GLP-1 boom is being leveraged by digital health companies for capitalization.

• By the end of the decade, the anti-obesity medication industry could reach $100 billion, according to some analysts.
• GLP-1 medications like Ozempic and Wegovy are being targeted by companies such as Calibrate, Ro, and WeightWatchers for weight loss programs.
• Challenges for both companies and consumers have arisen due to medication shortages, inadequate insurance coverage, and the prevalence of counterfeit medications.

Losing weight had become a challenging task for Gray Beard, a kindergarten teacher in Charlotte, North Carolina. Despite trying five different programs throughout her life, she had never achieved lasting results.

Last year, her luck shifted when she discovered a promotion on Instagram for Ro Body Program, an innovative health startup's latest offering. The advertisement stated that eligible patients could receive GLP-1 prescriptions, a popular class of obesity treatments that has experienced rapid growth in recent years.

Beard, 47, had previously requested a GLP-1 prescription, but her doctor "refused" to try and get it approved, assuming her insurance company would not cover the expensive medication, she said. GLP-1s cost approximately $1,000 per month before insurance and other rebates.

Ro's Body Program offers customers the possibility of being prescribed GLP-1 medications, such as Wegovy or Ozempic, and regular meetings with a doctor. Additionally, customers receive an educational curriculum, 24/7 messaging, one-on-one coaching with nurses, and assistance with navigating insurance complexities.

She started the program early last year weighing 210 pounds and has since lost 40 pounds. She now serves as an ambassador for Ro and pays $30 per month for GLP-1 treatment after insurance coverage, along with a $145 monthly fee for the program. She has no plans to leave.

Beard told CNBC that he was okay with remaining on it indefinitely.

Ro, founded in 2017, is part of a burgeoning group of digital health companies that aim to profit from the increasing demand for GLP-1s by developing programs and services for users on top of the medications. The potential is enormous. Analysts anticipate that 15 million U.S. adults will be taking anti-obesity drugs by 2030, and predict the industry will generate $100 billion in annual revenue by that time.

Besides Wegovy and Ozempic, GLP-1 class also contains highly popular weight loss drug Zepbound and diabetes treatment Mounjaro. GLP-1s mimic a hormone produced in the gut to suppress a person's appetite and regulate blood sugar.

GLP-1 medications have prompted non-drugmakers such as Ro, Calibrate, Sesame, Omada Health, Noom, and telehealth industry veterans to develop offerings or expand their services to include these popular medications.

Meanwhile, investors are cheering them on.

On May 20, Hims & Hers shares experienced a 28% increase in value after the company announced it would now offer compounded GLP-1 injections in addition to its oral medication kits. CEO Andrew Dudum stated on CNBC that the company is confident customers will have access to a consistent supply of the injections.

One of the significant challenges for companies in the market is the shortage of treatments, which has made it difficult for many patients to access the medication they need. Additionally, the rise of counterfeit products, as reported by the World Health Organization in January, has exacerbated the issue, particularly for patients with Type 2 diabetes who rely on medication for disease management.

That's not slowing down industry executives like Ro founder Zachariah Reitano.

Ro initially aimed to provide online treatments for erectile dysfunction, later expanding to hair loss and other health issues.

In 2020, Ro shifted its focus to obesity management, and after Wegovy was approved by the FDA in 2021, Reitano reported that patient inquiries increased dramatically, with tens of thousands of inquiries coming in.

Ro is investing heavily in its GLP-1 program through various marketing channels, including digital ads, TV commercials, and posters in subway stations, as well as influencer campaigns featuring patients like Beard.

GLP-1s are a "jetpack for positive behavior change," according to Reitano, who told CNBC that patients who use them tend to exercise more, eat healthier, and see a 30% reduction in calorie intake.

"As you gain momentum and lose weight, your sleep improves, you feel more energetic, and you can exercise and eat healthily, resulting in a positive cycle," Reitano stated.

PitchBook reports that Ro has secured approximately $1 billion in funding to date. Despite being valued at around $7 billion in early 2022, the company's valuation dropped significantly following the decline in tech stocks and the collapse of the initial public offering market, forcing many startups to lower their valuations.

WeightWatchers joins the market

Perhaps the most synonymous name in the U.S. for weight loss programs is one that has been in business for over 60 years.

The company launched a behavioral-support program in December, which is accessible to its general membership subscription for $23 per month. Members can participate regardless of whether they receive a GLP-1 prescription from their primary care physician or through the new WeightWatchers Clinic.

As GLP-1s reduce hunger, WeightWatchers recognized the need for a new program for those using the medication, according to Gary Foster, the company's chief scientific officer.

"According to an interview with Foster, people don't require assistance with choosing desserts or managing bread on restaurant tables, which accounts for approximately 50-60% of what they would do for individuals without medication."

Members of the clinic who join the GLP-1 program will incur an additional fee of $99 per month for exclusive access to registered dietitians, fitness professionals, and care team coordinators.

WeightWatchers reported that 87,000 people had subscribed to its clinic, although not all of them are taking GLP-1s. The company expects to have between 140,000 and 160,000 clinic subscribers by year-end, according to its first-quarter results.

