This startup makes money by selling generic Viagra and Rogaine

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All the men in Dylan Nelson’s family are bald. His father, his uncle and his two grandfathers: all hairless. The 28-year-old headhunter from Newport Beach, Calif., Began to suffer the same fate when he was 23. He tried Rogaine but found it expensive and ineffective. Then he saw a cheeky ad for Hims, a startup that sells prescription drug mail-order kits. Nelson asked her neighbor, a dermatologist, what she thought. The drugs Hims offered were the same as those she prescribed for her patients, but cheaper.

Two months later, they seem to be working. “I cut my hair every 10 days,” Nelson said.

Hims is one of a generation of new hipster branded startups that sell prescription drugs to men through the internet. But where others like Keeps or Roman focus on a single health issue (hair loss and erectile dysfunction, respectively), Hims wants to create a brand that serves men with many different conditions, from erectile dysfunction to erectile dysfunction. ‘acne.

Launched in November 2017, Hims allows men to get a prescription after a quick consultation with a doctor online. Medicines are supplied by a network of pharmacies and mailed in clean, discreet boxes to avoid embarrassment or shame.

Hims straddles a confluence of trends: the loosening of telemedicine laws in most states, the expiration of Pfizer’s monopoly on Viagra, and the growing willingness of men to speak up and pay for health and beauty. Andrew Dudum, founder and CEO of Hims, 29, is committed to building a more than $ 10 billion healthcare business. “We are the gateway to the doctor’s office,” he said. “We are completely different from anything that goes on in the health care system. “

It’s a bold plan, but Dudum and his team of Disruptors will need to tread carefully. After all, they don’t sell mattresses or razors. They sell prescription drugs with potential side effects. And some experts say telemedicine, an estimated $ 19 billion global industry that’s credited with bringing health care to underserved populations, could make it easier for people to get prescriptions that aren’t. not justified.

Lindsey Slaby, a marketing consultant who has worked for Target, Equinox, and Microsoft, praises Hims for trying to make it easier for men to talk about hair loss, erectile dysfunction and other illnesses. But Slaby said the company’s sometimes flippant marketing could overshadow the downsides of pill busting. “You just don’t feel like you are seeing a lot of the fine print,” she said.

Dudum has no medical training. It’s the archetype of your San Francisco startup: straightforward, upbeat, and brimming with good Californian vibes. While studying at Wharton School, he was part of the venture capital club. He is best known in tech circles for founding Atomic, a small venture capital firm that starts its own businesses and is backed by Silicon Valley titans Peter Thiel and Marc Andreessen.

Dudum had been researching men’s health, looking for a way to enter the market when his sister berated him about his non-existent skin care regimen one night over dinner. She grabbed her credit card and bought “French stuff” for $ 300 on the spot. The cost and confusion over what exactly he was receiving prompted Dudum to launch Hims as a seamless one-stop-shop for men who don’t want to deal with late-night Google searches or sheepish visits to the store or the store. doctor.

Hims has raised $ 97 million from investors like Institutional Venture Partners, Forerunner Ventures and Josh Kushner’s Thrive Capital. The latest round valued the company at $ 500 million, according to data company PitchBook. Hims said he generated $ 1 million in revenue in its first week, a rate that has only grown since then. Do the math and that’s a bare minimum of $ 32 million in eight months, a pretty decent execution rate for such a young startup. Dudum said signing up 2 million repeat customers will generate nearly $ 1 billion in recurring revenue.

Besides erectile dysfunction and hair growth drugs, Hims sells skin care products, cold sore remedy, scented candles, matches, and a limited selection of clothing. (“It’s a sweater. It keeps you warm.”) Medicines come in fancy packaging, and creams and shampoos don’t have the off-putting medicinal smell of your father’s foot ointment.

The key to Hims’ success so far is the availability of its two main drugs in generic form. In its heyday, Viagra was a blockbuster for Pfizer with around $ 1.26 billion in US sales in 2015. Since cheap generics became available last year, the drug has barely been a blip, selling less than $ 100 million in the United States in the first quarter of 2018. Merck’s hair loss drug, Propecia, has followed a similar trajectory since its debut in 1997. In 2012, the year before going generic , sales of Propecia reached $ 124 million in the United States. Two years later, they had fallen to $ 19 million.

