The TD Cowen Insight
GLP-1 sales could reach $102B by 2030, of which obesity is projected to contribute $41B. CV benefit of obesity treatment has now been definitively demonstrated. Supply capacity and payor dynamics should continue to shift favorably. Concerns around GLP-1s’ impact to medical device companies may be exaggerated. PBMs and digital health could benefit from GLP-1 volumes.
GLP-1 Drugs Are One of The Most Lucrative Drug Classes in History
GLP-1s are already among the most lucrative drug classes in history. 2023 global sales are estimated to be roughly $35B. This is despite global penetration into the addressable type 2 diabetes and non-diabetic obesity markets of only ~3% and ~0.2%, respectively. This outsized potential has created an opportunity that compels investor participation. However, there remains significant uncertainty around the level of uptake that can be achieved in an addressable market that represents roughly one-fifth of the world’s adult population.
How Will GLP-1 Success Impact Adjacent Health Care Sectors?
We are optimistic that the GLP-1 class of drugs will overcome supply issues and enjoy sustained uptake. We are also optimistic that reimbursement will steadily expand for weight loss, achieving over $100B in global sales by 2030. The GLP-1 market is projected to reach these heights without meaningfully reducing prevalence pools in adjacent healthcare sectors or reshaping other segments of the economy, at least in this decade. Concerns that GLP-1 use will eat into medical device sales may be exaggerated. PBMs and digital health companies stand to benefit from higher GLP-1 volumes, while drug retailers could be negatively affected. Impact to managed care and most distributors is likely to be more neutral.
Indicators Pointing Towards Sustained GLP-1 Growth
Our view is supported by an exhaustive overview of the obesity drug development landscape. This includes an examination of analogous drug markets over the past three decades, KOL expectations for the impact of GLP-1s on various healthcare sectors, and proprietary physician and payor polls. Collectively, all these point to sustained GLP-1 growth in type 2 diabetes and obesity.
Highly Concentrated GLP-1 Market
Two leaders in this field are expected to take roughly 44% and 52% share, respectively, of the global GLP-1 market in 2030. This compares to an estimated 4% compound annual growth rate in total drug sales across the entire industry. Modest GLP-1 impact on the fundamentals of most medical device subsectors may be expected through 2030.
Market Leaders, PBMS, and Digital Health Expected to Benefit
Vast potential has driven valuations for GLP-1 leaders to lofty heights, but sales forecasts are one thing and execution another entirely. The obesity market in its infancy. Execution by both leading companies has left little to be desired so far. Though, it’s reasonable to expect continued strong stock performance. Medical device companies are still poised to deliver top-tier revenue growth. PBMs, distributors, and digital health companies could benefit from GLP-1 volumes and weight management solutions.
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