FreshLeaf’s top ten 2020 trends for Australia’s medical cannabis industry
You don’t need a crystal ball to know that 2020 is going to be a big year for cannabis in Australia and around the world. But what does that mean exactly for companies, patients and regulators? Here are the top 10 most important trends in Australia’s medical cannabis industry according to FreshLeaf Analytics:
1. Senate inquiry frames issues but doesn’t directly solve them
There are a bunch of important patient access trends that will take centre stage in 2020. The first is increasing scrutiny on the performance of the system as a whole, highlighted by the upcoming Senate inquiry into barriers to patient access. The inquiry was launched in November 2019 and the Community Affairs References Committee is due to report on its findings by February 26th 2020, so this will set the scene for patient-centric policy debates for the rest of the year. FreshLeaf is not expecting any significant legislative/regulatory changes to come out of the inquiry, as the inquiry itself was not voted for by the current government, but it will be important nonetheless.
2. Products pricing plummets
Product cost is one of the top barriers to access currently and will be a focus of the Senate inquiry. Direct government subsidies outside of the PBS are unlikely, so we are essentially left with price competition to drive prices down. The good news is that FreshLeaf is aware of dozens of new products coming to market in 2020 that will be cheaper per-mg than existing products, and this trend will likely continue throughout the year, bringing average prices down.
3. More Aussie products come online
We closed out 2020 with around 100 different products available for Australian doctors to prescribe. Only two of those products were made from locally-cultivated plants. In Q1 2020 we expect to see another half-dozen or so products to come online from several local cultivators, one of which has already been publicly announced. By the end of 2020, since we’re making predictions, we expect the number of operational, Australian cultivators with locally-grown products on the market to reach at least five, setting the stage for some meaningful cash flows to be generated from Australian cannabis producers
4. Patient numbers hit the big-time
Despite the challenges being experienced by patients, we continue to see patient numbers grow on average 15-20% month-on-month. According to the FreshLeaf patient model, we closed off 2019 with around 10,000 active patients. But the end of 2020, while growth rates will slow we predict that the market size will have expanded to 30-50,000 active patients, representing annualised product sales in excess of AUD $100M.
5. New approval pathways become viable
2019 reforms to State prescribing rules in QLD and NSW now mean that it’s easier to prescribe as an Authorised Prescriber than it is to use the SAS-B portal. Previously, even those doctors who got AP status found they still had to tackle with State-level approval. And the more States/Territories that relax these rules, the more attractive AP status will become for frequently-prescribing doctors. Also keep an eye out for the rise of compounding cannabis medicines in 2020.
6. One license to rule them all
The Review into the Narcotic Drugs Act was published last July and the government has committed to implementing all 26 recommendations. Some have already been implemented, others will take stakeholder consultation and subsequent amendments to the Act. Arguably the most significant reform will be the amalgamation of all license types into a single unifying license. This was a recommendation from the Review and the ODC will be holding consultation sessions on the recommendation in January 2020 so it appears pretty much certain this will happen. Some details will of course need to be ironed out, including how the new approach will affect existing license holders and license applicants.
7. Global glut
In September 2019, Health Canada reported that there were 1,781,106 square metres of space under active cultivation in Canada, and that despite increasing sales of flower and oil, product inventories continued to increase from June to September. There is no longer a cannabis shortage. In fact, 2020 will see an ever-growing glut. As more large-scale cultivators come online in Canada, Australia, Portugal and elsewhere, demand simply cannot keep up with supply.
8. TGA starts enforcing GMP requirements
FreshLeaf understands that many of the products available in Australia do not meet the minimum quality standards required by the TGA for locally manufactured products. These imports have not yet been properly regulated, but 2020 might be the year in which GMP regulations are firmly and uniformly implemented. So the ever-increasing variety of products might be tempered by Australia’s quality standards. It’s not possible to tell what the net effect of these trends will be.
9. Patchy ASX post-bubble recovery
2019 was a bloodbath for many listed cannabis companies. The top 5 ASX listed cannabis companies by market cap closed 2019 about 32% lower than they opened. For some, 2020 won’t be much better. In fact FreshLeaf expects more bad news from the big players, probably a collapse or two, some firesales and takeovers. But it won’t be all bad. 2020 will be the year in which meaningful revenues and realistic pathways to market will be prioritised over hype and baseless billion-dollar forecasts. And besides North America and Germany, Australia is still the only meaningfully-sized market for medical cannabis in the world. And with our increasing patient numbers, local producers should have a comparatively easier time than their international counterparts.
10. NZ expansion sets example and opens new market
Our Kiwi cousins will also have a big year in 2020. Their new medical cannabis framework will come into effect, implementing a very simple and progressive patient access framework: all doctors will be able to prescribe without Ministerial approval. And people undergoing palliative care are already allowed to possess and consume non-prescribed cannabis. This is a great example to set for Australian States/Territories who have yet to remove their restrictions on doctor prescribing. It also presents an opportunity for Australian companies to export to New Zealand, as our quality and safety standards will be closely aligned.
That’s it for FreshLeaf’s 2020 forecasts! Some challenges for medical cannabis globally, but mostly things to look forward to if you’re in the Australian industry. If there’s anything you’d like us to expand on, or if you have particular questions, please feel free to get in touch. Here’s to a great year ahead!
FreshLeaf Analytics, a division of Southern Cannabis Holdings, is the leading supplier of data about the medicinal cannabis industry in Australia. We have access to medicinal cannabis product, pricing and clinical data sets from some of Australia’s leading healthcare companies and organizations including healthcare clinics, pharmacies, product suppliers and the TGA. The FreshLeaf Analytics team provides custom research, analysis and consulting services in the Medicinal Cannabis market in Australia. The FreshLeaf Analytics team can be contacted on +61 2 8203 8741 or [email protected]