A Hims prescription of finasteride, a version of Propecia, costs about $ 30 per month, less than the retail price of most drugstores. For $ 44 per month, Hims offers medicated shampoos and minoxidil drops, which sell for $ 30 over the counter at CVS.

The company is essentially building a brand around drugs that Pfizer and Merck have spent years and hundreds of millions of dollars marketing. Targeting men in their twenties and thirties, Hims’ ad focuses on the sophomor. Cheeky shots of drooping cacti and eggplants fill NYC subway stations, urinals, sports arenas (they’re plastered all over the bathrooms at AT&T Park in San Francisco) and are on TV during the finals. of the National Basketball Association.

The Food and Drug Administration requires that advertisements that make a specific claim about a drug’s benefits disclose possible side effects. Hims said he was selling a brand, not a specific drug, and did not include boilerplate language in his ads (which would clutter the presentation). An FDA spokeswoman declined to comment on Hims’ ads.

But some experts are wondering whether finasteride should be prescribed to young, healthy men. The drug was originally developed to help most older men shrink enlarged prostates. When it was also discovered to help regrow hair, finasteride was marketed to younger men (although older ones, including Donald Trump, still take it too). Recent studies suggest that finasteride may cause difficulty in ejaculating or maintaining an erection in some men. A 2017 study found that 1.4% of men suffered from erectile dysfunction, some for 3.5 years or more after stopping finasteride. Among younger men, those who took the drug for long periods of time had a much higher risk of erectile dysfunction than those who did not.

Nelson Novick, professor of dermatology at the Icahn School of Medicine at Mount Sinai New York, said that because hair loss is not life threatening, it is not worth taking the risk of prescribing finasteride. especially young men. “He’s not a guy in his sixties, sixties and sixties where it might not make a big difference,” he said. “Now you have young men who can end up with lifelong dysfunction. While many doctors consider finasteride to be safe and effective, Novick has stopped prescribing it.

The ease of obtaining a prescription through Hims is also of concern to some experts. Patients fill out a health questionnaire which is sent to one of the 124 doctors in the network. People with hair loss take a few photos of their heads. The doctor can send a few follow-up questions via email, but it is not necessary to make a video or phone call. (Doctors are paid based on the time they spend seeing patients on the platform, whether or not they are prescribing medication.)

The process is perfect for busy and potentially shy Hims clients, but skipping a real conversation with a patient may miss important details. A 2016 study found that doctors were less likely to order follow-up tests when working on the internet than in person. Telemedicine also gives people another excuse to avoid regular check-ups.

“You are seeing a direct movement towards consumers that will likely force some people to do dangerous things,” said Adams Dudley, director of the Center for Healthcare Value at the University of California at San Francisco.

Hims said he got the job done to avoid the pitfalls of telemedicine. The conditions it focuses on do not require follow-up examinations. And the company said more than a third of Hims’ clients who request ED drugs are turned down because they don’t meet doctor’s requirements.

“They are trying to target these pretty universal issues and either help people who would not be treated otherwise or make it easier for people to receive the care they need,” said Arash Mostaghimi, professor of dermatology at Brigham. and affiliated with Harvard. Women’s hospital which advises Hims. He argues that startups like Hims will encourage men in their 20s and 30s who typically shy away from doctors to log into the healthcare system.

Hims has only been online for nine months, but has so far navigated the delicate space of consumer drugs. The company plans to continue rolling out new prescription drugs at a steady rate, expanding the breadth of its offering as Dudum pursues its goal of becoming a household name in men’s health. But every new drug will raise new questions, and there are only a limited number of drugs that are safe and easy to buy online. Additionally, even if Hims does manage to sell drugs online, he could potentially stumble upon Amazon.com, which this month signaled plans to shake up the prescription drug market with the $ 1 billion acquisition of PillPack online pharmacy.

Dudum is adamant it can be done. “Building a brand for a whole genre whether you’re 16 or 80,” he said. “This is what we are looking for.”

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