'Bubble effect': Weight loss drug fueled growth is putting the pharma sector at risk, report finds

Surging demand for weight loss and diabetes drugs leaves the pharmaceutical sector at risk from a "bubble effect" as profitability soars, new research suggests. Demand for the likes of Wegovy and Zepbound has driven research and development returns to their highest level in years, but a report published by Deloitte on Monday suggests this is masking pressure facing the rest of the sector. Pharmaceutical R&D returns for the world's top 20 pharma companies have improved for a third consecutive year to 7%, thanks almost entirely to a handful of high-forecast assets such as glucagon-like peptide receptor agonists, or GLP-1s. The report found that, for the first time in 16 years, oncology has been surpassed as the largest contributor to late-stage pipeline value by obesity treatments. This, according to Deloitte, increases companies' exposure to therapeutic-area-specific shocks. "It is a bubble, because so much is concentrated," Life Sciences and Healthcare Partner at Deloitte Hanno Ronte, told CNBC's "Squawk Box Europe." Drugs that target obesity and diabetes now account for an estimated 38% of all projected commercial inflows from the 2025 late-stage pipeline. The impact is so significant that it masks a weaker environment for the rest of the industry. If GLP-1/GIP assets are excluded from the analysis, the industry's rate of return drops to just 2.9%, a decline from 3.8% in 2024. …