The High-Growth Peptide Market + The Best Way To Play

An Introduction to Peptides, Antibody Discovery Platforms & Peptide Manufacturing

Proteins are the key machinery to allow the human body to function. They make cells work (e.g. enzymes), they are the building blocks for the human body (e.g. collagen), they transport things around the body (e.g. hemoglobin carrying oxygen), they send signals (hormones), and they also defend the body against microbes (antibodies).

The below illustration from Duke shows how proteins are created. First, inside the cell nucleus, genes are read from DNA and transcribed into mRNA. This mRNA leaves the nucleus and goes out into the cytoplasm, the jelly-like fluid that fills the inside of a living cell, where a ribosome reads the mRNA code and then builds proteins.

So, the ribosome collects amino acids and stitches them together in the right order to build the protein. Once complete, the amino acid chain releases from the ribosome and folds into a functioning protein. This is exactly what Google’s AlphaFold AI model is all about—give it a sequence of amino acids and the model will predict the 3D structure of the protein. Before AlphaFold, it would take years of lab work to estimate the structure based on the amino chain sequence. The image shows a 3D rendering of a protein as predicted by AlphaFold and colored according to confidence:

Peptides are basically very small proteins, built out of much shorter chains of amino acids than the one shown above. A common rule of thumb is that anything under about 50 amino acids is a peptide, while longer chains are called proteins. Another key distinction is that while proteins fold into stable, complex 3D structures that determine their function; short peptides often have little fixed structure, although many still do important work.

Peptides have garnered a lot of interest both from the biotech space as well as on social media. Influencers on TikTok and Youtube regularly discuss the many benefits of particular peptides—from weight loss to faster healing, anti-aging, better sleep, more rapid muscle growth and even bigger erections. Clearly, these are very powerful molecules. However, note that many of these generic, consumer peptides are sold for ‘research purposes’, meaning that they’re not actually approved for human use. So, they can contain microbial contamination which could be life threatening. Secretary of Health Bobby Kennedy is now looking into approving some peptides for human use, meaning that you’ll potentially be able to get them at compounding pharmacies in the US going forward.

Peptides have also become big business for the pharma and biotech industry. OmniAb’s capital market day discussed how therapeutic peptides are now a $117 billion market which is projected to reach $333 billion by the mid-2030s, compounding at a 11% CAGR:

While the current engine of the therapeutic peptide market are GLP-1s, the peptides that make you lose weight, OmniAb shows that peptides can be used in a wide range of therapeutic markets. This includes big markets such as oncology (cancer) and cardiovascular, as well as high growth markets such as neurological and also rare diseases.

OmniAb provides a research platform to help pharma and biotech companies identify the right molecules to put through expensive trials. In return, OmniAb collects licensing and services revenues, as well as lucrative royalties on the sales of the drugs. Historically, OmniAb has been focused on antibodies but given the large potential in peptides, the company has now also developed a research platform to play in this new market.

This is OmniAb’s VP of Exploratory Research discussing the peptides research platform:

“I’m thrilled to tell you about OmniTides today. So we’re introducing this new platform, and it extends our reach into a high-value market that is adjacent to the antibody market that we have historically tailored our platforms towards. So as you’ve heard in the context of therapeutic antibodies, the immunization of animals is really a well-established and clinically proven method, and it has yielded most of the approved antibodies on the market today. We have a suite of transgenic animals that addresses that market.What we’re doing is we’re repurposing the immune system. You could consider it nature’s discovery engine to discover peptides. And this really opens up new possibilities for us. Peptides have really been reinvigorated in recent years with the explosive use of GLP-1s, and these kind of medicines can transform diseases in different ways. So we really see peptides as being like a really exciting opportunity, and this is because of their small size. They’re able to penetrate tumors very effectively, and they have tunable clearance. For imaging, that clearance time frame can match the radioactive decay half-lives of radionuclides. This really expedites the discovery to lead times. I want to share with you the OmniTides workflow. It’s really quite simple because what we do is we start with the OmniUltra chicken. So this is immunization. And what happens then is that it will produce these antibodies that have this protruding stalk-knob feature. You can think of this as an antibody that’s displaying a peptide that’s integrated into the antibody structure. We screen the output of an immunization campaign using xPloration. So, having identified potential binders at the B cell secretion stage, we can then reconfirm these hits by recombinantly making them or we can also just make the peptide by chemical synthesis. This is pretty amazing that this little peptide that was discovered within the context of an antibody can actually function as an autonomous unit and it contains all the optimization that you would expect from antibodies.”

