With interest in anti-obesity medications growing significantly, the head of our European Pharmaceuticals Team examines just how large that market could become.

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Welcome to Thoughts on the Market. I’m Mark Purcell, head of Morgan Stanley’s European Pharmaceuticals Team. Along with my colleagues bringing you a variety of perspectives, today I’ll talk about the enormous ripple effects of anti-obesity drugs across the global economy. 

It’s Thursday, April the 25th, and it’s 2pm in London. 

Obesity is one of the biggest health challenges of our time. More than a billion people are living with obesity worldwide today, with 54 per cent of adults expected to be either overweight or obese by 2035. Growing rates of obesity worldwide combined with rising longevity are putting a heavy burden on healthcare systems.

Our Global Pharma team has covered obesity extensively over the last 18 months. When we wrote our original report in the summer of 2022, the whole debate centered on establishing the patient-physician engagement. The historic precedent we looked at was the hypertension market in the 1980s when high blood pressure was considered a disease caused by stress rather than a chronic illness. And obesity was seen as the result of genetics or a lack of willpower.

But through the influence of social media and an increasingly weight-centric approach to treating diabetes, demand for anti-obesity medications skyrocketed. Back in July 2022, we saw obesity as a $55 billion market. And at that point the key question was if and when these drugs would be reimbursed. 

If you fast-forward to July 2023, what we saw was reimbursement kicking in the U.S. much more quickly than we anticipated. There were almost 40 million people who had access to these medicines, and 80 percent of them were paying less than $25 out of pocket. 

By the end of 2023 we had the first landmark obesity trial called SELECT, and that finally established that weight management saves lives in individuals not living with diabetes. These SELECT data supported the cardiac protection GLP-1 medicines have already established for individuals living with diabetes. We expect weight management with anti-obesity medicines will improve the outlook for more than 200 chronic diseases, or so-called co-morbidities, including heart failure and kidney disease, as well as complications like sleep apnea, osteoarthritis, and even potentially Alzheimer's disease.

Now the debate is no longer about demand for these medicines, but it’s about supply. The major pharma companies in the space are investing almost $60 billion of capital expenditure in order to establish a supply chain that can satisfy this vast demand. 

And beyond supply, the other side of the current debate is the ripple effects from anti-obesity drugs. How will they impact the broader healthcare sector, consumer goods, food, apparel? And how do lower obesity rates impact life expectancy? 

So, with all this in mind, our base case, we estimate the global obesity market will now reach $105 billion in 2030. Right now, supply is being primarily diverted to the U.S., but in the long term we think that the market opportunity will become bigger outside the US. 

Furthermore, the size of the obesity market will be determined by co-morbidities and improved supply. So, if all these factors play out, our bull scenario is a $144 billion total addressable market. However, if supply constraints continue, then we can see a market more restricted to $55 billion as of 2030. So, things are developing fast, and we will continue to keep you updated. 

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