How vertical healthcare is reshaping a billion-dollar market
Is vertical selling in healthcare putting profits over patients?
Kickstart weight loss. Curb cravings. Turn down food noise. That's the promise from Juniper, one of a growing number of telehealth start-ups selling weight-loss programs online.
What it doesn't tell you - and legally can't under Australia's drug advertising laws - is the name of the prescribed medication behind the treatment: Ozempic.
The diabetes drug turned global weight-loss phenomenon is the poster child for vertical sales models, a new way of doing business in healthcare. Instead of a patient seeing a GP, being referred to a specialist, then filling a script at a local pharmacy, the process is collapsed into one pipeline.
You click on an ad, do an online quiz, have a telehealth appointment and, if approved, the treatment arrives at your door, judgement free.
For consumers, it's convenience mixed with the vibe of online shopping. For companies, it's even better; control over the supply chain. As the model spreads from cosmetic injectables to sexual health, mental health and weight-loss, regulators are asking whether profit is starting to override patient care.
How telehealth accelerated the shift
The engine behind the rise of vertical selling is telehealth. The pandemic accelerated online consultations during lockdowns.
In the US, usage jumped from 11% in 2019 to 46% during COVID, McKinsey reports. Singapore's MyDoc and China's Ping An Good Doctor - both vertically integrated telehealth platforms - saw explosive growth, with user numbers multiplying several times over in just months.
In Australia, Federal data shows telehealth went from 0.1% of GP visits in February 2020 to 44% by April. "By all indications, telehealth is not just a trend ... It's here to stay," venture capital firm NearView Capital said in 2021, when it invested $30 million in Sydney start-up Eucalyptus.
It pointed to the vertical healthcare model's core: in-house doctors, central patient data, pathology and pharmacy partnerships, remote monitoring tools and strong marketing.
Eucalyptus has since turned that template into a suite of brands: Pilot (men's health), Kin (reproductive care), Software (skin), Compound (premium men's health), and Juniper. "Clearly, the system is failing us, so we decided to fix it," the website says.
Why Ozempic became the flashpoint
By 2023, Eucalyptus was valued at $560 million, with backing from investors including Woolworths and Blackbird. That same year, it began prescribing Ozempic through Juniper, supplied by Danish pharmaceutical giant Novo Nordisk.
General practitioners had criticised the growing use of Ozempic for weight loss, noting it was only approved (or 'labelled') for Type 2 diabetes, not obesity.
While weight loss is a common side effect, the Therapeutic Goods Administration (TGA) has stressed that "off-label prescribing" is at the discretion of doctors.
"We do not have the power to regulate the clinical decisions of health professionals," the regulator says.
How drug advertising rules shape the model
What the TGA does regulate is the advertising of off-label treatments, to prevent consumers from assuming Ozempic is approved for weight loss. These labels also dictate the price. Through the Pharmaceutical Benefits Scheme (PBS), diabetic patients pay around $30 for Ozempic, but off-label prescriptions for weight loss cost $140-$200 at least.
Nor can businesses directly or indirectly promote prescription-only drugs such as Ozempic. Nick Henderson, acting deputy secretary of the Department of Health, Disability and Ageing, warns that doing so could create "inappropriate demand" for the medicines and lead to "unnecessary or harmful prescribing".
"Appropriate treatment options should be determined by a health professional in consultation with their patient," he says.
Juniper leans into reassurance with its ads: "It's normal to have questions before starting medical weight loss. Will I feel unwell? Is it safe? Will I gain the weight back? You'll get the answers and support you need from a team of medical experts."
The delivery box arrives unbranded, with only a sticker noting that it must be refrigerated.
Inside the marketing strategies of telehealth brands
On ABC's Gruen, advertising panellists debated the strategy. Campaign Edge's Dee Madigan argued Juniper's marketing tapped into weight stigma.
"There's stigma about being overweight, and stigma about losing weight medically - it's seen as cheating," she said. "So Juniper knows these women are kind of damned if they do and damned if they don't, and they've created their marketing really cleverly around that."
Leo Burnett's Todd Sampson called the campaign "smart" and "seductive" but "morally wrong", labelling it as "suggesting selling to get people to move toward injections. The problem is they're sort of wrapping this box in Millennial gauze, like a lifestyle unboxing," said Sampson. "But the danger is when you turn medicine into merch and make it click-and-go consumerism, you're not really following the clinical, transparent way. I worry that this may nudge people into something they don't necessarily need."
To avoid such arguments, Eucalyptus pointed to the data. It published a peer-review study of more than 28,000 Australian weight-loss orders, finding a dispensing error rate of just 0.35% - far below the global average of 1.6%. Of the 99 errors reported, most involved incorrect doses (59 cases) or short medical expiry windows (21).
Are digital clinics dispensing medicines safely?
The study found that 85% of errors were classed as medium urgency, potentially causing minor harm, while 11% could cause major harm. Error rates were higher among female and younger patients. Eucalyptus said the findings showed digital clinics can dispense safely and at scale, with error rates below global hospitals and pharmacies. But while Juniper points to safety, many other providers continue to flout the rules.
