According to the Center for Disease Control (CDC), more than one-third (35.7%) of all adults in the United States are obese. Obesity-related medical conditions include heart attack, stroke, type-2 diabetes and even certain types of cancer. Since 2008, medical costs associated with obesity have climbed to an estimated $147 billion dollars per year. The alarming growth of diabetes has led to big profits for American drug companies.

In a new report out today, Bank of America Corp.’s (NYSE: BAC) Merrill Lynch pharmaceutical research team surveyed 75 U.S. physicians to assess current and anticipated treatment practices in diabetes, with the focus on DPP4 and GLP-1 drugs. Both are categories of diabetes drugs that doctors use to control the disease. The research showed that physicians are continuing to increase their use of these drugs as a percentage of total treatment.

The DPP4 drug class is very important for major U.S. pharmaceutical companies. For three of the top four companies, it represents sizable revenue.

Pharmaceutical giant Merck & Co. Inc (NYSE: MRK) is the hands-down winner in the DPP4 drug sweepstakes in the United States. Its lead diabetes drug Januvia controls 77% of prescriptions written for patients. Unfortunately, other companies want a larger share of that pie and are beginning to take sales away.

Bristol-Myers Squibb Co. (NYSE: BMY) and its diabetes drug Onglyza is starting to chip away at the Merck franchise. Currently it has a 16% share of the DPP4 drug market, and that piece of the pie is growing.

Eli Lilly & Co. (NYSE: LLY) runs a distant third, with its drug Tradjenta garnering a 7% share of the overall market. Again though, physicians surveyed indicated that the trend to other drugs is expected to continue, and the company is expected to continue to lose market share to its competitors.

One issue that could upset the entire market for this class of drugs was mentioned by the Merrill Lynch team. Although they did not go into great detail, they pointed out in their report that there is the potential for a Federal Drug Administration (FDA) investigation into the risk of pancreatitis for patients who use these drugs.

Physicians are also positive on a new line of inhaled insulin for both type 1 and type 2 diabetes patients. The company that looks to benefit the most from this brand of oral medication is MannKind Corp. (NASDAQ: MNKD). In today’s report, Merrill Lynch raises its price target on this very controversial company to $5. Closing yesterday at $3.33, this one could be a big win for investors. The Wall St. consensus price target for the stock is $4.

The world’s leading provider of diabetes drugs, Denmark based Novo Nordisk A/S (NYSE: NVO), has started to gain market share with the recently released drug Victoza. This comes at the expense of the exenatide franchise of drugs, which includes Byetta and Bydureon.

Large pharmaceutical companies are well aware of the overall implications of the increasing patient population suffering from type 1 and 2 diabetes. This is a large and growing overall part of their product sales. The fight between these companies will only intensify as new and easier methods for patient maintenance are brought to market.

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