Post-Patent D2C Drugs

Building direct-to-consumer healthcare companies around generic drugs after patent expiration, exemplified by Hims and Roman who leveraged regulatory changes to create billion-dollar businesses selling generic versions of drugs like Viagra and Propecia.

Key Points:

• Market Opportunity:

  • Patents expired on proven drugs (Viagra, Propecia, Rogaine)
  • Existing proven market demand
  • Regulatory changes allowed telemedicine prescriptions

• Business Model:

  • Direct-to-consumer sales of generic versions
  • Telemedicine consultations instead of in-person doctor visits
  • High customer acquisition costs ($100-150 per customer)
  • 3x return on customer value over 3 years

• Growth Strategy:

  • Heavy investment in marketing
  • Rapid scaling through Facebook ads
  • Revenue Growth Example (Hims):
    • Year 1: $15M
    • Year 2: $90M
    • Year 3: $150M
    • 2023 Projection: $800M

• Capital Requirements:

  • Highly capital intensive
  • Required ~$200M before going public
  • Additional $200-300M raised through SPAC
  • Currently operates at 2% EBITDA margin

• Market Position:

  • Multiple successful companies launched simultaneously (Hims, Roman)
  • Both became $1B+ companies
  • Leveraged regulatory inflection point for rapid growth