Epidolex may be the first FDA-approved, cannabis-based pharma product on the market. But over-the-counter, hemp-based CBD products will take a large bite out of that market as it continues to show similar effects as the price, prescription-based brand.
Companies build moats – ones that hold back or suppress competition.
Being unaware of these moats can lead to real losses for investors.
Some are natural. They are simply there because the company has a real competitive advantage. In the early days of the iPhone, Apple Inc. had a commanding position. It took other companies several years to threaten its market share.
But a competitive edge like this doesn’t last long.
The biggest and longest lasting ones are a result of the costs of complying with legislation and regulation.
That’s why there are just a few big banks that dominate the banking terrain, with almost no newcomers. Regulatory compliance costs are so high that competition gets smothered.
Frankly, the job of most of the lobbyist horde crowding Capitol Hill is to build legislative moats for the industries and companies they represent.
The same is true when it comes to Big Pharma. Global spending on pharmaceutical research and development will approach $8 trillion this year. Much of this spending yields patentable intellectual property, which can form huge moats.
And building patent moats in the wide-open field of cannabis drugs is just what many pharmaceutical companies are working to do – right now.
And what is out there so far isn’t so unique upon a deep review, meaning market share can be taken away from the pharma companies.
And the product developers doing so won’t even have to go through expensive or arduous federal testing to compete with them.
You have to see what I mean right here…
CDB Will Threaten the Epidiolex Moat
Globally, pharmaceutical sales are already well on the way to $1 trillion by 2020. The potential to carve out some of this market with cannabinoid-based pharmaceuticals is enticing – and some are close to succeeding. After all, the first Food & Drug Administration-approved cannabis-based pharmaceutical is now on pharmacy shelves throughout the country.
After GW Pharmaceuticals Plc got FDA approval for its epilepsy drug Epidiolex, the federal Drug Enforcement Administration soon rescheduled the new drug to its lowest restriction classification on the books (Schedule 5). All other cannabis products are for now stuck on Schedule 1 (which includes heroin).
GW’s strategy is to build a traditional pharmaceutical moat around CBD-based treatments for epilepsy – and then expand it with other treatments.
But, as I explained a few weeks ago here, Epidiolex is just a formulation of CBD (cannabidiol) with an exceptionally high concentration. You can buy CBD in the U.S. over the counter, provided it is sourced from hemp.
The CBD used in Epidiolex is sourced from cannabis, which is why the drug needed to be rescheduled by the DEA. And the reason GW Pharmaceuticals sought FDA approval was so the company could market Epidiolex as a treatment for a particular type of drug-resistant epilepsy.
Doctors, however, can already direct patients to use over-the-counter forms of CBD for this, and any other treatment. Or, perhaps just as likely, patients will do a little research and try CBD of their own volition.
Either way, it’s too easy for patients to go the over-the-counter route for CBD.
That’s not to say that Epidiolex will flop. GW will make plenty of money off of its invention.
It’s important for investors to realize one very important thing: Pharmaceutical companies relying on typical intellectual property tactics for cannabis drug development will have a much harder time generating profits than they have in the past with traditional drugs.
Investors not invested now with those select CBD companies best situated to disrupt the trillion-dollar pharmaceutical industry will miss out on the type of life-changing opportunity to build wealth that rarely comes around twice.
And a growing number of recently published research reports back up our view that over-the-counter CBD will flourish.
Over-the-counter products often require a lower dose and result in far fewer side-effects. Most importantly, my analysts did some digging and, along with data in the research report, determined that over-the-counter CBD can provide similar treatments for a much lower price – far lower than even I originally estimated.
Pharma Can’t Play Offense and Defense Here
Traditional pharmaceutical companies are in the unenviable position of having to play both offense and defense at the same time. Offense is developing cannabinoid-based drugs that fit the pharmaceutical model of having patent protections that can be used to defend a high price for years.
This is the traditional pharmaceutical moat.
But to maintain it, they have to defend against the encroachment of far cheaper treatments with a growing body of evidence to justify their use.
Health and wellness companies with strong CBD distribution will be the dominant players for years. My Cannabis Investor’s Report members have been reading about which companies – one in particular – are best positioned to boost their revenues massively by cutting deep into the $1 trillion pharmaceutical market. In a few days, I’ll share some more of the math and the science behind over-the-counter CBD’s with them.
Given the effectiveness and affordability of over-the-counter products, you will want to be invested in these types of cannabis health and wellness companies, the ones best positioned to drain the moats that pharmaceutical companies are trying to create.
Patients for big-pharma CBD can save thousands of dollars per year by walking into a health food store instead of a hospital or doctor’s office. Consumers and investors only just starting to figure this out.
And the number of people who know this secret will explode sooner than later.
Thanks for being an important part of the National Institute for Cannabis Investors,
Executive Director, National Institute for Cannabis Investors
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