Hims & Hers stock plummets after Novo Nordisk ends partnership over “knock-off” Wegovy

This morning, the Danish pharmaceutical giant Novo Nordisk announced the abrupt end of its brief partnership with telehealth company Hims & Hers Health, Inc. (NYSE: HIMS), citing concerns over Hims & Hers’ “knock-off” weight loss drugs. Now, Hims & Hers’ shares are plummeting as investors react to the news.

It’s the latest update in a somewhat volatile year for Hims & Hers. Just this April, the company’s stock spiked after it initially announced a collaboration with Novo Nordisk that allowed Hims & Hers to sell Novo Nordisk’s FDA-approved weight loss drug, Wegovy, through its platform. But less than two months later, that partnership is fracturing after Novo Nordisk’s claim that Hims & Hers engaged in “deceptive promotion and selling of illegitimate, knockoff versions of Wegovy that put patient safety at risk.” 

At the time of this writing, HIMS stock is down 32.6% since market open. Here’s what to know about the break-up:

The shortage that fueled knock-off Wegovy

Back in 2022, the Food and Drug Administration (FDA) declared a shortage of GLP-1 medications including Ozempic and Wegovy. Under this shortage notice, pharmacies were permitted to make compounded versions of the brand name drugs using their active ingredient, semaglutide, and sell them at a lower cost. Hims & Hers was one company that took part in selling a compounded—and non-FDA-approved—version of Wegovy. 

Then, this February, the FDA announced that Ozempic and Wegovy were no longer categorized under a shortage. With the brand name drugs fully back on the market, the FDA gave compounders 60 to 90 days to stop making copies of the patented drugs. 

At the time, Hims & Hers stated in a regulatory filing that, while it saw pathways to continue offering access to certain compounded GLP-1s after the shortage, it could not “guarantee that we will be able to continue offering these products in the same manner, to the same extent, or at all.” However, an analyst told Reuters that Hims & Hers appeared poised to continue selling compounded semaglutide using “personalized doses” after the shortage officially ended. 

Why is Novo Nordisk cutting ties now?

In the wake of the FDA’s shortage notice, Hims & Hers announced in April that it was entering a “long-term collaboration” with Novo Nordisk to offer Wegovy directly to its consumers. Now, though, Novo Nordisk is breaking off the commitment over claims that Hims & Hers has not acted fast enough to stop selling its compounded GLP-1. Other telehealth companies, like Ro and Noom, have similarly faced criticism for continuing to sell their own compounded GLP-1 despite agreements with Eli Lilly, the maker of Zepbound.

In an email to Fast Company, a Novo Nordisk spokesperson explained that “semaglutide compounding is permitted under US compounding laws only in rare instances,” adding that other companies it’s working with have “demonstrated a good faith effort to transition patients to authentic, FDA-approved Wegovy.”

However, the spokesperson continued, “after over one month into the collaboration, Hims & Hers Health, Inc. has failed to adhere to the law which prohibits mass sales of compounded drugs under the false guise of ‘personalization’ and are disseminating deceptive marketing that puts patient safety at risk. This is unacceptable and that is why we have decided to end the collaboration.”

That personalization, involves offering the same drug; however, at different doses.

In a press release published this morning, Novo Nordisk also noted that it is “deeply concerned” about knock-off drugs “made with foreign illicit active pharmaceutical ingredients.”

“Based on Novo Nordisk’s investigation, the ‘semaglutide’ active pharmaceutical ingredients that are in the knock-off drugs sold by telehealth entities and compounding pharmacies are manufactured by foreign suppliers in China,” the release reads. “According to a report from the Brookings Institute, FDA has never authorized or approved the manufacturing processes used by any of these foreign suppliers to make semaglutide, nor has FDA ever reviewed or authorized the quality of the ‘semaglutide’ they produce.”

Hims & Hers did not immediately respond to Fast Company’s request for comment on Novo Nordisk’s claims. On X, Novo Nordisk CEO Andrew Dudam said “Novo Nordisk’s commercial team increasingly pressured us to control clinical standards and steer patients to Wegovy regardless of whether it was clinically best for patients. We refuse to be strong-armed by any pharmaceutical company’s anticompetitive demands that infringe on the independent decision making of providers and limit patient choice.” He went on to say “We will continue to offer access to a range of treatments, including Wegovy, to ensure providers can serve the individual needs of patients.”