Medicinal cannabis in Germany - Business Report

162 Confidential __________________________________________________________________________________ Prescription drugs 10.1 Cannabis flowers At present there is still a shortage of Cannabis flowers on the German market and consequently prices are high. In the pharmacies the gram of Cannabis flowers costs between 18 and 22 euros. This is due to the high percentage surcharges for Cannabis prescription drugs. Even if the Cannabis flowers are only filled in daily rations in the pharmacy, the high surcharges are effective. If pharmacists open the pre-portioned cans and decant or package the flowers in an unaltered state, the price is calculated according to § 4 Pharmaceutical Price Ordinance. If the flowers are processed into a prescription drug by crushing, sieving or packaging in individual doses, § 5 Pharmaceutical Price Ordinance applies. Reportioning, granulation, sieving and weighing by the pharmacist make the drug considerably more expensive. Thus, prices increase when the pharma- cist "lends a hand" and processes the medicine into a prescription drug. Pharmacies that sell Cannabis flowers at the previous prices commit an administrative offence. As a result, the prices for medical Cannabis have risen from 12.50 euros per gram to over 20 euros per gram following the change in the law. In other EU countries, Cannabis flowers are considerably cheaper and fetch prices of only 10 euros per gram or less. The production costs for the gram of Cannabis ( COG ) are estimated to be between three and five euros, if grown in an indoors facility. Economies of scale mean that a significant price reduction can no longer be achieved in energy-intensive indoor cultivation. Price development, for the next 5 years, prescription drugs ▪ The price of Cannabis flowers will be significantly reduced. A lot of suppliers will flood the market. The sick funds will demand discounts and manufacturers will have to say goodbye to a pull market (supply bottlenecks). ▪ The prices of Dronabinol will also fall, as the first generic drugs for this drug will be available in the next few years. ▪ Cannabis extracts will probably be able to maintain their price level, especially since there is still little competition in this sub-sector. ▪ Cannabis oils (CBD) will fall significantly in price as there will be an oversupply as more and more suppliers enter the market. ▪ The surcharges for Cannabis prescriptions will decrease significantly.