UPDATED:
Sun., July 22, 2018, 11:59 a.m.
By Gerrit De Vynck and Ellen Huet Bloomberg
Every
man in Dylan Nelson’s family is bald. His dad, uncle and both grandfathers: all
hairless. The 28-year-old headhunter from Newport Beach, California, started
suffering the same fate when he was 23. He tried Rogaine but found it pricey
and ineffective. Then he saw a cheeky ad for Hims, a startup that sells
mail-order kits of prescription drugs. Nelson asked his neighbor, a
dermatologist, what she thought. The drugs Hims was offering were the same ones
she prescribed to her patients but cheaper.
Two
months in, they seem to be working. “I’ve been cutting my hair every 10 days,”
Nelson said.
Hims is
one of a crop of new direct-to-consumer, hipster-branded startups selling
prescription drugs to men through the internet. But where others like Keeps or
Roman focus on one health issue (hair loss and ED, respectively), Hims wants to
build a brand that serves men with many different ailments, from erectile
dysfunction to acne.
Launched
in November 2017, Hims makes it possible for men to get a prescription after a
quick consultation with an online doctor. The meds are provided by a network of
pharmacies and mailed out in clean, discreet boxes to avoid embarrassment or
shame.
Hims is
riding a confluence of trends: the loosening of telemedicine laws in most
states, the expiration of Pfizer’s Viagra monopoly and men’s growing
willingness to talk about and pay for health and beauty. Andrew Dudum, Hims’s
29-year-old founder and chief executive officer, vows to create a $10
billion-plus health-care company. “We’re the front door of the doctor’s
office,” he said. “We are completely different from anything in the health-care
system.”
It’s a
bold plan, but Dudum and his team of disrupters will have to tread carefully.
After all, they aren’t selling mattresses or razors. They’re selling
prescription drugs with potential side effects. And some experts say
telemedicine, a global industry worth an estimated $19 billion that’s credited
with bringing health care to underserved populations, could make it easier for
people to get prescriptions that aren’t warranted.
Lindsey
Slaby, a marketing consultant who’s done work for Target, Equinox and Microsoft,
applauds Hims for trying to make it easier for men to talk about hair loss, ED
and other ailments. But Slaby said the company’s sometimes glib marketing could
gloss over the downsides of pill popping. “You just don’t feel like you’re
seeing a lot of the fine print,” she said.
Dudum
doesn’t have a medical background. He’s your archetypal San Francisco startup
guy: direct, optimistic and oozing California good vibes. During college at
Wharton School he was in the venture capital club. He’s best-known in tech
circles for founding Atomic, a small venture firm that starts its own companies
and is backed by Silicon Valley titans Peter Thiel and Marc Andreessen.
Dudum
had been researching men’s health, looking for a way into the market when his
sister berated him about his nonexistent skin-care regime one night over
dinner. She grabbed his credit card and bought $300 worth of “French stuff” on
the spot. The cost and the confusion over what exactly he was getting pushed
Dudum to start Hims as a transparent, one-stop shop for men who don’t want to
deal with late-night Google searches or sheepish trips to the store or 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 firm PitchBook. Hims said it
pulled in $1 million in revenue in its first week, a rate that’s only grown
since then. Do the math and that’s a bare minimum of $32 million in eight months,
a pretty decent run rate for such a young startup. Dudum said signing up 2
million regular customers would generate almost $1 billion in recurring
revenue.
Besides
ED and hair growth drugs, Hims sells skin-care products, a cold-sore remedy,
scented candles, matches and a limited selection of apparel. (“It’s a sweater.
It keeps you warm.”) The meds come in chic packaging, and the creams and
shampoos lack the off-putting medicinal smell of your father’s foot ointment.
The key
to Hims’s success so far is the availability of its two main drugs in generic
form. At its peak, Viagra was a blockbuster for Pfizer with about $1.26 billion
in U.S. sales in 2015. Since cheap generics became available last year, the
drug is barely a blip, selling less than $100 million in the U.S. in the first
quarter of 2018. Merck’s hair-loss drug Propecia has followed a similar
trajectory since debuting in 1997. In 2012, the year before going generic,
Propecia sales reached $124 million in the U.S. Two years later they’d dropped
to $19 million.
