Creso Pharma subsidiary Mernova Medicinal has engaged a key advisory firm to progress its EU GMP licence application and fast-track exports to Europe and Australia.
Cannabis play Creso Pharma (AX:CPH) has announced its Canadian subsidiary, Mernova Medicinal Inc. has entered into an agreement with CannDelta, a leading North American regulatory and scientific cannabis consulting agency.
The collaboration will enable Mernova to navigate the European Good Manufacturing Practice (EU GMP) licensing process for its manufacturing facility in Nova Scotia, Canada.
Obtaining an EU GMP licence will enable Mernova to expand its international presence and tap into new markets that offer higher-margin opportunities.
Initially, Mernova will target the Australian market, which commands prices twice as high as Canada’s for cannabis on a per gram sales basis.
CannDelta, with several offices in the US and Canada, specialises in providing consulting services to companies in the cannabis, psychedelic and pharmaceutical industries.
The firm assists with licensing, business plans, strategy, operational support and ongoing compliance.
CannDelta will provide Mernova quality and regulatory advisory support as it progresses with its EU GMP licence application, including evaluating and making recommendations regarding physical security, standard operating procedures, inventory control and record keeping measures.
The firm will also assist with additional requirements, such as cleaning and process validation, building and equipment qualification, and stability study protocols, measures that are necessary for Mernova to apply for EU GMP approval.
Key certification for pharmaceutical manufacturers
The EU GMP certification sets the minimum standards for pharmaceutical manufacturers.
Once obtained, the certification will significantly expand Mernova’s operations and allow the company to focus particularly on the Australian market.
CPH’s decision to pursue an EU GMP licence follows recent regulatory changes in Australia.
As of July 2023, the Australian government’s Department of Health requires all imported medicinal cannabis products released for supply in Australia to demonstrate compliance with GMP standards.
This decision presents a lucrative opportunity for Creso Pharma, as the average cannabis
price in Australia is three to four times higher than it is in Canada.
Leveraging Health House to drive Aussie sales
Following the completion of its acquisition of Health House International Limited, Creso Pharma plans to leverage its existing distribution channels and relationships in the Australian market to drive sales.
Health House is an international pharmaceutical distributor, specialising in the sale and distribution of medicinal cannabis products across Australia and the UK.
CPH’s 2022 acquisition of the Health House added to the company’s complementary portfolio of businesses and brands.
CPH said Mernova’s multiple grow rooms would provide the necessary scale to meet the expected demand in the Australian market.
Mernova is currently operating at 60 per cent capacity to meet demand and was break-even last quarter, meaning it has sufficient capacity to service new international markets.
Preparations for the EU GMP inspection will start soon, with approval anticipated by February 2024.
Scaling up opportunity
CPH CEO and managing director William Lay said the decision to pursue EU GMP registration for Mernova would allow the company to considerably scale up operations and further expand its international footprint outside of Canada.
“Following the completion of the HHI acquisition, Creso Pharma has an enviable international medicinal cannabis distribution network which can be immediately leveraged to drive sales growth in Australia at a much higher margin than Canada,” he said.
“Further, to have secured the services of a top tier consulting firm such as CannDelta will ensure Mernova’s operations are running at optimum capacity and in line with stringent regulations.
“Work alongside CannDelta is expected to commence in the coming weeks, which will be followed by minor building upgrades and process optimisation prior to an EU GMP inspection in early 2024.”
CPH continues to advance its footprint across the Asia Pacific region in May announcing it had expanded its product ranging agreement with leading Singaporean pet care distributor, Gotro Global.
The expansion deal will see Creso’s entire Green Goo animal care range stocked online through Gotro’s partner company, Happy Town Pets, a specialist e-commerce platform.
This article was developed in collaboration with Creso Pharma, a Stockhead advertiser at the time of publishing. This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.