Does This Generic Viagra Seller Really Look Like a Unicorn?

(Bloomberg Opinion) -- Hims was founded a bit more than a year ago. It sells a generic version of the erectile-dysfunction drug Viagra at a markup, and will soon be worth $1 billion according to a Monday report from ReCode

That’s oversimplifying things a bit. The direct-to-consumer company also offers products ranging from a hair-loss drug to gummy vitamins. It charges a $10 monthly membership fee, which covers access to its platform and the firm’s network of physicians.

The company’s basic aim is to make the process of obtaining potentially embarrassing products simple and stigma-free for younger men. (A similar product for women, Hers, was launched in November). As a business proposition, Hims seems fine as far as it goes. But potential investors should ask themselves, is this the stuff of which unicorns are made? The company offers largely commoditized products that might be cheaper elsewhere. It’s already facing fierce competition, and will have to spend aggressively on marketing to stay ahead.

Does This Generic Viagra Seller Really Look Like a Unicorn?
Hims charges $20 for 10 tablets of generic Viagra, according to its website. GoodRX analyzes in-store drug prices and discounts around the country, and cites a price as low as $15.63 for 30 tablets after a coupon. The company also charges $18.50 for generic Propecia for balding men. The medicine is available elsewhere for as little as $11.30 after a coupon, according to GoodRx. That’s a hefty price difference, even with the nice-looking bottle and cheeky marketing – especially when you include the membership fee. There are cheaper mail-order options too. Prescription drug startup Blink Health is offering 10 generic Viagra pills for $9.99 and a month's worth of generic Propecia for $12. It also offers online prescriptions, free shipping, and "discrete packaging."

Hims does make it very easy to obtain a prescription for these products. Men generally just have to fill out a questionnaire and possibly send a photo of their head to the company. But what’s to stop customers from going elsewhere once they discover they like these products? For many, brand loyalty, convenience, and distaste for talking to other human beings won’t be enough to justify Hims’s higher prices. 

Hims has branched into non-prescription products including supplements and skin care. But that’s also a competitive business, where the company doesn’t appear to have much advantage beyond its extremely nascent brand. 

The firm has a highly similar competitor in Roman that also has plenty of ad cash to burn, if its presence on New York City’s subways is any indicator. Lemonaid Health, which offers online consultations with physicians as well as prescriptions, is also in the erectile-dysfunction game. Keeps is a direct competitor in hair loss, while Nurx competes with the company’s newer birth-control offering. Others will follow if there’s money to be made, and there’s not a huge barrier to entry. 

Convenience and a good consumer experience go a long way. Both are too hard to find in health care. But beware the markup. 

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Max Nisen is a Bloomberg Opinion columnist covering biotech, pharma and health care. He previously wrote about management and corporate strategy for Quartz and Business Insider.

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