The Unraveling of Hims’ GLP-1 Strategy
A Cautionary Tale of Fleeting Fortunes and Structural Blind Spots
Over the past several months, Hims & Hers Health has been touted as a digital healthcare trailblazer—an online platform that connects patients with licensed providers to offer treatments for everything from hair loss and sexual wellness to weight loss. In its boldest, most high-profile maneuver, Hims capitalized on a temporary regulatory loophole: an FDA-designated shortage of semaglutide, the active ingredient in blockbuster weight loss drugs like Ozempic and Wegovy. By offering compounded, personalized versions of GLP‑1 treatments at a fraction of the cost of branded medications, Hims generated impressive growth and investor enthusiasm. You’ve probably seen ads for this all over your TV screens. But now, as the FDA officially lifts that shortage, the foundation of this business model is crumbling, exposing a series of legal, ethical, and operational challenges that may have been overlooked from the start by those who don’t live and breathe drug development.
In this post, I want to talk about Hims’ business model, explore the collapse of the compounded GLP‑1 strategy, discuss the pivot to alternative weight loss solutions, and critically examine the broader ethical implications. And remember, Hims isn’t alone: competitors like Ro have been following the same playbook, meaning the entire compounding sector could soon face a reckoning.
I. A Primer on Hims’ Business Model
For those new to Hims & Hers, here’s a quick primer. Hims is a fully digital telehealth platform that allows patients to fill out detailed online questionnaires about their health, lifestyle, and symptoms. This information is then reviewed by a network of licensed providers—typically physicians, nurse practitioners, dermatologists, and pharmacists—who, as independent contractors, determine whether a patient qualifies for a particular treatment. The convenience of receiving a prescription without having to step into a doctor’s office has been a game-changer for many.
In the weight loss arena, Hims leveraged a unique opportunity. When semaglutide entered a shortage phase (a designation set by the FDA when supply cannot meet demand), compounding pharmacies were permitted under strict guidelines to produce “personalized” copies of the drug. Hims and its peers jumped on this chance to offer compounded GLP‑1 treatments at dramatically lower prices than the branded drugs. For example, while Wegovy might cost over ~$1,800 per month, Hims’ compounded alternative was available for as little as ~$165 per month. This price difference, combined with the promise of personalized dosing (i.e. Hims can manufacture unapproved and untested doses of Ozempic/Wegovy), helped Hims rapidly scale its weight loss business.
It’s important to note that Hims’ business model isn’t isolated. Competitors like Ro have also embraced the compounding strategy. The fact that multiple companies have built significant revenue streams off this temporary regulatory exception raises an obvious question: What happens when the conditions that allowed this model to thrive finally disappear?
II. The Collapse of the GLP‑1 Compounding Model
A. A Fleeting Advantage
When semaglutide was in shortage, Hims struck gold. The FDA’s shortage designation essentially created a window of opportunity for compounding pharmacies. Under those conditions, these pharmacies could legally produce personalized versions of semaglutide that, while similar in active ingredient to branded drugs like Ozempic and Wegovy, were not subject to the same rigorous FDA approval process. The compounded versions also did not use the same auto-injectors as the branded versions. Patients typically injected themselves with a needle, drawing drug from a vial. There are all sorts of potential safety and efficacy issues around this worth getting into at another time. But in short, Hims leveraged this regulatory gap to offer an affordable alternative, drawing in a massive customer base hungry for weight loss solutions that didn’t break the bank, all the while doing it on the back of the brand that Novo had built with Ozempic and Wegovy. In a sense, this loophole enabled early generic entry for a time.
However, this wasn’t a breakthrough in pharmaceutical innovation—it was a clever exploitation of a temporary anomaly. In hindsight, many industry experts have argued that building a scalable business model on a transient regulatory condition is like constructing a house on sand. It might look impressive in the short term, but when the tide comes in, everything washes away. This seemed quite evident to folks like me and many of you who work in or around drug development. But for the Hims crowd, who stem from more of a tech and consumer health background, this truth was not that salient.
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B. The Regulatory Reckoning
Fast forward to the present: the FDA has removed semaglutide from its shortage list. This decision forces compounding pharmacies—and by extension, platforms like Hims—to cease mass production of these personalized formulations within 60 to 90 days. As expected, investors reacted sharply. Hims’ stock price experienced a significant drop, reflecting the market’s growing skepticism about a model that was never built to last.
This regulatory move underscores a fundamental flaw in the model: Hims’ success in the GLP‑1 space was predicated on conditions that were, by design, temporary. The market now sees that if you build your business on an administrative loophole rather than on sustainable innovation, you’re setting yourself up for a painful reckoning.