Is Big Pharma Taking Over the Cannabis Industry?

Overview

• The cannabis industry is expected to grow to $56.7 billion in 2027 with a CAGR of 42% in 2023. The industry is predicted to accelerate further as greater emphasis is placed on education, physician use, consumer uptake and efficacy, exemplified through further clinical trials. According to Canopy Rivers, the cannabis industry is thought to be at the beginning of ‘Wave 3’ which can last up to 10 years. The next wave is the establishment of Big Pharma.

• Unlike Europe, Latin America has only recently legalised the sale of cannabis. A recent report published by Canaccord Genuity cited “We believe the region is more receptive to natural medicines than many other regions, which could boost medical adoption rates as the market is positioned for significant growth”. On the other hand, the European market continues to progress quickly from a regulatory perspective, with a potential medical market of $25 billion. There is a significant opportunity for CBD branding, revenue and use in Germany and the rest of Western Europe. Finally, the Asia Pacific market represents the greatest potential for big pharmaceutical multinationals due to the 4.5 billion population and already existing medical programs in South East Asia, Thailand and the Philippines.
• The increasing number of clinical trials and R&D has attracted many countries to legalise CBD for medicinal purposes. This market has attracted the largest pharmaceutical companies in the world (table below). With a total market share of $1.7 trillion, there are now several patented drugs, such as Sativex, which has been legalised in mainland Europe. With the global CBD market dominated by a 40% market share in North America, followed by 31% in Europe and 29% for the rest of the world, the total market size is expected to reach $6 billion in Latin America and $25 billion in Europe by maturity.
• In the US, GW pharmaceuticals and Sanofi are leading the cannabis clinical trials with 40 and 38 clinical trials in 2018, respectively. This recent interest has been attributed to an increase in scientific research surrounding the medical benefits of CBD, the legalisation of cannabis in many states, and the increasing percentage of the US population resorting to marijuana as a substitute for pharmaceuticals and opioids. The largest current stakeholders of cannabis patents are multinational pharmaceutical companies; including Novartis, GW Pharmaceuticals and Sanofi. Continued interest in the industry is likely to be driven by Ex-USA catalysts; which include the Mexican Senate legalising cannabis, Colombia allowing its first domestic sale of medical cannabis, and the potential legalisation in New Zealand for recreational use.
• CBD for medical use is now legalised in over 33 US states, most of mainland Europe and parts of South America. Its potential therapeutic benefits range from food supplements, sleep deprivation, and multiple sclerosis. Pharmaceutical companies are starting to release FDA-approved CBD drugs which could allow them to start eating into the production, prescription and distribution pathways of the industry.
• GW Pharmaceuticals developed the first licensed cannabis-derived prescription medicine Sativex. Besides GW Pharmaceuticals a number of companies have initiated clinical trials with cannabis-derived medicinal products; Tilray, Zynerba, Tetra and Veritas.

Background of the Pharmaceutical Cannabis Industry

The cannabis industry has been around for thousands of years, primarily as a form of medication. It was used as an anaesthetic in ancient China and was also one of the five herbs used to alleviate anxiety in India. However, the scenario began to change during the 1900s — cannabis was banned in 29 states in the US between 1916 and 1931, with the Marihuana Tax Act of 1937 making it illegal across the US. Several countries subsequently mimicked the decision to prohibit cannabis in the US.

Recent changes in legislation have resulted in the approved use of medicinal cannabis in all US states, most of Europe and beyond. With the presence of cultivation licences in the already approved countries, retail brands have provided customers across the globe with an array of different CBD products; from food supplements to the emergence of wellness and beauty products. In fact, CBD has seen a rapid rise in consumer interest due to its association with “Wellness” products — US sales alone are expected to grow to $18.5 billion by 2025 whilst Europe lags at $1.7 billion.

