Preparations are underway in registering its schedule 3 medicinal cannabis product, which CEO George Karafotias told NutraIngredients-Asia would come in the form of soft gel capsules for general pain relief, including migraine, menstrual pain and joint pain relief.
In Australia, schedule 3 medicinal cannabis is a nascent market, with the regulator, Therapeutic Goods Administration (TGA) permitting schedule 4 cannabidiol (CBD) to be downscheduled to schedule 3 less than two years ago.
The decision will allow TGA approved low-dose CBD containing products, up to a maximum of 150 mg/day for use in adults, to be supplied over-the-counter by a pharmacist without a prescription.
The CBD content must comprise 98 per cent or more of the total cannabinoid content of the preparation, with only a maximum of one per cent of tetrahydrocannabinol (THC) – the psychoactive compound in cannabis.
Wellnex Life announced its intention to enter the schedule 3 medicinal cannabis market on May 9 and is asking investors to fund the project.
The entire process will cost about AUD$3.5 (US$2.4m) to AUD$4m (US$2.7m) before government subsidy.
The final product is expected to hit the market in end 2023.
“We are doing this because we believe that's the low hanging fruit in the market. It's got the widest use for that particular product and I think that's what's going to achieve us our maximum sales.
“Initially, it will go for a general pain relief indication on that S3 medicinal cannabis product,” Karafotias told us.
He stressed that being one of the first to go through the registration process would help the company create higher barriers to entry for its competitors.
“While it seems like a challenge to get an approval, it actually in the long term will help us because this creates higher barriers to entry for our competitors.
“There's not many competitors in the market who have experience and knowledge that we have here at Wellnex. So, in the long term, we will actually be in an advantage that there is this difficult process to navigate to get an S3 approval.”
“Being an OTC medicine, it is going to have limited shelf space on how many different brands and prices will be available, so being first is where our strategic advantage is, more than the formulation, because the formulation is heavily controlled by the TGA here in Australia.”
He also talked about how the product could command higher margins, which is a point that excites retailers.
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On the other hand, the company is launching an online-exclusive brand – which will include products spanning from supplements to skincare and gym equipment.
The intention behind the online-exclusive brand is to ride on the fast-growing e-commerce market, while not hurting the profits of its offline retail partners at the same time, Karafotias said.
The company currently does not sell its products online, only in offline with retail partners such as Chemist Warehouse, Coles, and Woolworths.
Some of its supplement brands include The Iron Company – which sells iron supplements in the form of gummies and Wakey Wakey – a range of caffeine gummies and effervescent.
Instead of working with third party e-commerce sites, the company will be opening its own D2C online platform.
“One of the results of COVID and the worldwide pandemic that we've experienced and are still currently in is that has been the growth on online sales, especially in the health and wellness market.
“Currently, we don't sell any of our brands and products online. So, to take advantage of this growth, we're actually going to be developing an e-commerce platform, which will also have our existing brands and products that we currently sell to the retailers.
“But what is important is we don't want to compete against the retailer because they are technically our partners. So what we're doing is developing a new brand that will only be available online, so there's no competition with the retailers,” Karafotias said.
The margin for selling the products online will be anything between 65 and 75 per cent, he added, which would be higher than the 40 to 45 per cent margin from a product sold offline.
The launch date for the D2C online platform is expected to be in August or September.