GLP-1 Weight Loss Drugs: Overhyped or a Gamechanger?

Ozempic, Wegovy, Mountjaro, Zepbound: while not exactly household names like Band-Aid and Kleenex, you likely have heard or read about the exploding popularity of this class of drugs.  We will explore their origins, uses and effectiveness, along with their challenges and potential future.

Nearly 20 years ago, Amylin Pharmaceuticals’ (in partnership with Eli Lilly) drug exenatide, marketed as Byetta, was approved by the FDA for the treatment of Type 2 diabetes.  It was the first drug classified as a member of the GLP-1 agonist category, named after a naturally occurring gut hormone that the drug mimicked: glucagon-like peptide 1. By then, studies of this particular hormone had been ongoing for decades around the world. Scientists discovered that individuals with Type 2 diabetes had lower levels of GLP-1 hormones, and the drug helped them to better manage their blood sugar levels by stimulating the pancreas to release more insulin.

Incidentally, many of these patients lost a modest amount of weight. Biopharmaceutical companies initially were reluctant to jump on the weight-loss bandwagon, burnt by safety troubles with previous weight loss drugs such as fen-phen. However, Danish company Novo-Nordisk broke the ice with the late 2017 approval of its injectable diabetes drug Ozempic. As news spread of its remarkable weight loss side effect, a higher-dose version of the same drug was approved in the spring of 2021 for obesity, marketed as Wegovy.  A little over two years later, US drugmaker Eli Lilly received FDA approval for its dual receptor (mimicking both GLP-1 and GIP hormones) candidate for diabetes, marketed as Mountjaro, and late last year, Lilly’s obesity version of Mountjaro, marketed as Zepbound, was approved.

While researchers are not exactly sure how these drugs work, they do know that they influence the communication between the brain and the gut, promoting feelings of satiety and reducing appetite. I recently listened to an interview on NPR with a patient taking Wegovy. She exclaimed that after decades of struggling with her appetite and obesity, she finally felt that she had control, that she could successfully stop eating when she wanted to, that it was truly a “gamechanger” in her life.

How effective are these drugs? What are the side effects/risks?

Recent studies have demonstrated that up to 60% of participants lose 20% of their body weight, a remarkable achievement as compared to previous weight loss drugs. More importantly, these drugs appear effective at reducing or delaying health conditions associated or exacerbated by obesity. For example, a recent study (17,000 participants) of people with obesity and existing cardiovascular disease showed a significant 20% reduction in major cardiovascular events. Signs of improvement in these health metrics were observed prior to weight loss, interestingly.

Additional trials are in progress for many other conditions, and results are expected to further the case for GLP-1 treatments. Trials are underway to study the drugs’ effects on stroke, diabetes and prediabetes, heart failure, kidney disease, various liver diseases including NASH, Alzheimer’s disease, Parkinson’s disease, sleep apnea, osteoarthritis, hypertension, and others. Intriguingly, there could be some success in treating addictions, such as tobacco and alcohol, and trials are underway to further explore this potential.

Thus far, the side effects have largely been manageable, mostly involving gastrointestinal complaints like nausea, vomiting and constipation that many users claim diminishes over time. Additional side effects like muscle and bone density loss may need to be addressed or monitored. There are rare incidences of pancreatitis that can be more serious. In addition, there was a concern raised in Europe that increased suicidal thoughts could occur. A recent large-scale US trial report suggests that suicidal thoughts were actually lower in GLP-1 patients than for those on other diabetes or weight loss medications.

What about the costs and challenges?

At roughly $1,000/week, these drugs are not cheap. With negotiated discounts, the cost could drop by 50% and perhaps by another third by 2030. Private insurance currently covers 30-40% of patients with obesity alone (diabetes is covered nearly 100% now) and many expect coverage to expand to 60-80% in the next few years as more successful trial data are released. However, a large hurdle exists as Medicare puts weight loss drugs in the same class as hair loss and erectile dysfunction. There is a bill that has been languishing in Congress to change this but there appears to be no momentum to pass it at the present. The Congressional Budget Office is awaiting more data for “scoring” but for now, it would be a significant new expense. For Medicaid, states can “opt in” coverage and five states have done so to date. So cost and coverage remain key challenges but should diminish in the future.