Currently, over 700 clinical trials are evaluating the efficacy of different cannabinoids for therapeutic uses. In a race to own potential intellectual property rights, pharmaceutical multinationals are starting to conduct clinical trials and apply for patents in the US and Canada. The results of previous clinical trials have been promising. Within the next ten years, the cannabis industry will see further trials to validate medical cannabis as a possible treatment alternative.

Furthermore, the cannabis industry could see an increased level of M&A activity as larger multinationals acquire early-stage companies with existing intellectual property and established brands. The continued expansion into the CBD space is also driven by the similarity in the regulatory framework of medical cannabis to that of conventional medicine, the increasingly cheaper cost to export cannabis, and consumer trends.

However, there are still several milestones to overcome, which will determine the success of the industry and the magnitude of investment by pharmaceuticals. Although multinationals have existing manufacturing and testing facilities, they must establish cultivation, branding and distribution channels along with the extra challenges of competition, property rights and clinical research.

The Future of the Pharmaceutical Cannabis Industry

As the pharmaceutical Cannabis industry grows, the future state of the market will inevitably change. Although cannabis has been used medicinally since ancient China, scientific research is largely in its preliminary stages. Since Big Pharma has been investing heavily in cannabis the cannabis industry has changed significantly, but we haven’t even touched the surface. In the future, we will see ground-breaking new technologies and formulations that will transform the industry. The following section lists the changes that we can expect in the future from the pharmaceutical cannabis industry:

• Reduced Market Share of Smoking Flowers

The most obvious change from Big Pharma’s involvement in the cannabis industry will be the drop in market share for smoking flowers. As more technologies, formulations, and products are developed, the medical cannabis industry will start to grow exponentially. Also, as research becomes more conclusive, regulations will ease and it will become more and more likely that doctors will advocate the use of cannabis for a variety of conditions. In all likelihood, the technological advancement of cannabis-derived medicines in combination with the easing of rules and laws surrounding cannabis will place medical cannabis as a market share leader.

• New Products and Formulations

As mentioned in the former, Big Pharma’s involvement is going to increase the range of new products and formulations to satisfy the needs of the patient and customer. You can expect the cannabis-derived drug portfolio of many different pharmaceutical companies to increase as they experiment with new flavours, strains and technology. Currently, there are only 3 licensed pharmaceutical-grade cannabis drugs on the market, but as research continues and more pharmaceutical companies get involved, we expect this to rise significantly within the next 5–10 years.

• The Introduction of Blue Chip Players

New opportunities for financial gain, results in the introduction of new blue-chip companies looking to expand their control. A major sub-industry of cannabis is the food and drink market, and you can expect a number of renowned FMCG (fast-moving consumer goods) conglomerates looking to place their stake in this rapidly growing sector. There have been rumours that Ben & Jerrys are releasing a new CBD ice cream, and even the likes of Coca Cola bringing out a new CBD infused drink. While this is expected, there hasn’t been much movement as of yet — it is likely that these blue-chip players will wait until CBD becomes more widely socially accepted globally before they take this leap.

• The Improvement of Formulation & Delivery

As new, more effective formulations are created, the performance of delivery will be significantly improved, resulting in better bioavailability. Currently, the bioavailability of recreational CBD products is unimpressive due to the early stages of research and development of products containing cannabinoids. With Big Pharma’s backing, the technology will only be on an upwards trajectory — expect to see new ways of administering cannabinoids with more fine tuned extraction methods, resulting in higher-quality products with more effective outcomes for patients and customers.

• A New Industry is on the Horizon

Finally, and perhaps most significantly — it is thought that in the future there will be a mass replacement of pharmaceutical products with new cannabis-derived products. Out of all the points we have mentioned, this will take the longest to come to fruition, but it could be sooner than you may think. Currently, there are over 300 medicinal cannabinoid-based products currently in the clinical trial phase for FDA approval. It is predicted there will be a major shift in the market when more of these products get licensed, as consumers become more and more conscious of the substances they are taking, opting for natural alternatives. Some investors and economists have predicted this new industry could be worth £50bn eventually.

