The growing demand for obesity and diabetes drugs like those made by Eli Lilly and Novo Nordisk has pushed R&D returns to their highest point in years, but it is also creating a "bubble effect" in the biopharma industry, an annual Deloitte report reveals.
The findings show that, for the first time in 16 years, obesity drugs have surpassed oncology as the largest contributor to late-stage pipeline value. GLP-1 drugs now account for around 38% of all projected sales and roughly a quarter of total forecasted sales from the 2025 late-stage pipeline.
This is "a rapid shift from 2022," when obesity accounted for just 1% of the projected value, Deloitte said in an emailed statement.
Fueled by the GLP-1 hype, R&D's internal rate of return climbed to 7% last year, up 1.1% from the year before. But when GLP-1/GIP drugs are excluded, the rate of return drops to 2.9%, down from 3.8% in 2024.
This trend is raising concerns, as an industry-wide critical dependency on GLP-1 drugs could create a "bubble effect," Colin Terry, life sciences partner at Deloitte, said in a press statement.
The industry's future value is increasingly concentrated in a small number of drugs, the analysis found. In 2025, there were 108 blockbuster candidates -- defined as therapies expected to generate more than $1 billion in annual sales -- including 14 new additions. Just 54 of these, representing 9% of all drugs in advanced development, are projected to account for roughly 70% of total forecast sales.
"This concentration of value into a few mega-blockbuster drugs, while exciting, exposes the industry to risk once launched," Terry added.
It also leaves the companies vulnerable to clinical, regulatory or market access shocks.
"This high-stakes environment is compounded by the continued upsurge in development costs, which has seen an increase of half a billion dollars per asset," David Chapman, life sciences director at Deloitte, also said in the company's press release.
The average cost to bring a drug from discovery to launch rose from $2.23 billion in 2024 to $2.671 billion in 2025. At the same time, average forecast peak sales increased to $598 million, up from $510 million the year prior. Excluding GLP-1 drugs, however, average peak sales fall to $353 million.
According to Deloitte, the share of value attributed to drugs with novel mechanisms of action rose to 53% in 2025, up from 35% the year prior. This growth reflects increased investment in new modalities such as gene and cell therapies, with GLP-1 drugs accounting for 60% of the segment's value.
While the GLP-1 boom has boosted headline returns, it also highlights the need to strengthen R&D resilience and ensure sustained patient impact and market share.
"Companies must rethink their investment approach, including prioritizing early-stage acquisitions to capture greater value in the long term, alongside internal pipeline assets," Terry said. "There also needs to be a bolder risk appetite for truly novel drugs, the kind that could be the next game-changing GLP-1, rather than just incremental improvements."
In addition, pharma companies need to reconsider how they are leveraging AI in R&D and how they define and measure its impact.
"Right now, and despite significant investment, AI hasn't yet delivered on its promise to reduce R&D costs and speed up drug development across the industry -- in fact, it is probably one of the contributors to increasing cost per asset. To truly deliver, AI must be integrated across a company's entire operations, not just in pockets," Terry concluded.
Alivia Kaylor is a scientist and the senior site editor of Pharma Life Sciences.
