By Mackenzie Tatananni
The recent fixation on weight-loss drugs, a catchall term referring to GLP-1 medications like Wegovy and Zepbound, has brought Eli Lilly and Novo Nordisk squarely into the limelight. But the race to conquer the "diabesity" market is just beginning.
GLP-1 adoption among the eligible obesity population reached 6% in the U.S. by the end of 2025. That's up from 3% at the start of the year, but relatively low compared with adoption among patients with Type 2 diabetes, which came in at around 26% last year.
The combined market for both indications -- chronic weight management and diabetes -- is projected to be enormous. Morgan Stanley forecasts a "diabesity" total addressable market in the neighborhood of $190 billion in 2035. That's up from earlier calls for $150 billion.
Remaining overhangs on branded GLP-1 uptake, namely injectable supply and pricing dynamics, "were largely resolved last year," analysts wrote in a lengthy research note on Tuesday.
The Food and Drug Administration declared an end to the shortage in 2025 and ordered compounding pharmacies to wind down production of drugs that were "essentially a copy" of FDA-approved products (though some telehealth providers like Hims & Hers Health found a way around the rule).
But there are other growth catalysts on the horizon, namely the expansion of Medicare access in the U.S. and the launch of oral GLP-1 therapies. Taken together, these factors "have the potential to meaningfully broaden adoption," analysts wrote.
Both Lilly and Novo struck agreements with the Trump administration last November to expand patient access to GLP-1 drugs, leading to what Morgan Stanley describes as an "opening of the U.S. Medicare obesity channel."
Medicare and Medicaid generally don't cover the medications for weight loss due to their cost. However, the Centers for Medicare and Medicaid Services last month detailed a pilot program aiming, in part, to increase access to certain GLP-1 medications.
Under the model, CMS will negotiate drug pricing and coverage terms with manufacturers on behalf of state Medicaid agencies and Medicare Part D plans. Medicare Part D beneficiaries who meet certain requirements can participate in a so-called bridge to the model starting in July.
Already, the patient cost burden for GLP-1s appears to be easing. Roughly 60% of respondents to a recent Morgan Stanley survey reported full coverage, up from 53% last year, with average monthly out-of-pocket costs falling to $119 from $172 in 2025 and $196 the year prior.
The firm's analysis indicates GLP-1 insurance coverage for diabetes is expected to remain stable at around 70% in 2026, and increase modestly to 75% by 2027. Meanwhile, obesity coverage is set to expand rapidly, from 48% in 2025 to around 65% by 2027.
Questions remain around the uptake of new oral GLP-1 drugs, which are set to encompass around a quarter of the total GLP-1 market by 2030. Lilly's franchise should capture the lion's share of that amount, at 61%.
For the time being, patients have better awareness of Novo's oral Wegovy than Foundayo, survey responses indicate. However, analysts noted that Lilly's rival treatment only recently received regulatory clearance, as opposed to oral Wegovy, which has been on the market since January.
Moreover, Lilly's tirzepatide, the active ingredient in its Mounjaro and Zepbound injectables, "has a superior profile" to Novo's Ozempic and Wegovy, analysts asserted.
While claims of this nature are open to debate, tirzepatide generally has been shown to be more effective at promoting weight loss. This advantage likely stems from its dual-agonist mechanism, targeting both GIP and GLP-1 receptors, whereas semaglutide targets only the latter.
While Morgan Stanley is broadly constructive on the development of obesity medications, the haves and have-nots in the industry are beginning to emerge. Lilly, in the firm's view, is one of the clear winners, alongside smaller players Viking Therapeutics and Structure Therapeutics, which are at work developing their own weight-loss drug candidates.
The firm remains sidelined on Novo Nordisk, whose U.S.-listed shares have been beaten down considerably this year. Amgen and Pfizer, similarly, give analysts pause. Amgen is at work developing a once-monthly GLP-1 shot, while Pfizer has pivoted to acquiring other drugmakers to secure next-generation treatments.
Write to Mackenzie Tatananni at mackenzie.tatananni@barrons.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
April 07, 2026 17:47 ET (21:47 GMT)
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