The Current Big Pharma Players

Although barriers of entry for the cannabis industry are significant, as the evidence mounts up for the medical potential of cannabis, and the popularity and growth of the CBD industry continues, more and more pharmaceutical companies have made the leap into the cannabis industry.

It is thought that further easing of cannabis regulations will hugely affect Big Pharma’s bottom line as consumer interest moves away from man-made drugs to natural alternatives. According to Visual Capitalist, the medical cannabis and CBD industry could take more than $4bn worth of sales from Big Pharma, so it is no surprise why we are seeing an influx of major multinational pharmaceutical companies seeking to take controlling stakes in the industry.

The US patent and trademark office has continued to increase the number of patents issued containing the words cannabis marijuana. With over $4 billion spent on CBD products globally, by 2025 the CBD market value will swell to $16 billion. Big pharma is slowly tapping into the cannabis industry through collaborations, conducting clinical trials and patenting products to slowly gain market share.

The following section documents the activity of some of the Big Pharma players in the cannabis industry.

Cara Therapeutics

Founded in 2004, Cara Therapeutics is a biotechnology company founded in the US that is focused on finding new medicines for the treatment of inflammation and pain. Due to their focus in this area, Cara Therapeutics has sustained a strong interest in cannabis, as it has shown strong potential for treating conditions that bring on symptoms like pain and inflammation. Currently, Cara Therapeutics has one listed cannabis-derived drug called Korsuva which has been submitted for clinical trials with the hope that it can be approved for medical use. This drug is designed to treat pain and severe itching, and it’s hoped that this could replace more addictive drugs like opioids.

Corbus Pharmaceuticals

Based in the US and founded in 2009, Corbus Pharmaceuticals is focused on offering new treatments for inflammatory and fibrotic conditions. The company has shown a strong interest in entering the cannabis industry and currently has one drug in the clinical trial stages of development called anabasum. This drug is designed to be used for patients suffering from four different conditions, including systemic lupus erythematosus, cystic fibrosis, systemic sclerosis and dermatomyositis.

22nd Century Group

Founded and established in 1998 in the US, 22nd Century Group started off at North Carolina State University, with a focus on research of nicotine biosynthesis in the tobacco plant. The company has now expanded its portfolio into the hemp industry and is considered to be one of the leading plant-based pharmaceutical companies in the world.

In September 2014, 22nd Century Group landed a license agreement with Anandia Laboratories in Canada. Anandia is focused on providing licensed producers with the knowledge and facilities to grow superior hemp, through better testing, breeding and genetics archiving. 22nd Century Group agreement extends to an exclusive sublicense in the United States, with an exclusive co-sublicense for the rest of the world. This places the 22nd Century Group in a unique position in the industry and will allow the company to create a range of new hemp plants that are optimised for cannabinoids such as CBD, CBC and CBG. The hope is to develop, research and create strains of hemp that are designed to be enhanced for medical cannabis.

22nd Century Group released a statement detailing its ambitions for the hemp and the medical cannabis industry. They said:

“i) Creating a cutting-edge genetic database which utilizes the results of genomic analyses of several hundred existing, exceptional hemp/cannabis plant lines for use in the acceleration of the Company’s development and licensing of uniquely characterized and improved hemp/cannabis plants;

(ii) Enhancing genetic variation to empower 22nd Century’s development of new and significantly improved varieties of hemp/cannabis plant lines and varieties with highly desirable cannabinoid profiles optimized for medicinal or therapeutic applications;

(iii) Creating a proprietary and industry-leading high-resolution “molecular genetic map” of the entire cannabis plant genome to facilitate rapid, cost-effective breeding of innovative varieties of hemp/cannabis plants with distinctive agronomic traits;

(iv) Analyzing the genomic sequences of multiple species of the hemp/cannabis plant and identifying shared genetic markers, allowing 22nd Century to develop improved commercial hemp/cannabis plant lines more rapidly than through conventional plant breeding approaches; and

(v) Initiating the rapid-cycle generation of hemp/cannabis plant lines with distinctive cannabinoid and terpene profiles to create elite hemp/cannabis plant lines.”

