Creso Pharma Ltd (ASX:CPH) (FRA:1X8) (OTCMKTS:COPHF) has secured a comprehensive distribution agreement with leading nutritional supplements company, Route2 Pharm Pvt Ltd for its hemp-derived therapeutic products exclusively into Pakistan and Philippines, and non-exclusively into other potential target markets.
These markets include Cambodia, Afghanistan, Azerbaijan, Bangladesh, Georgia, the Maldives, Myanmar, Tajikistan, Turkmenistan, Uzbekistan and Vietnam, which takes the potential addressable market to 750 million people.
The agreement contemplates combined minimum order quantities for the first contractual year of up to CHF1.71 million (A$2.48 million) across CannaQix 10, Cannaqix 50 and CannaDOL product lines, pro-rata subject to timing of product registrations.
It follows a landmark decision by the Pakistan Government in September 2020, allowing the country to enter the billion-dollar cannabidiol (CBD) market, through a focus on cultivating cannabis and hemp for therapeutic products.
Pakistan has a population of more than 216 million and a wide range of unmet needs that can be addressed by Creso’s targeted portfolio of products.
Combined population of 750 million
Creso Pharma non-executive chairman Adam Blumenthal said: “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.”
Fully leverage financial & marketing strength
Route2 and Highnoon Laboratories Ltd chairman Tausif Khan added: “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 peoples’ lives.
“We intend to fully leverage the financial and marketing strength of our group to deliver on this mission.”
Route2 managing director Shahnawaz Baig said: “Our company has 30 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.”
Terms of the agreement
Under the terms of the three-year agreement, Route2 has exclusivity rights over the company’s cannaQIX® and cannaDOL product lines in the exclusive territories, subject to Route2 achieving minimum order quantities (MOQ) for each product line in the first contractual year, being January 1 to December 31.
The minimum order quantities only become applicable three months after each product is registered in each exclusive territory, and Route2 shall launch and commence distribution within six 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.
Route2 is responsible for obtaining all such necessary and legally required registrations, authorisations 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.
In the event that minimum order quantities are not realised within any contractual year, Creso has the right to terminate the agreement upon giving Route2 six months written notice, with such notice to be given on or before March 31 of the following contractual year.
The agreement may otherwise be terminated by either party in the event of a material breach, or bankruptcy of the counterparty.
Broadening international footprint
Route2Health has a strategic association with Highnoon Laboratories Limited (PSX:HINOON), 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.
This considerably broadens Creso’s international footprint and unlocks a number of large market opportunities.
Route2 is a subsidiary of Route2Health, which has more than 30 years of pharmaceutical sciences experience, producing and distributing world-class herbal remedies and dietary supplements.
It is based in Pakistan and has US Pharmacopeia (USP) GMP compliant manufacturing facilities and global partnerships.
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 has a portfolio of 13 products, eight of which have been commercialised and are generating revenues, as well as a strong product development pipeline.
Story by ProactiveInvestors
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