GLP-1 receptor agonists are changing the way chronic conditions like type 2 diabetes are managed, but they have also been approved in the United States to treat obesity, resulting in investors assessing the various outcomes if they become more widely adopted. But how big is the market for these drugs, and what's driving their potential for future growth?
What Is GLP-1?
GLP-1 drugs are exploding in popularity for treating obesity and diabetes, with forecasts predicting a massive market. This surge has seen investors look to GLP-1 linked stocks as they see potentially big returns on the horizon.
Goldman Sachs stated in a recent note that “the newest generation of GLP-1 drugs are being hailed by some as ‘miracle drugs’ for the treatment of obesity.”
GLP-1 Market Size
The investment bank notes that obesity physician Dr. Fatima Cody Stanford argues that it’s only a fraction of the 1 billion people worldwide who have obesity.
Meanwhile, one Goldman Sachs analyst agrees that many factors will constrain market size in the near-to-medium term, though he expects the global GLP-1 market to grow to $100bn in 2030.
Furthermore, it is seen as growing potentially much higher if more insurers cover GLP-1s and they show promise in treating other diseases, which the bank estimates could result in a ~70 million US patient population.
Furthermore, the bank says that wider GLP-1 adoption could meaningfully boost US growth. They highlighted the fact that “MIT’s Jonathan Gruber warns that expanding insurance coverage for GLP-1s would cost the US government a staggering sum.”
A US biopharmaceuticals analyst assumes that the US patient population will grow from around 2 million people today to 15 million in 2030 — 14% of the US adult population with obesity — which would increase the size of the GLP-1 market from ~$10 billion today to $100 billion in 2030.
Weight Loss Market Forecast
Goldman Sachs notes that while the stocks of GLP-1 manufacturers Eli Lilly and Company (NYSE:LLY) and Novo Nordisk A/S (NYSE:NVO) have surged partly due to investors’ search for innovation, they are “ultimately pricing in significant optimism around these companies’ ability to ramp up supply to keep pace with rising demand.”
As a result, they see the risks to these stocks as “fairly balanced today, with some downside risk if supplies disappoint, but upside risk if further positive outcomes studies increase the potential patient population and the odds of Medicare coverage.”
If this were to happen, Goldman believes the knock-on effects would stretch far beyond the pharmaceutical sector, with industries ranging from beauty products to airlines to medtech considering the implications of these drugs.
The bank’s US consumer staples analyst also highlights that Food companies are trading at a sizable discount as investors consider what greater GLP-1 use could mean for the industry.
Furthermore, it is felt that the widespread adoption of GLP-1 drugs, and the associated improvement in health outcomes could have meaningfully positive impacts on economic growth.
Goldman Sachs analysts estimate that the level of US GDP could increase by 0.4% if 30 million Americans take these drugs, with the GDP impact rising to over 1% in the upside case of a nearly 70 million patient population.
Find the Biotech Stocks
Biotech companies are at the forefront of innovation, developing groundbreaking therapies to address unmet medical needs. For investors who aren’t afraid of volatility, the rewards of biotech stocks can be substantial, with the potential for significant returns on investment as promising drugs progress through the pipeline and reach commercialization.