Investing.com -- Hims&Hers Health Inc (NYSE:HIMS) stock fell 3.8% Tuesday after Eli Lilly and Company (NYSE:LLY) indicated it would not partner with telehealth firms selling copycat versions of weight-loss drugs, effectively ruling out a potential deal with Hims.
Lilly shares rose 3.8% following the comments from Chief Financial Officer Lucas Montarce at the Goldman Sachs (NYSE:GS) 46th Annual Global Health (NSE:GLOH) Care Conference, where he stated that the company’s recent agreements with telehealth providers like Ro and LifeMD prohibit them from selling compounded versions of Lilly’s Zepbound and Novo Nordisk (NYSE:NVO)’s Wegovy.
The CFO said, “How we construct our agreements is that we are enforcing in those agreements that as long as the product is out of the shortage list, that those telco services are not compounding either trisepatide or semaglutide, right? So it’s also another way to move those out and move into the original brands.”
The announcement dampens Hims&Hers’ prospects for securing a distribution partnership with Lilly similar to its April deal with Novo Nordisk, which allows Hims to offer Wegovy at a discounted price to its platform users. Investors had been hopeful for such an arrangement with Lilly, particularly after the company began working with several of Hims’ competitors to distribute lower-cost Zepbound.
Hims&Hers has been expanding its presence in the weight management market, with its existing Novo partnership representing a significant part of its growth strategy. The inability to secure a similar arrangement with Lilly could limit its competitive positioning in the rapidly growing GLP-1 weight loss medication space.
Eli Lilly’s stance reflects growing concerns among major pharmaceutical companies about compounded versions of their branded weight loss drugs, which they argue may not meet the same safety and efficacy standards as FDA-approved medications.
Additional downward pressure has been put on Hims stock today following an announcement by GoodRx of a new subscription service for erectile dysfunction (ED), directly challenging Hims&Hers in one of its key product categories. With pricing starting as low as $18 per month and including virtual consultations and discreet delivery, GoodRx’s offering introduces a low-cost, streamlined alternative that could lure away some customers.
The stock movement reflects growing concerns about Hims’ ability to maintain its growth trajectory amid increasing pressure in the weight loss and sexual wellness markets, as investors sent shares down 3.8% on lost opportunity and rising competition.