Navigating the GLP-1 boom

Welcome to the 16th edition of Measuring the return from pharmaceutical innovation. This year, the analysis shows an industry at an inflection point. While headline pharmaceutical research and development (R&D) returns have improved for the third consecutive year, reaching a 7.0 percent internal rate of return (IRR) in 2025, this recovery is largely driven by a few mega-blockbuster programs, notably glucagon-like peptide receptor agonists (GLP-1s) and GLP-1 combinations with gastric inhibitory polypeptide-based drugs (GIPs) in obesity, masking broader R&D pressures.

With portfolio value consolidating into these fewer, larger assets and the cost to develop them continuing to climb there is a precarious balance of high potential returns and the risk of significant value destruction from a single program failure.

For the first time in our 16 years of analysis, obesity has displaced oncology as the largest contributor to late-stage pipeline value, increasing exposure to therapeutic-area-specific shocks. For leaders, the agenda is clear: build a more resilient innovation engine by integrating strategy with dynamic capital allocation, embedding competitive reality into progression and deal decisions, and demanding measurable, end-to-end productivity returns from AI investments.

Key findings

Returns are improving, but underlying productivity is strained

Our analysis reveals that the projected internal rate of return (IRR) on late-stage pipeline assets rose for the third consecutive year in 2025 to 7.0 percent, a 1.1 percentage point improvement from 2024 (see Figure 1). Twelve of the 20 companies in our cohort increased their IRR in this period of analysis, with the greatest increase in IRR for those companies who have progressed new GLP-1/GIP assets to their late-stage pipeline. The impact of these few companies driving up the cohort IRR is further demonstrated by the median IRR value staying relatively static at 3.8 percent in 2024 and 4.0 percent in 2025. Whereas, for the second year in a row, the mean IRR is eclipsing the value of the third quartile. 

This improvement is driven by an increase in average forecast peak sales per asset, which climbed to US$598 million in 2025, a notable jump from $510 million in 2024 (see Figure 2). This surge in expected value, however, is not distributed evenly across the pipeline; it is, again, overwhelmingly attributable to a few very high-forecast GLP-1/GIP assets. Eleven of the 20 companies in our cohort increased their average peak sale in this period of analysis, with, again, the most notable increases coming from those companies who have progressed new GLP-1/GIP assets to their late-stage pipeline.

GLP-1/GIP assets primarily target obesity and diabetes indications, but are additionally in the late-stage pipeline for a broad scope of indications including chronic heart failure, osteoarthritis and liver fibrosis. These assets now account for an estimated 38 percent of all projected commercial inflows from the 2025 late-stage pipeline. When the GLP-1/GIP mechanisms of action (MoA) are excluded from our analysis, the underlying health of industry R&D productivity is significantly weaker with a rate of return of just 2.9 percent (down from 3.8 percent in 2024) and average forecast peaks sales of $353 million (down from $370 million in 2024). 

There is a higher concentration of value into mega-blockbusters

This leads to a critical strategic challenge: portfolio value is being increasingly concentrated into a small number of mechanisms resulting in a high degree of competition at the indication level. While the number of blockbusters (asset-indications forecast to achieve peak sales greater than $1 billion) has decreased to 108 in 2025, down from 111 in 2024, the number of mega-blockbusters (asset-indications forecasts to achieve peak sales greater than $10 billion) has increased from six in 2024 to eight in 2025. Additionally, the average value of those mega-blockbusters has increased by 14.7 percent. In 2025, just 54 blockbuster asset-indications, representing approximately 9 percent of the late-stage cohort, are projected to generate around 70 percent of total risk-adjusted peak sales (see Figure 3).

While reliance on blockbusters is not new, the degree of concentration is. This can create a high-stakes environment where a small number of asset-indications can lift ROI, but with greater competition and sensitivity to clinical, regulatory, or market access shocks affecting those specific programs. Meanwhile, a long tail of asset-indications persists. Our 2025 data shows that approximately 53 percent of pipeline asset-indications have a forecast peak sales potential below $250 million. This large cohort of lower financial return programs demands scrutiny to confirm that each serves a high unmet need and is differentiated or first in class, justifying its place in an increasingly resource-constrained portfolio.

