Goldman Sachs: Why do we say that weight loss drugs could become a $100 billion business?

The continuous increase in the number of obese people and the breakthrough effect of GLP-1 have opened the door to the weight loss drug market.

With the popularity of "miracle weight loss drugs", Goldman Sachs' latest report predicts that the global anti-obesity medication (AOMs) market will reach $100 billion by 2030. Earlier this year, the market was estimated to have an annual scale of about $6 billion, which means that the weight loss drug market will grow 16 times in six years.

It is worth mentioning that Goldman Sachs is not the only one predicting that the weight loss drug market will reach a trillion-dollar scale. Morgan Stanley predicts that the industry will reach $77 billion by 2030, while Barclays and Berenberg predict that the weight loss drug market will reach $100 billion and $85 billion, respectively.

Why is it said that weight loss drugs may become a trillion-dollar business?

Obesity rates are expected to continue to rise

According to statistics from the World Health Organization, the number of obese patients (defined as abnormal or excessive accumulation of fat, posing a threat to both physical and mental health) has almost doubled globally since 1975. Today, obesity has become the fifth leading global risk factor for death listed by the World Health Organization.

Affected by factors such as dietary patterns, levels of physical exercise, and genetics, obesity rates are expected to continue to rise. According to the predictions of the "2023 World Obesity Map", based on the current trend, more than half of the global population will be overweight or obese by 2035, compared to only 38% in 2020.

Goldman Sachs pointed out in the report:

Our researchers' forecast for the $100 billion market is based on a series of driving factors for AOM sales, including the potential total number of patients. They estimate that by 2030, there will be approximately 15 million adults in the United States alone who may receive AOM treatment, accounting for about 13% of the obese/overweight adult population in the United States.

Chris Shibutani, a biopharmaceutical analyst at Goldman Sachs, further added:

The obesity market is still in its early stages, and the $100 billion figure is still preliminary. The model assumptions have uncertainties, and slight adjustments to the underlying driving factors are relatively sensitive.

GLP-1 opens the door to the weight loss drug market

In 2013, the American Medical Association recognized obesity as a chronic disease, which in turn increased people's awareness of treatment and prevention. However, early treatments could only provide moderate help, reducing weight by 3%-11%. Some early AOMs even found safety hazards and were withdrawn or recommended to suspend sales.

But in recent years, a new class of drugs called incretins has been proven to be more effective, reducing weight by about 20%. These drugs, led by glucagon-like peptide 1 (GLP-1) receptor agonists, stimulate key receptors in the gastrointestinal tract and brain, promote insulin synthesis (which helps regulate healthy metabolism and blood sugar levels), reduce hunger, and so on. Semaglutide from Novo Nordisk is one of them. Currently, the GLP-1 weight loss drug market is essentially monopolized by Danish pharmaceutical company Novo Nordisk and American pharmaceutical company Eli Lilly. With the popular weight loss drugs Wegovy and Ozempic in their hands, Novo Nordisk has surpassed LVMH Group to become the leader in the European stock market.

Chris Shibutani pointed out that although the weight loss drug market is still in its early stages, it may have reached a turning point.

"We believe that the chronic weight management market is experiencing a turning point and may achieve steady growth and reach a peak in the future. This peak opportunity may ultimately generate the highest revenue ever for drugs. In addition, there are indications that the next generation of AOMs may bring better results."