Popular diabetes and weight-loss drugs known as GLP-1s are helping to boost the biopharma sector's return on investment this year, according to a new report from consulting firm Deloitte.

Companies that are developing drug candidates that could compete with the two market leaders, Novo Nordisk (NVO) and Eli Lilly (LLY), and their blockbuster weight-loss and diabetes drugs are adding more value to research in the sector, said Deloitte.

The report shows the R&D returns for 2024 were 5.9%, up from 4.1% in 2023. Without GLP-1s, the returns for R&D would have dropped to 3.8% in 2024.

The value from R&D comes from products that are still in the pipeline but in late stages of development, according to Kevin Dondarski, life sciences R&D strategy leader at Deloitte.

Of the companies studied, about 20% of late-stage assets that rely on a new technology or platform currently account for 40% of the R&D value calculated in the 2024 trend, he said.

But repeating that success — addressing a disease with a novel approach that has such a large potential market size — is difficult.

"There still is a value proposition in not staying on the beaten path and exploring new opportunities. The market will continue to, at least it looks as if it will continue to, value new therapies and new ways of approaching disease," Dondarski said.

The report suggests that pharma companies should focus on finding areas of unmet need. The companies should also think more boldly about new technologies and platforms to invest in, which could result in a similar ROI as the GLP-1s, based on total cost rather than a similar large market size. In other words, what the industry is already pivoting to: more novel new therapies with high price tags.

Take, for example: Lenmeldy, a gene treatment for a rare inherited genetic disorder that affects the nervous system. Orchard Therapeutics received approval for the drug last year, and the list price of that drug is $4.25 million — making it the most expensive drug ever.

ROI isn't the only area in which GLP-1s are boosting the sector. Peak sales forecasts are also benefiting. Average peak sales projected per asset have increased to $510 million. But without GLP-1s, that average drops to $370 million.

"The remarkable growth trajectory of GLP-1s, particularly in the obesity market, underscores the substantial return potential of addressing unmet needs at a population health level. We mapped obesity against our 11 therapy areas and found that forecast revenue from obesity indications has increased by 1,296% from 2022 to 2023 and by a further 144 per cent from 2023 to 2024," the report said.

Anjalee Khemlani is the senior health reporter at Yahoo Finance, covering all things pharma, insurance, care services, digital health, PBMs, and health policy and politics. That includes GLP-1s, of course. Follow Anjalee on social media platforms X, LinkedIn, and Bluesky @AnjKhem.

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