Medicinal cannabis in Germany - Business Report

160 Confidential __________________________________________________________________________________ Vertically integrated suppliers have good chances to sustainably assert themselves and build a veritable business. Those who have geared their business model to CBD still have to overcome the regulatory hurdles in Germany, because CBD products are quickly classified as novel food and can then no longer be mar- keted without further ado. This could be a tough road to market. Also, all suppliers who enter the Cannabis market very late will have greater problems. "The dogs bite the last one" or "the market punishes those who come too late" is valid in the Cannabis market with particular severity. Who will be among the winners in the long term? The manufacturers of Cannabis products with well-defined and characterized Cannabinoid APIs. These products have a regular drug approval and clinical efficacy in defined indications proven by often extensive clinical studies. Often these finished drugs also have orphan drug status, which is almost a guarantee for high prices. Over the next few years, we will see the market entry of several innovative finished drugs. Ready-to-use drugs versus prescription drugs - who will win the race here? Share price performance: Figure 58: Share price development of Aphria and GW Pharmaceuticals; Wallstreet Online, finanzen.net In the long term, the finished medicinal products based on clearly defined molecules ( API ) will pre- vail. For comparison, the above chart shows the share price development of Aphria (Cannabis flowers and prescription drugs) in Canada and GW Pharmaceuticals (finished drug Epidyolex ® and Sativex®) in the UK. Our hypothesis is impressively reflected here. The majority of players in the Cannabis market in Germany focus on one or two value chain stages. This means the import of Cannabis flowers and/or drugs and the subsequent distribution to pharma- cies, clinics or drugstores.