Thoughts on the Market
The Real Drivers of GLP-1 Growth
Why It Matters
Understanding the GLP‑1 unlock is crucial because it signals a structural shift in chronic disease treatment that could reshape not only pharma revenues but also consumer habits in food and health services. The convergence of oral options, Medicare access, and broader insurance coverage makes the market more scalable, positioning investors and policymakers to anticipate significant economic and public‑health impacts.
Key Takeaways
- •Obesity drug market could hit $190 billion peak.
- •Only 6% of U.S. eligible patients use GLP‑1 now.
- •Oral GLP‑1 options drive new user adoption.
- •Medicare coverage could lower out‑of‑pocket to $50/month.
- •Innovation expands GLP‑1 use beyond weight loss.
Pulse Analysis
Terrence Flynn of Morgan Stanley outlines a dramatic upside for obesity therapeutics, projecting the global GLP‑1 market could reach roughly $190 billion at peak, with a bullish scenario near $240 billion. Despite the hype, current adoption is modest—only about 6% of eligible U.S. patients are on GLP‑1 drugs, leaving a massive untapped pool. This low penetration underscores a structural growth runway, as the therapy moves from early‑adopter status to mainstream chronic‑disease management, reshaping both health outcomes and related consumer markets.
A key catalyst is the shift from injectable to oral GLP‑1 formulations, which have attracted nearly 80% of oral users as first‑time patients, expanding the addressable base. Parallel policy changes, notably Medicare’s new framework, could bring millions of seniors into coverage with out‑of‑pocket costs potentially as low as $50 per month. Concurrently, average patient expenses have fallen from $170 to $120 monthly, and employer coverage is expected to climb from just under 50% to about 65% by 2027. These cost and access improvements are poised to accelerate uptake dramatically.
Beyond weight loss, GLP‑1 agents are being tested for cardiovascular, kidney, inflammatory, and neurological conditions, broadening the therapeutic horizon and further inflating the market’s addressable size. Internationally, price‑sensitive markets such as China and Brazil present sizable opportunities as costs decline and insurance frameworks evolve. The aggregate effect could reduce U.S. calorie consumption by roughly 1% by 2035, generating ripple effects across food retail and health‑service sectors. In sum, the convergence of oral innovation, expanded payer coverage, and multi‑indication research defines a long‑term structural shift in chronic disease treatment and market dynamics.
Episode Description
Our Head of U.S. Pharma and Biotech Terence Flynn discusses how the rapid pace of adoption of weight management treatments could have far-reaching implications across healthcare, consumer behavior and global markets.
Read more insights from Morgan Stanley.
----- Transcript -----
Welcome to Thoughts on the Market. I’m Terence Flynn, Morgan Stanley’s Head of U.S. Pharma and Biotech Research. Today: the next phase of growth in obesity medicines – the GLP-1 unlock.
It’s Friday, April 17th, at 2pm in New York.
There are moments in healthcare where innovation, policy, and patient demand all converge. And when they do, the impact can extend far beyond medicine. Now we believe GLP-1 therapies are at one of those moments. We estimate that the obesity medications market could reach around $190 billion at peak across obesity and diabetes. Now, that’s a meaningful step up from prior expectations – and it reflects a shift from early adoption to a much broader, more scalable opportunity.
Despite the surge in attention to GLP-1s in the last couple of years, penetration actually remains relatively low today. Only about 6 percent of eligible obesity patients in the U.S. are currently using GLP-1 therapies, and just 2 percent outside the U.S. So, while the growth has been significant, the reality is that we’re still early. And that’s what makes this moment so important.
So, we see five drivers that are pushing the next phase of adoption.
The first is a shift of oral medications. These therapies have historically been injectables, which limits adoption. But newer oral options are changing that. Notably, just under 80 percent of oral GLP-1 users are new to the category. And this signals real market expansion.
Second, expanding access through Medicare. A new U.S. framework is opening these drugs to millions of older patients, with out-of-pocket costs potentially around $50 per month. Now, that’s a meaningful shift, and one that could significantly broaden utilization.
Third is lower costs and broader insurance coverage. We’re already seeing progress here. Average monthly out-of-pocket costs have declined to about $120, down from $170 last year. Now, at the same time, employer coverage for obesity treatments is expected to rise from just under 50 percent last year to around 65 percent by 2027.
Fourth is global expansion. Outside the U.S., adoption is more price-sensitive, but the opportunity is large. As costs come down and access improves, especially in markets like China and Brazil, we expect uptake to accelerate.
And fifth is innovation beyond weight loss. These therapies are increasingly being studied across a range of conditions: from cardiovascular and kidney disease to inflammation and neurological disorders. And that has the potential to further expand the addressable market over time.
So how big could the GLP-1 market get? Well globally, we estimate there are about 1.3 billion people eligible for these therapies. Now our base case assumes roughly 12 percent of that population is treated by 2035, including about 30 percent penetration in the U.S. Now, even at those levels, we’re looking at a $190 billion market – with a potential bull case of around $240 billion.
But this story doesn’t stop at healthcare. We estimate GLP-1 adoption could reduce U.S. calorie consumption by about 1.6 percent by 2035. Now, that may sound modest, but at scale it has real implications, with ripple effects across consumer behavior and industries like food, retail, and healthcare services.
So, stepping back, this is what defines the GLP-1 unlock. We’re approaching a key inflection point that’s driven by oral therapies, broader access, and ongoing innovation. With adoption still low relative to the eligible population, the growth runway remains significant. At its core, this is a long-term structural shift in how chronic disease is treated, and how that reshapes markets.
Thanks so much for listening. If you enjoy the show, please leave us a review wherever you listen and share Thoughts on the Market with a friend or colleague today.
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