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  • Little Green Pharma's (LGP) recent partnership with HIF puts a spotlight on the often overlooked medicinal cannabis treatments
  • The significant rebate for LGP's cannabis oil treatments makes the product more affordable and allows it to compete for a slice of the pharmaceutical market
  • The global pharma market is already estimated to be worth US$1.25 trillion (around A$1.72 trillion) while in Australia, it's valued at around $25 billion
  • The company also believes the HIF deal could make it easier for Australian consumers to receive its products in a market where medicinal cannabis treatments can be difficult to access
  • Shares in LGP are currently trading a slight 2.5 per cent down, worth 39 cents each

Little Green Pharma (LGP)’s recent partnership with health insurer HIF shows how medicinal cannabis treatments could shake-up the lucrative pharmaceutical market in Australia and beyond.

Under the deal, HIF will offer a rebate of up to $105 per bottle of LGP's cannabis oils, substantially reducing the products’ recommended retail price. Crucially, by making medicinal cannabis more affordable, LGP and HIF have opened the door for the treatment's wider use.

They've also placed the drug in direct competition with comparable prescription and over-the-counter medications, not to mention patients currently treating themselves with cannabis sourced from the black market.

The market as a whole

There's no doubt about it — the pharmaceutical industry is big business.

The global pharma market was assigned an estimated worth of US$1.25 trillion (around A$1.72 trillion) in 2019, having tripled in worth in the last 18 years.

In Australia, the pharmaceutical market is much smaller in comparison but still manages to have an estimated worth of over $25 billion in 2020.

The Federal Government has already declared it spent $12.7 billion subsiding prescription medication last year as part of its Pharmaceutical Benefits Scheme (PBS), which subsidises the cost of common prescriptions.

Looking at ASX-listed businesses, leading drugmaker CSL (CSL) recorded US$8.8 billion (around A$12.1 billion) in sales revenue for the 2020 financial year, as well as US$2.1 billion (approximately A$2.9 billion) in profit after tax.

The ongoing value of the pharma markets also coincides with the growing demand for both prescription and over-the-counter drugs.

A recent survey found nine million Aussies currently take a prescribed medicine every day, while eight million take two or more prescribed medicines each week. It also estimated two million people take over-the-counter medicine daily and more than seven million take a complementary medicine daily.

Given the demand and market size of the medicines industry, Little Green Pharma's partnership with a health insurer shows cannabis is a legitimate competitor in the business of treating chronic and acute ailments.

Little Green Pharma explained

So what exactly is Little Green Pharma, and how is it different to other cannabis companies?

LGP first began as a privately owned company back in 2016 and has grown to become one of a handful of vertically integrated cannabis business listed on the ASX.

This means it both cultivates, produces, manufactures and wholesales its cannabis products, with both the cultivation and manufacturing plants located onsite together in WA's southwest.

The company is fully licenced by Australian authorities, recently receiving a Good Manufacturing Practices (GMP) licence from the Therapeutic Goods Administration (TGA) for its new manufacturing facility.

Its cultivation plant was also expanded over the last year and now comprises nine flowering rooms, two mother plant rooms, and two vegetation rooms.

Altogether, that's enough product to manufacture over 110,000 bottles of medicinal cannabis oil per annum: Little Green Pharma's main product.

The company produces four different cannabis oil which contain different formulations of both CBD and THC — the two main components of cannabis prescribed for pain, inflammation, nausea, spasticity and seizures.

Source: LGP Prospectus

Accessing LGP's oils

Currently, Australian patients are able to access Little Green Pharma's range of cannabis oils via three different pathways, including the Special Access Scheme Category B (SAS-B) — where healthcare practitioners, including GPs, can obtain approval to prescribe medicinal cannabis to individual patients.

The other two options are the Authorised Prescriber Scheme —where authorised doctors can prescribe specific medicinal cannabis products for any patient diagnosed with a specific condition — and clinical audits and trials.

These are the main options available not only for Little Green Pharma, but for other cannabis producers as well. While cannabis is legal, it's still not available as a registered prescription medicine for the substantial majority of conditions.

Despite the barriers to accessing the product, more than 6700 patients have accessed LGP's range of medicinal cannabis oils as of September 2020.

Enter HIF

However, with the backing of a major insurance fund, Little Green Pharma's range of products will become more affordable for Australians to access going forward.

LGP Chief Operating Officer Paul Long has described the deal as a "milestone" which will open the door for medicinal cannabis as a treatment going forward.

"This partnership is hopefully one of many, but it really acknowledges the fact that medicinal cannabis is becoming mainstream for clinical practitioners and for patients across Australia," he said.

HIF CEO Justin James agreed and said cannabis was too often overlooked as a treatment option for many Australians.

"What is clear to us in feedback is that patients are keen to see alternatives to standard prescription medicines," he explained.

"Medicinal cannabis is becoming far more widely accepted and we know that it has multiple benefits, and can treat multiple life-stage illnesses" he added.

Looking ahead, Little Green Pharma believes its partnership with HIF will be the first of many as the healthcare industry wakes up to the benefits and possibilities of medicinal cannabis treatments.

Shares in LGP are trading a slight 2.5 per cent down, worth 39 cents each.

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