So, OmniAb uses genetically engineered chickens that carry human antibody genes. When these animals are exposed to a disease target, they produce fully human antibodies that can be developed into drugs. The animals’ immune systems generate a huge variety of antibodies and OmniAb’s xPloration tool selects the antibodies that bind best to the target. Then, the suitable peptides are cut out of these antibodies and chemically synthesized by manufacturing partners.

These types of research platforms can be tremendously powerful to find drug candidates. Regeneron is a good example here. Normally, if you immunize a regular mouse with a target protein, you get mouse antibodies. Human patients’ immune systems recognize those as foreign and so they have to be humanized afterwards, which is slow and can weaken the antibodies. Regeneron’s solution was to swap out a mouse’s own antibody genes for human ones, so directly inserting them into the mouse genome.

Earlier humanized mice had failed at this approach as fully human antibodies don’t communicate well with mouse immune cells. That led to weakened immune systems for humanized mice and so these mice weren’t effective at producing antibodies. Regeneron’s solution was to replace only specific parts of the mouse antibody genome with a human version. This is the part of the antibody that actually binds the target, while keeping the stem of the antibody—the part that interacts with the mouse’s own immune machinery—intact.

This made Regeneron’s mice both healthy and able to produce highly effective antibodies that also work inside the human body. A platform that allowed the company to launch one successful drug after the other. Investors were richly rewarded in this name—shares rose from $15 in 2008 to almost $1,200 in 2024.

OmniAb’s view is that chickens have an advantage over mice. Chickens are evolutionarily more distant from humans, making them respond to human proteins that mouse-based systems treat as self. Basically, chickens can produce antibodies for targets where mice fail.

Samsung Biologics is one of the largest drug manufacturers in the world. In biotech, these drug manufacturers are called the CDMOs (contract development and manufacturing organizations). CDMOs are similar to the foundries in the semiconductor industry. So, Nvidia will tell TSMC which chips to manufacture, while in biotech, a pharma or biotech name can outsource manufacturing to a CDMO. These CDMOs can produce a large variety of biological molecules as Lonza shows—biologics, cell & gene therapy, mRNA, etc.:

However, peptide manufacturing is a skill that few of the CDMOs possess. So, Samsung Biologics decided to step into this market by acquiring Polypeptide, one of the best peptide manufacturers in the world. This is Polypeptide’s CEO on what will likely be the last earnings call of the company, describing the attractive outlook:

