The GLP-1 Effect

In a video interview with Pharma Commerce, Kevin Dondarski, Deloitte’s life sciences R&D strategy leader, describes how his company’s 15th annual Deloitte report on the return on investment (ROI) in pharmaceutical R&D reveals a continued upward trend, with a projected ROI of 5.9% for 2024. This marks a notable reversal from the consistent decline seen throughout much of the 2010s. During that period, ROI dropped largely due to a more challenging commercial environment, which reduced the projected value of drug pipelines. This was influenced by both business dynamics and a shift toward developing treatments for more specific, nuanced patient populations, often with smaller market sizes.

However, the past two years have shown a positive turnaround, with year-over-year increases in projected ROI. Two key drivers are behind this recent momentum. First, the overall projected value of late-stage drug pipelines has grown, especially when adjusted for risk, signaling stronger confidence in the commercial viability and clinical success of these therapies.

Second, a small number of exceptionally high-value drug programs have had an outsized impact. Among these, treatments in the GLP-1/obesity space stand out, significantly boosting the total value of the late-stage pipeline. These high-potential programs are reshaping expectations and driving much of the improvement in projected R&D returns.

The renewed optimism in pharma R&D ROI is largely attributed to an increase in risk-adjusted value across the pipeline and the emergence of breakthrough therapies in lucrative areas such as obesity treatment, highlighting a shift toward more valuable and promising innovation.

Dondarski also comments on the strategies companies can adopt to manage or mitigate escalating drug development costs; current best practices for balancing long-term pipeline sustainability with short-term financial returns; how GLP-1’s success influence future investment strategies in high unmet-need areas; how AI and automation realistically reduce clinical development timelines; and much more.

A transcript of his conversation with PC can be found below.

PC: How do you see GLP-1 therapies’ success influencing future investment strategies in high unmet need areas, and which other disease areas do you believe have the greatest potential to replicate the commercial and clinical success seen with those therapies?

Dondarski: It's a good question, and it's a difficult question, because I'd argue it's a broader trend, at least since we've been writing the report. It’s the proverbial low-hanging fruit, as far as drug targets having been met. I think there's been such a strong emphasis across companies on really trying to drive their focus to unmet medical need, and that's why we've seen such a growth in oncology over the years. I think that doesn't necessarily indicate that there aren't other areas on medical need.

I think what makes the GLP-1 phenomenon so unique is that it's a throwback to the intersection of unmet medical need and large patient populations, The “so what” of this is difficult to summarize because the reality is, there's so much uncertainty with respect to what you're going to see anytime you go from the lab to the clinic. It certainly has reinvigorated—I would say— some of the therapeutic focus in those areas, and much like we've seen in other disease areas, I think we'll continue to see benefits in the sense that there'll be more therapies that come online that may have differentiated impacts to either smaller patient cohorts or subsets of just the broader obesity category.

I think it just showcases that there's still a lot of unmet medical need and a lot of different therapeutic categories. It's exciting to me that we're seeing the broader industry continuously focus on all those different areas, as opposed to just refining its concentration into certain areas.