The weight-loss drug market is experiencing a rapid expansion, with telehealth provider Hims & Hers Health, Inc. (HIMS) finding a niche by offering affordable alternatives to popular medications like Eli Lilly And Co’s (LLY) Zepbound and Novo Nordisk A/S’ (NVO) Wegovy. These alternatives cater to customers who are either unable to access the original drugs due to shortages or are deterred by their high costs.
Hims & Hers has seen significant success by selling a compounded version of the GLP-1 treatment for $199 per month, a stark contrast to Wegovy’s $1,349 price tag. This strategy led to a 70% jump in their stock price following the drug’s introduction in May. However, the Financial Times reports that U.S. regulations may soon pose challenges to this business model. Current rules allow compounding only during drug shortages or for creating patient-specific doses, which could limit Hims’ ability to sustain its revenue stream once shortages resolve.
Meanwhile, Eli Lilly and Novo Nordisk are working to alleviate shortages. Lilly recently introduced a less expensive version of Zepbound to compete with lower-cost options and maintain its market share. The ongoing shortage of GLP-1 medications, a key component in these drugs, continues to disrupt the market, prompting legal and regulatory clashes over the compounding of patented medications.
Despite potential obstacles, Andrew Dudum, co-founder of Hims, remains optimistic, viewing their compounded drugs as an additive rather than a replacement for existing options. However, competitors like Michael Botta of Sesame are more cautious, suggesting they may discontinue such offerings once normal supply resumes.
This evolving landscape highlights a potential shift in how weight-loss drugs are distributed and regulated, with significant implications for both consumers seeking affordable options and pharmaceutical giants aiming to protect their innovations.