Telehealth Stocks Surge onGLP-1 Drug Controversy
Telehealth stock Hims & Hers (HIMS) soared over 24% in trading Thursday, following its controversial Super Bowl ad promoting affordable GLP-1 weight-loss drugs. The ad criticized the healthcare system while marketing cost-effective options without specifying the type of drugs (generic or branded) offered.
HIMS has since gained 100% year-to-date, driven by retail investor interest. The stock's rise aligns with the US Senate's approval of Robert F. Kennedy Jr. as Secretary of Health and Human Services (HHS).
Industry experts believe Kennedy's HHS will adopt a lenient stance towards GLP-1 compounders, provided safety concerns are addressed. The incoming administration reportedly prioritizes cost-benefit ratios in the pharmaceutical industry, particularly in preventive health.
Ongoing GLP-1 shortages have contributed to the enthusiasm surrounding HIMS. Market leaders Eli Lilly (LLY) and Novo Nordisk (NVO) are investing billions to increase production. During the shortage, compounding pharmacies produced and sold patented products at lower prices, raising safety concerns. However, consumers continued to support telehealth providers like Hims and Ro, who captured an estimated 20% market share.
Despite the FDA removing Lilly's tirzepatide drugs from its shortage list, concerns remain about the company's ability to meet demand. Novo's semaglutide drugs remain listed but are expected to be removed based on increased production. This allows telehealth providers to continue offering compounded products.