Hims & Hers shares rise as company adds Eli Lilly's Zepbound

Key Concepts:

• Hims & Hers business model: Offering compounded versions of weight loss drugs.
• Eli Lilly's branded weight loss drugs (e.g., Mounjaro).
• FDA ban on compounded versions of certain drugs.
• Cost comparison: Hims vs. Eli Lilly's drugs.
• Generic liraglutide: Alternative treatment for type 2 diabetes and weight loss.

Hims & Hers and the Weight Loss Drug Market

Hims & Hers shares experienced a surge after the company announced its intention to sell Eli Lilly's branded weight loss drugs, specifically those found in Mounjaro. This move is positioned within an ongoing "chess match" between major pharmaceutical companies (Big Pharma) and companies like Hims, which have been providing compounded versions of these drugs.

FDA Intervention and Compounded Drugs

The FDA recently implemented a ban on the sale of compounded versions of certain drugs. Despite this ban, Hims asserts that it will continue to offer these compounded drugs in personalized dosages, citing legal allowances for such practices.

Cost Analysis: Hims vs. Eli Lilly

A key point of contention for investors is the cost. Hims' monthly prescription for weight loss drugs is priced at $1,899. This is $800 more than the list price of Eli Lilly's Zepbound. Hims justifies this higher price by including a Hims membership, unlimited consultations with a healthcare provider, and treatment support. Consumers will need to evaluate whether these additional services justify the higher cost.

Alternative Treatment: Generic Liraglutide

Hims will also offer generic liraglutide, a treatment from Novo Nordisk typically used for type 2 diabetes. Liraglutide, similar to Wegovy, aids in weight loss by reducing hunger and improving blood sugar control.

Conclusion

Hims & Hers is navigating a complex landscape in the weight loss drug market, balancing the sale of branded drugs with the continued offering of compounded versions despite FDA scrutiny. The company's strategy hinges on providing value-added services to justify a higher price point compared to branded alternatives. The availability of generic liraglutide provides an additional option for consumers seeking weight loss and diabetes management solutions.