Understanding the GLP-1 Revolution: A Guide for Risk and Compliance Leaders

The healthcare industry is witnessing what many experts consider to be a once-in-a-generation breakthrough. GLP-1 receptor agonists, originally developed for the treatment of diabetes, have emerged as remarkably versatile medicines with implications that stretch far beyond their initial purpose.

Their market potential is staggering. Analysts project annual global sales of up to $140 billion for these drugs. To put this in perspective, that’s equivalent to the entire market for oncology drugs in 2020.

But this breakthrough, like any other, brings not only opportunities but also significant risks. This article discusses some of the emerging strategic, operational, and ethical challenges and uncertainties arising from the GLP-1 revolution, impacting companies developing or marketing these drugs, and those that are not.

The Science and Scope of GLP-1s

To understand why these drugs are generating such excitement, and the potential new risks they may introduce, we need to look at their mechanism of action.

GLP-1 drugs work by mimicking a naturally occurring hormone in our bodies called glucagon-like peptide-1. This hormone plays multiple roles: it helps regulate blood sugar, creates feelings of fullness, and influences how quickly food moves through our digestive system. What makes these drugs particularly remarkable is their ability to affect multiple systems in the body simultaneously, acting like what The Economist aptly called a “molecular Swiss Army knife.”

So far GLP-1s have demonstrated effectiveness in weight management (with average losses of 15-22% of body weight) and cardiovascular disease (reducing serious cardiac events by 20%). These drugs are also showing promising results to help with treatment for addiction, applications in managing Alzheimer’s disease, as well as in reducing inflammation throughout the body.

A New Healthcare Giant Emerges

The commercial success of these drugs has already been extraordinary. Consider how Novo Nordisk for example, one of the pharmaceutical companies leading this field, rapidly rose to become Europe’s most valuable company in 2023 and 2024 – surpassing the total market capitalisation of luxury goods conglomerate LVMH.

The ripple effects from GLP-1s extend far beyond the pharmaceutical sector, however.

United Airlines estimates it could save $80 million annually in fuel costs if the average passenger lost just 10 pounds through these medications! Meanwhile, Fundsmith, a London-based investment management company, recently dumped their stake in Diageo, a global leader in alcoholic beverages, citing concerns about GLP-1 drugs’ potential to reduce alcohol consumption.

The insurance industry faces a similar period of uncertainty and potential change. If GLP-1s effectively prevent or mitigate a wide range of diseases, as early evidence suggests, insurers might see a long-term reduction in the volume of claims related to conditions like heart disease, diabetes, and certain cancers. This could lead to a fundamental reassessment of risk and premium calculations.

Societal Change

The use of GLP-1 drugs also has the potential to reshape society more broadly, including in how we understand, view and manage our weight and health more generally.

The remarkable efficacy of these medications in promoting weight loss raises questions about the role of biology versus willpower in weight management, potentially reducing stigma and fostering greater empathy for individuals struggling with obesity. On the other hand, could the widespread availability of such effective weight-loss drugs lead to an oversimplification of the complex interplay of factors contributing to obesity? Might it diminish the perceived importance of lifestyle interventions like diet and exercise, even though they remain crucial for overall health and well-being?

It will be interesting to observe how these dynamics play out over time. And yet, while the longer-term societal impact is still unclear, the immediate risks for the pharmaceutical industry are becoming increasingly evident.

The Risks of Success

GLP-1s have dramatically altered the pharmaceutical industry in a short period of time, achieving remarkable early success. But this triumph comes with a sting in its tail. The very factors driving their success and excitement also create significant risks that, if not managed effectively, could have severe consequences.

Let’s explore three critical areas where new risks are emerging:

1. Portfolio Concentration: Victims of Their own Success? For companies marketing GLP-1 drugs, these medications contribute an increasingly substantial share of their total revenue and profit. This growing dependency on GLP-1s creates a high-stakes environment, with significant market sensitivity (perhaps even overreaction) to clinical trial outcomes, reported sales volumes, and regulatory shifts, such as pricing controls. A prime example of this sensitivity is Novo Nordisk’s recent experience. When their latest drug, CagriSema, showed slightly lower than expected weight loss results (22.7% of trialists’ body weight versus a targeted 25%), the company lost a staggering $125 billion in market value, representing 27% of their total value. Reuters characterized this as “one of the biggest one-day wipeouts on record for a European company.” While some volatility is inherent in this rapidly evolving market, companies heavily reliant on GLP-1s might adapt their approach to future R&D and M&A. Although it is tempting to continue ‘backing a winner’, it may be prudent to reinvest GLP-1 profits into other disease areas and products, restoring balance and diversifying the portfolio.
2. Operational Challenges: Supply Chain Continuity and Quality Control Accurately predicting market demand in the relatively novel and rapidly evolving GLP-1 market is challenging. While companies work hard to increase production capacity, meeting global demand will likely remain a major short-term risk, as will maintaining quality control. The high value and burgeoning demand for GLP-1 medications also make them attractive targets for counterfeiters and criminals, necessitating more secure and resilient supply chains. Companies are, for example, investing in more sophisticated track-and-trace systems, incorporating security features into packaging, and implementing robust monitoring to detect and respond to counterfeit products.
3. Navigating Ethical Dilemmas and Compliance Requirements: Pricing, Promotion and Regulatory Pitfalls The high cost of GLP-1s, (Ozempic currently costs $997 a month and Wegovy $1,349 a month in the U.S. at the time of writing), raises ethical concerns about their affordability and accessibility, potentially exacerbating existing health inequalities. If these drugs become the go-to solution for weight loss, will they only be accessible to the affluent, further widening the gap in health outcomes between the rich and the poor? In the medium-term, a robust pipeline of over 100 competing drugs in development suggests future price reductions will be inevitable through increased competition, and government scrutiny and interventions to curb healthcare spending will likely add further downward pressure on prices. The versatility of GLP-1 drugs also creates a risk of unethical promotion for unapproved, or “off-label” uses. The widespread public discussion surrounding these drugs, combined with the rise of influencer marketing and social media, where geographic boundaries are often blurred, further complicates the ability to control the flow of accurate and appropriate information to patients, especially in markets where Direct-to-Consumer (DTC) promotion is prohibited.

Conclusion

The GLP-1 revolution holds immense promise for improving public health, but its ultimate success will be judged not solely by sales figures or stock prices, but by its ability to provide meaningful and accessible benefits to those who need them most. The coming years will be critical in determining whether these drugs can live up to their potential while navigating the significant challenges inherent in any major medical breakthrough.

In this critical endeavor, risk and compliance leaders will be linchpins, helping ensure that the pharmaceutical industry embraces innovation responsibly and sustainably while also capitalising on this ‘once-in-a-generation’ breakthrough.