A recent report from consulting firm Deloitte reveals that the biopharma sector's return on investment this year has been enhanced by the popularity of GLP-1s, which are commonly used for diabetes and weight loss treatments.
In the report, Deloitte highlighted that companies working on drug candidates to rival the leading market players Novo Nordisk (NVO) and Eli Lilly (LLY) in the diabetes and weight-loss drug sector are contributing significantly to research value in this field. The report indicated that in 2024, the R&D returns increased to 5.9% from 4.1% in 2023, with GLP-1s playing a crucial role. Without GLP-1s, the R&D returns would have dropped to 3.8% in 2024.
Deloitte's life sciences R&D strategy leader, Kevin Dondarski, emphasized that a considerable portion of R&D value is derived from products at advanced stages of development. He pointed out that around 20% of late-stage assets leveraging new technology or platforms accounted for 40% of the calculated R&D value in 2024.
Despite the success seen in developing innovative approaches for diseases with significant market potential, replicating that achievement remains challenging. Dondarski stressed the importance of exploring new opportunities and unconventional therapies to meet market demands.
The report suggests that pharmaceutical companies should prioritize addressing unmet medical needs and consider investing in new technologies and platforms to achieve a comparable return on investment as seen with GLP-1s. By focusing on novel therapies with high-priced tags, companies could potentially replicate the success of the GLP-1s.
For instance, the report mentioned Lenmeldy, a gene treatment for a rare genetic disorder, which received approval last year with a list price of $4.25 million, making it the most expensive drug to date.
Apart from enhancing ROI, GLP-1s are also driving peak sales forecasts, with average projected peak sales per asset now standing at $510 million, whereas without GLP-1s, the average drops to $370 million.
The report highlighted the significant growth in revenue from addressing obesity with therapies like GLP-1s, showcasing the potential for substantial returns by addressing broader population health needs. The forecasted revenue for obesity indications has surged dramatically, demonstrating the financial rewards of meeting unmet needs effectively in the pharmaceutical industry.