JPMorgan recently raised its projections for weight loss drugs, expecting the drug category known as GLP-1 agonists to bring over $100B in annual sales by 2030 in a duopoly controlled by Novo Nordisk (NVO) (OTCPK:NONOF) and Eli Lilly (NYSE:LLY).
In a research note last week, JPMorgan analyst Chris Schott said that he did not rule out further sales upside for GLP-1s in obesity and diabetes, where the uptake of the drug class is fast rising amid social media hype.
JPMorgan’s revised estimate follows LLY’s better-than-expected Q2 sales for its dual GIP/GLP-1 agonist, Mounjaro. It also comes after Novo (NVO) announced topline data from its Phase 3 SELECT trial in August, demonstrating that its GLP-1 agonist semaglutide brought cardiovascular benefits in obesity.
In 2021, Novo (NVO) launched semaglutide as Wegovy for weight loss after marketing a lower-dose version of the drug, as Ozempic for type 2 diabetes. The drugs targeted at a gut hormone called incretin helped the Danish drugmaker become the most valuable European company this month.
“From a market share perspective, we see the incretin market largely remaining a duopoly between LLY and Novo,” Schott wrote.
However, rising popularity and Mounjaro’s off-label use for weight loss have pressured supplies and led to copycat versions, with a month’s supply of semaglutide costing as much as $1.5K.
JPMorgan expects GLP-1 prices to decline over time amid improvements in supply and access. The firm projects GLP-1 pricing to reach $325–$350 per treatment, implying a $4K annual cost by the end of the decade.
In July, JPMorgan ruled out a “winner-takes-all competition” in the obesity drug market, where potential new entrants could include Pfizer (PFE) and Amgen (AMGN), which are also advancing GLP-1 candidates.
With Eli Lilly (LLY) expected to receive FDA approval this year to market Mounjaro for weight loss, the stock remains one of JPMorgan’s favorites among GLP-1 developers with an Overweight rating and a $600 per share target.
“We see meaningful upside to Street estimates for Mounjaro and LLY’s broader incretin portfolio over time as well as a favorable setup on the stock heading into a number of important catalysts in 2023 and early 2024,” Schott wrote.
A potential FDA approval of the company’s Alzheimer’s therapy donanemab and full data from Novo’s (NVO) SELECT trial are among some of the events that could drive LLY’s shares higher, the analyst pointed out.
JPMorgan stands ahead of the consensus on LLY’s GLP-1 prospects, expecting the drug class to bring ~$50B in sales in 2030 for the company, up from ~$8B, ~$23B, and ~$34B in 2022, 2025, and 2027, respectively.
Its 2030 forecast is underpinned by high obesity rates in the U.S. (35%–40% prevalence among adults) and improving reimbursements over time, including potential Medicare coverage for obesity drugs by the end of the decade.
JPMorgan also highlights LLY’s next-gen weight loss drugs, notably the oral GLP-1 agonist Orforglipron, which caused up to ~15% weight loss after 36 weeks of therapy in a Phase 2 trial.