual-first weight management tools that may or may not include medications.

Several have seen recent deal activity, including:

  • Knownwell, a startup providing hybrid, weight management-focused primary care, in January collected $4.5 million in seed funding.
  • WeightWatchers in March agreed to buy the parent company of telehealth-based weight management business Sequence in a deal valued at $132 million.
  • Enara, a startup helping physicians provide patients with personalized weight loss support using digital tools, in June raised $6 million in seed financing.
  • Alfie, an AI-powered obesity management tech company, raised a $2.1 million pre-seed round last month.
  • In 2021, three digital weight management startups — Noom, Calibrate and Found — raked in a collective $740 million in later-stage funding rounds.

What they're saying: "Telehealth could emerge to capture a meaningful portion of the overall weight loss market," the authors of the PitchBook report write.

  • "There is an opportunity for telehealth companies to either focus on weight loss as a primary business or add weight loss telehealth to existing offerings," the authors say.
  • "This category is telehealth friendly, especially for prescription renewals, because provider questions would mainly revolve around outcomes (weight loss) and typically would not require anything more complex," they add.

Be smart: Several recent studies appear to support the use of digital tools for weight management.

  • A 2022 paper published in the journal Obesity found that in 74% of cases, people who frequently used digital tools for weight loss lost more weight than those who used them rarely.
  • Another 2022 study published in Obesity Reviews found a positive link between the use of digital weight management tools and weight loss and increased activity levels.

Yes, but: Startups interested in entering the weight management market face several risks, the authors of the PitchBook report note, including...

  • A lack of studies on Ozempic for weight loss (the medication is currently approved for Type II diabetes and is being prescribed off-label for weight loss).
  • The long-term and consistent requirements for taking GLP-1 drugs to maintain their effects.
  • Potential pushback from payers due to the medications' high costs.

Meanwhile, the authors also warn that the new trends could negatively impact existing nutrition and wellness companies.

  • This could include Jenny Craig, which in May declared bankruptcy, but was revived for e-commerce by the owner of the weight-loss meal provider Nutrisystem this week.
  • "Startups entering this market must be aware of increasing competition and fragmentation," the authors write.
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