The argument for marijuana as a legitimate medicine is rapidly gaining momentum as more and more clinical studies are released. The illegal nature of marijuana has made it hard for doctors and researchers to conduct clinical trials and source product to experiment on, but once legalization arrives in Canada later this year, we think the medical data backing up the efficacy of marijuana as an epilepsy medicine will explode.
The positive effect medical marijuana has on epilepsy patients’ quality of life is a feel good story for sure, but how big is the market for epilepsy medicine really? We aim to find out if marijuana’s rise as the epilepsy cure is a big money opportunity for licensed producers or another bull market mirage.
Worldwide, 7 of Every 1,000 People Suffer from Epilepsy
According to the World Health Organization, there are 50 million people worldwide who suffer from epilepsy. Every year 2.4 million more people are diagnosed with the disease. Rates of the disease vary depending on which country you live in. Developed countries have a lower prevalence than emerging markets. For example, new cases in developing countries appear two times as often as in the US and Germany.
Though the population of epilepsy sufferers is small compared to the global population, there are still over 7 million epileptics in the US, Canada, Europe, and Japan. Not a small number.
Spending on Epilepsy Drugs Explored
According to GlobalData, global spending on epilepsy drugs was $6 billion in 2016, and is expected to rise to $7.5 billion by 2026 due to patient growth and higher pricing from new formulations hitting the market. Another report from Grandview Research points to a smaller market at $4.2 billion rising to $5.5 billion by 2024. The US is by far the largest spender on epilepsy medicine, which isn’t a surprise with some of the highest health care costs in the world.
The Canadian market for epilepsy medicine is worth only $136 million a year or 2% the size of the marijuana market, according to the Canadian Institute for Health Information.
Epilepsy Spending vs the Marijuana Market
Source: GlobalData, Pharma Intelligence Center, Drugs Database
Regardless of which forecast you use, the size of the market for epilepsy medication is larger than the marijuana market in Canada even after legalization. Licensed producers have plans to produce almost 2.3 million kg a year by 2022, which if sold for the government’s preferred purchase price of $4.50 per gram implies revenue of $10 billion Canadian Dollars.
Marijuana treatments would have to take 7% market share of all epilepsy drug sales to add 10% to the revenue of licensed producers. This is totally possible, with blockbuster drugs commanding 15-20% market share.
Long Road Ahead Before Acceptance of Medical Marijuana
As the conversation on marijuana legalization has spread, so has interest in marijuana research. Published articles on cannabis and epilepsy have skyrocketed in recent years, but there’s still a long road of research ahead before marijuana is definitively accepted as a standalone medication.
According to the National Institute of Health, three high-quality studies were released in the last sixth months showing that CBD, an active ingredient in marijuana, works in the control of seizures, however all of the patients in the studies were already on other seizure medicine, so the contribution just from CBD could not be determined. This tells us there needs to be many more clinical trials before the true efficacy of CBD as an epilepsy treatment can be determined. Clinical trials take time, but the revenue opportunity is substantial.
Number of Articles When Searching “Cannabis and Epilepsy” on PubMed
Source: PubMed
Recommended Way to Invest in Medical Marijuana Stocks
Making money off of the growth in the pharmaceutical use of marijuana is not as simple as buying any licensed grower. Grizzle thinks the way to play this trend is to buy companies that specialize in the medical research of marijuana medicines.
The leader in the medical marijuana field is GW Pharmaceuticals (GWPH), the first company to receive FDA approval for a CBD-derived medicine to treat children with seizures. Another private legal producer Tilray has been participating in clinical studies related to CBD-based medicines, which is unique among producers and makes them a future IPO to watch for.
The purchase of Anandia Labs, a marijuana testing company, by Aurora Cannabis this week signals that deal making for cannabis research and testing companies is picking up. Larger marijuana growers are close to completing their quest to add growing capacity by buying other producers. Now the focus is going to shift to companies that can help round out a grower’s marijuana expertise in the fields of manufacturing, genetics testing and pharmaceutical R&D.
Even if growers don’t buy marijuana research houses, the global pharmaceutical giants certainly will once the industry produces more positive clinical trial results. Grizzle thinks pharmaceuticals is where the real money will be made, so choose your stocks wisely.
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