A
case
can
be
made
that
metabolic
medicine
was
the
theme
of
the
life
sciences
industry
in
2024.
Insatiable
market
demand
fueled
rocketing
revenue
growth
for
Novo
Nordisk,
which
makes
Wegovy,
and
Eli
Lilly,
maker
of
Zepbound.
This
commercial
success
is
paving
the
way
for
metabolic
drug
research
more
broadly,
as
would-be
contenders
aim
to
develop
new
and
better
products
for
weight
loss.
While
this
space
has
become
active
and
crowded,
not
so
long
ago,
obesity
drugs
were
a
research
desert.
Omar
Khalil,
managing
director
of
Sante
Ventures,
remembers
those
days.
“Five
years
ago,
you
couldn’t
get
a
meeting
with
a
[venture
capitalist]
if
you
said
you
were
developing
a
drug
for
weight
loss,”
he
said.
“It
was
a
space
that
investors
did
not
want
to
touch,
given
the
failures
and
the
challenges
with
getting
drugs
approved.
With
the
success
of
Novo
and
Lily
getting
their
drugs
approved,
that’s
obviously
changed
drastically.”
Not
surprisingly,
there’s
enough
momentum
in
metabolic
medicines
to
carry
over
into
2025.
The
class
of
expensive
GLP-1
drugs
touches
on
broader
themes
that
will
affect
the
life
sciences
in
the
coming
year,
such
as
drug
pricing
and
regulation.
Deloitte’s
survey
of
150
C-suite
executives
for
its
2025
Life
Sciences
Outlook
report
shows
that
pricing
and
access
to
drugs
and
medical
devices
is
the
most
significant
issue:
47%
expect
pricing
and
access
to
significantly
affect
their
strategies
while
49%
expect
a
moderate
impact.
What’s
Ahead
in
Drug
Pricing
The
Centers
for
Medicare
and
Medicaid
Services
has
already
selected
the
first
10
drugs
for
the
negotiation
program
established
by
the
Inflation
Reduction
Act
(IRA).
Those
prices
won’t
take
effect
until
2026.
In
2025,
up
to
15
more
drugs
under
Medicare
Part
D
will
be
selected
for
the
negotiation
program.
Novo
Nordisk’s
Wegovy
and
Lilly’s
Zepbound
won’t
be
covered
by
these
negotiations.
But
they
could
still
come
under
CMS’s
purview
under
a
policy
change
proposed
by
the
Biden
administration.
Federal
law
does
not
permit
Medicare
to
cover
obesity
drugs.
But
the
Biden
administration
has
proposed
reinterpreting
the
law,
classifying
GLP-1s
as
chronic
disease
medicines
rather
than
obesity
drugs.
It’s
unclear
what
the
Trump
administration
will
do.
Robert
F.
Kennedy
Jr.,
Trump’s
pick
to
lead
the
Department
of
Health
and
Human
Services,
opposes
such
drugs.
But
Elon
Musk,
who
is
leading
the
Department
of
Government
Efficiency,
has
expressed
support
for
obesity
drugs
as
a
way
to
lower
healthcare
costs.
In
a
Dec.
5
online
media
briefing
after
the
Citi
Global
Healthcare
Conference,
Citi
analyst
Geoff
Meacham
said
one
looming
drug
price
question
is
whether
Trump
adopts
most
favored
nation
pricing,
a
policy
proposed
in
his
first
term
that
would
cap
Medicare
drug
prices
at
the
levels
paid
by
other
countries.
He
added
that
he
does
not
think
a
repeal
of
the
IRA
is
in
the
cards.
As
for
Trump’s
unconventional
nominees,
Meacham
didn’t
think
that
Mehmet
Oz
leading
the
Centers
for
Medicare
and
Medicaid
Services
and
Martin
Markary
at
the
FDA
would
be
very
controversial
or
unsettling.
But
the
selection
of
RFK
for
HHS
raises
uncertainty,
he
noted.
Despite
all
the
handwringing
and
fear,
Meacham
does
not
see
radical
changes
brewing.
“We’re
not
of
the
view
from
a
policy
perspective
that
drugs
are
going
to
be
pulled
from
the
market,”
he
said.
“We’re
not
of
the
view
that
the
drug
review
process
will
be
changed.”
