A new Wells Fargo report spotlights how GLP-1 weight-loss drugs are reshaping the healthcare industry by addressing obesity, a condition the bank describes as foundational to how American medicine has been organized.

Released Thursday, the report notes that much of the American healthcare system has been structured around obesity, which has become a foundational condition in the country, with 40.3% of adults considered obese and 9.4% severely obese. The drugs at the center of the shift — GLP-1s, short for glucagon-like peptide-1 receptor agonists — mimic a gut hormone that regulates insulin and suppresses appetite, and the class was first approved for type 2 diabetes before being cleared for weight loss. It now includes Novo Nordisk's semaglutide, sold as the diabetes brand Ozempic and the weight-loss brand Wegovy, and Eli Lilly's tirzepatide, sold as Mounjaro and Zepbound.

Surging adoption, falling surgery volumes

Usage of GLP-1 drugs surged in recent years, rising more than 140% from 2022 to 2024, which had a significant impact on hospital services aimed at treating obesity. In that same timeframe, bariatric surgery volumes fell 34.1%. The growth has come even though the brand-name medicines carry list prices of roughly $1,000 or more a month, with insurance coverage varying widely across employers and insurers.

"GLP-1s may be marketed as weight-loss drugs, but they're rapidly becoming one of the most disruptive economic forces in healthcare," John Teasley, market executive for Wells Fargo Healthcare Banking, told FOX Business. "We're seeing a medication class with the potential to reshape how providers generate revenue, where investors allocate capital, and how consumers engage with their health."

According to the report, the healthcare system — and hospitals in particular — is having to adapt to a changing landscape caused by the rise of GLP-1 semaglutide drugs, as obesity patients who previously would have undergone surgery after attempting to diet now have a pharmaceutical alternative that is "visible, reversible, and socially normalized."

Potential implications for cardiology and chronic care

GLP-1s may also have an impact on cardiology, with a trial showing that their use reduced major cardiovascular events by 20% in overweight or obese adults without diabetes. The result, from the semaglutide study known as the SELECT trial, formed the basis for the FDA's 2024 approval of Wegovy to reduce the risk of cardiovascular death, heart attack and stroke in adults with cardiovascular disease and overweight or obesity. If that trend prevails at scale, hospitals would see fewer procedures, repeat admissions, complications, and other downstream interventions — leading to a sizable reduction in demand for those services.

Other aspects of managing chronic obesity may also evolve with increased use of GLP-1 therapies, with more longitudinal management, outpatient visits, side effect monitoring, and medication management. The Wells Fargo analysts noted that it could also have implications for treating comorbidities driven by obesity, such as knee and hip replacements, sleep apnea, and metabolic liver disease.

"The biggest takeaway from our research isn't that healthcare is shrinking, it's that healthcare is being rewired," Teasley said.

Pharmaceutical pipeline shift

The report said the rise of GLP-1 treatments is also reshaping the development strategies of pharmaceutical companies, citing an analysis by Deloitte that found obesity drugs are now the largest component of the late-stage pipeline after surpassing oncology treatments for the first time in 16 years.

GLP-1 drugs drove that increase almost exclusively, raising obesity treatments from 1% of the pipeline in 2022 to about 25% now, while oncology slipped to 20% after being at 32% in 2022. That pipeline includes oral formulations intended to be easier to take and cheaper to produce at scale than today's injectable versions.

"Obesity therapies have already taken cancer as the pharmaceutical industry's leading area of investment, reflecting growing confidence that these treatments could improve the health of millions of Americans while fundamentally reshaping one of the country's largest industries," Teasley said.

The Wells Fargo report concluded that the likely winners in the healthcare industry will opt against trying to defend the old model and will instead reposition ahead of it — for example, by reallocating capital and talent toward obesity medicine, integrated cardiometabolic care, and specialty pharmacy services.

Source: Fox Business