Hims & Hers (HIMS) Down 21% – Is the GLP-1 Gravy Train Over?

Shares of Hims & Hers Health (NYSE:HIMS) are down about 21%, or $14.

All on news the Ozempic shortage is over.

Key Points About This Article 

• Just this morning, the US FDA said Novo Nordisk’s popular diabetes and weight loss drugs Ozempic and Wegovy are no longer in shortage.
• That means Hims & Hers Health, which markets compounded versions of the two treatments, can no longer manufacture exact copies of the drugs as they did during the shortage. It also means the gravy train is over for HIMS, at least for now.
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Just this morning, the US FDA said Novo Nordisk’s (NYSE:NVO) popular diabetes and weight loss drugs Ozempic and Wegovy are no longer in shortage.  That means Hims & Hers Health, which markets compounded versions of the two treatments, can no longer manufacture exact copies of the drugs as they did during the shortage.

It also means the gravy train is over for HIMS, at least for now.

When and if there’s another shortage, HIMS could easily rally back. So, while it may be a good idea to avoid the HIMS stock for now, keep an eye on it.

The drugs, collectively known as semaglutide, were in short supply in the U.S. for months thanks to a massive increase in demand for obesity drugs. This led to supply constraints for Eli Lilly’s (NYSE:LLY) tirzepatide.

During the shortage, “patients flocked to compounders, which were allowed to make copies of semaglutide since it was on the shortage list. Patients were also drawn to compounded semaglutide since it was cheaper than the brand-name version, which carries a list price of about $1,000 a month,” as noted by StatNews.com.

Demand is Still Sky-High for Obesity Drugs

With demand not showing any signs of cooling, companies could see supply issues again down the road, which could be good news for companies, like HIMS.

For one, we have to consider the obesity market opportunity is substantial.

As noted by Goldman Sachs, the global obesity treatment market could grow to $130 billion by 2030. Even Morgan Stanley expects the global obesity drug treatment market to reach $105 billion by 2030 from $77 billion. At the high end, $144 billion.

Plus, there’s no shortage of demand.

That’s because, according to the World Health Organization, obesity has more than doubled since 1990. Adolescent obesity has quadrupled. In addition, about 390 million children and adolescents aged five to 19 years were overweight in 2022, including 160 million who were living with obesity.

Two, companies like Novo Nordisk are seeing record sales for Wegovy and Ozempic, leaving the company struggling to keep up with demand. “Obesity drug sales jumped by 154% at constant exchange rates to 41.6bn Danish kroner (£4.8bn) last year, fueled by demand for Wegovy, which brought in £3.6bn. Sales of diabetes drugs such as Ozempic grew by 52%, and obesity and diabetes drug sales totaled nearly £25bn,” according to The Guardian.

Again, while it may be a good idea to avoid the HIMS stock for now, keep an eye on it. Future obesity drug shortages could lead to opportunities in Hims & Hers Health down the road.

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