US GLP-1 market dynamics Report Interpretation

Overview

Morgan Stanley combines an August 2026 survey of roughly 200 US primary care physicians with LillyDirect credit-card panel data to assess GLP-1 demand, oral-product adoption, company share shifts, Medicare Bridge uptake, and the durability of the self-pay channel. Its central view is that the category continues to expand, with Lilly positioned for further gains and Novo facing share loss and stronger competitive challenges.

Core views

The report's starting point is that the US GLP-1 market should continue expanding in both obesity and type 2 diabetes. Surveyed physicians estimate that 30% of obese, non-T2D patients currently use GLP-1 medicines, up from 24% in the prior-year survey, and expect penetration to reach 36%-46% by the end of next year. For T2D patients, estimated penetration rose from 35% to 40%, with a projected range of 44%-56% within a year. Morgan Stanley also sees the Medicare GLP-1 Bridge as an incremental demand driver: 75% of surveyed physicians were at least somewhat familiar with the program, and they estimated that 38% of eligible patients could obtain treatment through it over the next 12 months. The program provides eligible Medicare Part D patients access to specified Novo and Lilly products at approximately $50 per month and has been extended through year-end 2027. The physician results favor Eli Lilly in the expected competitive redistribution of the market. In obesity, Lilly's combined share rose from 35% in 2025 to 43% currently and is projected to reach 50% over the next 18 months. Zepbound itself is expected to decline from 39% today to 30% as newer therapies enter, but Foundayo and Retatrutide are expected to add 9% and 11% share, respectively. In T2D, Lilly's share rose from 39% to 43% over the past year and is projected at 52% over the next 18 months if Foundayo and Retatrutide obtain approval for that indication. Mounjaro is expected to move from 35% currently back to about 28%, but Foundayo and Retatrutide are projected to capture 8% and 10% of GLP-1-treated T2D patients, respectively. Morgan Stanley models Foundayo worldwide sales of $977mn in 2026 and $6.0bn in 2027, above consensus estimates of about $785mn and $3.5bn. The report attributes Lilly's prospective gains partly to improving physician awareness and early commercial momentum for Foundayo. Physician familiarity with Foundayo reached 55%, versus roughly 36%-37% in 2025, and nearly 20% of physicians had received and distributed samples. Foundayo reached around 20% of the oral-obesity market on approximately 44k weekly prescriptions, according to the report's cited company figures, and Morgan Stanley notes Lilly's disclosure of approximately 36k prescribers and about 25% of new oral starts. In the LillyDirect panel, Foundayo reached 4.5% of July 2026 transactions after its April launch. The report interprets the finding that 57% of obesity patients currently using oral GLP-1s are treatment-naive as evidence that oral products can add patients rather than merely shift existing users between formats. Novo Nordisk faces the opposite share trajectory in the survey. In obesity, its total share is projected to decline from 45% currently to 42% over 18 months, with Wegovy's combined injectable and oral share expected to fall from 45% to 35%. In T2D, Novo's share is projected to decline from 49% to 44%, mainly because of reduced prescribing of injectable Ozempic and Victoza; its Rybelsus/Ozempic pill share is expected to remain around 10%. Morgan Stanley also highlights comparatively weaker awareness and expected uptake for Novo's CagriSema: 28% physician awareness versus 39% for Lilly's Retatrutide, and expected patient shares of 6% versus 11%. The report says Novo's upside case depends on oral GLP-1s becoming a larger portion of the obesity market than consensus expects and on Novo capturing more of that opportunity, but its survey instead suggests only moderate oral-category expansion. It also notes that recent US prescription data suggest Wegovy Pill growth has slowed, potentially because of discontinuation or Foundayo competition, while Zepbound appears to have captured most of the Medicare-related injectable patient influx. Oral GLP-1s are a central category-growth mechanism in the analysis, although persistence is a counterweight. Oral share among obese GLP-1 patients more than tripled from 6% last year to 19% currently and is projected to reach 21% in 18 months. In T2D, oral share rose from 7% to 10% and is expected to reach approximately 18%. Physicians reported that 37% of obese patients prefer oral treatment at initiation, compared with 33% preferring weekly injectables and 18% preferring monthly injectables. However, physicians estimate that approximately 25%-26% of obesity patients discontinue GLP-1 treatment within the first year. Morgan Stanley therefore views lower-priced oral products as supportive of addressable-market expansion but recognizes treatment persistence as a potential constraint. The LillyDirect card panel offers a separate view of self-pay demand. The panel covers 171,600 transactions from October 2024 through July 2026, involving 13,857 cash buyers and $6.1mn of July card spend. Monthly spend increased from roughly $220k in October 2024 to roughly $6mn in July 2026 as monthly buyers grew from fewer than 500 to approximately 14k. Buyer count increased 29 times over the period while spend per buyer fell around 10%, indicating that channel growth has come from new buyers rather than greater spending by existing buyers. Cumulative panel spend reached approximately $72mn, with about 55% generated year to date. The report views Foundayo's $149 and $199 pricing tiers as aligned with consumer affordability, although the panel's price mapping means higher-dose Foundayo at $299 cannot be separated from Zepbound 2.5mg. The transaction data show that posted-price changes are reflected rapidly in the self-pay channel. In July 2026, the $299, $399, and $449 price points accounted for 20.8%, 24.2%, and 48.6% of transactions, respectively. The December 2025 repricing shifted transaction bands from $499 and $349 to $449 and $299 within one quarter. Across the two quarters following Foundayo's launch, mean purchase price was $398, with 96% of volume concentrated at $299, $399, and $449. The share of transactions at or below $175 rose from less than 1% in 1Q26 to about 4% in July, entirely because of Foundayo tiers. Morgan Stanley concludes that revenue per buyer resets quickly when posted prices change, rather than gradually drifting afterward. Retention results indicate repeat engagement but not uninterrupted long-term persistence. Approximately 30% of accounts made only one purchase, around 45% had ended before a third fill, 37% reached six continuous months, and about 20% reached 12 continuous months; median first-run duration was about three months. Accounts reaching at least six months generated about 78% of first-run sales. One-third of accounts that ended a first purchasing run returned within a year, but the median return time was 153 days after the last purchase, implying roughly 125 days without observed supply assuming 28 days per purchase. Returning accounts had weaker persistence in their second run: median duration fell to two months, only 26% reached six months, and 7% reached at least 12 months. Morgan Stanley cautions that card-panel exits cannot be equated with clinical discontinuation because patients may move to insurance, another pharmacy, another payment method, another manufacturer, or a compounded product; the results therefore represent a floor on time on therapy rather than a definitive persistence measure.