Zynerba Pharmaceuticals

Founded and established in the US, 2007, Zynerba Pharmaceuticals is focused on offering cannabinoid treatment tailored for patients suffering from severe and rare neuropsychiatric diseases. Zynerba Pharmaceuticals currently hold the first and medically approved topical treatment called Zygel. This is a medicine which is applied to the skin for transdermal absorption and was developed for people dealing with conditions such as fragile X syndrome, autism spectrum disorder (ASD) and epileptic encephalopathies (DEE).

Zynerba Pharmaceuticals have also been at the forefront of campaigning for less stringent regulations. In May 2019, the company presented scientific data and information on products containing cannabinoids to the U.S. Food and Drug Administration (FDA) at a public hearing and is continuing to advocate the potential of medical cannabis for a variety of different ailments and conditions.

Abacus Health Products

Abacus health product was established in 2014 as part of the company Aidance Scientific with a mission to provide superior topical CBD products. Aidance Scientific has focused on dermatology since it was founded in 2004 and distributes to over 150 countries. Abacus Health Products is one of the leading OTC drug technology companies and is the first to sell OTC registered hemp-derived topicals. The company manufactures and sells to two established medical CBD brands — CBDMEDIC and CBD CLINIC.

Abacus Health product’s end goal is to manufacture and distribute the world’s most fast and effective pain management topicals using the hemp plant.

Important to note, in March 2020, Charlotte’s Web, a leading CBD wellness consumer brand acquired Abacus. The combination of Charlotte’s Web and a leading player with OTC topical products with active pharmaceutical ingredients with hemp extract created the world’s largest vertically integrated CBD company so far.

GW Pharmaceuticals

Founded in 1998 in the UK by Dr Geoffrey Guy and Dr Brian Whittle, GW Pharmaceuticals has been researching cannabinoids since its establishment and recently developed Sativex, a cannabinoid used to alleviate neuropathic pain and spasticity — a symptom commonly found in MS patients. GW Pharmaceuticals also licensed the rights to commercialise Sativex to Novartis and Bayer, citing their continued interest to enter the cannabis market. GW continues to invest in R&D to accelerate its growth and value in the cannabis space. Epidiolex, another drug by GW, received FDA approval and it has 2 other drugs in clinical trials to treat epilepsy and schizophrenia.

Currently, GW Pharmaceuticals has 28 U.S. patents, and due to its strong investment in cannabis, we can expect many more cannabis-derived medicines to come into the market in the near future.

Novartis

Back in December 2018, Novartis, through its generic drug arm Sandoz, was the first pharmaceutical company to embrace the cannabis industry. Novartis signed a contractual agreement with Tilray Canada — a cannabis company that produces both THC and CBD products for patients suffering from particular medical conditions. Tilray Canada also has a market share of the recreational cannabis industry in Canada and is the only cannabis cultivator and trader to go public on the NASDAQ stock exchange.

The agreement finalised by the two parties also extended Novartis’s ability to commercialise Tilray Canada’s products in legal jurisdictions globally and also allowed them to advertise their products to physicians and pharmacists. Both companies have an agreement to develop future cannabis products together.

Tilray is working in partnership with Novartis on a generic, non-combustible medical drug. Tilray was the first licensed medicinal cannabis producer in North America to obtain a cGMP and entered into a framework agreement with Novartis to develop and distribute its medical marijuana in legal jurisdictions around the world.

Novartis currently has the most number of Canadian cannabis patents currently sitting at 21, and have future plans to keep expanding its control of the cannabis industry in Canada.

