Obesity Drug Industry: The Next Wave of GLP-1 Competition

Novo Nordisk and Eli Lilly are currently dominating the weight loss drug market. However, biopharmaceutical companies are creating obesity drugs that will soon hit the market—with 16 new drug candidates potentially launching in the next five years. These challengers are anticipated to account for roughly $70 billion of the total GLP-1 market, which is expected to be worth $200 billion by 2031.

By having a deeper knowledge of the market landscape, institutional investors can make better decisions. Our Morningstar researchers analyze obesity treatments, market concentration, obesity drug candidates, public and private market considerations, and more.

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These drugs act similarly to the hormone glucagon-like peptide 1 (GLP-1), which helps the body produce insulin and slows the movement of food. While initially approved for diabetes, GLP-1 drugs are gaining new indications—including the large opportunity in obesity following decades of failed attempts to create an effective and safe drug.

Novo Nordisk’s semaglutide (Ozempic and Rybelsus for diabetes and Wegovy for obesity) and Eli Lily’s tirzepatide (Mounjaro for diabetes and Zepbound for obesity) are the clear leaders in the GLP-1 class. However, several new drug launches in 2027 (Amgen, Altimmune), 2028 (Pfizer, Roche, Viking, and Structure), and 2029 (Roche, Viking, AstraZeneca, and Zealand) stand out to us as potentially competitive with Novo Nordisk and Eli Lilly.

Here are key trends to know about this growing industry.

We view Novo Nordisk and Eli Lilly as overvalued with the market likely projecting too much market penetration for obesity drugs or expecting obesity drug pricing to remain stable.

To support their current valuations, US GLP-1 market penetration into obesity would need to reach close to 75% with international obesity market penetration reaching close to 25%. And for the scenario to support the stocks as undervalued, Lilly and Novo would also have to retain close to 95% of the market by 2031, which seems highly unlikely given the increasing competitive pressures.

There are several ways that new firms can differentiate from incumbents Novo Nordisk and Eli Lilly. For example, efficacy (speed, duration, and quality of weight loss), gastrointestinal tolerability, injectable versus oral dosing, and availability of supply will all be key determinants.

Roche shows strong potential when it comes to efficacy—Viking and Amgen have also generated promising data. Among oral drug candidates, high-dose Rybelsus may be the first to launch. If Pfizer’s once-daily danuglipron can generate similar efficacy as the twice-daily program, it has a better chance at producing stronger efficacy than Novo’s injectable Wegovy. We also believe candidates such as Zealand bode well for leading tolerability.

The obesity treatment sector is experiencing a surge of innovative startups, each bringing unique approaches to tackle this global health crisis.

Metsera, backed by $290 million from Arch Venture Partners and Population Health Partners, is developing a portfolio of oral and injectable weight loss drugs targeting multiple gut hormones. Similarly, Hercules CM NewCo, a $400 million venture supported by Bain Capital, RTW Investments, and Atlas Venture, has licensed a portfolio of incretin drugs from Chinese pharmaceutical company Jiangsu Hengrui.

The obesity drug industry market is continuing to grow. When you’re informed on the latest trends, it can be easier to identify investment opportunities.

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