This is bad news for Big Alcohol and Big Tobacco, who are both at a big disadvantage despite huge, headline-making investments into legal Canadian cannabis companies. Since for the moment medical marijuana enjoys more global popularity and acceptance than recreational drugs, Big Pharma is better positioned to seize more of the marijuana market than legacy “vice” companies.
Until now, Big Pharma had limited itself to selling marijuana analogs like synthetic THC pills, and marijuana-derived concoctions like GW Pharmaceuticals’ line of cannabinoid-based products including Sativex and Epidiolex. But until now, a major pharma company had yet to involve itself directly.
As STAT, MarketWatch, and other outlets reported, the move allows Tilray to move into markets where cannabis is legal with the imprimatur of an existing pharmaceutical company.
Such a move “lends credibility” to the product that it might not otherwise have, as Tilray CEO Brendan Kennedy told Bloomberg in an interview. And credibility means more customers and more expansion, which is what the marijuana industry is all about.
Tilray will continue to market and sell recreational cannabis products in its native Canada, where legalization kicked into effect on Oct. 17, Kennedy told Bloomberg in an interview.
Both medical and recreational are “equally important” to the company, he said, but as the recent news from Thailand, where one of the world’s most repressive countries on drug policy recently legalized medical marijuana, it’s clear where the immediate opportunity for rapid market expansion lies.
According to a joint statement, the two companies plan to market and export Tilray’s existing line of cannabis oil, tinctures, and other nonsmokable products; “educate” pharmacists and physicians about those products (in an effort to get them prescribed en masse) and possibly develop new products in consultation with those physicians and pharmacists.
As Vivien Azer, a market analyst with Cowen observed, this move will allow the two companies to “capture early share in new medical cannabis markets as they come online.”
Like everything else, brand loyalty — and brand trust — are built early, and if new and curious and wary cannabis customers encounter a Tilray-Novartis branded product first, the chances that they will stick with it are good.
In this way, the inherent advantage Big Pharma has over Big Alcohol and Big Tobacco becomes apparent. The investments Constellation Brands, the parent company of Corona and other beer brands, and Altria, the parent company of Marlboro and other very famous cigarette brands, made into licensed Canadian marijuana companies for the recreational area were both late-stage investments, made well after medical cannabis was an accepted thing.
But there’s another advantage: the advantage of well-funded research. The main stated impediment in countries weighing whether to allow medical cannabis or not is a supposed lack of information regarding what cannabis does to the human body and brain. In nearly every drug market, the main funding source for drug research comes from drug companies. Novartis executives likely realize this, and are likely considering just how much of their R&D budget to spend on “proving” what many of us take as obvious gospel: That cannabis is viable medicine.
Granted, they will likely fund research proving the efficacy of a branded and patented proprietary product rather than cannabis at large. But in a market economy where the Bigs are king, this is what progress looks like.