Roche

Founded in Basel, Switzerland 1986, Roche is one of the most prominent pharmaceutical companies in big pharma. Roche is the largest biotech company in the world, boasting 17 biopharmaceuticals in today’s market, which enables the company to provide some of the best-targetted care in the industry.

Currently, Roche has 17 U.S. Patents, and as the medical cannabis and CBD industry grows further, they are expected to accumulate more.

Solvay

Based and founded in Brussels, Belgium 1863, Solvay is one of the oldest established pharmaceutical companies in Big Pharma. Solvay is focused on offering products and solutions which range from a variety of different medicines to medical devices and cleaning agents. It also offers pharmaceutical industry solutions to packaging. Currently, Solvay has made big moves into the medical cannabis industry and holds 7 different patents for products in Canada.

Pfizer

Based and founded in New York in 1849, Pfizer is one of the leading and oldest pharmaceutical companies in Big Pharma and has provided over 170 different medicines and vaccines. In recent times, Pfizer has seen the value in medical cannabis and CBD and has started to invest a large number of resources to develop new pharmaceutical-grade cannabis medicines. Currently, Pfizer has 25 U.S. patents for molecules relating to the cannabis plant.

Sanofi

Based and founded in France, Paris in 2004, Sanofi is one of the youngest companies in the Big Pharma market. Sanofi specialises in vaccines and general medicines and is currently developing over 90 new molecular entities and have 39 new projects in Phase 3 or submitted for safety approval. Currently, Sanofi has six Canadian patents and is actively looking to expand its presence in the medical cannabis and CBD industries. Sanofi recently partnered with Opiant Pharmaceuticals to continue its product portfolio expansion.

Merck

Founded in Darmstadt, Germany in 1953, Merck prides itself on its holistic approach to medicine. As well as specialising in medicine to treat cancer and multiple sclerosis (MS), Merck’s other focus is innovating new technologies for hospitals and healthcare centres to improve the diagnosis of patients suffering from life-threatening conditions. Other areas Merck focuses on our endocrinology, fertility, general medicine, neurodegenerative diseases and oncology. Currently, Merck is looking at the potential of cannabis for treating certain conditions and has invested heavily in this industry, with 35 U.S. patents.

Merck has 11 cannabis-related patents, and recently announced a partnership with Intec to pursue a clinical-stage biopharmaceutical company that has developed a proprietary oral drug delivery system for CBD and THC in treating pain. The number of US patent holders has nearly tripled in the last 3 years for cannabis-related products.

Neuraxpharm

Neurazpham — a leading pharmaceutical firm focusing on the treatment of the central nervous system (CNS) — has been focused for 35 years on finding the most effective medical solutions for patients suffering from CNS disorders. The pharmaceutical firm has operations in thirteen countries, and presently supplies around 80% of the European CNS drug market. Its impressive product portfolio includes 115 CNS molecules and is consistently engaging in new research to consolidate its control on the CNS drug market.

On the 22nd of October, Apax Partners announced that it sold its controlling stake in Neuraxpham, to the private equity firm Permira. The deal is subject to the agreement of customary closing conditions which are believed to be finalised at the end of 2020. This new partnership adds new capital for Neuraxpham to continue sustainable growth across Europe but is also significantly strengthened due to Permira’s long-standing investment in the pharmaceutical sector and high-growth companies.

As recently as October 29, 2019, Neurazpham announced the acquisition of S.T.U. GmbH (Swiss Trade Union or S.T.U.), a leading manufacturer, developer and distributor of pharmaceutical-grade cannabidiol (CBD) located in Liestal, near Basel. The company owns the leading European CBD brand Hemplix, which cultivates and develops its products exclusively in Switzerland with 100% organic raw hemp. Hemplix abides by the strictest quality-control standards and is considered to be the gold standard for pharmaceutical-grade CBD in Europe.

