Following a landmark decision by the country’s Government, Pakistan, with a population of over 216 million, has entered the multi-billion dollar CBD market
Poised to capitalize on the massive new market opportunity, Creso Pharma has signed an exclusive distribution deal to bring the company’s innovative hemp-derived CBD products into Pakistan and the Philippines
The deal will also see Creso look at additional potential target markets, with a total addressable market of approximately 750 million people, which includes Cambodia, Afghanistan, Azerbaijan, Bangladesh, Georgia, the Maldives, Myanmar, Tajikistan, Turkmenistan, Uzbekistan, and Vietnam
Creso Pharma (ASX: CPH) (OTC: COPHF) (FRA: 1X8) announced on Monday the signing of a new comprehensive distribution agreement with Route2 Pharm, a leading nutritional supplements company. Under the terms of the deal, Route2 Pharm will import, market, distribute and sell Creso Pharma’s innovative hemp-derived therapeutic products exclusively in the Asian markets of Pakistan and the Philippines.
Route2, a subsidiary company of Route2Health, will also non-exclusively import, market, distribute and sell the company’s products in additional potential target markets, including Cambodia, Afghanistan, Azerbaijan, Bangladesh, Georgia, the Maldives, Myanmar, Tajikistan, Turkmenistan, Uzbekistan, and Vietnam.
Based in Pakistan, Route2Health has over thirty years of pharmaceutical sciences experience and produces and distributes world-class herbal remedies and dietary supplements. Route2Health has United States Pharmacopeia (USP) GMP compliant manufacturing facilities and global partnerships.
Per the terms of the 3-year deal, Rout2 holds the exclusivity rights to Creso Pharma’s cannaQIX and cannaDOL product lines in the previously mentioned exclusive territories of Pakistan and the Philippines. The agreement is subject to Route2 meeting a minimum threshold of orders for cannaQIX and cannaDOL in the deal’s first year.
The Agreement follows a landmark decision made by the Pakistan government in September 2020, which will allow the country to enter into the billion-dollar cannabidiol (CBD) market through a focus on cultivating cannabis and hemp for therapeutic products. Route2Health has a strategic association with Highnoon Laboratories Limited (PSX: HINOON) (‘Highnoon’), one of Pakistan’s most successful and progressive pharmaceutical companies. Under the Agreement, both parties have agreed, subject to further regulatory approvals, to leverage their combined international reach to distribute and sell Creso’s products into additional markets, including the Philippines and Cambodia, as initial priorities, as well as Afghanistan, Azerbaijan, Bangladesh, Cambodia, Georgia, the Maldives, Myanmar, Tajikistan, Turkmenistan, Uzbekistan, and Vietnam.
This considerably broadens Creso’s international footprint and unlocks a number of immense market opportunities. Pakistan has a population of over 216 million people and a wide range of unmet needs that can be addressed by Creso’s targeted portfolio of products.
Creso has a growing portfolio of cannabis and hemp-derived products that focus on four key areas, including therapeutics, nutraceuticals, animal health, and cosmetics. The Company currently has a portfolio of 13 products, eight of which have been commercialized and are generating revenues and a strong product development pipeline.
“This Agreement has the potential to take Creso into markets with a combined population of over 750 million people. Our mission is to deliver access to affordable, high-quality, broad-spectrum GMP products for the betterment of people’s lives everywhere. We’re delighted to conclude this important partnership, through which we hope to provide the opportunity for millions of people to have access to our innovative products,” said Adam Blumenthal, Non-Executive Chairman of Creso Pharma.
“We are very excited to progress this partnership with leading global cannabis company Creso Pharma. There exists a vast amount of real-world and strong clinical evidence which supports the safety and efficacy of hemp-based therapeutic products. The basis for this partnership is a shared commitment of bringing affordable, high-quality products to market which improve people’s lives. We intend to fully leverage the financial and marketing strength of our group to deliver on this mission,” commented Route2 and Highnoon Laboratories Chairman Tausif Khan.
“Our company has thirty years’ experience of successfully bringing products to market. These products draw on our knowledge in both pharmaceutical sciences and time-tested herbal remedies. We have been strongly encouraged with the recent regulatory breakthrough on CBD in Pakistan, which will result in the removal of obstacles to patient access. We continue to work closely with the relevant authorities to pave a way for patients and consumers to gain access to the benefits of Creso’s innovative hemp-derived therapeutic products,” stated Shahnawaz Baig, Managing Director of Route2.
Key Terms of the Deal
The minimum order quantities for the first contractual year (January 1, 2021 – December 31, 2021) are as follows:
- cannaQIX 10: MOQ (CHF) = 123,250 | MOQ (AUD) = 178,712
- cannaQIX 50: MOQ (CHF) = 1,402,500 | MOQ (AUD) = 2,033,625
- cannaDOL, 0.1%: MOQ (CHF) = 78,000 | MOQ (AUD) = 113,100
- cannaDOL, 1%: MOQ (CHF) = 108,000 | MOQ (AUD) = 156,600
- Total: MOQ (CHF) = 1,711,750 | MOQ (AUD) = 2,482,037
The minimum order quantities only become applicable three months after each product is registered in each Exclusive Territory. Route2 shall launch and commence distribution within 6 months after such product registration, with minimum order quantities in the first contractual year being adjusted pro rata relative to the date that a product is registered and launched in an Exclusive Territory. Route 2 is responsible for obtaining all such necessary and legally required registrations, authorizations and certifications.
For the second and third contractual years of the Agreement, the Parties will negotiate in good faith to set new minimum sales targets.
If minimum order quantities are not realized within any Contractual Year, Creso has the right to terminate the Agreement upon giving Route 2 six months written notice, with such notice to be provided on or before 31 March of the following Contractual Year.
Either party may otherwise terminate the Agreement in the event of a material breach or bankruptcy of the counterparty.
Deal Highlights & Recap
- Creso enters into a Distribution Agreement with Route2 Pharm Pvt Ltd in Pakistan for the exclusive distribution of Creso Pharma’s products into Pakistan and the Philippines and non-exclusive distribution into other potential target markets.
- The agreement contemplates combined minimum order quantities for the first contractual year of up to CHF1.71 million (AUD$2.48 million1) across CannaQix 10, Cannaqix 50 and CannaDOL product lines pro-rata subject to timing of product registrations.
- The agreement follows a landmark decision by the Government of Pakistan allowing Pakistan to enter the billion-dollar Cannabidiol (CBD) market.
- Pakistan has a population of over 216 million people and a wide range of unmet needs that can be addressed by a targeted portfolio of products.
- With an addressable market of approximately 750 million people, the deal’s additional potential target markets include Cambodia, Afghanistan, Azerbaijan, Bangladesh, Georgia, the Maldives, Myanmar, Tajikistan, Turkmenistan, Uzbekistan, and Vietnam.
CPH Stock Price Action & Chart
Shares of Creso Pharma’s ASX listed CPH stock closed Monday’s trading session at $0.225 per share, down -2.17% on the day. South of the border, the company’s U.S.-listed COPHF shares closed the day at $0.21, down -4.55%. Overseas in Germany, Creso’s Frankfurt listed stock traded up +4.26% on Monday, closing the day at $0.147.
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