The Implications of GLP-1s Replacing Oncology as the Key Value Driver

A recent report shows that US prescription drug spending is expected to surpass $1 trillion this year. This increase in spending is largely attributed to the increasing popularity of GLP-1 prescriptions.

The report details that prominent GLP-1s, such as Tirzepatide and semaglutide, are hitting about $60 billion in spending. This number more than doubles the spending on the third highest drug, apixaban.

Pharmaceutical Executive recently spoke with Kevin Dondarski, a partner at Deloitte Consulting, life sciences strategy practice. He recently participated in the company’s annual report “Measuring the Return on Pharmaceutical Innovation.” According to the report, GLP-1s account for a significant percentage of projected commercial inflows.

This is occurring at a time when the industry appears to be consolidating around drugs that Deloitte describes as “mega blockbusters,” with less than 10% of these drugs expected to generate about 70% of sales.

Pharmaceutical Executive: What are the implications of GLP-1s replacing oncology as the key value driver?
Kevin Dundarski: Since we started publishing the report in 2010, there's been a continuous shift towards more specialty therapeutics, nuanced patient populations, and rare diseases, and that's really been an industry wide trend. And this is almost a moving in the other direction.

I think it means a few things. Number one, first and foremost, there's a tremendous amount of value associated with the assets in this class. And it's important to remember that more than anything, the market generally rewards patient impact. So, it's easy to think about it as one versus the other. But to me, the first point to take away is just that it's a tremendous job and a tremendous opportunity to continue to deliver more targeted therapies towards a large area of unmet medical need.

That's a win for the industry. It's a win for patients.

Point two is that it introduces some challenging dynamics at various organizations. All companies have a core set of therapeutic or disease areas where they focus. For organizations who have had a long history in a cardio metabolic space, there's a natural opportunity.

But for those who haven't had an active footprint in those areas, it precipitates an important strategic decision. Do we stay the course and continue to focus on the areas where we feel like we have unique knowledge, either on the disease area, biology, the chemistry, the clinical development, whatever it may be across the value chain, or do we pivot because we feel like there's such a large market opportunity that we need to change our strategy?

The most important thing is how, from an organizational standpoint, are you adhering to what you had laid out before, or are you making a shift or a pivot?