With the forecasted rise of the medical cannabis industry in Europe over the next five years, the newly found presence of Permira will provide an opportunity for further research and development of CBD in treating a variety of CNS disorders, and will surely solidify Neuraxpham’s control of the CNS pharmaceutical drug market for the foreseeable future.

These are just a few of the notable players to enter the cannabis industry from Big Pharma, with many other entities now seeing the value in investing in research, cultivation and development of medical cannabis, and in some cases, recreational cannabis. As regulations ease, and more countries permit the use of compounds such as CBD, the more involvement we will see from Big Pharma.

Expect to see more pharmaceutically named medicines which derive from the cannabis plant to enter the market soon.

Barriers for Entry

The pertinent obstacle multinational pharmaceuticals have been working tirelessly to overcome is patenting cannabis compounds. As the vast majority of drugs are synthetic, pharmaceutical companies can easily patent products for exclusive trade in the drug market, whereas THC and CBD cannabinoid molecules are not patentable. This automatically restricts the financial and market share opportunities, but multinationals are working around this issue by developing novel mechanisms of actions (MOA) in cannabis-derived medicines, which are synthetic complexes that are dissimilar in structure in a minor way when compared to the natural cannabinoids.

Pharmaceutical cannabis products are patented and developed by designing analogues of cannabinoids with improved pharmacokinetic and pharmacodynamic profiles to treat symptoms of diseases. Analogues are different forms for a molecule, that is, new functional groups are introduced to help a drug enter the human body, lower its dose by improving potency and reducing toxic metabolites. This process is expensive and cannabis-derived medicines take a long time to be developed, making it difficult to take control of the industry quickly.

Another issue hindering the progressions of pharmaceutical-grade cannabis-derived treatments is the negative stigma that surrounds cannabis in the general population. Given that cannabis is associated with ‘getting high’, a large percentage of the global population is unaware of the medicinal benefits cannabis shares. Furthermore, in legalised states and countries, many physicians remain hesitant to prescribe medicinal cannabis. The hope for the future is that with continued legislative support, clinical trials, educational programs and favourable demographics surrounding CBD, physicians should slowly become more informed and confident prescribing such adjunctive therapies.

The slowness of the release of negative stigma is partially down to the difficulties in facilitating a clinical trial. Although many clinical trials are looking into the clinical effectiveness of cannabinoids, the HTA assessment of drugs in Canada, Asia-Pacific and the EU5 require specific trial data to grant a treatment regulatory approval. Most EU5, including France and Germany, require a head-to-head comparator trial with an existing biologic. Such a trial design proves challenging to achieve with cannabis and therefore acts as a milestone for the industry’s development.

The issues of clinical trials share symmetry with the difficulties of testing cannabis for its purity, identity and safety before it can be packaged and delivered to the patient. The purity of the pharmaceutical ingredients (API) can be affected by the production method. If the cannabinoids, such as CBD, are extracted from a cultivated plant, then the concentrations of the API will vary due to uncontrolled biotic and abiotic factors. Although this issue could be fixed by utilising a biosynthesis pathway, the current third-party testing currently conducted on CBD products varies significantly, and therefore, there is a need to develop clear and consistent testing for the cannabis API’s.

Finally, and perhaps the most difficult barrier to overcome is the fierce competition from existing retailers in the CBD industry. The most prominent countries in the world allow entrepreneurs to start a brand through third-party white-labelling, contract manufacturing and fulfilment outsourcing, without the need to use pharmaceutical companies to develop their products. This increasingly competitive space, with already established brands, will increase the costs of entry for multinationals. For example, HydRx farms, headquartered in Canada, is a licensed producer of medical cannabis with a focus on pharmaceutical-grade derivative products. The competition facing multinationals is only set to increase due to the continued investment of current businesses into new product lines, manufacturing plants and branding.

CBD and Medical Cannabis Pharmaceuticals

So what cannabis-derived pharmaceuticals are currently on the market?

