Novartis is paying out at least $5 million to get into the cannabinoid arena by linking up with UK company GW Pharmaceuticals.
GW, which specialises in cannabis-derived drugs, will get $5 million upfront, royalties on sales, and possible future payments of $28.75m based on its Sativex drug hitting certain regulatory and commercial targets. Novartis gets the rights to commercialise the drug in Australia, New Zealand, Africa and parts of Asia and the Middle East.
Markets in the US and Europe for Sativex – a multiple sclerosis treatment – have previously been sold off by GW to other pharma companies. But it is also hoping that the drug gains approval for use in cancer, making Novartis’s strengths in MS and oncology a useful asset.
The current market for cannabinoid drugs is decent but not huge. One analyst told the FT he would predict a market of $100m for annual sales for MS spasticity in Europe and Canada. But some reports put the size of the quasi-legal medical marijuana market at over a billion dollars, incentive enough for big companies like Novartis to get a foot in the door early.