Hims & Hers Hopes To Expand In A Changing US Market Despite FDA Ban 

Hims has been in demand in the market as it sells cheaper compounded versions of highly in-demand weight-loss drugs like Wegovy, manufactured by Novo Nordisk. 

Hims & Hers Health is banking on the cash-pay market for weight-loss drugs to drive up customer demand, although analysts believe that the online website needs to first adjust to changing competition in the US.  

Hims has been in demand in the market as it sells cheaper compounded versions of highly in-demand weight-loss drugs like Wegovy, manufactured by Novo Nordisk. The US Food and Drug Administration (FDA) permitted this when there was a shortage of those drugs. However, with adequate supply, the FDA mandated that the sale of compounded versions must be stopped towards the end of May. 

Since the ban on compounded versions was announced, company shares plunged 14%, and job cuts were announced soon after. Hims did clarify that the layoffs were not related to the ban, but no other explanation was provided, save that it was being implemented across teams. The company reiterated that it would continue to hire for roles related to its long-term growth strategy. 

The semaglutide shortage, which is an anti-diabetic medication used to treat Type 2 diabetes, is now over. Hims must now face the prospect of generating growth using its other products, under its broader weight-management program. 

In light of the ban, the company announced that it would now sell personalised dosages of Wegovy at just $165 a month, citing clinical reasons like decreased side effects, per the rules. Along with selling branded Wegovy and Eli Lilly‘s rival Zepbound, Hims also sells liraglutide, a generic version of an older Novo diabetes drug, which also causes weight loss. 

However, analysts have questioned the validity of this offering. Doubts have been raised regarding the authenticity of these ‘personalised dosages.’ Novo has previously said that mass production of its copies is illegal, and therefore, market experts are doubtful whether the company will Hims to follow through on this grand plan. 

Market experts believe that rather than producing cheaper weight loss drugs, Hims should redirect its focus to working with insurers, although the company’s spokesperson has publicly attested that no such plans are currently on the horizon. Hims’ rival firms, Ro and Noom, also sell compounded products, which these companies describe as ‘personalised,’ and also work with insurance companies. 

Insurance firms CVS Health and Cigna have both adopted new strategies for weight-loss drugs by limiting which ones they will cover and which must be paid for out-of-pocket. Leerink’s Cherny added that if insurance coverage for these drugs were expanded, it would reduce the need for cash-pay vendors and compounders. Therefore, Hims growth is bound to be hindered, as customers will look for better-suited options, more compliant with their insurance plans. 

Hims hopes to meet its revenue target of $6.5 billion by 2030. Analysts estimate that, according to LSEG data, the company can achieve a revenue of $2.4 billion this year, up from $1.5 billion in 2024, and record earnings of 65 cents a share. 

In an investor meeting last month, Hims CEO Andrew Dudum explained that customers prefer the cash-pay option as their insurance deductibles for these weight-loss drugs are too high. In order to stay afloat in the US market, the company has circled under-insured consumers as their target audience and plans to offer personalised products once it purchases a diagnostic lab, which would help Hims to identify potential new patients. 

Hims’ compounded semaglutide is sold at roughly a third of Wegovy‘s price. However, those purchases are not considered against the patients’ insurance deductibles and can often amount to thousands of dollars. 

Analysts do believe that the firm’s newest plans could prove to be a legal complication and could elicit a lawsuit from its newest partner, Novo Nordisk.