Analysis framework

Morgan Stanley first compares its August 2026 survey of approximately 200 qualifying US primary care physicians with its 2025 survey to assess GLP-1 penetration, prescribing preferences, product awareness, expected market shares, and Medicare Bridge adoption. It then analyzes anonymized US credit- and debit-card transactions in one LillyDirect dispensing channel to track buyer counts, spending, posted-price bands, product proxies, purchase runs, and returns. The report uses these findings to evaluate category growth, company competitive positioning, oral-product adoption, and the durability of self-pay demand.

Methodology notes

• Industry AnalysisSupply-demand framework

  Physician-reported GLP-1 adoption, prescribing preferences, product shares, and Medicare Bridge participation are used to assess demand growth and competitive supply changes.

  The report uses expected patient penetration and prescribing allocations to explain how new oral and injectable products could expand the market while redistributing share between Lilly and Novo.

• Industry AnalysisVolume-price decomposition

  LillyDirect cash-spend growth is decomposed into buyer growth and spend per buyer.

  This separates growth caused by more self-pay customers from growth caused by each customer's spending, showing that new buyers rather than higher spending drove channel expansion.

• Valuation methodsP/E and PEG Valuation

  Lilly's 12-month price target is based on a 27x P/E multiple applied to estimated 3Q27-2Q28 EPS of $52.57.

  Morgan Stanley compares the selected multiple with Lilly's 10-year average of 28x and an industry level of about 15x, arguing that Lilly's growth profile and pipeline optionality justify the premium.

• Valuation methodsDCF (Discounted Cash Flow)

  Novo is valued using a DCF with a 7.5% WACC, explicit forecasts through 2040, and 1% terminal growth.

  The framework estimates value from projected future cash flows discounted to the present, with terminal value influenced by the long-run growth assumption.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Eli Lilly & Co. (LLY.N)

  Expected beneficiary of GLP-1 market growth, Foundayo uptake, Retatrutide potential, and Medicare-channel share gains.

