- Top global pharma companies’ return on R&D increased for third consecutive year;
- Growth is almost entirely driven by GLP-1 drugs - used to treat obesity and diabetes - and accounts for 38% of projected sales;
- Obesity drugs have displaced oncology drugs as the largest contributor to the industry’s pipeline value for first time in 16 years;
- Average cost to develop a drug continues to climb, reaching $2.67 billion in 2025.
GLP-1* drugs have helped increase the return on investment in pharma research and development (R&D) for the third consecutive year, but the industry’s reliance on these medicines is creating a 'bubble' effect according to Deloitte.
Findings from the latest Measuring the Return from Pharmaceutical Innovation, an annual report by Deloitte which analyses the late-stage drug development pipelines of the top 20 global biopharma companies, revealed an increase in the forecast internal rate of return (IRR), from 5.9% in 2024 to 7.0% in 2025. The research shows the upward trend is attributable to a few GLP-1 drugs, primarily targeting obesity and diabetes.
For the first time in the 16 years of analysis, obesity drugs have displaced oncology drugs as the largest contributor to a pharma company’s pipeline value. Obesity drugs now account for 25% of total forecast sales – in 2022 this was just 1%. However, when GLP-1 drugs are excluded from the analysis, R&D productivity is weaker, with a rate of return of just 2.9%.
Colin Terry, Life Sciences partner at Deloitte, said: "While the headline figures suggest a robust recovery in R&D productivity, our analysis uncovered an industry wide critical dependency on GLP-1 drugs that could create a 'bubble' effect. This concentration of value into a few mega-blockbuster drugs, while exciting, exposes the industry to risk once launched.”
Development costs continue to increase - the average cost to progress a drug from discovery to launch went from $2.23 billion* in 2024, to an average of $2.671 billion in 2025. There was also a rise in the average forecast peak sales which increased to $598 million in 2025, a notable jump from $510 million in 2024. If GLP-1s were excluded from the analysis, the average peak sales drops to $353 million.
The increasing concentration of R&D value
The report revealed that the industry's future value is increasingly concentrated on a small number of major drugs. In 2025 there were 108 ‘blockbuster’ drugs – those expected to generate over $1 billion in annual sales – in the pipeline, which included 14 new additions. Only 54 of these blockbuster drugs represent just 9% of all drugs in advanced development, yet they are forecast to deliver around 70% of the total projected sales.
Chris Aylott, Deloitte Partner and Life Sciences Catalyst lead, commented: "The degree of concentration we're seeing is unprecedented as a small number of assets can lift the entire industry's ROI. However, it comes with greater competition and sensitivity to clinical, regulatory, or market access shocks. This high-stakes environment is compounded by the continued upsurge in development costs, which has seen an increase of half a billion dollars per asset.”
Focus on ‘novel drugs’ for greater commercial value
Deloitte's analysis revealed that the value of drugs which have ‘novel mechanisms of action’ (MoAs) has risen sharply to 53% in 2025, up from 35% in 2024. The new ways a drug produces a pharmacological effect, such as with gene or cell therapies, has risen sharply. GLP-1 drugs, which use MoAs, take the lion's share of value (60%) in this tier.
Terry added: "The GLP-1 boom has boosted headline returns, but it also highlights the urgent need for building a resilient R&D engine and securing future prominent patient impact and company market share. Companies must rethink their investment approach, including prioritising early-stage acquisitions to capture greater value in the long term, alongside internal pipeline assets. There also needs to be a bolder risk appetite for truly novel drugs, the kind that could be the next game-changing GLP-1, rather than just incremental improvements.
“Additionally, pharma companies need to rethink how they’re applying AI in R&D, as well as how they will measure the impact. Right now, and despite significant investment, AI hasn't yet delivered on its promise to reduce R&D costs and speed up drug development across the industry - in fact, it is probably one of the contributors to increasing cost per asset. To truly deliver, AI must be integrated across a company’s entire operations, not just in pockets.”
Image: Chris Aylott, Deloitte Partner and Life Sciences Catalyst lead
