Marijuana producers look past retail, shift focus to medicines
Canadians are counting down to the legalization of recreational marijuana this summer, but industry players are already racing to get ahead in a potentially more lucrative market segment for the plant in the years to come: cannabis-based pharmaceuticals.
Companies are researching and developing marijuana-based medicines that, they hope, will not only have broader appeal to doctors and patients, but will create lucrative intellectual property that will provide revenues far into the future.
This is the next level of the “green rush,” said Har Grover, the chief executive of Toronto-based Scientus Pharma, a biopharmaceutical firm focused on cannabis. “The potential down the road is far greater than what the recreational market sizes are … What you need to do is deliver medicine in a form that patients and physicians are used to using.”
Marijuana firms are eyeing the higher margins these value-added products can command compared to dried bud. Licensed medical marijuana producers also see the associated intellectual property as key to their future profitability, providing a competitive edge and a resilient profit stream as cannabis moves toward commoditization like every agricultural crop.
While cannabis itself cannot be patented, licensed producers can apply for plant breeders rights protections for marijuana strains if they can sufficiently prove it is new. But innovations such as formulations, delivery mechanisms, and scientific techniques for testing have the potential to qualify for intellectual property protection.
“There is certainly a desire by companies to develop cannabis products that can have defensibility from a business standpoint, from an IP standpoint,” said Neil Closner, chief executive of licensed producer MedReleaf.
Scientus Pharma and MedReleaf are among Canadian firms researching and conducting clinical trials examining medical uses for cannabinoids, chemical compounds found in the cannabis plant.
MedReleaf has been looking at the efficacy of cannabis for a range of conditions, including cancer and post-traumatic stress disorder. Scientus Pharma has been researching various conditions as well, focused on pain management.
Canopy Growth, Canada’s biggest licensed marijuana producer, launched its own biopharmaceutical company called Canopy Health Innovations two years ago.
Bruce Linton, Canopy’s chief executive, said its subsidiary has been “running hard” and just last quarter filed 27 patents for combinations of cannabinoids and delivery mechanisms for sleep.
Canopy and other Canadian licensed producers have been exporting cannabis to countries such as Germany. As Linton expects most of these countries to develop their own cannabis industries, Canopy ’s proprietary products and methods can be still be sold or licensed there, generating revenue for the long term, he said.
“Your real advantage is your methods and intellectual property, as well as your unique proven products,” he said.
Canopy and Scientus Pharma are among the 32 firms with a dealers’ licence from Health Canada, which gives them more latitude than a licensed producer to conduct activities with cannabis, such as testing. There is relatively little scientific research into the therapeutic effects of cannabis, in large part due to its long-held illegal status, said Grover. “The cannabinoid plant is a gold mine of drug discovery and development for the next 10, 20, 50 years,” he said.