Hims & Hers Stocks Decline as FDA Addresses Obesity Drug Shortage

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Hims & Hers Stocks Decline as FDA Addresses Obesity Drug Shortage

Investing.com -- Hims & Hers Health, Inc. (NYSE: HIMS) shares experienced a sharp decline of 15% following the U.S. Food and Drug Administration's (FDA) announcement that the shortage of tirzepatide injection has been resolved. The FDA's decision, based on a comprehensive analysis, marks the end of a period during which certain pharmacies could compound, distribute, or dispense the medication without facing penalties due to violations related to the drug's shortage.

The FDA's reevaluation, announced on December 19, 2024, reverses its previous position from October 2, 2024, stating that the tirzepatide shortage has ended. The agency established transition periods for state-licensed pharmacies to continue compounding the medication until February 18, 2025, and for outsourcing facilities until March 19, 2025. However, the FDA clearly stated that it could take action against other legal or regulatory violations, including low-quality or unsafe products.

The market reaction reflects concerns about the impact on Hims & Hers Health due to the company offering compounded versions of obesity drugs, like Novo Nordisk's Wegovy (semaglutide), alongside companies such as WW International (WeightWatchers). The FDA still lists semaglutide and other GLP-1 products on the shortage list, with varying availability reported by manufacturers.

Investors were closely monitoring the FDA report on the shortage status of Eli Lilly's bestselling compound tirzepatid in anticipation of an update on December 19. The FDA had removed tirzepatid from the shortage list in October but agreed to the reevaluation following a lawsuit filed by a compounding trade association.

The FDA's recent decision could reshape the dynamics of the obesity drug market, as compounded versions were permitted under U.S. regulations during the shortage. The stock movements of Hims & Hers Health signal the end of a favorable period for the company's compounded drug offerings in direct response to the FDA's announcement.