In May 2024, the TGA fined a NSW pharmacy nearly $19,000 for allegedly promoting Ozempic in-store. Later that year, 21 infringements worth more than $319,000 were issued against telehealth clinics and medical practices for unlawful advertising of prescription-only medicines, most tied to weight-loss treatments.
Beyond Ozempic: Other treatments under scrutiny
In August, the TGA fined a Victorian pharmacy and wellness centre $60,000 for allegedly unlawfully advertising antidepressant and fibromyalgia treatments, as well as an intravenous iron infusion.
And that's not mentioning the many instances of advertising infringements for medicinal cannabis.
Against this backdrop, Eucalyptus has tried to get on the front foot. The company argues that regulation hasn't kept pace with the growth of telehealth, leaving clinics to fill the gap.
Calls for a telehealth code of conduct
In June, it published a set of voluntary 'best practice principles' covering clinical governance, continuity of care and data protection, and is calling for a broader industry code of conduct.
"Telehealth clinics should be mandated (or at least incentivised) to comply with such a code, and there should be tangible consequences if they do not," the company said.
"Moreover, there should be a mechanism for an external agency to independently review each telehealth clinic's internal processes, to ensure that they practise what they preach."
The aim, says Eucalyptus, is to give both government and patients confidence that online clinics are safe, effective and transparent.
While the jury's still out, it could reassure sceptics that vertical healthcare can be more than just medicine sold as merch that puts profits over patients.
Medicinal cannabis highlights growing concerns
When Alex (not their real name), a 31-year-old from Western Australia, sought treatment for anxiety two years ago, he turned to Alternaleaf - a company that calls itself an 'online alternative solutions' provider.
The process, Alex says, was "surprisingly quick". "You do have to have a reason for getting prescribed, but I don't think they really care about what you tell them," he says.
After a brief consultation, he received a script for medicinal cannabis that he now renews every six months, with a shorter three-month check-in the first time. "They ask how it went and if you need new strains with higher or lower dosages," he explains.
Once approved, the medicinal cannabis arrives in the post within days, packaged in 10 gram tubes with pharmacy-style labelling. "They're proper buds, really high quality."
For Alex, the treatment works, but he admits it feels transactional. "I think it's just a money-making scheme to a degree, or a tick-the-box exercise," he says.
"It's obviously better than flat-out banning it. At the end of the day, the product helps me and it saves going to the doctor in person."
Regulators warn of prescribing risks
Since medicinal cannabis was legalised in 2016, prescriptions have surged from 18,000 patients in 2019 to more than one million by January 2024, according to the Australian Health Practitioner Regulation Agency (AHPRA).
The TGA was forced to respond as companies began spruiking the prescription-only treatment online. Between 2023 and 2024 it issued more than 165 infringement notices, worth $2.3 million in penalties, and launched two civil penalty proceedings over alleged unlawful advertising.
One case targets Montu Group, Alternaleaf's parent company, which the TGA alleges unlawfully promoted medicinal cannabis on its website, social media accounts and a "medicinal cannabis awareness
week" site between January 2022 and April 2024.
Alternaleaf has pushed hard on visibility, from Instagram ads to a short-lived NRL Dolphins sponsorship, abandoned when players were told to tape over the logo after legal advice.
The core question: Are profits outweighing patient care?
Industry insiders say enforcement has been uneven. "There are strict rules governing the advertising of medicinal cannabis in Australia, and the TGA has said it regards the enforcement of those rules as a compliance priority," Cannabiz co-founder Martin Lane told Crikey.
"There has been some frustration in the industry about a perceived lack of urgency from the regulator, so the action against Alternaleaf should at least provide some clarity, whatever the outcome."
Montu vice-president Rhys Staley told Cannabiz the company had "made mistakes in the past" but argued scrutiny should be applied evenly. A Montu spokesperson said the company would "vigorously defend these proceedings".
By early 2025, scrutiny had intensified. An ABC 7.30 investigation revealed one doctor issued 17,000 scripts in six months - the equivalent of a script every four minutes.
In response, AHPRA created a Rapid Regulatory Response Unit to monitor prescribing and dispensing patterns and issued new guidance to pharmacists.
ABC's 7.30 also included testimony from Dr Claire Noonan, a NSW-based GP who briefly worked for a cannabis company before stepping down. She told medical industry publication newsGP that some patients were being prescribed quantities above what she understood to be safe limits, and that her contract included a clause making her pay contingent on prescribing.
"Even when I took that clause out, I still felt pressured to prescribe the way the patient requested rather than what I thought was best," she said. "If it comes down to you, prescribe or you don't get paid. That is a bit of a trap."
AHPRA CEO Justin Untersteiner warned practitioners of the inherent conflict of interest for practitioners working in an organisation that only prescribes and dispenses a single medicine.
"Some business models that have emerged in this area rely on prescribing a single product or class of drug and use online questionnaires that coach patients to say 'the right thing' to justify prescribing medicinal cannabis," says Untersteiner.
"This raises the very real concern that some practitioners may be putting profits over patient welfare."
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