Introducing a new drug to the market is harder than it seems. The reality is that very few companies, excluding big pharma, simply do not have the resources needed to bring a new pharmaceutical drug into the market.
This may be because:
Financial investment required – the average cost of introducing a new drug to the market is around $1.3 Billion
Time – the average time needed for a drug to go from experimental to the pharmacy shelf is about 12 years
Any new drug being developed now has very low chances of succeeding, as the likelihood of a new drug getting approved by industry initiative is a tiny 9.6%
What This Means for the Cannabis Industry
This reality means that the cannabis companies of today most probably will not bring to market tomorrow’s pharmaceutical products based on medical cannabis; there is a higher likelihood that they will supply Big Pharma with the necessary raw materials or active ingredients, if they are able to ensure safety, quality and consistency.
One of the exceptions to this hypothesis is a British company dedicated to developing and marketing medical cannabis drugs, GW Pharmaceuticals. Currently they have two drugs on the market, Sativex which was approved in 2010, and Epidolex which was approved in 2018. The company, established in 1999, generated just over $310 million dollars in revenue just last year, a far cry from the revenues of Big Pharma.
What About Synthetic Drugs?
Synthetic THC has existed as a pharmaceutical drug since the late 1970s with drugs such as Marinol (dronabinol), Syndros (dronabinol), and Cesamet (nabilone). Companies have less profit incentive to sell actual cannabis or whole plant extracts, than to isolate and synthesize its components. Yet none of these synthetic alternatives are blockbuster drugs making over US$ 1 billion in annual sales. If the therapeutic potential of medical cannabis were simply down to THC or CBD on its own, or the ratio between the two, synthetic THC drugs would be blockbusters and GW’s revenue would be much greater. Additionally, most patients stop using them after one round because of side effects, which do not exist in the botanical version.
The reality is more complex, as the cannabis flower has hundreds of active compounds which can influence its efficacy and are more than just THC or CBD. Some call this the entourage effect in which the active compounds in cannabis act together to adjust its affect.
To determine the function and potential of each compound will take years at the very least. This progress depends on dedicated researchers devoting their professional careers to this important research.
For the industry (and investors), this means that the chances of a significant medical cannabis breakthrough resulting in a blockbuster pharmaceutical drug generating annual revenues of at least $1 billion happening in the coming years is unlikely. There are simply too many challenges and obstacles along the way. For the time being, however, there are other directions and opportunities for the medical cannabis industry to pursue and grow for the benefit of individuals and communities worldwide.