AI Summary
5 min readGLP-1 therapies for obesity and diabetes are entering a new growth phase, according to Terrence Flynn, Morgan Stanley's head of U.S. pharma and biotech research. With current penetration low—6% of eligible U.S. patients and 2% outside the U.S.—the market has significant runway. Flynn outlines five drivers shifting from early adoption to broader scalability, projecting a peak market of $190 billion.
Low Penetration Sets Up Expansion
Despite recent hype, GLP-1 use remains early-stage relative to the 1.3 billion people globally eligible for these therapies. In the U.S., only about 6% of obesity patients are on them, and ex-U.S. penetration is just 2%. This low baseline means growth potential hinges on overcoming barriers like delivery method, cost, and access. Flynn emphasizes that innovation, policy changes, and demand convergence are now aligning to unlock wider adoption.
Shift to Oral Formulations
Historically, GLP-1s required injections, limiting uptake. Newer oral options are changing this dynamic. Notably, nearly 80% of oral GLP-1 users are new to the category, indicating true market expansion rather than just switching from injectables. This convenience factor addresses a key adoption hurdle, drawing in patients who avoided needles.
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What you'll learn
- 1 (00:00) **Episode Intro** - Terrence Flynn introduces GLP-1 therapies' next growth phase in obesity meds
- 2 (00:25) **GLP-1 Market Opportunity** - $190B peak estimate across obesity/diabetes, shifting to broader adoption
- 3 (00:45) **Current Low Penetration** - 6% US and 2% ex-US eligible patients using GLP-1s, still early innings
- 4 (01:09) **Five Key Growth Drivers Overview** - Oral shift, Medicare access, costs/coverage, global expansion, beyond-weight-loss innovation
- 5 (01:13) **Driver 1: Oral Medications** - Injectables limited adoption; orals bring ~80% new users, expanding market
- 6 (01:31) **Driver 2: Medicare Expansion** - New framework covers millions of seniors at ~$50/month out-of-pocket
- 7 (01:48) **Driver 3: Lower Costs & Insurance** - OOP costs down to $120/month; employer coverage to 65% by 2027
+ Full timestamped outline available in the app
Show Notes
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 furt
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