The beef between the two companies started when Novo broke the partnership with HIMS over allegations of “illegal mass compounding” then fired and replaced the CEO who made the deal. After that, we saw Novo launch 132 lawsuits against companies selling copycat versions of their products, Wegovy and Ozempic, and $HIMS was one of these companies. HIMS is in trouble.
Importance of Patent
Let's start with the basics. Novo has a patent for its products, and nobody is allowed to Manufacture, Market, or Sell products that contain the active ingredient or new drug compound, specific formulations of the drug, unique manufacturing processes, or particular therapeutic uses of the drug.
Here, we see that $HIMS is breaking all three patent rules by manufacturing, marketing, and selling compounded versions of the $NVO products, which is hurting the sales for $NVO, which invested money into research and development of these special products for years.
Even without going too deep into the legal issues, anybody can logically realize that finding a hole in the law and ignoring the patent/investment that one company made is risky business.
$HIMS is selling compounded (cheaper) versions of Wegovy and Ozempic more than $LLY's products, which is why we see Novo's sales slowing down and $LLY's still rising.
More Regulation Against HIMS
Recently, on September 05, we had an interesting event where the FDA launched a green list to protect Americans from illegally imported GLP-1 drug ingredients, saying that they will have to be approved by the FDA before they can enter the US marker. This creates a new problem for HIMS as its semaglutide is manufactured in China, and we can assume the FDA is not going to go to China to evaluate and approve that substance. This is a new regulatory blow for HIMS, and this is just the beginning.
In 2025, (FDA) declared the semaglutide shortage resolved, effectively ending the legal basis for large-scale compounding of GLP-1 drugs. This move forced Hims & Hers to abandon its reliance on compounded semaglutide, a product that had driven much of its 2024 revenue. ( https://www.ainvest.com/news/hims-navigating-glp-1-regulation-lead-digital-obesity-revolution-2508/)
Risk, Risk and More Risk For Hims
HIMS is now investing in domestic production infrastructure, acquiring a U.S. peptide facility in California and a 503B outsourcing pharmacy, MedisourceRx. This raises the question: if there is no shortage anymore, NVO and LLY are the only companies that have patents on the best products. To whom is HIMS going to sell their copycat versions?
The answer is they will keep selling and trying to gain as much money as possible until the court case is resolved (I predict they will lose big). And after that they will most likely be in a tough spot as their investments and inventory will be frozen, main source of revenue will be dropping and fines will be coming. This doesn't even include competition from $AMZN that will become bigger at some point.
HIMS, which partners with licensed U.S. pharmacies and compounding labs, is expected to comply with FDA standards, sourcing only from approved suppliers. (The main part of semaglutide is coming from China, and they are sticking a "made in US" stamp on it. This sounds like more lawsuits.)
Novo Nordisk is a Big Favorite in This Fight
So, let's get back to logical thinking. Novo Nordisk has the biggest production of semaglutide in the world and is heavily increasing production to meet high demand globally. How is that going to impact HIMS? Simply, there will be fewer shortages, less room for $HIMS, and significantly less revenue.
These are reasons why I'm betting big on $NVO and avoiding $HIMS. As for Novo, it's just a matter of time before they win, and for Hims, it's just a matter of time before they lose.
I think Novo can double its price in the next three years, as there are many new catalysts, like a cure for MASH, raising Novo's income by 13%, potential treatments for Alzheimer's disease (which could do wonders for income), winning the lawsuits against HIMS, etc..
Add comment
Comments