Canopy Growth Corp (NYSE:CGC)(TSX:WEED) recently announced that it is expanding its reach into Europe with the acquisition of a medical cannabis company in Germany. For $342.9 million, C3 Cannabinoid Compound Company will give Canopy Growth access to dronabinol, which is a drug that has been used to treat patients in Austria, Denmark and Germany for nausea, vomiting, and cancer pain. According to the release, “dronabinol was the first cannabinoid product in Germany that could be prescribed by the country’s physicians.”
For all of 2018, C3 sold $41.5 million worth of cannabinoid products across the world and dronabinol saw incredible year-over year growth of 85%, reaching nearly 19,500 patients in Germany. C3 has been working for decades on research and development into cannabis products and has several patents. With more clinical trials underway, there could be significant opportunities for C3 down the road to further expand its product offerings.
And Canopy Growth will be collaborating with C3 on clinical research and other opportunities as well. But The Company isn’t stopping there. Canopy Growth is also looking for more investment and acquisition opportunities with its ‘substantial cash reserves’ that it hopes will create more growth opportunities and give the company a competitive advantage over its peers.
This acquisition will allow us to offer more options to physicians across Europe, accelerate our commercial sales and increase our economic footprint on the continent, and drive forward new innovations. Our goal is to build on C3’s extraordinary reputation and decades of success as we move to an innovative continuum of medical cannabis therapies that will enable physicians globally to better treat their patients.
– Bruce Linton, Chairment & Co-CEO of Canopy Growth
One of the ways Canopy Growth can help C3 is with growing its state-of-the-art facilities which are continuing to expand to meet demand for dronabinol. And as Canopy Growth helps to grow C3’s products around the globe, it looks to be inevitable that further expansions will be necessary.
Medical market could be key to long-term growth
The opportunities in the medical market are significant and the acquisition is a good move on Canopy Growth’s part to invest in technology and research and development. We’ve seen a lot of progress being made over the past few years with respect to the legalization of medical marijuana across the globe and as exciting as the opportunities may be in the market for THC, medical marijuana could achieve much more growth outside of North America. The key is research and for patients and doctors to learn more about what cannabis can and cannot treat so that more effective treatment option and drugs can be developed.
And if Canopy Growth can develop effective drugs for patients to treat pain or that are helpful in fighting diseases, it could dwarf whatever The Company could achieve in the recreational market in terms of sales. Health care is big business and pharmaceutical companies are likely keeping a close eye on the industry. The more patents and knowledge Canopy Growth gains in this area, the more attractive of an investment it becomes to prospective buyers.
Although this might not be the biggest acquisition Canopy Growth has made, it could prove to be one of the most important.