The biopharma sector has been hotly watched among investors over the past two years amid a boost to the industry by the growing popularity of the glucagon-like peptide-1 (GLP-1) drugs used in weight loss treatments. Looking ahead into 2025, however, UBS foresees that the sector “will find it difficult to outperform against a more uncertain macro backdrop,” in the short-to medium-term. This is due to the current lower interest rate environment and U.S. President-elect Donald Trump’s selection of vaccine skeptic Robert F. Kennedy Jr. to lead the Department of Health & Human Services, the Swiss investment bank’s analysts detailed in a Dec. 18 note. “Within Biopharma the GLP theme will continue to dominate, though from the macro aspect, how RFK’s potential leadership will impact the GLP-1 industry is uncertain,” they wrote. Kennedy “has publicly criticized proposals to allow government health plans to pay for GLP-1 drugs due to financial concerns,” the analysts noted. Even so, they expect the market will grow and estimate that the market is currently pricing in a “sustainable peak” in GLP-1 sales ranging between $90 billion to $110 billion. “Given the addressable market size, the range of potential outcomes is wide with potential for the Eli Lilly and Novo Nordisk franchises to grow beyond 2031 with successful pipeline read-outs,” they added. Market leaders Eli Lilly and Novo Nordisk have been market leaders in the GLP-1 drugs sector. Shares in Eli Lilly are up around 34.4% since the start of the year, while its Danish rival Novo Nordisk has seen a loss of around 16% in the year-to-date. UBS’ analysts continue to expect a “duopoly” between the two firms with sales increasing as more capacity comes online in 2025. “While we acknowledge there is potential competition entering in c.2028, we see limited penetration,” they added in a Dec. 18 note. Both Eli Lilly and Novo Nordisk offer injectable weight-loss drugs and are in the process of introducing pills to support weight management. The launch of oral drugs will prove to be “another inflection point” for the sector, UBS’ analysts said, noting that it is a more convenient way of consuming the drug. Acknowledging that the duo face competition from other pharmaceutical companies like Amgen and Roche , which are also dabbling in weight-loss drugs, the analysts said they see “limited penetration given the entrenchment of Lilly and Novo.” According to FactSet, of the 31 analysts covering Eli Lilly, 24 have a buy or overweight rating on the stock at an average target price of $1,008.45 – giving it around 28.8% upside potential. Meanwhile, of the 31 analysts covering the stock Novo Nordisk, 21 have a buy or overweight rating with an average price target of 922.62 Danish krone ($129), or 48.1% upside, according to FactSet. — CNBC’s Michael Bloom contributed to this report.