Hims and Hers stock rises amid ad controversy

Investing.com -- Shares of Hims and Hers (NYSE:HIMS) climbed 5% despite facing criticism over a Super Bowl advertisement for its generic weight-loss drugs. The ad, which highlights the company’s more affordable alternatives to brand-name medications, has been labeled "misleading" by the Pharmaceutical (TADAWUL:2070) Research and Manufacturers of America (PhRMA), sparking a contentious debate over drug marketing practices.

Hims and Hers’ commercial, which aired during one of the year’s most-watched sporting events, touted its "life-changing" and "doctor-trusted" weight-loss medications against a backdrop of criticism aimed at the US healthcare system. The ad’s message underscored the company’s commitment to providing accessible care by selling cheaper versions of anti-obesity drugs, such as Novo Nordisk (NYSE:NVO)’s Wegovy, which has led to pushback from the branded drugmakers’ lobby.

The controversy stems from PhRMA’s statement claiming the ad misrepresents the safety and efficacy of Hims and Hers’ products and may violate marketing rules. Additionally, two US senators expressed concerns over the advertisement’s lack of safety or side effect information, potentially misleading patients.

Despite the backlash, Hims and Hers defended its advertising approach, asserting that the ad calls for change by prioritizing affordable healthcare for Americans. The company’s shares had previously fallen but have seen a 76% increase this year, indicating investor confidence in its business model.

The debate over the ad highlights the ongoing tension between branded pharmaceutical companies and providers of lower-priced generic drugs. Compounded drugs, like those sold by Hims and Hers, do not require the same pre-approval testing as branded drugs, raising concerns about quality and safety from competitors. However, compounding pharmacies argue they offer high-quality medications during shortages of FDA-approved drugs.

The Hims and Hers advertisement briefly noted that compounded drugs are not FDA-approved, a fact that PhRMA claims was not adequately disclosed, alleging a violation of federal advertising rules.

The stock’s movement reflects the market’s reaction to the company’s controversial but potentially market-disrupting stance within the weight loss drug industry. As the debate continues, investors seem to be weighing the potential legal and regulatory challenges against the company’s promise of affordable healthcare solutions.

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