Shares of Hims & Hers (-7.54%) experienced a decline of up to 8% on Tuesday, ultimately closing at the day’s lowest value following the announcement that Eli Lilly (0.42%) had reduced the price for an important weight loss medication.
Eli Lilly Targets Hims & Hers
Tuesday’s significant development was Eli Lilly’s decision to offer the weight loss drug Zepbound on its direct-to-consumer website at half the previous price. The cost for a 2.5-milligram single-dose vial is now set at $399 for a month’s supply, while a 5-milligram dose is priced at $549 monthly.
This marks the first time a name-brand GLP-1 weight loss medication is available at such an affordable rate without utilizing the shortage exemption that Hims & Hers employs to sell a compounded version of these drugs. Currently, investors view this as a potential threat to a critical growth path for Hims & Hers.
Positive Outlook for Hims & Hers
Despite the market perceiving this as negative news, I believe the opposite is true. Hims & Hers operates not only as a customer acquisition platform and distributor of name-brand products but also as a producer of its own branded treatments. Therefore, the company would likely welcome the opportunity to offer the Zepbound treatment at this competitive price.
The GLP-1 product currently offered by Hims & Hers is priced at $199 per month, maintaining a cost advantage over Eli Lilly’s option. Furthermore, given that Hims & Hers has only recently begun offering a GLP-1 product, any shift of customers to Eli Lilly’s direct site is unlikely to significantly impact existing sales.
While the market reacted sharply to today’s news, I am confident that it will not substantially affect Hims & Hers’ long-term growth prospects.
