Our Head of U.S. Pharma and Biotech Terence Flynn discusses how the rapid pace of adoption of weight management treatments could have far-reaching implications across healthcare, consumer behavior and global markets.

Read more insights from Morgan Stanley.

----- Transcript -----

Welcome to Thoughts on the Market. I’m Terence Flynn, Morgan Stanley’s Head of U.S. Pharma and Biotech Research. Today: the next phase of growth in obesity medicines – the GLP-1 unlock.

It’s Friday, April 17th, at 2pm in New York.

There are moments in healthcare where innovation, policy, and patient demand all converge. And when they do, the impact can extend far beyond medicine. Now we believe GLP-1 therapies are at one of those moments. We estimate that the obesity medications market could reach around $190 billion at peak across obesity and diabetes. Now, that’s a meaningful step up from prior expectations – and it reflects a shift from early adoption to a much broader, more scalable opportunity.

Despite the surge in attention to GLP-1s in the last couple of years, penetration actually remains relatively low today. Only about 6 percent of eligible obesity patients in the U.S. are currently using GLP-1 therapies, and just 2 percent outside the U.S. So, while the growth has been significant, the reality is that we’re still early. And that’s what makes this moment so important.

So, we see five drivers that are pushing the next phase of adoption.

The first is a shift of oral medications. These therapies have historically been injectables, which limits adoption. But newer oral options are changing that. Notably, just under 80 percent of oral GLP-1 users are new to the category. And this signals real market expansion.

Second, expanding access through Medicare. A new U.S. framework is opening these drugs to millions of older patients, with out-of-pocket costs potentially around $50 per month. Now, that’s a meaningful shift, and one that could significantly broaden utilization.

Third is lower costs and broader insurance coverage. We’re already seeing progress here. Average monthly out-of-pocket costs have declined to about $120, down from $170 last year. Now, at the same time, employer coverage for obesity treatments is expected to rise from just under 50 percent last year to around 65 percent by 2027.

Fourth is global expansion. Outside the U.S., adoption is more price-sensitive, but the opportunity is large. As costs come down and access improves, especially in markets like China and Brazil, we expect uptake to accelerate.

And fifth is innovation beyond weight loss. These therapies are increasingly being studied across a range of conditions: from cardiovascular and kidney disease to inflammation and neurological disorders. And that has the potential to further expand the addressable market over time.

So how big could the GLP-1 market get? Well globally, we estimate there are about 1.3 billion people eligible for these therapies. Now our base case assumes roughly 12 percent of that population is treated by 2035, including about 30 percent penetration in the U.S. Now, even at those levels, we’re looking at a $190 billion market – with a potential bull case of around $240 billion.

But this story doesn’t stop at healthcare. We estimate GLP-1 adoption could reduce U.S. calorie consumption by about 1.6 percent by 2035. Now, that may sound modest, but at scale it has real implications, with ripple effects across consumer behavior and industries like food, retail, and healthcare services.

So, stepping back, this is what defines the GLP-1 unlock. We’re approaching a key inflection point that’s driven by oral therapies, broader access, and ongoing innovation. With adoption still low relative to the eligible population, the growth runway remains significant. At its core, this is a long-term structural shift in how chronic disease is treated, and how that reshapes markets.

Thanks so much for listening. If you enjoy the show, please leave us a review wherever you listen and share Thoughts on the Market with a friend or colleague today.

Our Global Head of Fixed Income Research Andrew Sheets breaks down how Péter Magyar’s win in Hungary’s election could smooth relations with the EU and lower the risk premium in the country’s assets.

Read more insights from Morgan Stanley.

----- Transcript -----

Welcome to Thoughts on the Market. I'm Andrew Sheets, Global Head of Fixed Income Research at Morgan Stanley.

Today on the program, how we’re thinking about the market implications of a recent election.

It’s Thursday, April 16th at 2pm in London.

Hungary has about the same population as New Jersey. And yet its elections last weekend commanded global attention. The contest pitted the party of Viktor Orbán, who had served as Prime Minister since 2010, against a former protégé turned rival, Péter Magyar.

As a sign of the global importance and as a referendum on the future of Hungary and its place in Europe, this vote was seen as significantly important that the U.S. Vice President flew in to campaign on Orbán’s behalf.

Among the issues at stake were Hungary’s relationship with Europe’s broader political and economic architecture. Hungary has been a member of the European Union since 2004, but has frequently clashed with the bloc under Orbán’s tenure. This has European-wide implications, as a number of key EU procedures – including the levying of sanctions, defence policy, and enlargement – require unanimous approval among member states. A single dissenting vote, from Hungary or anywhere else, can prove highly disruptive.

This month the European Commission President proposed moving forward with changing the voting system and linking it more closely to population. But there’s a wrinkle… This change would still need to pass by unanimous vote.

So back to the election. The result was a landslide win for the opposition, with Péter Magyar’s party securing 138 out of 199 seats in the National Assembly. The shift in leadership, the first since 2010, and the scale of the majority, have meaningful geopolitical implications for Europe. But since this is a markets-focused podcast … we’ll focus on the markets.

First, new leadership in Hungary may mean warmer relations with the European Union. And that could mean money. Unfreezing access to EU funds, one of the new government's policy goals, could result in 1 to 1.5 percent higher potential GDP growth for Hungary, per Morgan Stanley economists. And the new government has also proposed taking steps to adopt the Euro as its official currency.

Both of these developments could help reduce the risk premium embedded in Hungarian assets. While Hungarian interest rates fell and its currency appreciated following the vote, our strategists think that both could move further – with interest rates falling a further 0.5 to 1 percent, and the currency appreciating a further 2 to 4 percent. And while Hungary is a pretty small equity market in global terms, it is one that our strategists like, and are overweight.

Hungary’s recent election attracted global focus. While much remains to be seen, the prospect for smoother relations with the rest of Europe is a positive for both Hungary's assets and the Bloc as a whole.

For different reasons related to Energy uncertainty, relative earnings, and relative monetary policy, we do continue to prefer U.S. equities and government bonds over their European counterparts. But as a longer-term story in Europe that’s important to watch, we think this definitely qualifies.

Thank you, as always, for your time. If you find Thoughts on the Market useful, let us know by leaving a review wherever you listen. Also tell a friend or colleague about us today.