Obesity drugs have proved to be a disruptor on a scale matched by few other pharmaceutical innovations. But this popularity is likely to have a ripple effect in the healthcare sector, far beyond weight management. Find out more.
At the Morgan Stanley 6th Australia Summit 2024, Sean Laaman, Head of Healthcare Research at Morgan Stanley and Mark Purcell, Morgan Stanley’s Head of European Pharmaceuticals Research, talked to Dr.Georgia Rigas VMO-Obesity Doctor and Professor Andrew Wilson about the impacts of obesity, the hype surrounding GLP-1 drugs and the future impacts of a lighter population.
Obesity is one of the most prevalent current health crises, with one in eight people worldwide living with obesity, according to the World Health Organisation’s 2022 estimates. Dr Rigas confirmed that a body mass index of 30 or higher indicates obesity, while a body mass index between 25 and 30 is considered overweight.
Obesity drugs, in particular, glucagon-like peptide-1 (GLP-1) was initially used to treat type 2 diabetes by controlling the amount of sugar released in the bloodstream after eating. However, diabetes and diet drugs like Ozempic and Wegovy are showing they can not only address diabetes and obesity but a raft of other diseases as well.
The current success of these weight management drugs has proved to be a disruptor on a scale matched by few other pharmaceutical innovations. In light of this surging demand, Morgan Stanley Research has re-evaluated the global market for obesity drugs and is now expecting it to reach US$105 billion in 2030, up from an earlier forecast of US$77 billion—and as high as US$144 billion.
Australian healthcare
The first GLP-1 drug was approved in Australia in 2019, though as elsewhere uptake has been limited by ongoing demand-induced supply constraints. Funding is the other key driver. While Ozempic, Wegovy and Mounjaro have all been TGA approved, currently only Ozempic is funded by the Australian Government via listing on the Pharmaceutical Benefits Scheme (PBS). Morgan Stanley estimates the number of patients using PBS funded Ozempic at 79,000 or 0.7% of the overall Australian population.
Government funding of obesity treatments via GLP-1 is expected to take time, as more supportive data builds regarding comorbidities. 1
Extending weight loss drugs beyond weight management
GLP-1 drugs are proving effective in not only the treatment of weight gain but the downstream diseases as well. The data shows that if we treat people within the first five years of diagnosis, particularly with diabetes, these patients will have more success over the longer term. Professor Wilson said there is no doubt these medications work – and the success goes beyond just the medical reasons.
Results from a recent landmark trial called SELECT, Novo Nordisk's landmark trial with 17,600 patients, found that taking one of the leading obesity medicines provided a 73% reduction in the risk of developing diabetes and a 20% drop in the risk of heart attacks, strokes and cardiovascular deaths. Data around the impact on Alzheimer’s disease will also be available in the future.
Expanding these drugs beyond weight management will require additional clinical trials supported by insurance reimbursement to help mitigate costs. But their impact on the healthcare sector could stretch even beyond obesity-related illnesses.
“The SELECT trial represents just the tip of the iceberg when it comes to these medicines’ potential to expand into new opportunities,” says Mark Purcell, Morgan Stanley’s Head of European Pharmaceuticals.
"Obesity cuts life expectancy by as much as 10 years, depending on age. If the widespread use of weight-loss drugs has a meaningful impact on longevity, there are a variety of ways that they could disrupt healthcare.” 2
Key suppliers of GLP-1
Novo and Lilly are building a wide economic 'moat' around their weight loss drug franchises. We expect both to remain the diabesity leaders, despite increasing competition, with a combined 84% share of the obesity pharmaceutical market in 2035.
This reflects the strength and depth of their pipelines as well as their enormous supply chain investments, which create barriers to entry. But the potential scale of the obesity market will also continue to attract other large companies with established platforms in cardio-metabolic disease.
Roche and AstraZeneca both entered the space via acquisitions in 2023, while Amgen and Pfizer are also developing pipeline drugs for diabesity. 3
