Morgan Stanley
  • Research
  • Sep 6, 2023

Obesity Drugs Boost Pharma’s Growth Outlook

Growing demand for innovative treatments, combined with accommodative reimbursement policies, could help the market for weight-management medicines reach $77 billion in the next decade.

Demand for obesity drugs has accelerated over the past year. A greater understanding among physicians of obesity’s root causes and the benefits of treating it to prevent associated illnesses, such as heart disease, has driven record levels of interest. This, in turn, has fueled consumer demand, setting up the new class of appetite-suppressing drugs to surpass initial estimates for blockbuster growth.

“Social media activity documenting transformative weight loss, together with the establishment of affordable insurance coverage more quickly than anticipated, has helped drive demand for obesity medicines beyond our expectations,” says Mark Purcell, Morgan Stanley European Biopharmaceuticals analyst. “While supply constraints have capped sales growth in the near term, the global obesity market could go from a $2.4 billion category in 2022 to reach $77 billion in 2030, up from our previous estimate for a $54 billion.”

Morgan Stanley Research expects the market for obesity drugs to reach $77 billion by 2030.

Source: Morgan Stanley Research Estimates

Changes in Obesity Perception, Policy and Treatment

More than 750 million people are living with obesity, which causes 5% of deaths globally, according to World Health Organization estimates.

New studies are helping make the case for weight management as a focus of treatment for not just obesity but related illnesses. For example, a recent landmark obesity study has shown that weight-management medicines are able to reduce the risk of heart attacks, strokes and cardiovascular deaths by 20%. “These results are just the tip of the iceberg when it comes to new growth opportunities for weight-loss medicines and market expansion,” says Purcell. 

Thanks to the rapid expansion of reimbursements for obesity drugs, 40 million people in the U.S. (out of roughly 110 million adults with obesity) have access to these medicines through their insurance plans, topping the total number of Americans estimated to have diabetes (37 million).

Along with the availability of new medicines, policies to further increase access should also help increase the number of people seeking treatment. In the U.S., a bipartisan effort to establish Medicare coverage for the treatment of obesity continues to make progress.

An evolution of diabetes treatment to focus on weight management alongside blood-sugar control has seen an acceleration in the uptake of GLP-1 medicines ahead of their rollout in obesity. Analysts estimate sales of obesity medicines to treat diabetes will exceed $56 billion in 2030, versus $40 billion estimated previously.

Companies that came to market first have an advantage in being out front supported by enormous investments in their supply chains, making it difficult for new entrants to join the field. But competition to take share in this high-growth market should remain robust.

“Supply shortages may have put a limit on near-term growth, but the industry’s pipeline has rapidly expanded to unlock new treatment options. This includes long-acting oral medicines in place of weekly injections, as well as combination therapies to bolster effectiveness,” says Purcell. “These innovations should help both broaden the appeal and improve access for these drugs in the U.S. and beyond.”

The treatment of obesity is on the cusp of moving into mainstream primary care management, similar to where the treatment of high blood pressure was before it transformed into a $30bn market by the end of 1990's. Here are 5 things you need to know.

For more Morgan Stanley Research on investor implications of the growing obesity medicines market, ask your Morgan Stanley representative or Financial Advisor for the full report, “Rising to the Obesity Challenge” (July 21, 2023). Morgan Stanley Research clients can access the report directly here. Plus more Ideas from Morgan Stanley’s thought leaders.