Deal opportunities in growing GLP-1 drug market

GLP-1s are medications that treat type-2 diabetes by lowering blood sugar levels and promoting weight loss. These drugs have displaced COVID-19 mRNA vaccine capabilities as the superstar of the pharmaceutical industry. Investors and analysts believe the market potential of these drugs is significant, with analyst forecasts varying but several estimating potential sales of US$100bn or higher. The anticipated large and sustainable demand for these drugs across the population has resulted in both revenue increases and stock price gains for companies such as Novo Nordisk and Eli Lilly, which already have GLP-1s on the market.

Companies across the value chain are expected to compete to position themselves in this fast-growing market, with a premium to be paid for innovation. GLP-1s are most often injectable medications; hence, those biotech companies which can demonstrate delivery of these drugs via an oral method of action are likely to be highly sought-after M&A targets in###-###-#### We have already seen examples of large-cap pharma companies investing in the development of oral GLP-1s, as illustrated by Roche’s proposed acquisition of Carmot Therapeutics and AstraZeneca’s exclusive license agreement with Eccogene.

The efficacy and projected widespread demand for GLP-1s has also prompted investor concerns around reduced demand for products and services focused on treating diabetes, sleep apnea, cardiovascular disease and other conditions. Medical technology (medtech) companies with exposure to GLP-1s and their tangential impacts have seen their stock prices negatively impacted in recent months. This creates potential for M&A as medtech companies disrupted by these new drugs seek to reposition themselves.