Despite efforts to alter its course, WeightWatchers' stock has fallen 83% this year due to worries about its financial obligations, core business, and Oprah Winfrey's departure from the board in February.

The landscape of GLP-1s and their impact on weight loss is quite exciting," Foster stated. "We should all celebrate and be delighted by the fact that there are more tools available to help people manage their weight.

Jennifer VanGilder, a 51-year-old economics professor at Ursinus College in Collegeville, Pennsylvania, had tried various methods to lose weight, including strict diets and services like Jenny Craig. She was considering bariatric surgery before discovering a program from digital health startup Calibrate.

Calibrate, established in 2019, was among the first companies to address obesity through the use of GLP-1s and personalized coaching. The program, which costs $199 per month, does not cover the medication and requires a three-month initial commitment.

Nearly four years ago, VanGilder enrolled and began receiving the weekly Ozempic injection for weight loss. Later, she switched to Wegovy.

VanGilder stated that GLP-1s are not a miracle drug, but by taking them and putting in the effort, she lost approximately 100 pounds of her 242-pound weight. The key difference between Calibrate and her previous weight loss attempts, VanGilder explained, is that she no longer feels like she's on a diet.

"I've been able to stay on it for as long as I have because of that reason," VanGilder stated.

The company's 2024 report analyzed data from over 16,000 members who completed at least one year of the program as of October, as well as a smaller group of patients who continued for longer.

The report states that the average weight loss among patients was 16.2% at 12 months, 17.3% at 18 months, and 17.9% at 24 months.

In an interview, Dr. Kristin Baier, Calibrate's vice president of clinical development, stated that our data demonstrates our ability to provide faster and superior results compared to some of the leading GLP-1 clinical trials.

But Calibrate has hit some major speed bumps in the past couple years.

In 2021, the startup secured $100 million in venture funding, but supply shortages, insurance issues, and a broader market downturn led to layoffs of hundreds of employees between 2022 and 2023. The company was later acquired by private equity firm Madryn Asset Management in October at a discount.

CEO Rob MacNaughton stated that the sector was not adequately prepared to handle the "significant demand" that resulted in a "severely limited supply" of GLP-1s last year.

The company, under new ownership, continues to promote its GLP-1 service, emphasizing its importance because the drugs alone are not enough.

"Baier stated that GLP-1 medications, although safe and effective, are merely a tool and not the entire treatment."

Options for patients

Last year, Ro's Reitano paused advertising for Wegovy and other GLP-1s due to shortages, and also issued refunds and credits to patients in its program who couldn't pick up their medication within 30 days of receiving a prescription.

Reitano stated that Ro has developed both technical resources and operational processes to assist patients in managing supply problems. This includes transferring prescriptions to nearby pharmacies based on their GLP-1 supply and proximity to patients. During July and August, the company made 50,000 phone calls to pharmacies across the U.S. to coordinate these transfers, according to Reitano.

In November, Zepbound was approved in the U.S., and Ro subsequently expanded its medication offerings to include it.

"After adding that to our formulary, we began advertising again because we were confident in our ability to provide patients with an option," Reitano stated.

Insurance problems persist, though.

Due to the high costs of covering treatments for thousands of patients, some employers have stopped offering weight loss drugs as part of their health plans. The federal Medicare program is legally required to cover weight loss drugs only if they are prescribed for another approved health benefit, such as diabetes or cardiovascular health.

Eli Lilly offers commercial savings card programs to increase access to their GLP-1s, allowing people with insurance coverage for Zepbound to pay as low as $25 for a monthly prescription, and users without insurance coverage may be able to get the drug for as low as $550 a month.

Despite launching a new weight loss program in December, Hims & Hers initially stayed out of the GLP-1 market due to high costs and difficult access.

Hims' senior vice president of weight management, Dr. Craig Primack, stated that the company has opted to provide treatment regimens using drugs that have been extensively researched and prescribed for many years.

""For various reasons, some individuals may not want an injection at present or prefer a different alternative. These are long-established tools used in our field," Primack stated in a March interview with CNBC."

Hims announced that customers can now obtain compounded GLP-1 medications through a prescription from a licensed healthcare provider on its platform. The company plans to make branded GLP-1 medications available to customers once supply becomes consistently available. Hims' oral medication kits cost $79 a month, while its compounded GLP-1 injections will be priced at $199 a month.

The company has partnered with a large generic manufacturer in the U.S. and has some exclusivity with the facility, which is under FDA oversight, said Dudum.

Despite not yet offering compounded GLP-1 injections, Hims anticipates that its weight loss program will generate over $100 million in revenue by the end of 2025.

Since starting the Body Program, Ro customer Beard has had to make some changes. Initially, she took Wegovy with no out-of-pocket costs due to her insurance coverage and a savings card program from Novo Nordisk. However, she hit a plateau on the drug and switched to Zepbound.

Despite some difficulties, Beard considers the program to have been mostly smooth and effortless in her routine, and she no longer obsesses over food constantly. She even convinced a family member to join.

"Since we're not experiencing any negative side effects, why discontinue it?" she remarked, emphasizing "it has assisted us in achieving our desired weight."

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