Regulatory
Outlook
Deloitte
said
most
some
industry
executives
are
bracing
for
business
volatility.
Some
of
that
volatility
could
come
from
changes
to
how
the
FDA
and
CMS
interpret
laws
due
to
the
U.S.
Supreme
Court’s
overturning
of
the
Chevron
doctrine,
Deloitte
said.
Under
this
decades-old
doctrine,
in
matters
where
a
law
was
ambiguous,
courts
deferred
to
the
expertise
of
federal
agencies.
Deloitte
said
it’s
unclear
whether
courts
will
continue
to
defer
to
government
agencies
for
their
statutory,
scientific,
and
technical
interpretations
of
laws.
To
Khalil,
the
biggest
regulatory
concern
to
investors
is
anything
that
leads
to
less
stability
or
predictability
within
the
FDA.
“It’s
not
so
much
whether
it’s
less
onerous
or
more
onerous,”
Khalil
said
of
regulation.
“It’s,
is
it
less
predictable?
Is
the
path
to
approval
something
we
can
understand
and
underwrite?
If
it’s
less
predictable,
or
if
there’s
an
exodus
of
FDA
employees,
or
if
review
times
are
extended,
those
dynamics
could
certainly
impact
the
biotech
market
and
certainly
reduce
inflows
into
the
market
if
people
don’t
see
a
predictable
path
or
a
regulatory
process
that’s
well
understood.”
To
the
extent
that
there
is
political
or
regulatory
uncertainty,
it
hasn’t
tamped
down
interest
in
metabolic
disorder
drugs.
According
to
the
Deloitte
report,
the
success
of
GLP-1
obesity
drugs
have
revitalized
interest
in
general
medicines
—
small
molecule
drugs
that
treat
common
conditions
(Currently
available
GLP-1
medications
are
injectable
peptides,
not
oral
small
molecules,
but
there
are
small
molecules
in
various
stages
of
development
for
obesity).
Deloitte
notes
that
many
companies
are
trying
to
capture
a
share
of
the
$200
billion
GLP-1
drug
market.
Beyond
obesity,
potential
indications
for
these
drugs
include
sleep
apnea,
addiction,
Alzheimer’s
disease,
and
metabolic
dysfunction-associated
steatohepatitis
(MASH).
New
medications
for
these
disorders
could
have
far-reaching
effects
by
reducing
demand
for
medical
devices
and
surgical
procedures
related
to
diabetes
and
obesity,
Deloitte
said
in
its
report.
Digital
Transformation
Led
by
AI
Artificial
intelligence
is
a
big
part
of
the
digital
transformation
underway
in
the
life
sciences
industry,
according
to
Deloitte.
Survey
respondents
said
technologies
employing
generative
AI
are
enhancing
products,
services,
operations,
and
strategic
decision
making.
About
60%
of
executives
said
they
plan
to
increase
investments
in
generative
AI
and/or
digital
transformation.
This
suggests
that
companies
are
moving
beyond
initial
pilot
projects
and
beginning
to
realize
substantial
value
from
adopting
these
technologies
at
scale,
according
to
Deloitte.
The
firm
adds
that
generative
AI
in
particular
is
seen
as
having
more
transformational
potential
than
previous
digital
innovations
because
it
can
reduce
R&D
costs
and
streamline
back-office
operations,
among
other
benefits.
The
clinical
trials
sector
is
one
area
realizing
the
benefits
of
AI-driven
technologies.
By
the
end
of
2025,
AI
will
go
from
being
used
in
certain
situations
to
being
a
main
component
of
clinical
trial
operations,
contends
Jeff
Sidell,
chief
technology
officer
of
Advarra,
a
clinical
trials
services
and
technology
company.
Generative
AI
already
enables
automation
of
labor-intensive
tasks
but
there
is
also
promise
in
predictive
analytics
to
forecast
outcomes,
optimize
allocation
of
resources,
and
streamline
timelines,
he
said.
These
technologies
can
also
be
used
to
extract
key
information
from
documents,
reducing
manual
entry
errors.
“Additional
use
cases
that
will
become
more
common
this
year
include
using
AI
to
analyze
past
trials
and
recommend
improvements
based
on
data
patterns,”
Sidwell
said.
