Medicinal cannabis sales will double in 2021, driven by a rapid growth in patient numbers and Authorised Prescribers (APs), according to the latest report from FreshLeaf Analytics.

Based on data collected from 45 suppliers and 1,000 CA Clinics patients in January and February 2021, the company’s H1 2021 Patient, Product and Pricing Analysis predicts sales will increase from A$100m to $200m, with active patient numbers up from 30,000 to 75,000 by the end of the year.

As a measure of the accelerated growth, year-to-date sales revenue has already surpassed that for the whole of 2019. The forecast excludes Schedule 3 low-dose CBD products as FreshLeaf does not expect any products to become available in 2021.

While SAS-B approvals topped 8,000 in February and remain the primary access point for patients, there has been a significant increase in APs after a long period of stagnation with FreshLeaf estimating the channel now accounts for almost 20% of active patients.

Product numbers almost doubled to 190 in the last 12 months, but FreshLeaf said they remain highly commoditised, leaving physicians with little ability to differentiate between them beyond formulation and price.

Product growth in the last six months has primarily come from oils (up from 89 to 123) and wafers, which tripled in size to become the fourth largest product category at 3.7% behind oils (64.7%), flower (16.8%) and capsules (8.9%).

As previously reported by Cannabiz, chews were the only new product format introduced to the market since FreshLeaf’s last report in September 2020.

FreshLeaf MD Cassandra Hunt said the lack of new formats was partly a product of the market reaching maturity, but also a sign that delivery methods common in recreational markets are not yet crossing over into the medicinal space.

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“If you look at Canada, there are formats that could work in a medical context that we aren’t seeing in the market yet. Things like topicals for pain and other more easily consumable formats like drinks and edibles.”

Hunt added there is also the potential for greater innovation in the area of bioavailability, citing Canntab’s instant and extended release hard-pill formulations as examples, but “those types of products take a lot of research and investment”.

Addiction specialist and CA Clinics medical director Dr Mark Hardy said it was important for the industry to move beyond oral routes both to help patients who are unable to swallow and increase bioavailability.

“I see people with quite significant or progressive neurological conditions, including motor neurone disease or dementia, who can no longer swallow anything.

“There has been some shift with a transdermal product overseas being used in very young children with quite significant developmental disabilities.

“Traditionally with cannabinoids and transdermal delivery systems the absorption has been relatively poor, but these newer products promise… potentially greater bioavailability than through an oral route.”

The number of flower products showed “modest” growth, with 32 now available supplied by nine manufacturers. But only four products are cultivated locally, the report said, again highlighting the heavy dependence on imported product, particularly from Canada.

Nevertheless, FreshLeaf noted the recent flower shortage in Australia triggered a response from local operators with “some releasing home-grown products for the first time while others have altered production plans to meet demand”.

Meanwhile, the price war of the last three years continues to intensify, with competition and a record number of products contributing to what FreshLeaf describes as an “astonishing drop” in the retail floor price to around 3c/mg, with an average price of 16c/mg.

Prices dropped across almost all product formulations, with a notable drop for high THC and CBD isolate Schedule 4 products. Of the 190 products on the market, 35 (or 18%) have a retail floor price below 10c/mg.

Average daily doses have stabilised at 87mg per patient, and patient spend remains flat at an average $359 per month. This, combined with falling prices, suggests almost all the forecast growth in 2021 will come from increasing patient numbers rather than higher yields or dosing.

When it comes to the down scheduling of CBD at doses up to a maximum of 150mg/day, FreshLeaf estimates the pharmacist-only CBD market will grow to $250m at maturity, capturing around two million customers.

According to its data, one in four patients currently take a CBD product at a daily dose below 150mg, spending an average $8.02 per day.

It said it expects this cohort will migrate to the pharmacy channel once low-dose CBD products become available over the counter, meaning that the first products to become available will take the lion’s share of the market – around 10,000 patients spending almost $29m per year.

The size of the prize remains staggering, with FreshLeaf calculating Australia’s combined medicinal cannabis market (legal and illegal) to be as high as $1.5b already.

Around one in five products currently fit the product profile for Schedule 3 low-dose CBD, as outlined by the new TGA regulations, with an average unit price of $193 – too high for an over-the-counter product. FreshLeaf said this will mean smaller, more affordable units will become a key feature of the category.

While the report states S3 should improve access and attract new patients, it warns the legal industry still faces significant hurdles if it is to transition the estimated 555,000 patients still accessing medicinal cannabis illegally to legal channels. These include regulatory hurdles, stigma, doctor education/willingness to prescribe, patients awareness/experience and price.

The size of the prize remains staggering however, with FreshLeaf calculating Australia’s combined medicinal cannabis market (legal and illegal) to be as high as $1.5b already.

Tim Drury, CEO of Southern Cannabis Holdings, the owner of FreshLeaf Analytics, said: “While we’re excited by the continued growth in the industry, the fact that the illegal market is still more than 10 times larger than the legal market means we still have a long way to go before Australia has the right ecosystem for helping patients.”

Hardy added: “When you consider there were only about 3,000 active patients just two years ago… clearly more people have been able to gain access to legal medicinal cannabis.

“It is of the utmost importance that patients have treatment options, and these figures suggest cannabinoid medicine is increasingly being accepted as a viable option by the mainstream.”

Clare Barker
Entoura GM Clare Barker: innovation is more important than ever.

However, Entoura general manager Clare Barker warned of the dangers of over supply: “The proliferation of medicinal cannabis products now available for Australian physicians to prescribe seems like a positive for patient choice on the surface, but it also makes it harder for doctors to differentiate between them.

She added: “Product and delivery format innovation is more important than ever.”

Elsewhere in the report, FreshLeaf predicted growing investment in research and development will continue throughout 2021, driven by the revenue potential of a registered medicine and the clinical research requirements for an S3 product.

It also forecast that the recent spate of acquisitions – which saw Auscann buy CannPal, Cann Group acquire Satipharm and ECS Botanics take over Murray Meds – will continue “as the market matures and consolidates around the major players”.

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