Obesity Drugs Are Scaling Fast

GLP-1 oral therapies for weight loss became available in the U.S. earlier this year. While they require certain conditions—such as taking the medication on an empty stomach and waiting 30 minutes before consuming food, beverages or other medications—oral options may be as effective as injections. These treatments could broaden adoption by appealing to patients who prefer to avoid injections and by enabling more scalable manufacturing.

Expanded insurance coverage is another key growth driver. Medicare and Medicaid, the U.S. public programs that offer health coverage for older and low-income populations, are increasingly incorporating GLP-1 treatments, potentially lowering patient costs. In some cases, out-of-pocket costs could be capped at $50/month under agreements between the government and pharma companies.

In addition to government programs, companies are also broadening their benefits to include coverage of GLP-1 medications. A Morgan Stanley AlphaWise survey of senior human resources executives showed that the percentage of employers covering GLP-1s for obesity rose from 44% in 2024 to 48% last year, with respondents projecting it to reach 65% by 2027.

U.S. regulators have begun taking steps to restrict compounded GLP-1 products—non-FDA-approved versions of branded drugs produced by specialized pharmacies. Although these products often contain similar active ingredients and are typically less expensive, they do not undergo the same safety and quality review.

The FDA is working to address potentially misleading direct-to-consumer marketing, while the Department of Justice may pursue related investigations. “While it is too early to call an end to compounding, potential intervention by the FDA and DOJ could support the branded GLP-1 market,” Flynn says.

More than one billion people with obesity live outside the U.S., representing a substantial opportunity for GLP-1 therapies. Adoption has been constrained by affordability, needle aversion and concerns about safety and tolerability.

However, Morgan Stanley Research analysis of such markets as Brazil and China suggests these barriers could diminish with the introduction of oral therapies, broader insurance coverage and the eventual entry of generics.

In Brazil, for example, the GLP-1 market could more than quadruple, with generic competition potentially reducing prices by up to 70%.

“We view Brazil and China as indicative of broader international trends, reinforcing our expectation that expanded access—supported by pricing resets and favorable policy—will drive global adoption,” Flynn says.

GLP-1 therapies are also being explored to treat conditions beyond diabetes and obesity. Some products already include indications for cardiovascular disease, chronic kidney disease and sleep apnea.

Emerging research points to potential applications in areas such as inflammation and neurological conditions, as well as substance-use disorders, depression, psoriasis, Crohn’s disease and asthma.

“We expect initial clinical data over the next two years,” Flynn says. “This could open entirely new treatment categories and support the next phase of market expansion.”