What are the opportunities?

The Centers for Disease Control and Prevention (CDC) reports that the prevalence of obesity in the US alone was 41.9% in 2017 – March 2020. The National Institute of Health forecasts that by 2030, nearly half of U.S. adults will be obese, including nearly 1 in 4 who will have severe obesity. The obesity rate will surpass 50% in 29 states. Globally, a similar trajectory can be observed, with 39% of the global population currently classified as obese. The World Obesity Foundation, a partner of the World Health Organization, predicts that over half the world’s population will be either overweight or obese by 2035, while the economic impact of a high BMI could reach $4.32 trillion annually if current trends continue and policy inertia around the disease remains in place. Clearly, something needs to slow or stop this ticking time bomb.

A recent JP Morgan research report stated that over one-hundred agents were in development to treat diabetes and obesity. Novo-Nordisk and Eli Lilly are the clear market leaders but others are getting involved, from small, private biotechnology initiatives to large, diversified biopharmaceutical companies like Roche, Merck and Pfizer. To date, the most effective administration of treatment has been via an injectable, with the best combination of effectiveness and reduced side effects, as oral versions require a higher dose with potentially less tolerable side effects. However, the company who first overcomes this challenge (injectable to oral) will be amply rewarded. With the addition of an effective oral version, some prognosticators expect GLP-1 drug class revenues to reach or exceed 100 billion dollars annually by the early 2030’s, even if the patient penetration of the obese population remains in the single digits of the eligible group. Given the troubling global trends, expecting that robust competition will reduce costs over time, the emergence of GLP-1 agonist drugs is not an overhyped “flash-in-the-pan”, but instead is a gamechanger with the potential to improve health and healthy longevity worldwide.

The next segment of this exploration of GLP-1 drugs will focus on the latest developments, including recent research trials and approvals, along with an examination of the competitive landscape, focusing on companies like Novartis, Eli Lilly and some of the smaller challengers such as Viking Therapeutics. Last, the article will identify how investors can benefit from the rise of these drugs.

In the meantime, should you have questions or are interested in how to best position your investment portfolio to take advantage of these groundbreaking treatments, please reach out to any of us at Baldwin.

Baldwin Management LLC. (“Baldwin”) is a registered investment adviser that does not suggest a certain level of skill or training. The views and opinions expressed in this newsletter are those of Baldwin professionals and may change at any time without prior notification. There is no guarantee that the objectives of any investment program will be achieved. Any strategies or securities discussed is not a recommendation to invest in such strategies or to purchase or sell securities.   Investing involves the risk of partial or total loss that investors should be prepared to bear. Past performance is not a guarantee of future results..  The value of investments may be worth more or less than their original cost when sold.   Baldwin obtains information from third-party vendors believed to be reliable; however, the accuracy of such information is not guaranteed.  For additional information regarding Baldwin’s business practices, registration status and important disclosures, please click on the following link and type our name in the space provided IAPD – Investment Adviser Public Disclosure – Homepage ( 

Susan Berry-Gorelli
serves as the Chief Executive Officer of Baldwin Management LLC, and also is the Director of Research and a Portfolio Manager of Baldwin Investment Management. She has over 30 years of individual and institutional investment and risk management experience in the financial services industry. Susan attended The College of William and Mary and the University of Delaware, earning a B.A. in Economics and History, Summa Cum Laude and Phi Beta Kappa. She is the Board Vice President of the Colonial Theatre in Phoenixville, as well as serves on the finance committees of the French and Pickering Conservation Trust and the Whitemarsh Boat Club.