Investors worry that anti-obesity drugs could dent demand for medical procedures and devices. Here’s what they could be missing.----- Transcript -----Welcome to Thoughts on the Market. I'm Patrick Wood, Morgan Stanley's MedTech analyst. And today, I'll be talking about the potential impact of anti-obesity medications on the MedTech industry. It's Monday, January 8th at 10 a.m. in New York. Anti-obesity drugs have made significant gains in popularity over the past year, and by and large, the market expects them to disrupt numerous MedTech markets as widespread adoption leads to population-level weight reduction and co-morbidity improvement. To a certain extent, we agree with the premise that obesity is linked to high health care spend and therefore anti-obesity drugs could represent a risk to device sales. Our research suggests that moderate obesity is associated with about $1,500 a year higher spend on healthcare per capita, with an even greater impact in severe obesity at about $3000 bucks a year. But  we think it would be a mistake to assume reduced rates of obesity are intrinsically negative for medtech makers overall. In fact, we think anti-obesity drugs may ultimately prove to be a net positive for MedTech companies as the drugs increased life expectancy and increased demand for procedures or therapies that would not have been a good option for patients who are obese. In some cases, severe obesity can actually be contraindication for ortho or spine surgery, with many patients denied procedures until they shed a certain amount of weight for fear of complications, infection, and other issues. In this context, anti-obesity drugs could actually boost procedure volumes for certain patients. Another factor to consider, we believe the importance of life expectancy shifts as a result of potentially lower obesity rates cannot be ignored. In fact, our analysis suggests that obesity reduces life expectancy by about ten years in younger adults and five years in middle age adults. Think of it this way, from the standpoint of total healthcare consumption, one incremental year of life expectancy in old age could equate to as much as ten years of obesity in terms of overall healthcare spending. Adults 65 plus spend 2 to 3 times more per year on average, than adults 45 to 64, with a significant $10 to $25,000 step up in dollar terms. Furthermore, rates of sudden cardiac death increased dramatically in high body mass index patients, eliminating the possibility of medical intervention to address the underlying obesity issue or the associated co-morbidities. Given all this, we think anti-obesity drugs will ultimately prove to be a net benefit for cardiovascular device makers overall, even in certain categories where body mass index is correlated with higher procedure rates. In markets such as structural heart, where we're replacing things like heart valves, we believe the number of patients reaching old age, that is 70 plus, is most important in regards to volumes. Though rates of obesity are contributing factors as well, orthopedics is more of a mixed bag. The strongest evidence we've seen here is on lower BMI's leading to reduced procedure volumes though pertaining to osteoarthritis in the knees and degenerative disc disease in spine. But we think the argument that fewer people with obesity means fewer knee replacements or fewer incidences of spine disease is actually only half the picture. Clearly, age may be a factor here, and our sense is that hip volumes in particular are not dependent on high BMI's as much as on an aging population. To sum up, we believe that anti-obesity drugs won't dismantle core MedTech markets. There are more layers to the story here.Thanks for listening. If you enjoyed the show, please leave us a review on Apple Podcasts and share Thoughts on the Market with a friend or colleague today.