The Future of GLP-1 Investment: Q&A with Cheryl Reicin

Cheryl Reicin
International chair, life sciences
Mintz

It’s arguable that one of the most pharma successful stories from the past few years is the rise and adoption of GLP-1 medications, especially for use with weight-loss. However, as the years continue to pass, more companies are entering the space and competition is getting tighter. Cheryl Reicin spoke with Pharmaceutical Executive about the market and how drug makers and investors are looking to the future.

Pharmaceutical Executive: How is the GLP-1 boom impacting deal flow, valuations, and partnership terms?

Cheryl Reicin: Lily and Novo Nordisk are flush with cash and have been racing to have many shots on goal for the next generation of GLP-1 drugs. While the GLP-1 drugs initially propelled both of these companies into the number 1 and number 2 market cap position of big pharmas, both companies were well aware that one trick ponies don’t last forever in this industry and have been investing not only in the next generation of the GLP 1 drugs but in other therapeutic areas also. These developments also coincide with the patent cliff , where many blockbuster drugs will be coming off patents soon, creating the impetus behind other big pharmas seeking new therapeutic opportunities, the cash situation for Lily and Novo and the patent cliff concerns has caused big pharma to be competitive and generous with valuations but this has been tempered because the real competition to partnership, licensing and M&A for bio pharma companies are traditionally capital provided by venture capitalists and other private investors and the public markets. These sources of funding have been particularly difficult to access post COVID pandemic.

While early-stage companies are starved for cash and big pharma are starved for new product, options-to-buy have come back into vogue. This allows big pharmas to cast a wide net for potential drugs while keeping the research and development (R&D) budgets off the balance sheet. While option agreements provide needed capital and can be non-dilutive to small companies, generally if the clinical results are successful and the option to buy is exercised, the pre-determined acquisition prices will be lower than it would have been if the company had funded the R&D with capital from third party investors.

This subsector of the industry is dynamic and changes rapidly and will continue to do so. The recent announcements have focused on Lily’s new oral GLP-1 and other companies are also gunning for the best oral applications. At the same time, Novo Nordisk has announced massive layoffs, and its market value is down $490 B since its peak in 2024 while still reaping in enormous revenue.

PE: What role are cross-border transactions and foreign investments playing in capturing market opportunities?
Reicin: R&D is a cross border global game—great innovation and science wherever it is conducted is valuable. When it comes to production and supply, demand for GLP-1s materially outpaces supply, and cross-border transactions and foreign investments play a critical role in scaling production and expanding market access. Novo Holdings’ acquisition of CDMO Catalent to boost production of Ozempic and Wegovy, as well as AstraZeneca’s $50 billion investment in a new US manufacturing facility, are examples. Global and cross border deals with big pharma or regional players allow smaller companies access to market faster. Also, there is a race to access Chinese innovation which is quicker and cheaper than innovation in North American and elsewhere. The political, tariff, intellectual property protection vulnerability and other concerns that accompany partnering with China allows for an interesting and uncertain future but with that comes opportunity for those willing to take calculated risks. They also keep lawyers busy!

PE: How can smaller companies differentiate themselves in the GLP-1 market?
Reicin: While Lily, Novo Nordisk, Astra Zeneca and others are conducting internal research for the next gen GLP-1s, they are in a war to be and remain at the cutting edge of this drug class. Smaller companies with innovative improvements such as those that provide oral delivery, lower dosing frequencies, broader metabolic benefits, new indications, lesser muscle loss, improved gastrointestinal tolerability and other lessor side effects and /or lower cost alternatives are most attractive, and several are garnering significant valuation premiums. Also, innovations for targeted subsectors of the current market are desirable as a way of increasing market access. Unique models for self-pay may become more important as side effects diminish and the drugs become more of lifestyle aid.

PE: What are the key deal considerations for GLP-1 companies?
Reicin: The big pharma companies are entering into deals with multiple companies to address the same or similar problems. A big risk for a small company that is granting exclusivity to a big pharma is that exclusivity is likely not to be reciprocal––especially in the fast-evolving GLP-1 market. Smaller companies must focus on monetary compensation or claw back rights if a big pharma is no longer prioritizing its technology. Negotiating the right incentives and protections can be critical.

Also, as the GLP-1 boom continues to accelerate, dealmakers are navigating a complex set of considerations that go beyond clinical promise. Supply chain vulnerabilities are front and center: GLP-1 manufacturing is intricate, with many therapies relying on materials from many different and sometimes less stable regions. As a result, thorough supply chain due diligence is crucial in deals for GLP-1 companies.

Regulatory hurdles are another key factor. Strict aseptic manufacturing requirements for injection-based GLP-1s come with steep production costs. Dealmakers must also anticipate potential increased regulation that could further impact margins. Skyrocketing valuations for developers of early-stage GLP-1s without strong clinical backing also raise concerns about overpayment.

Competition in the GLP-1 market is intensifying as well. Biosimilars for first-generation GLP-1s like semaglutide are expected in Canada and Brazil by 2026. Compounding pharmacies also add pressure, making lifecycle management a critical deal consideration. Limited insurance coverage for GLP-1s and the resulting prevalence of self-pay channels in this market mean that dealmakers targeting GLP-1 companies must take into account their pricing strategies, distribution channels, and cost efficiency. Deals covering international markets also face unique challenges, including slower regulatory approvals and the absence of e-prescription infrastructure, which can complicate commercialization strategies.