Hims and Hers Health reported a strong market response on Thursday after unveiling a compounded version of Novo Nordisk’s new Wegovy pill at an introductory price of $49 per month. The telehealth company’s shares rose 19% on the announcement, reflecting investor enthusiasm for the lower-cost alternative.
Market reactions extended beyond Hims. Novo Nordisk shares dropped 7% and Eli Lilly shares fell 3.6% as traders reassessed competitive dynamics in the weight-loss drug sector. Hims’ introductory price sits roughly $100 below the branded Wegovy product from Novo Nordisk.
Hims said the introductory $49 per month price will change after a trial period. Patients who enroll in a five-month subscription will pay $99 per month for the company’s compounded semaglutide pills, compared with the $199 monthly charge for Novo Nordisk’s branded offering. The company also plans to offer shorter subscription options, including a three-month plan that amounts to a $277 total payment.
Commenting on the rollout, Hims CEO Andrew Dudum said, “We’re excited to find ways to continue bringing branded treatments to the platform across specialties. More choice on the platform is the best thing for customers everywhere.”
The timing of Hims’ announcement follows a recent warning from Novo Nordisk about unprecedented pricing pressure as patients migrate to cash-pay channels and insurers seek deeper discounts. Novo Nordisk is also contending with competition from Eli Lilly, according to the company’s statement referenced in market commentary.
Hims and Novo Nordisk previously operated a partnership to distribute injectable Wegovy, but that relationship ended amid allegations from Novo Nordisk that Hims had wrongfully marketed copycat products. The termination of that collaboration is part of the backdrop to the current competitive tensions.
Summary
Hims’ launch of a compounded semaglutide pill at a $49 introductory monthly price catalyzed a 19% gain in its stock, while shares of Novo Nordisk and Eli Lilly fell 7% and 3.6% respectively as investors reacted to heightened competition and pricing pressure in the weight-loss drug market.
Key points
- Hims priced a compounded Wegovy-style semaglutide pill at $49 monthly initially, with a five-month subscription price of $99 per month thereafter.
- Novo Nordisk shares fell 7% and Eli Lilly shares declined 3.6% following the announcement, reflecting market concerns about pricing and competitive dynamics.
- Sectors affected include telehealth distribution, pharmaceutical manufacturers of weight-loss therapies, and payer markets where cash-pay shifts and insurer negotiations influence pricing.
Risks and uncertainties
- Pricing pressure in the weight-loss drug market may intensify if more low-cost alternatives enter cash-pay channels, affecting pharmaceutical manufacturers’ revenues and margins.
- Competition among drugmakers and new entrants could lead to compressed prices and altered market share dynamics, impacting investors in the pharmaceutical and healthcare sectors.
- Past disputes between Hims and a major drugmaker related to marketing of copycat products point to legal and commercial uncertainty that could affect partnerships and distribution arrangements.