Morgan Stanley analysts said they are seeing a profound shift in the way diabetes is treated, with doctors focusing more on weight management, accelerating the rollout of GLP-1 drugs. What’s more, analysts predict that within the next 24 months, this weight-focused approach will begin to spread to other health complications—from heart failure to sleep apnea to kidney disease. “During the past 12 months, we increased our Novo/Lilly GLP-1 diabetes revenue from $40 billion to $56 billion in 2030, outpacing obesity revenue growth,” analysts wrote in a research note published last Friday, citing their sales forecasts. In the GLP-1 category, Novo Nordisk sells semaglutide under the brand name Ozempic for the treatment of type 2 diabetes and Wegovy for the treatment of obesity. Meanwhile, Eli Lilly has been approved to sell Mounjara, or tirzepatide, as a treatment for type 2 diabetes. The drug is expected to be approved by the Food and Drug Administration for weight loss by the end of this year. Both GLP-1 drugs have attracted a lot of attention for their ability to lower blood sugar, curb food cravings, and help patients lose weight. Both companies are also preparing next-generation products that soon promise to be even more efficient. While other biotech and pharmaceutical companies develop their own products, Novo and Lilly should dominate the category for years to come. Morgan Stanley said GLP-1 drugs now account for nearly 30% of all new diabetes prescriptions in the US. About 22% of all diabetes prescriptions are for this class of drugs. Outside the US, revenue was slower, which analysts say is an opportunity for future growth; they estimate global sales, excluding the U.S., to exceed $70 billion by 2030. Eyes on Novo’s Select study The Morgan Stanley rating comes ahead of the highly anticipated results of Novo’s Select study, which is expected to be released sometime in the coming weeks. A five-year study looks at the long-term cardiovascular benefits that obese patients experienced when taking Wegovy. 17,500 patients in the study took either Wegovy or a placebo. Hora NVO YTD Shares of Novo Nordisk are up around 20% year-to-date. The positive results of the study could help support the idea that treating obesity and less extreme weight gain with GLP-1 drugs will make patients healthier and ultimately save the health care system money. Heart disease and high blood pressure are two conditions commonly associated with being overweight, but there are also links to sleep apnea, chronic kidney disease, and other conditions. Investors hope that strengthening the link between weight loss and better health will help patients get insurance coverage for these expensive drugs. This includes Medicare, which is not allowed to reimburse patients for weight loss drugs. Morgan Stanley said it has already been surprised by how quickly insurers are adding coverage for drugs that can cost more than $1,000 a month. “Reimbursement for obesity drugs has expanded much more rapidly than we anticipated, covering 40 million lives in the US, which exceeds the total number of people estimated to have diabetes,” they said. Analysts now expect the market for GLP-1 drugs to reach $77 billion by 2030, up from a previous forecast of $54 billion. “We reframed the obesity treatment opportunity based on the faster uptake rates seen in the US with our expectation that positive data from the SELECT trial will lead to positive treatment guideline changes by the end of 2024. We believe the knock-on effect of this will be to further unblock the patient-physician engagement bottleneck and expand payer engagement,” Morgan Stanley said. The Wall Street investment bank also raised its price target on Lilly stock to $560 from $551. The new target implies a 20% upside from Monday’s close. Morgan Stanley’s price target is much higher than the $471 average. Lilly shares are up about 26% today through Monday. Shares of LLY 6M mountain Eli Lilly are up more than 26% year-to-date. Lilly profit up Meanwhile, Wells Fargo on Monday forecast that Lilly’s second-quarter sales would beat expectations thanks to stronger-than-expected earnings from sales of Mounjaro. “We see LLY ~3% gains during 2Q as Mounjaro spins are highly sensitive to payout improvements. EPS guidance of $8.65-$8.85/sh may not change significantly as LLY could decide to reinvest in upcoming launches in [Alzheimer’s disease] and immunology,” analyst Mohit Bansal wrote in a research note explaining the forecast. Lilly is scheduled to report second-quarter results on Aug. 8. Lilly is offering co-pay coupons to help patients start using Mounjaro even if their health insurers don’t yet fully cover the drug. But as more insurers can add prescription drug revenue to boost their prescription drug revenue, the price will continue to improve as, starting in 2022, 100 they’re pushing co-pay cards for lower-paying patients,” Bansal said. That’s why he’s not worried that the overall number of prescriptions in Mounjar has slowed since early June, as he expects it’s due to an influx of less profitable patients who used the co-pay card program. This means that sales growth for patients with insurance may have continued in June, Michael, Bloom. contributed to this report.