The Game-Changing Economic Impact of Health Care Innovation

Episode #334 | November 6, 2023

Episode #334 | November 6, 2023

The Game-Changing Economic Impact of Health Care Innovation

In This Episode

On this week's Stansberry Investor Hour, Dan and Corey are joined by David Cervantes. He's the principal and founder of Pinebrook Capital Management – a boutique asset manager focused on asset allocation and managing various systematic trading strategies. In today's episode, David shares his groundbreaking thesis that could transform not only health care but also the broader economy.

But first, Dan and Corey discuss disgraced FTX founder Sam Bankman-Fried being found guilty of fraud, coworking-space company WeWork's impending bankruptcy, and fluctuating Treasury yields. While some may view Bankman-Fried's conviction as a negative development for the crypto market, Dan emphasizes that one bad actor does not taint all crypto. And he brings up the importance of bitcoin and Ethereum both trading near yearly highs...

This is just another typical sign of what you get after decades of declining interest rates and then more than a decade of 5,000-year-low interest rates. You get all kinds of crazy stuff that has to work its way out.

Next, David joins the conversation to detail the far-reaching consequences of obesity, plus the potential impact of new weight-loss drugs on the economy. He notes that obesity not only places a significant financial burden on the health care system but also hampers overall productivity and gross domestic product ("GDP") growth rates.

Between now and 2050, obesity will drag U.S. GDP down by about 4% a year. This is bonkers. This is more than we spend on defense... There's medical costs, there's absenteeism from work, there's people getting out of the workforce earlier, people getting on disability sooner. It's a black hole of problems.

However, David clarifies that GLP-1 (or glucagon-like peptide 1) drugs have the potential to revolutionize obesity treatment. Two such blockbuster drugs – Wegovy and Ozempic – have already been introduced. And there's much more growth potential within this sector...

There are currently over 50 new GLP-1 [drugs] in the pipeline in development right now... This is currently early days, $2.2 billion in sales. It's expected to hit $40 billion within the next five years, and [the] total global addressable market's probably about $100 billion... This is a huge, huge market. It's a huge opportunity.

David then explores the potential winners and losers of this medical innovation. He stresses that it's not too late to make money off the drug manufacturers since there are plenty of companies developing and trying to improve these weight-loss drugs right now. He also touches on other sectors that will benefit from mass weight loss – such as dating apps, the fashion industry, and airlines – and those that will be hurt by it. David explains that insurance companies will eventually be forced to pay for these drugs, which will give them an even bigger boost...

Either [the insurance company] pays $900 a month for the drugs or it pays for your kidney transplant, or your immobilization, or it pays for your hip replacement because now you're obese... There's a whole range of factors to consider that govern the economics.

Finally, David discusses the next iteration of this medicine and how companies are now trying to develop similar drugs that could instead curb alcohol or drug addictions. If you're interested in the future of health care and what opportunities lie ahead for you as an investor, you won't want to miss this week's podcast.