After the launch of Lilly's "mini-bottled" Zepbound, Hims & Hers, which relied on the popularity of generic weight loss drugs, saw a sharp drop in its stock price

According to the financial news app Zhitong Finance, on Tuesday Eastern Time, Hims & Hers Health (HIMS.US), which focuses on providing remote medical services and personalized health products through online platforms, saw its stock price plummet by over 8% during the trading session in the US stock market. By the end of Tuesday's US stock market close, the stock had dropped by over 7%. This was mainly due to the launch of a new "small bottle" version of the weight-loss drug Zepbound by the US pharmaceutical giant Lilly (LLY.US). This cheaper version of the weight-loss drug, which is only available for purchase through Lilly's direct-to-consumer website LillyDirect, has put new competitive pressure on Hims & Hers Health, which relies on selling generic weight-loss drugs.

Lilly is currently selling a monthly supply of its popular weight-loss drug Zepbound, known as the "miracle weight-loss drug," in a small bottle version for as low as $399 per month. This move comes as the company is trying to overcome the supply shortage of the popular weight-loss drug injections.

In a recent statement, Lilly announced that starting from Tuesday, patients with prescriptions for the weight-loss drug Zepbound can purchase a one-month supply of single-use small bottles through Lilly's direct-to-consumer website LillyDirect. The highest price for these small bottles is approximately half of the normal dosage injection of Zepbound, with the higher dosage priced at $549 per month and the lower dosage at $399 per month, making it more affordable compared to the regular dosage.

It is understood that Zepbound from Lilly is usually sold in the form of an injection pen exclusively launched by Lilly. When using the small bottles, patients have to fill the syringe themselves, significantly reducing the production time required for Lilly's weight-loss drug and allowing a wider range of patients to access the medication.

For Lilly, the complexity of its exclusive automatic injection pen has severely hindered the supply. Earlier this year, US patients who were struggling to meet prescription demands began urging Lilly to sell the drug in an easier-to-produce small bottle format, as has been done in other countries.

Patrick Johnson, Executive Vice President of Lilly, stated in an interview that this move is part of Lilly's "all-out" effort to increase the availability of Zepbound and a large-scale combination drug called Mounjaro, which combines diabetes treatment and weight-loss medication, both of which are currently in short supply.

Lilly emphasizes that the prices of these small bottle medications are half or less than half of the prices of pre-filled normal dosage vials. Additionally, the medication will be delivered through the company's exclusive online platform LillyDirect for self-pay distribution, to some extent helping consumers who do not qualify for the Zepbound savings plan or whose insurance does not cover the weight-loss drug to afford it more easily.

In a recent statement, US President Biden expressed, "I am pleased to see one of these manufacturers, Lilly, taking steps to lower prices by offering drugs directly to consumers at less than half the previous price." Eli Lilly and its strongest competitor in the weight loss drug field, Novo Nordisk (NVO.US), are both striving to meet the almost endless demand for anti-obesity drugs. Goldman Sachs, a major Wall Street firm, predicts that by the end of this decade (2030), the market size for weight loss drugs will reach a staggering $130 billion. Since their launch, Novo Nordisk's Wegovy and Eli Lilly's Zepbound have been in short supply, with the U.S. Food and Drug Administration (FDA) recently still considering them to be very scarce.

This is undoubtedly bad news for Hims & Hers Health, which recently started offering generic versions of Novo Nordisk's weight loss drugs Wegovy and Ozempic at discounted prices, known for providing direct-to-consumer generic prescription drugs across the United States.

It is reported that in May of this year, the company began selling a normal-dose weight loss drug injection, with the main ingredient being the same as the core ingredient of Novo Nordisk's popular weight loss treatments Wegovy and Ozempic, but at a much cheaper price.

Due to the continued shortage of weight loss drugs from Eli Lilly and Novo Nordisk, the U.S. Food and Drug Administration allows certain pharmaceutical companies to produce generic drugs. Although these drugs are marketed as having the same active ingredients as Zepbound or Wegovy, they are not regulated or officially guaranteed by pharmaceutical companies like brand-name drugs, and in some cases may even lead to patient hospitalization.

Furthermore, because their prices are usually much cheaper than brand-name weight loss drugs, they are driving a trend in the development of a generic weight loss drug market estimated to be worth as much as $1 billion, directly competing with Eli Lilly and Novo Nordisk.

Executives at Hims & Hers Health stated at a recent earnings conference that the company plans to sell a generic version of the weight loss drug with the same core ingredient as Eli Lilly's Zepbound "in the near future."

Hims & Hers Health is a U.S.-based digital healthcare technology company founded in 2017, focusing on providing remote medical services and personalized health products through online platforms. The company's goal is to break down barriers in traditional healthcare, allowing users to access health services more conveniently. Its main business involves providing remote professional medical consultations, as well as online prescription drug and health product prescription and delivery services.

Although Hims & Hers Health's stock price fell by over 7% at the close of trading on Tuesday, the strong demand for generic versions of weight loss drugs combined with expectations of a Fed rate cut have driven small-cap stocks up. Hims & Hers Health's stock price has still risen by nearly 70% year-to-date