GLP-1 Drugs Propel Pharma R&D Returns to 7%, but Concentration Risks Loom
Event summary
- Projected IRR for late-stage biopharma pipelines rose to 7% in 2025, up from 5.9% in 2024, driven by GLP-1 assets.
- GLP-1 assets now account for 38% of projected commercial inflows, with obesity overtaking oncology as the largest contributor to late-stage pipeline value.
- Average forecast peak sales per asset increased to $598 million in 2025, up from $510 million in 2024.
- 54 blockbuster assets (9% of the late-stage cohort) are projected to generate 70% of total risk-adjusted peak sales.
- Average cost to develop a drug increased to $2,671 million in 2025 from $2,229 million in 2024.
The big picture
The pharmaceutical industry is experiencing a shift in R&D focus, with GLP-1 assets driving significant gains in projected returns. However, this concentration poses risks, including competitive intensity and manufacturing supply constraints. The shift towards large-molecule modalities and novel mechanisms of action also highlights the industry's evolving innovation landscape.
What we're watching
- Therapeutic Concentration
- How the dominance of GLP-1 assets will affect portfolio resilience against therapeutic-area-specific shocks.
- Cost Pressures
- Whether the rising development costs can be offset by the commercial success of GLP-1 assets.
- Innovation Sourcing
- The pace at which externally sourced assets will continue to contribute to pipeline value.
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