Hims & Hers Teams Up With Its Former Rival—Hidden Concerns Lurk in the Weight-Loss Drug Market
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Shares of telehealth platform $Hims & Hers Health Inc.(HIMS)$ have experienced dramatic volatility over the past few years. Currently down 65% from its all-time high, the stock surged 50% in March—thanks to a new partnership agreement the telehealth platform struck with a weight-loss drug manufacturer that once sued it. Today, Hims & Hers is joining hands with its former adversary. Following this latest move in Hims & Hers’ stock price, two S&P 500 components are worth watching, and what this deal means for the future of the weight-loss drug market is equally food for thought.
The agreement with Hims & Hers highlights the dominance currently held by weight-loss drug manufacturers in the market. Initially led by Novo Nordisk (NVO), the space is now dominated by Eli $Eli Lilly(LLY)$Zepbound. This has fueled rapid growth in Eli Lilly’s business in recent quarters, while Novo Nordisk’s operations have stagnated. Nevertheless, both companies have grown their revenues by approximately 200% over the past decade. Eli Lilly has formed a partnership with Ro, a competitor of Hims & Hers, while Novo Nordisk has struck a deal with Hims & Hers itself. It’s likely that both pharmaceutical giants hope to make these weight-loss drugs more accessible to consumers at home, thereby boosting demand.
These partnerships underscore that the core power of the industry remains in the hands of pharmaceutical behemoths like Novo Nordisk and Eli Lilly. They have invested billions of dollars in the research, development, and regulatory approval of these drugs. Whether these medications are sold through Hims & Hers or other telehealth platforms, the majority of profits ultimately flow back to the drugmakers. This explains why both pharmaceutical companies generate over $15 billion in net profit annually, while Hims & Hers, acting as a reseller, barely turns a profit. Weight-loss drugs may be the fastest-growing drug class in history, with implications potentially profound enough to reshape the global obesity crisis and significantly improve the health of hundreds of millions of people. Leveraging their industry leadership, these two pharmaceutical giants have long been outperforming stocks and are poised to benefit from the weight-loss drug momentum for years—even decades—to come.
Eli Lilly’s stock fell 5% before midday on Tuesday (Eastern Time), a move attributable to analysis from HSBC. The bank just downgraded Eli Lilly’s stock rating to “Sell”—or more precisely, HSBC used the term “Reduce,” but the sentiment is identical. Most analysts predict that the total addressable market (TAM) for obesity drugs, represented by Novo Nordisk’s Ozempic and Eli Lilly’s Zepbound, will exceed $150 billion. However, HSBC analyst Rajesh Kumar believes this figure is overly optimistic. Even looking ahead to 2032, he expects annual revenue from GLP-1 weight-loss drugs to reach only $80 billion to $120 billion.
One flaw in other analysts’ forecasts is that while GLP-1 drugs are currently priced high, their prices are falling—and “price competition could be very intense” in the future. Another issue is that not all patients who start taking GLP-1 drugs will stick with them, as dropout rates in clinical trials have shown. Entering 2025 and 2026, multiple rounds of price cuts have already occurred between the two GLP-1 giants. Eli Lilly’s guidance indicates that the company plans to offset the impact of price reductions by expanding sales volume to maintain growth.
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