A Hims
prescription of finasteride, a version of Propecia, costs about $30 a month,
less than what most pharmacies sell it for. For $44 a month, Hims bundles in
medicated shampoo 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
spent years and hundreds of millions of dollars marketing. Targeting men in
their 20s and 30s, Hims advertising leans sophomoric. Cheeky shots of drooping
cacti and eggplants fill New York subway stations, urinals, sports arenas
(they’re plastered all over the bathrooms at San Francisco’s AT&T Park) and
are on TV during the National Basketball Association finals.
The
Food and Drug Administration requires ads that make a specific claim about a
drug’s benefit to disclose possible side effects. Hims said it’s selling a
brand, not a specific drug, and doesn’t include the boilerplate language in its
ads (which would clunk up the presentation). An FDA spokeswoman declined to
comment on Hims ads.
But
some experts wonder if finasteride should be prescribed to healthy, young men.
The drug was originally developed to help mostly older men shrink enlarged
prostates. When it was also found to help regrow hair, finasteride was marketed
to younger men (though older ones including Donald Trump still take it, too).
Recent studies suggest that finasteride can make some men have trouble
ejaculating or maintaining an erection. A 2017 study found 1.4 percent of men
got ED, some of whom had it for 3.5 years or more after they stopped taking
finasteride. Among younger men, those who took the drug for extended periods of
time had a much higher risk of ED than those who didn’t.
Nelson
Novick, a dermatology professor at the Icahn School of Medicine at Mount Sinai
New York, said that because hair loss isn’t life-threatening, it’s not worth
the risk prescribing finasteride-especially to young men. “It’s not some guy in
his 60s, 70s and 80s where it may not make that much of a substantive
difference,” he said. “Now you have young men who may end up with permanent
dysfunction.” While many doctors consider finasteride a safe and effective
drug, Novick has stopped prescribing it.
The
ease of getting a prescription through Hims also worries some experts. Patients
fill out a health questionnaire that goes to one of a network of 124 doctors.
Those suffering from hair loss take a few snapshots of their head. The
physician might send a few follow-up questions by email, but there’s no need
for a video or phone call. (Doctors are paid depending on the amount of time
they spend seeing patients on the platform, regardless of whether they
prescribe medication or not.)
The
process is perfect for busy, potentially shy Hims customers, but skipping a
real back-and-forth conversation with a patient runs the risk of missing
important details. A 2016 study found physicians were less likely to order
follow-up tests when working over the internet than in-person. Telemedicine
also gives people yet another excuse to skip regular checkups.
“You’re
seeing a direct-to-consumer movement that probably will have some people doing
things that are unsafe,” said Adams Dudley, director at the Center for
Healthcare Value at the University of California, San Francisco.
Hims
said it’s done the work to avoid the pitfalls of telemedicine. The ailments it
focuses on don’t require follow-up exams. And the company said more than a
third of Hims customers who apply for ED meds are rejected because they don’t
meet doctor’s requirements.
“They’re
trying to target these fairly universal problems and either help people who
wouldn’t get care otherwise or make it easier for people to receive the care
that they need,” said Arash Mostaghimi, a dermatology professor at
Harvard-affiliated Brigham and Women’s Hospital who advises Hims. He argues
that startups like Hims will encourage men in their 20s and 30s who typically
avoid doctors to plug into the health-care system.
Hims
has been live for only nine months but has so far navigated the tricky space of
direct-to-consumer medications. The company plans to keep rolling out new
prescription drugs at a steady clip, expanding the breadth of what it offers as
Dudum presses onward to his goal of becoming a household name in men’s health.
But each new drug will elicit new questions, and there are only so many
medications that are safe and easy to buy online. Plus, even if Hims can nail
online drug sales, it could potentially run into Amazon.com, which this month
signaled its intention to shake up the prescription medication market with the
$1 billion acquisition of online pharmacy PillPack.
Dudum
is adamant it can be done. “To build a brand for an entire gender, whether
you’re 16 or 80,” he said. “That’s what we’re going after.”
No comments:
Post a Comment