Costs to develop an asset from discovery to launch continues to increase

Increasingly stretched resource is demonstrated by the average cost to develop a drug from discovery to launch growing to $2,671million in 2025 (from $2,229million in 2024), see Figure 4. Our cost analysis includes the total R&D expenditure incurred by a company in bringing its assets to launch, including the cost of failure due to the inherent risks in undertaking R&D. The increase in costs per asset observed is driven by both sides of the cost per asset equation; 17 of the 20 analyzed companies have increased their R&D spend year-on-year, while the number of assets in the late-stage pipeline has decreased by 4.6 percent. This raises the minimum risk-adjusted value each program needs to generate to counteract their cost to develop, meaning portfolios with many lower forecast value assets face disproportionate pressure unless they are clearly differentiated or strategically essential.

R&D value is increasingly concentrated 

For the first time in our 16 years of analysis, oncology has been displaced as the largest contributor to pipeline value. Obesity assets, driven almost exclusively by GLP-1/GIP assets, are now the dominant value driver, accounting for approximately 25 percent of total forecast sales of the late-stage pipeline. This is a seismic shift from 2022, when obesity assets contributed just 1 percent of projected value.

This rapid consolidation of value means that the portfolios of the highest-performing companies in our analysis are now more sensitive to therapy area-specific shocks. Tightening of pricing and market access, an increase in competitive intensity, unexpected safety signals, or manufacturing supply constraints within the GLP-1/GIP space could have a significant impact on their overall R&D returns.

This concentration of value extends beyond specific MoAs. Our analysis shows that within every therapeutic area, a small number of companies dominate the value landscape. Across the pipeline, the assets of the top three companies in any given therapy area account for over 50 percent of its projected value, even in oncology where 17 of the 20 companies compete, see Figure 5. Despite the average total number of therapy areas per company remaining stable and therefore companies maintaining a broad portfolio, there appears to be an increasing concentration of resources and investment in one or two core therapy areas, given the focused commitment required for leadership within a specific therapy area.

The value share of assets with a novel MoA has risen sharply to 53 percent in 2025, up from 35 percent in 2024 (see Figure 6). In this ‘novel’ category, value is highly concentrated. The top ten novel MoAs, primarily GLP-1 combinations, capture approximately 60 percent of the value in this tier. These novel GLP-1 combinations are being viewed favorably by analysts compared to other totally net-new MoAs, highlighting the disproportionate commercial attractiveness of the obesity market. Strategically, this points to a much more competitive and dynamic commercial environment in obesity. Organizations who succeed at bringing obesity assets to market will need to be highly sophisticated in terms of patient segmentation and targeting across reimbursed and direct-to-consumer markets.

How can Pharma leaders sustain R&D productivity for the long term?

To secure future market success, here are three critical actions Pharma leaders can take right now.

1. Improve integration of strategy and capital allocation
   Foster a culture of shared accountability between R&D and Commercial, where emerging science informs long-term strategy, and market insights shape early R&D choices. This improved alignment should allow for greater agility to prioritize the most promising assets, cut losses on others earlier, and ensure sufficient capital is deployed to the novel science needed to secure future market leadership.
2. Embed competitive reality into asset decisions
   In a market demanding first-in-class assets, shift from simply advancing a pipeline to making deliberate choices about where your organization can truly lead, both scientifically and commercially. Implement rigorous, market-oriented assessments into every progression and M&A decision and focus resources on programs with the highest probability of achieving clear market leadership.
3. Drive tangible returns from AI investment
   Despite years of technological investment, R&D costs continue to rise. The promise that AI would significantly reduce time and costs to develop assets, has not yet been realized at scale, largely due to a pilot-driven, function-by-function approach. Generating a meaningful return will require a move from isolated AI projects to end-to-end operational integration.

Successfully delivering on these priorities requires a culture of strategic discipline, enabled by technology. This involves using data and AI to conduct a rigorous assessment of whether the organization possesses the necessary people, assets and capabilities to secure a leading market position for a given program. It necessitates divesting assets, even those with potential, where the competitive landscape presents significant barriers to success and pursuing those most aligned with the organization's core strengths. This commitment to strategic focus is what will give companies the competitive edge to lead the next wave of breakthrough, high-value assets that improve lives.

To discuss any of this year’s report findings in more detail and what they mean specifically for your organization, please get in touch.