The biopharma sector has been hotly watched amongst traders over the previous two years amid a lift to the business by the rising recognition of the glucagon-like peptide-1 (GLP-1) medicine utilized in weight reduction therapies. Looking forward into 2025, nonetheless, UBS foresees that the sector “will discover it troublesome to outperform towards a extra unsure macro backdrop,” within the short-to medium-term. This is as a result of present decrease rate of interest surroundings and U.S. President-elect Donald Trump’s collection of vaccine skeptic Robert F. Kennedy Jr. to guide the Department of Health & Human Services, the Swiss funding financial institution’s analysts detailed in a Dec. 18 observe. “Within Biopharma the GLP theme will proceed to dominate, although from the macro facet, how RFK’s potential management will impression the GLP-1 business is unsure,” they wrote. Kennedy “has publicly criticized proposals to permit authorities well being plans to pay for GLP-1 medicine as a consequence of monetary issues,” the analysts famous. Even so, they anticipate the market will develop and estimate that the market is presently pricing in a “sustainable peak” in GLP-1 gross sales ranging between $90 billion to $110 billion. “Given the addressable market measurement, the vary of potential outcomes is extensive with potential for the Eli Lilly and Novo Nordisk franchises to develop past 2031 with profitable pipeline read-outs,” they added. Market leaders Eli Lilly and Novo Nordisk have been market leaders within the GLP-1 medicine sector. Shares in Eli Lilly are up round 34.4% because the begin of the yr, whereas its Danish rival Novo Nordisk has seen a lack of round 16% within the year-to-date. UBS’ analysts proceed to anticipate a “duopoly” between the 2 companies with gross sales rising as extra capability comes on-line in 2025. “While we acknowledge there’s potential competitors getting into in c.2028, we see restricted penetration,” they added in a Dec. 18 observe. Both Eli Lilly and Novo Nordisk supply injectable weight-loss medicine and are within the technique of introducing tablets to help weight administration. The launch of oral medicine will show to be “one other inflection level” for the sector, UBS’ analysts stated, noting that it’s a extra handy method of consuming the drug. Acknowledging that the duo face competitors from different pharmaceutical corporations like Amgen and Roche , that are additionally dabbling in weight-loss medicine, the analysts stated they see “restricted penetration given the entrenchment of Lilly and Novo.” According to FactSet, of the 31 analysts masking Eli Lilly, 24 have a purchase or obese ranking on the inventory at a mean goal worth of $1,008.45 – giving it round 28.8% upside potential. Meanwhile, of the 31 analysts masking the inventory Novo Nordisk, 21 have a purchase or obese ranking with a mean worth goal of 922.62 Danish krone ($129), or 48.1% upside, based on FactSet. — CNBC’s Michael Bloom contributed to this report.