In the USA, there are already two cannabinoid drugs; Nabilone and Dronabinol, which are used to treat the symptoms of chemotherapy. Pharmaceutical companies continue to explore the effectiveness of cannabis for treating cancer due to the demand, opportunity, and lack of existing cannabis therapies. Other currently used medical cannabis drugs include:

Epidiolex

A highly purified CBD oil made by GW Pharmaceuticals that is used to treat epilepsy and multiple sclerosis (MS). This product does not lead to any psychoactive effects and can be prescribed by doctors in the UK for patients with Dravet syndrome and Lennox-Gastaut (rare forms of epilepsy). Legalising Epidiolex is a significant milestone in offering patients a new line of treatment for debilitating and rare diseases. The European Commission recently approved this pharmaceutical drug for all 28 European countries.

Nabiximols (Sativex)

The first cannabis-based medicine to be licensed in the UK, and it is classified as a Class B controlled drug. This drug, which contains a mixture of THC and CBD, administered in the form of a mouth spray for four weeks. Sativex is prescribed to treat the symptoms of muscle spasms, and stuffiness which is caused by multiple sclerosis (MS). Side effects include dizziness, hallucinations, and psychoactive effects. For this reason, Sativex is only prescribed if a positive response to treatment is observed.

Due to these new, approved pharmaceuticals, there has been a worldwide surge in cultivation, and the global market is expected to be worth over USD $57bn by 2026. In fact, Europe is set to become the world’s largest Cannabis market, with over 15 countries legalising the use of medicinal cannabis.

The rescheduling of cannabis — more good news for Big Pharma?

Back in January 2019, the World Health Organisation Expert Committee on Drug Dependence’s (ECDD) made recommendations to the United Nations Commission on Narcotic Drugs (CND) to make adjustments to the way in which cannabis is scheduled. The United States has rejected WHO’s recommendation to remove cannabidiol (CBD) which contains less than 0.2% THC from international drug control but accepted to change cannabis from a Schedule 4 to a Schedule 1 controlled drug.

The most restrictive categorisation — Schedule 4 — is implemented when a drug has very limited or no medicinal value and is regarded as dangerous to the population. The less restrictive category — Schedule 1 — is implemented when a drug has some medicinal value but is still liable to abuse and addiction. Also, drugs in this section are considered to show the same dangers as drugs in Schedule 4.

This is somewhat good news for the pharmaceutical industry, as the easing of regulation may provide Big Pharma with an easier ride in terms of regulation. Barriers to research, cultivation and development of new pharmaceuticals may be eased, meaning existing players could get cannabis-derived drugs to market faster, and processes could be simplified for new players looking to enter the industry.

Summary

The cannabis industry has evolved from its initial roots of cultivating the plant to the entry of large multinationals, competing with the already present online retailers. According to wave theory, the cannabis industry is presently in ‘wave 4’, and it is expected to grow further; with the entry of larger pharmaceutical multinationals hoping to exploit un-tapped intellectual property and patent rights, R&D, as well as increased M&A activity, is likely to propel the market size further.

However, there are still barriers to entry with the biggest threat to multinationals being the current existence of smaller biopharmaceutical companies already in clinical or preclinical stages of new specialised therapies; mostly based in Canada.

From a regulatory backdrop, the FDA is likely to approve any CBD/cannabinoid product that leads to some form of medical benefit. Therefore, private payers are also expected to provide these treatment plans to the public, given the current lack of medically approved cannabis drugs. This is a key driver for the entry of multinationals.

On the other hand, HTA assessment in Europe is likely to be more complicated due to the clinical trial requirements, cost-benefit analysis, and need to show some form of benefit over existing biologics. Unless a multinational can achieve parity to existing biologics, there would not be an incentive to continue R&D in this industry. Big Pharma is appearing late to an already saturated market and we would most likely see increased M&A activity to increase market share.

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