With marijuana becoming legal in more and more places, and the medicinal value of cannabis increasingly recognized, it’s only natural that big pharmaceutical companies would be interested in jumping into the cannabis market. And it’s just as natural for consumers and industry observers worried about squashed competition and high prices to be nervous about such a move.
Last December, British Columbia-based cannabis producer Tilray announced a global supply and distribution agreement with Swiss pharma giant Novartis. The agreement represented a ramping up of the original deal that Tilray signed in 2017 with Novartis subsidiary Sandoz.
“Around the world, people are substituting medical cannabis for traditional pharmaceutical products,” said Tilray CEO Brendan Kennedy in an interview with Market Watch. “Medical cannabis is disrupting Big Pharma, and Sandoz and Novartis are smart for being ahead.”
Big Pharma Adds Legitimacy to Medical Marijuana as it Expands Into More Global Markets
Kennedy claims that this deal is the first between a cannabis company and a big pharmaceutical company. It will give Tilray access to 35-plus countries, which allow medicinal cannabis use.
“The key point is that it will allow us to expand into more markets, more quickly,” Kennedy said in the interview. “This is an agreement that will take advantage of Sandoz’s global footprint and leverage their brand, which inspires trust and confidence with pharmacists around the world.”
The last part of the quote is important—not only does the deal give Tilray expanded distribution, it gives them legitimacy.
“If a product comes into a pharmacy with the Sandoz logo cobranded on it, or if a pharmaceutical sales rep is talking to a physician about a product that’s branded as Tilray and Sandoz, it lends credibility to that product,” added Kennedy in an interview with Bloomberg News.
The companies will also collaborate to develop new nonsmokable and noncombustible medical marijuana products.
Some Big Pharma Companies Appears to Be Ambivalent About Medical Marijuana
Lots of big industries are intensely interested in the potential of the legal medical and adult-use cannabis market. Many are looking to form partnerships and buy businesses to get their feet wet.
For example, Altria, the world’s largest tobacco company and owner of Philip Morris and Marlboro cigarettes, invested a whopping USD $1.8 billion in Canadian cannabis producer Cronos for 45% of the company.
Or take beer giant Molson, which formed a partnership with Canadian medical marijuana company Hydropothecary to create a line of nonalcoholic cannabis-infused beer.
Before cannabis became legal in Canada last October, big pharma players seem poised to jump into the market. In September 2018, an article posted by in-PharmaTechnologist pointed out:
“According to a joint research project between U.S. analytics firm New Frontier Data, and U.K.-based cannabis biotech, Grow Biotech, seven of Canada’s top 10 cannabis patent holders are major pharmaceutical companies.”
Even so, at the same time, some pharma companies seem ambivalent about the possibilities. Pfizer, for example, which was the second-largest holder of cannabis patents with 14, claims that its work in the area was confined to the laboratory; it says it has since abandoned its patents in the area.
Big Pharma’s Takeover of the Cannabis Industry Poses Some Dangerous Possiblities
Perhaps some pharmaceutical giants are more worried about medical marijuana cutting into sales of their established products than they are about exploring new market possibilities. And on the flipside, some consumers are worried about big pharma price hikes and monopolies.
Their fears may have merit if you look south of the border, where a pharmaceutical company called Insys spent some $500,000 in 2016 to help block legalization of cannabis in Arizona.
Then, the following year, Insys got approval from the U.S. Drug Enforcement Agency (DEA) to develop Syndros, a cannabinoid designed to treat chemotherapy patients struggling with nausea and AIDS patients with anorexia. This gave credence to critics who said Insys was merely trying to get rid of its competition.
“We’ve got these pharmaceutical companies that are using their lobbying power to bring something to market that people can grow in their home,” said JP Holyoak, a marijuana dispensary owner and cultivator, who chaired Arizona’s marijuana legalization campaign. “They recognize that the horse has left the barn regarding marijuana. They can’t beat it, so now they’re trying to just take it over.”
So, we may have to find out the hard way whether such a takeover will help cannabis companies or hurt cannabis consumers.
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