“We posted in the first half of 2026 a strong growth in revenues and profitability. Our revenues increased 41.6% versus the first half of 2025 across both commercial and development. And this growth was driven by metabolics, which actually grew 72.6%. Our EBITDA margin improved from 2.7% in the first half of 2025 to 20.7% in the first half of 2026, and this reflects the benefit from the strong revenue growth of the company. Our capacity expansion across our global manufacturing network is on track. Braine is now already operating at target capacity, and our capacity expansions across Malmo, Strasbourg and Ambernath are on track. We have further expanded our rich pipeline. The number of Phase III projects increased from 30 at the end of 2025 to 37 at the end of the first half of 2026. Just to put this into context, globally, the number of synthetic peptide drugs in development in Phase III is about 70. That basically means that about half of all Phase III development activity is going through PolyPeptide. Peptide is one of the most attractive markets for CDMOs. The market is expected to quadruple from 2023 to 2031. When you look at the number of peptide drugs in clinical development, if you include early-stage activity, you have about 1,600 programs. Of those ones, you already have 591 in clinical development. And the clinical development is across multiple therapeutic areas. Metabolic and oncology account for 40% of our clinical development activity. We are seeing a next wave of innovation in metabolics, which is the main growth engine for peptides. We are seeing indications expansion, whether it is MASH, cardiovascular, sleep apnea, osteoarthritis. We are seeing extended dosing intervals like monthly injections. We are seeing higher efficacy, better side effects profile. We are seeing alternative delivery routes like orals. And basically, what this is doing is enhancing the value proposition of metabolic peptide offerings, which will ensure that the strong demand that we are observing today continue for the foreseeable future. If you look at the peptide market, there is always a mix between in-house and outsourcing. Some customers have in-house, some customers have 2, some customers rely more on outsourcing. Now based on what we see today, if you look at the number of pharmaceutical and biotech players moving to large peptide drugs without any peptide manufacturing expertise, this is very large. And that’s why we see they are relying on peptide CDMO support. With concerns around biosecurity, when we look at Western customers, we are only competing against other Western players. We do not compete against Chinese players. Now at the same token, when there is a tender for China, we do not participate and it is mainly Chinese CDMO players participating. The concerns around intellectual property continues to be a barrier for Chinese CDMOs to participate more actively in the Western side. And of course, it’s a benefit for companies like PolyPeptide.In the case of consumer peptides, we are following this development with interest. It could be an opportunity, but I have to say the demand from branded pharmaceutical and biotech players is so large that we are very much focused on bringing all these new products to market and supporting their commercialization. And generics is more or less the same. We do not really engage in terms of generic production. We believe most of the production is being done by Chinese and Indian players. But again, going back to what I discussed in terms of the level of innovation and development in terms of metabolic peptide drugs, we think that there are many differentiated offerings coming to market and the branded side of the market will continue to grow very rapidly.Now, let me just talk about the Samsung Biologics’ offer to acquire PolyPeptide. As we communicated on the 20th of July, PolyPeptide and Samsung Biologics announced they have entered into a transaction agreement under which Samsung Biologics agreed to make an all-cash public tender offer to acquire all publicly held shares of PolyPeptide for CHF 44.31 per share. This transaction aims to provide PolyPeptide with the resources, investment capacity and a strategic platform to pursue the next phase of its growth and innovation. The combination of PolyPeptide’s deep scientific expertise and rich pipeline with Samsung Biologics’ industrial scale, resources and capabilities will create a transformational player to drive the growth in the overall peptide market.Samsung Biologics is one of the most successful CDMOs globally and their track record and reputation is very high. So customers see this as an opportunity for PolyPeptide to access resources and capabilities to scale up in a way that before was going to be very difficult. And on that front, this is very positive. Our anchor shareholder supported the process and agreed to tender all of its shares, accounting for 55.65% based on total shares outstanding. And the Board of Directors, acting through its independent and nonconflicted members unanimously recommended that PolyPeptide shareholders accept the offer, a recommendation supported by an independent fairness opinion. This offer is a 40% premium over the undisturbed price before the market rumors of a potential transaction became public and it is a 60% premium on the VWAP on the 60-day volume-weighted average stock price, again before the news regarding a potential transaction became public.”

Polypeptide sees the global therapeutic peptide market growing at an 18% CAGR:

And the company revised its guidance up to 25-30% top line growth for this year:

Polypeptide is clearly a good company and the peptide space in general should be an interesting market for investors in the coming decade. Innovation is high here, as we saw with OmniAb’s discovery platform, which means that a lot of peptide-based drug candidates should go into trials. And as we saw with Polypeptide, companies in the peptide space are generating high growth and this is drawing strong M&A interest. As many countries are dealing with aging populations, peptides should be an interesting thematic for investors.

Next, we’ll review a company that we invested in a little while ago and that we reviewed for premium subscribers at the time. Shares are up 50% since, but the good news is that the outlook remains highly attractive. We expect these shares to compound at a 20-25% IRR in the coming years and with the potential to double in the coming 3-4 years.

The Best Way To Play The High-Growth Peptide Market