'What opportunities are there in investing in anti-obesity drugs?'

Indeed, it exceeds supply, and sales of it and its rival product from Eli Lilly are expected to top $15bn (£12.2bn) this year. Both companies are struggling to meet demand – surely the precursor of a very strong investment opportunity.

That Danish Novo Nordisk’s stock market value is now bigger than Denmark’s GDP is worrying.

We’ve seen this before, when Finland’s Nokia became so dominant it was generating 25 per cent of Finland’s corporation tax receipts. When iPhones gobbled up Nokia’s market in the 2000s, the Finnish economy struggled to grow for a decade.

It's worrying because when companies grow this much and this fast, expectations are always exaggerated. Professional investors, even if they are doubtful of the hype, face powerful peer pressure to join in – so they aren’t outliers from the rest of their peers.

The scene is then set for disappointment: disappointment for investment returns if the sky-high financial predictions aren’t fulfilled; for the healthcare industry, because the expected positive health benefit cannot be achieved in real life; and for other drug and healthcare research, which struggles to get the attention and capital they need.

But what’s behind all this? 

There’s a real problem here, westerners are too fat and the rest of the world is catching up. Novo Nordisk (and soon US-based Eli Lilly) has effective drug solutions that suppresses appetite via the GLP-1 hormone system. 

Obesity increases the risk of medical conditions like cardiovascular disease, diabetes, cancers, osteoarthritis, liver disease, kidney disease, sleep apnoea, and depression.

Losing weight will improve health and quality of life, but it does not reset risk to ‘normal’.

Estimates of the direct medical costs of obesity in the US alone are $173bn per year, and the cost to the economy to be more than $1tn. Increased obesity is arguably the main driver of the emerging difference between lifespan and years of life lived in good health.

So, with one in three people in western markets being overweight or obese, it is no surprise investors are excited about the revenue potential of an effective anti-obesity drug.

So what’s not to like?

This is very unlikely to remain a two-horse race. These drugs cost $1,000 per month – a lot for a 'forever' drug that patients have to keep injecting themselves with, or their weight will return.

There are newer drugs in development for obesity that work on the appetite hormones. They will take market share from Novo and Eli Lilly. We know how this works, sooner or later, this will become all about price.

The Novo and Eli Lilly obesity drugs suppress appetite by targeting the GLP-1 hormone system. GLP-1 is the stomach’s signal to the brain to tell you that you are full, as opposed to feeling hungry. If you don’t feel hungry, you eat less and lose weight.

Recent data purports to show that GLP-1 users eat less and eat healthier food. This has hit the share prices of all sorts of food and drink companies. But watch out. This data was from people with Type 2 diabetes, where GLP-1 drugs originated nearly 20 years ago.

These people have a serious medical condition because their body cannot cope with blood sugar spikes. Extrapolating data from such people to those who are merely overweight risks given a false impression.

There is no research to show that overweight people will take GLP-1 drugs and see lifelong changes to what they desire to eat and drink.

For the overweight population losing weight is hard. Any help is welcome. But losing even 20 per cent of your body weight where your BMI is more than 40 won’t leave you at normal risk. A healthy BMI is 24, losing 20 per cent of weight from a BMI of 40 would still leave a person with a BMI of 34.

So the idea that demand for bariatric surgery, cardiac care and even insulin pumps and glucose monitors will fall because of GLP-1 drugs makes no sense. The number of obese patients is growing faster than the number of patients on these drugs.

Added to this health problems from being obese are irreversible. Losing weight will improve health and quality of life, but it does not reset risk to ‘normal’.

These health conditions will continue to grow and will thus continue to generate profits for healthcare companies.

This is because damage that obesity does to health is cumulative. For someone with joint damage who then loses weight, the wear and tear will slow but not reverse. Atherosclerosis (clogging of the arteries) is not reversible either (which is important for the long-term risk of vascular dementia or stroke), nor is kidney damage.

Insulin pumps are used mainly by Type 1 diabetic patients. How fat you are may impact how much insulin you need, but not the importance of delivering it when needed – a job best done by an insulin pump taking data from a continuous glucose monitor.  

Prospective bariatric patients (those eligible for stomach stapling or gastric band surgeries) may try these obesity drugs before resorting to surgery. In the UK patients need to show commitment to losing weight before surgery. Obesity drugs can help patients get to the required pre-operation weight loss.

The idea that GLP-1 obesity drugs are the fix-all for numerous chronic and acute health conditions is wide of the mark. These health conditions will continue to grow and will thus continue to generate profits for healthcare companies.

The pharmaceutical and healthcare industries must continue to find ways to treat and, if possible, cure them. The healthcare investment industry has historically been very good at furnishing risk capital for this to happen. 

Failure is common. But success is rewarded – as it has been for shareholders in Novo Nordisk and Eli Lilly – up 120 per cent and 180 per cent respectively over the past two years.

But when the hype gets out of control priorities become skewed, capital resources are misallocated and investors risk being dragged into an unsustainable and expensive fairytale.

Investors should look anew at the opportunities created by this capital misallocation. The need for treatments across obesity-linked conditions is not going to change. At the same time, human beings are not going to stop bonding over food and drink.

Paul Major is manager of the Bellevue Healthcare trust