  Strengths

  Physician survey projects obesity share rising to 50% and T2D share to 52%; Foundayo awareness and sampling have increased; self-pay buyer growth is strong.

  Weaknesses

  Zepbound and Mounjaro are expected to lose individual share as newer Lilly products enter the mix; cash-pay persistence is limited.

  Comparison

  Survey projections favor Lilly versus Novo in both obesity and T2D share over the next 18 months.

  Risks

  Foundayo approval or launch could be delayed or underperform; Eloralintide and Retatrutide could be discontinued before market entry; competitor pipeline data could weaken the outlook.

• Novo Nordisk A/S (NVO.N)

  Expected to face competitive pressure in obesity and T2D from Lilly's oral and pipeline products.

  Strengths

  Potential upside would arise if US price cuts drive a multi-fold volume increase, compounding is displaced by Wegovy Pill, or Zenagamtide improves terminal value.

  Weaknesses

  Surveyed physicians project declining company share in obesity and T2D, with lower awareness and expected uptake for CagriSema relative to Retatrutide.

  Comparison

  Novo's projected obesity and T2D shares decline while Lilly's combined shares rise over the next 18 months.

  Risks

  Global GLP-1 prices could erode faster than expected, Novo could fail to regain commercial and Medicare-channel share, and competitors could deliver differentiated innovation.

Key data

• Obesity GLP-1 penetration30% currently; 36%-46% projected next yearUp from 24% in the 2025 physician survey.
• T2D GLP-1 penetration40% currently; 44%-56% projected within a yearUp from 35% last year.
• Lilly obesity GLP-1 share43% currently; 50% projected in 18 monthsVersus 35% in the prior-year survey.
• Novo obesity GLP-1 share45% currently; 42% projected in 18 monthsProjected decline as newer products gain share.
• Lilly T2D GLP-1 share43% currently; 52% projected in 18 monthsAssumes approval of Foundayo and Retatrutide for T2D.
• Novo T2D GLP-1 share49% currently; 44% projected in 18 monthsPrimarily reflects lower injectable Ozempic and Victoza prescribing.
• Oral GLP-1 share in obesity19% currently; 21% projected in 18 monthsUp from 6% in 2025.
• LillyDirect July 2026 card spend$6.1mnPanel included 13,857 cash buyers and 171,600 transactions from October 2024 through July 2026.
• Cash-pay retention56% persisted more than 3 months; 20% reached 12 monthsMedian first-run duration was approximately 3 months.

Impact & implications

The report argues that broader oral availability, lower cash-pay pricing, and Medicare Bridge access can expand GLP-1 treatment volumes. Within that growing market, Morgan Stanley sees Lilly benefiting from Foundayo and Retatrutide-driven mix shifts, while Novo's commercial outlook depends on improving oral-market capture and regaining share amid intensifying competition.

Risks

• Physician-survey findings are based on approximately 200 US primary care providers and should be extrapolated to the broader market with caution.
• The card panel covers one LillyDirect dispensing partner and card payments only, so channel levels are understated.
• Leaving the LillyDirect card panel cannot be distinguished from clinical treatment discontinuation; observed persistence is therefore a floor on time on therapy.
• Product and dose attribution is based on transaction amounts, and higher-dose Foundayo priced at $299 cannot be separated from Zepbound 2.5mg.
• For Lilly, Foundayo launch execution, pipeline development, government-channel share capture, and competitor pipeline data are explicit risks.
• For Novo, faster global pricing erosion, failure to regain share, and differentiated competitor innovation are explicit risks.

What to watch

• Adoption of the Medicare GLP-1 Bridge program and the share of eligible patients obtaining treatment.
• Foundayo prescription uptake, physician familiarity, sampling, and self-pay transaction growth following its April 2026 launch.
• Whether oral GLP-1 products continue to attract treatment-naive patients and expand category penetration.
• Lilly and Novo market-share changes in obesity and T2D, particularly Zepbound, Wegovy, Ozempic, Foundayo, Retatrutide, and CagriSema.
• LillyDirect buyer growth, price-band mix, cash-pay retention, and return behavior.
• Evidence of whether slowing Wegovy Pill growth is temporary or reflects discontinuation and Foundayo competition.