The Multibillion-Dollar Sale That Will Change Drug and Cannabis Trading
The planned acquisition of $7.2 billion could spark a wave of negotiations between pharmaceutical and medical cannabis companies
Curated and edited by Sechat Content, with information from Marijuana Business Daily (Matt Lamers)
The planned $7.2 billion acquisition of UK-based GW Pharmaceuticals by Jazz Pharmaceuticals could initiate a wave of negotiations between pharmaceutical and medical cannabis companies. This is what analysts and industry sources are saying.
But not all cannabis producers will benefit. Only companies with marketable intellectual property and an established presence in the medical cannabis arena will attract serious interest.
>>> Subscribe to our NEWSLETTER and receive reliable information from Sechat about Medical Cannabis
“In the short term, you will likely see many LPs taking advantage of GW's news. But in reality, it will have little to no impact on most of them unless they have deep expertise in R&D and plant genetics,” said David Kideckel, an analyst at ATB Capital Markets in Alberta, to Marijuana Business Daily.
Additionally, Kideckel highlighted Organigram from New Brunswick and its partnership with biosynthetic company Hyasynth Biologicals, Cardiol Therapeutics from Ontario, and Willow Biosciences from Alberta as three examples of the type of company that may attract some interest.
>>> Join the Sechat group on TELEGRAM and receive news first
“This is a clear testament to what GW has done, and we believe it will transform the industry over time,” he said. “We know that pharmaceutical companies are already engaged, but very few will say so publicly.”
GW spent approximately $560 million on R&D between 2017 and 2020, according to financial statements.
“What this does is validate cannabinoid-based science within the medium to large-cap pharmaceutical industry. So I think this could open the floodgates for other unique businesses,” Kideckel said.
>>> Join the Sechat group on WHATSAPP and receive news first
Furthermore, he also warned that only a few cannabis companies stand to gain. “GW is in a world of its own. What GW does is lend credibility to the cannabis field for pharmaceutical products,” Kideckel said.
Standardization
As stated by Ken Weisbrod, former head of strategy at Canada's largest pharmacy, Shoppers Drug Mart, standardization in the field of medical cannabis is a prerequisite.
“There are companies in Canada that have remarkable capabilities to do this, and they have become stronger as this area has evolved. These companies will stand out and may move internationally as API (active pharmaceutical ingredient) manufacturers, potentially joint venturing with pharmaceutical companies,” Weisbrod said.
>>> Sechat freely discloses services of 118 medical prescribers of Medical Cannabis
The GW-Jazz deal is "a validation of cannabinoid therapy," Weisbrod said, "but it also sends a message that if you want doctors to prescribe, you have to go down this path (proving clinical efficacy) - that's the right way to do it. Jazz obviously sees it this way, and GW has shown how to put this into practice.”
Organigram is involved in biosynthesis through its investment in Hyasynth Biologicals, a private biotechnology company in the field of cannabinoid science and biosynthesis.
The Cronos Group, a Toronto-based company, has a partnership with Ginkgo Bioworks in Boston to produce cultivated cannabinoids.
>>> Sechat confirms for 2021 the largest event on Medical Cannabis in Brazil
The Big Question
Medical markets in Canada, the United States, and Europe are developing in different ways, and this poses a challenge for executives to create adaptable business models.
In Europe and most markets outside North America, medical cannabis is distributed through pharmacies. In Canada, however, pharmacy sales remain off-limits, and most products must be shipped directly from the producer to the patient.
Beyond distribution, efficacy and standardization play a much larger role outside North America than they currently do in Canada.
Tilray, based in British Columbia, was perhaps the first cannabis producer to form an alliance with a pharmaceutical company, Quebec-based Sandoz, in 2018. “The big question I’m wondering is, in two or three years, will the medical cannabis model in the U.S. look more like Europe or more like Canada?” Tilray CEO Brendan Kennedy told MJBizDaily. “I don’t have the answer, but I’m sensing it may look a little less like Canada than everyone assumes.”