Weight loss drugs pose risk to pharma, report finds
Rising demand for weight-loss and diabetes drugs puts the pharmaceutical industry at risk of a “bubble effect” as profitability increases, new research suggests.
Demand for companies such as Wegovy and Zepbound has caused research and development returns to rise to their highest level in years, but a report published by Deloitte on Monday suggests this is masking the pressure facing the rest of the sector.
Drug R&D returns for the world’s top 20 pharmaceutical companies rose to 7% for the third consecutive year, thanks almost entirely to a handful of highly anticipated assets such as glucagon-like peptide receptor agonists, or GLP-1s.
The report revealed that for the first time in 16 years, oncology was left behind as the sector that made the biggest contribution to the late-stage value increase in obesity treatments.
This increases companies’ exposure to treatment area-specific shocks, according to Deloitte.
“It’s a bubble because so many things are concentrated,” Deloitte Life Sciences and Healthcare Partner Hanno Ronte told CNBC’s “Squawk Box Europe.”
Drugs targeting obesity and diabetes now account for an estimated 38% of all planned commercial introductions in late 2025.
The impact is so significant that it masks a weaker environment for the rest of the industry. If GLP-1/GIP assets are excluded from the analysis, the sector’s rate of return drops from 3.8% in 2024 to just 2.9%.
Obesity assets now represent approximately 25% of total estimated sales at late stage, while oncology’s share has fallen to 20%. This represents a staggering increase for the obesity industry, which contributed to just 1% of projected value as recently as 2022.
While the boom boosted headline growth, it also led to a significant concentration of risk. Deloitte found that just 54 mega-blockbuster indications, representing just 9% of the late-stage cohort, are predicted to account for roughly 70% of total risk-adjusted peak sales.
Concentration risk
Over-reliance on blockbuster drugs is not new, but Deloitte says the degree of concentration is new. “Big four” accounting creates a high-risk environment where a small number of holdings can increase the overall return on investment, but where there is greater competition and vulnerability to shocks in specific therapeutic areas, he said.
“From a patient perspective, the bubble isn’t going to burst and the drugs aren’t going to disappear, but we’re reaching a point here for GLP-1s where vanity and health are colliding and creating a truly transformative market for patients, for healthcare systems, for everyone,” Ronte said.
Scientists are still trying to find all the benefits of GLP-1s. Novo Nordisk’s GLP-1 is approved to reduce cardiovascular risks and treat patients with liver and kidney disease, while Eli Lilly’s GLP-1/GIP combination is approved to treat sleep apnea in people with obesity.
However, many question marks remain, especially about the drug’s potential. its impact on brain health and inflammation.
Last year, Novo released the result of a years-long clinical trial examining the effect of semaglutide, the active ingredient in Novo’s blockbuster diabetes and weight-loss drugs Ozempic and Wegovy, on slowing the progression of Alzheimer’s disease. The trial showed no significant delay in disease progression but an effect on patients’ Alzheimer’s disease-related proteins as well as biomarkers of systemic inflammation.
GLP-1s have also been shown to help patients struggling with the disease. dependence.
“That’s actually the hope. We’re still in this wave and that’s why people are investing in it,” Ronte said. “Of course, when you ride a wave and have to share it with a lot of people, you don’t have a lot of room to surf.”
“The question is, are you doubling down on that — that’s the bubble — or are you really saying, ‘we’re going to try to find the next scientific wave’?”
