Clear Winners3
Global GLP-1 sales, around $40bn in 2023, could approach $150bn by 2032 (15.8% CAGR), with Novo Nordisk and Eli Lilly together comprising close to 100% of the market for now (competitive entrants are assumed to take up to 15% share by 2032). We believe that Novo and Lilly will see tremendous long term GLP-1 opportunities that include newer pipeline drugs now in Phase 3 testing, with supply constrained double-digit revenue growth likely through 2028 at least.
The healthcare wild card is the extent to which this drug class has the potential to affect other therapeutic areas, including cardiovascular and kidney disease, of which some are in late-stage clinical trials. Cardiovascular disease is the leading cause of death globally and the drug market is projected to reach $64bn by 2026 (3.8% CAGR). The global chronic kidney disease drug market is expected to expand to $19.8bn by 2030 (5.2% CAGR). If GLP-1 clinical results are highly positive on these diseases, market volumes could be much larger than the data above. Additionally, several medical device companies, such as Thermo Fisher, that supply analytical instruments, diagnostics, and drug delivery systems should benefit as well.
Implications for other industries
Treating obesity has far-reaching implications for various industries, particularly healthcare and food and beverage. Obesity is linked to numerous chronic illnesses causing impacts to the healthcare sector beyond obesity. GLP-1 drugs encourage healthier diets and decrease appetites which will likely shift consumer trends.
Medtech In the medtech industry, insulin pump makers may face higher risk, while companies producing continuous glucose monitors may be less affected. In the realm of heart valve disease, GLP 1 's impact is likely minimal, but its potential to extend lifespans could lead to a growing patient cohort for heart valve replacement/repair products Similarly, for kidney dialysis equipment providers, GLP 1 may initially reduce the patient funnel but could contribute to longer term growth. In orthopedics, weight reductions from GLP 1 therapy could reduce joint damage and the need for replacements.
Food & Beverage: GLP 1 's effects on the food and beverage industry are concentrated in categories like sugary sodas, candy, and greasy foods, as it reduces the desire for these items. Additionally, GLP 1 may lead to a reduction in restaurant traffic, but adaptation and menu changes should lessen this impact Fast food outlets may be more exposed, while healthier alternatives could benefit with an increased focus on healthier eating habits
Managing Risks and Engagement
While the growth prospects for companies like Novo Nordisk and Eli Lilly are strong, as the use of GLP 1 s for weight loss becomes more common, there are risks to consider which include:
- Off-label marketing/promotion of obesity and diabetes drugs:
- Social media promotion
- Drug pricing
- Patient safety
Mirova continues to engage with companies like Novo Nordisk and Eli Lilly to discuss these risks and share best practices. Both companies are actively monitoring online activities and addressing emerging risks associated with social media, including the sale of counterfeit medicines, and have communicated sales and marketing practices in line with Mirova’s ethical standards. Additionally, they are working with authorities to improve the serialization process and are emphasizing the importance of prescribing drugs based on FDA approval to the physicians they collaborate with.
While investors should consider the risks and medical treatment should go along with prevention and healthier lifestyle choices, in many cases medical treatment is necessary and can help reduce comorbidities. Mirova also continues to advocate for healthy products and better nutrition policies. As we are in the very early stages in the global fight against obesity, these drugs are likely to play an important role, offering long term business opportunities for the companies involved in the space.
Written in June 2024
Mirova is an affiliate of Natixis Investment Managers.