The anti-obesity drug market may prove smaller than expected

The market for anti-obesity drugs, particularly those using injectable versions of GLP 1-based drugs, is still new and continuously evolving. Revisiting its model for the market for such medication, Goldman Sachs Research forecasts the global market to reach $95 billion by 2030 — lower than its previous estimate of $130 billion. The new figure reflects trends influencing how these drugs are priced, how long patients stay on them, and how patient populations are segmented, says Asad Haider, head of the healthcare business unit within Goldman Sachs Research.

In the US, too, Haider and his team lowered their market projections to a peak of $70 billion, as against $95 billion previously. “But we also see room for greater penetration in markets outside the US,” Haider says. His team forecasts a market peak of $50 billion outside the US, compared to $35 billion previously.

We spoke to Haider about the reasons behind these forecasts, and what lies ahead for the anti-obesity medication market.

Could you describe the reasons for the flatter forecast for the anti-obesity medication market?

Broadly, our new forecast takes into account higher price erosion — which is to say, declining prices per unit of medication. But there are also other factors. Insurance companies may be more stringent in covering the costs of these drugs. The potential patient population may also be segmented across different weight-loss needs, rather than addressed with a “one-size-fits-all” approach that we incorporated into our previous projection. We also expect increasing consumerization — which essentially means people paying out of pocket for lower-priced versions of these drugs, particularly in markets outside the US as they grow. But to be clear, even with this moderated forecast, we see a significant growth opportunity for both existing players as well as new entrants into this market

You mention price erosion as one of the factors shaping your US forecast. How has this price erosion factor changed from your previous forecast?

In our prior model, we had a smaller degree of price erosion, which was partially offset by new therapies launching at premium pricing. This resulted in a 2025-2035 average yearly erosion rate of around 2%, which we now believe was too benign.

In our new model, we’ve taken a more aggressive stance with a normalized price erosion assumption of 7% annually. For our US market forecasts, pricing dynamics are the single biggest swing factor. To give you an idea of the sensitivity in the model, every 1% change in our year-over-year price erosion forecasts has a $6 billion impact on our US peak sales numbers. The recent direct-to-consumer/out-of-pocket strategies introduced by companies as lower cost options for their obesity medications, as well as more stringent payor/insurance coverage dynamics, could present some risk of even greater price erosion over the longer-term.

And similar to price in the US, what is the single biggest factor that influences the market outside the US?

Excluding China, we see over 300 million obese, non-diabetic patients in countries outside the US. Academic forecasting studies show that the prevalence of obesity is anticipated to increase for the next several decades in most nations around the world. The dynamic in countries outside the US differs from that in the US because they will likely be mostly out-of-pocket markets. Hence, the starting point for price ex-US is materially lower than in the US, by around 70% in our forecasts. To that end, penetration rates are the key swing factor. In our base case, we assume an 8% peak penetration rate outside the US.

Your new model is based, in part, on a survey of US physicians. Could you describe the survey, and what you learned from it?

To help inform some of the key inputs for our rebuilt obesity model, we conducted a proprietary survey of over 50 doctors in the US, with a broad geographical representation across 23 states, and the average doctor treating about 200 patients with obesity a month. The key conclusions included that lower doses of anti-obesity medications are working well for a majority of patients, and that insurance coverage is the most important factor in the decision-making process.

The market forecast is also affected by patient drop-outs, or the rate at which patients stop using the anti-obesity medications they have been prescribed. Your model expects one in every two patients to drop out in this fashion. In the US, what are the biggest reasons for patients discontinuing drugs that they have been prescribed?

According to the survey we conducted, cost and the loss of insurance coverage together represented the majority of discontinuations, accounting for 60-64%. Tolerability issues such as gastro-intestinal side effects were also cited as a common reason, accounting for around 15% of discontinuations.

Previously, you’d expected a 70% probability that Medicare would cover anti-obesity medications prescribed to its patients. Has that “Medicare unlock” probability changed recently, and if so, why, and how big a role does that play in your model?

A key pivot factor to access in the US is the Medicare population unlock. We previously used a 70% probability of Medicare being unlocked, given the strong cardiovascular outcomes data seen from GLP-1 obesity studies. However, the path is now more unclear with the change in administration as well as continued stringent payor dynamics with respect to insurance coverage for obesity medications. We now utilize even-odds reflecting a 50% assumption of a Medicare unlock.

How does your new model take into account the drugs being launched or in the pipeline, and how does that affect your forecast?

Our forecasts segment the market across a large but heterogenous patient population, where doctors will increasingly be looking to prescribe medications tailored to the patient's individual situation based on a multitude of factors. This fragmentation allows for participation from both the current incumbents as well as next-generation agents that are not yet on the market. As one example, we see oral GLP-1 tablets for obesity representing one of the most significant new product cycles across our entire biopharma coverage. While these pills are not yet approved, the data seen so far from ongoing clinical trials has been very encouraging. We forecast that daily oral pills will capture some 25% share of the anti-obesity medication market by the end of the decade.

What factors will determine the near future of the anti-obesity medication market’s growth trajectory?

One dynamic that we and investors will be closely monitoring is the potential tailwind to branded GLP-1 drugs for obesity when compounded versions can no longer be sold in the US, as of May 22, 2025. There are estimated to be at least 1 million patients currently on compounded GLP-1s in the US. We expect that a large number of these patients could switch to branded versions, helping the near-term growth trajectory for the current incumbents.

 

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