“Site
selection
will
also
benefit
from
AI
by
identifying
optimal
sites
with
a
greatest
likelihood
for
patient
recruitment
success,
considering
factors
like
demographics,
past
performance,
and
patient
availability.”
The
Investment
Outlook
for
2025
2024
was
a
rebuilding
year
for
the
IPO
market,
according
to
Renaissance
Capital.
The
IPO
research
firm
counted
146
companies
that
went
public
across
a
range
of
industries.
Those
companies
raised
$29.6
billion,
which
was
50%
more
compared
to
the
prior
year.
Even
so,
deal
flow
was
slow
as
companies
repeatedly
pushed
back
IPO
timelines
amid
uncertainty
about
interest
rate
cuts
and
other
signs
of
economic
volatility.
Renaissance
expects
2025
will
be
a
better
year
for
IPOs.
“While
some
may
be
skeptical
that
a
pickup
is
once
again
‘right
around
the
corner,’
the
IPO
market
has
a
stronger
foundation
now
than
at
any
point
since
the
Covid
bubble
burst
in
2022,”
the
firm
said
in
its
2024
annual
review.
“High
returns,
renewed
optimism,
and
a
steady
flow
of
private
company
news
point
to
more
deals
on
the
horizon,
and
while
we
don’t
expect
a
blowout
year,
IPO
activity
should
finally
normalize
fully
in
2025.”
Sante
Ventures’
Khalil
noted
key
differences
in
the
kind
of
biotech
company
that
can
go
public
now
versus
a
few
years
ago.
Many
companies
that
went
public
during
the
IPO
boom
were
early
stage
or
even
preclinical.
Some
had
what
amounted
to
an
interesting
science
project
or
scientific
thesis
that
was
not
well
supported
by
clinical
data,
he
said.
Investors
welcomed
these
newly
public
companies
in
part
because
extremely
low
interest
rates
made
it
easy
to
invest.
The
capital
available
to
biotech
companies
has
since
become
more
constrained,
Khalil
said.
Consequently,
biotechs
are
more
amenable
to
striking
deals
with
big
pharma.
The
fundamentals
of
investing
in
biotech
are
not
revenue
and
profitability,
but
rather
clinical
data,
he
said.
The
companies
best
positioned
to
go
public
have
one
or
more
assets
in
late-stage
clinical
development.
Companies
that
achieve
clinical
proof
of
concept
against
a
well-validated
target
are
able
to
raise
capital
to
fund
their
research
to
late-stage
development,
Khalil
said.
But
earlier-stage
companies
are
still
struggling
to
raise
financing.
Macroeconomic
factors
could
be
key
to
shaping
investment
trends
in
the
new
year.
Deloitte
said
36%
of
survey
respondents
were
evaluating
the
potential
impact
of
inflation,
economic
recession,
and
supply
chain
and
manufacturing
disruption.
According
to
Khalil,
improving
macroeconomic
conditions
could
improve
the
investment
climate.
“As
inflation
has
gotten
more
under
control
and
interest
rates
have
started
to
come
down,
that’s
started
to
loosen
some
of
the
capital
that’s
been
stuck
on
the
sidelines
for
some
time,”
he
said.
In
Conclusion…
There’s
optimism
for
the
life
sciences
in
the
coming
year.
Deloitte
said
75%
of
survey
respondents
expressed
that
sentiment,
based
on
their
expectations
for
strong
growth
and
margin
expansion
in
2025.
The
outlook
for
scientific
advances
is
also
positive.
Oncology
once
dominated
drug
pipelines,
and
unmet
medical
needs
means
there
is
still
research
interest
in
this
space.
But
research
and
investor
interest
is
also
expanding
to
immunology,
which
has
emerged
as
another
hot
therapeutic
area.
Meanwhile,
metabolic
disease
drugs
are
already
demonstrating
growth
potential
beyond
obesity
and
type
2
diabetes.
As
2024
drew
to
a
close,
the
FDA
approved
Lilly’s
Zepbound
for
obstructive
sleep
apnea,
making
the
product
the
first
drug
therapy
approved
for
the
chronic
disorder.
Lilly
and
others
are
working
furiously
to
expand
metabolic
medicines
to
more
indications.
That
could
very
well
become
a
key
theme
of
2025.
Photo:
Stuart
Ritchie,
Getty
Images