Goldman Sachs analysts identified a substantial opportunity in the manufacturing sector for new obesity therapeutics, as demand for these treatments escalates.
Goldman Sachs projects the global obesity market to potentially reach $100 billion by 2030, with a more optimistic outlook suggesting it could expand up to $400 billion.
Currently, dominant market players like Novo Nordisk A/S NVO and Eli Lilly And Company LLY conduct much of their production in-house but are expected to increasingly outsource this business unit to meet the burgeoning demand for weigh-loss medications.
“We estimate the long term potential market size for GLP-1 manufacturing is ~$10bn and the role of outsourcing will likely increase with volumes.”
Despite the current dominance of Eli Lilly and Novo Nordisk in the obesity treatment market, Goldman Sachs believes “increasing volumes along with new entrants into the space will lead to about 50% outsourcing and a about $5bn opportunity for outsourced providers in 2030.” Both companies have announced capacity expansions to meet growing demand.
According to Goldman Sachs, Eli Lilly’s tirzepatide, approved as Mounjaro for type 2 diabetes and Zepbound for chronic weight management, is forecasted to achieve around $55 billion in sales by 2030, potentially becoming one of the best-selling pharmaceuticals ever.
7 Biotech Stock Benefiting From Obesity Drugs’ Outsourcing Opportunity
- Avantor Inc. AVTR: Avantor is poised to benefit from the surge in demand, especially for oral tablet active pharmaceutical ingredients (APIs), as Goldman Sachs anticipates 45% of GLP-1 drugs will be orally administered by 2030. The focus will shift towards API synthesis (upstream) over fill and finish services (downstream).
- Thermo Fisher Inc. TMO: Thermo Fisher, already involved in fill and finish services for Novo Nordisk, is expected to see growth in its contract development and manufacturing organization (CDMO) business due to increasing GLP-1 production demands.
- Water Corp. WAT and Agilent Technologies Inc. A: Both companies could gain from the need for more high-performance liquid chromatography (HPLC) instruments and columns as production scales up.
- Danaher Corp. DHR: Danaher is noted to benefit from the entire production chain for biologically produced GLP-1 drugs, which require more upstream solutions like cell lines and culture media.
- Wuxi AppTec Co. Ltd WUXIF: As of August 2023, Wuxi AppTec was a key CDMO for 11 GLP-1 drugs, including clinical and commercial-stage projects, indicating a strong position in the market.
- Asymchem Laboratories: Specializing in small molecule drug manufacturing, Asymchem is actively engaged in developing leading oral GLP-1 programs, positioning it well in the growing market.
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