Hims & Hers Health (HIMS) saw its stock surge nearly 10% on Monday, closing at $20.50, after the U.S. Food and Drug Administration (FDA) announced that compounding pharmacies could continue producing copycat weight-loss drugs. This decision comes as the FDA reexamines whether there is a shortage of the active ingredients used in popular obesity treatments, such as Eli Lilly's Mounjaro and Zepbound.
The FDA’s move benefits Hims & Hers, which produces compounded versions of these weight-loss drugs and has capitalized on the limited availability of the originals. The company's stock has more than doubled in value since the beginning of 2024, driven by strong demand for obesity medications.
This regulatory shift follows a lawsuit filed by the Outsourcing Facilities Association, which represents compounding pharmacies, challenging the FDA’s earlier ruling that removed Eli Lilly's treatments from its shortages list. In response, the FDA stated it would not take immediate action against companies producing the compounded drugs while the matter is reconsidered. Hims & Hers stands to gain significantly if the FDA maintains its more lenient stance on compounding, as it could continue to serve the growing market for weight-loss treatments.
The FDA’s move benefits Hims & Hers, which produces compounded versions of these weight-loss drugs and has capitalized on the limited availability of the originals. The company's stock has more than doubled in value since the beginning of 2024, driven by strong demand for obesity medications.
This regulatory shift follows a lawsuit filed by the Outsourcing Facilities Association, which represents compounding pharmacies, challenging the FDA’s earlier ruling that removed Eli Lilly's treatments from its shortages list. In response, the FDA stated it would not take immediate action against companies producing the compounded drugs while the matter is reconsidered. Hims & Hers stands to gain significantly if the FDA maintains its more lenient stance on compounding, as it could continue to serve the growing market for weight-loss treatments.