“Glory World Repair was a company with a 60% market share before it was stopped by the regulator. It would be presumptuous to tell you that we will go back to that number, but I definitely think we will go back to market leadership and restore the old crown soon in our day – and said artist”: August 2019 Court He banned the leader of the medical cannabis market in Israel at the time from continuing to engage in cultivation under the previous controlling shareholder, Tzachi Cohen, among other things due to fears of a connection to criminal organizations, and forced him to sell control of it. A year after its activity in Israel passed into the hands of Barak Rosen, who in exchange for NIS 42 million merged it with his cannabis, Tikun Olam CEO Avinoam Sapir issues a lyrical prayer in an interview with BizPortal – something to get her back on the horse. So what is Master-Plan? The company is cooperating for the first time of its kind in Israel with the “United” HMO, and Sapir is revealing other clauses that will advance the company towards the goal.
We said medical cannabis, but what exactly do we do in
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? The company is active throughout the value chain in the field, which means that they conduct R&D activities for the development of varieties, perform clinical trials, grow cannabis in two facilities in Neot and Kfar Yehoshua and produce in a factory in Tziporit that was recently inaugurated. , And a system of guidance and counseling for patients – as well as physicians, who will now be mentored as part of the collaboration with Meuhedet.
Tikun Olam is proud of their seniority with 13 years of research behind them, and the publication of studies in reputable scientific journals, but the question is how to make money from all this reputation, because around the company there are other competitors that produce cannabis while meeting international standards. By the way, in this half year that World Correction has stopped growing activity, the competition has only become tougher.
“Definitely our cannabis is higher quality than others. The same standard that others meet, GAP for growth or GMP for production, where it tells you nothing about quality,” Sapir claims, “Excuse me for the phrase but I can produce poop in a bag in GMP standard. But how much is this product “Effective, relevant to a particular disease? That’s a different story. You have 100 new breeders in the country, but you will not know if their product only gives a psychoactive effect, for example, and does not affect the body.”
In 2020, the number of licensed medical cannabis patients increased by 35%, and only in December did it increase by about 4%. At the end of the game the name is that this increase in product use will reach you and not the competitors. How do you do that?
“Only in one way, and that is quality. In the end quality wins. We hope that the more patients experience and understand the benefit of our inflorescence or oil. We know to say about the clinical effect, that whoever takes our product to sleep better, will complete all four stages of sleep and universe. “Vigilant enough to pass the day. There are some companies that know how to knock patients down hard, but they will not get up the same morning.”
“In terms of accessibility to us, we are scattered in the country nicely, you can find us in every Super-Pharm and we also have an agreement with Be. Until two or three months ago it was very difficult to get our products because there was a great shortage, and even now we are talking varieties. “We returned in full. In the coming months, we will feel the impact of their return more.”
But a patient with a license that gets a satisfactory answer from your competitors, why would he even consider experimenting with another product and discovering you?
“There are a lot of people who compromise on mediocre quality, I’m fine with that and they’ll be successful. Ask consumers, not me. I do not know how to answer in their place, just assume they will more enjoy our customer club services like training and transportation to home. He is disabled by the Ministry of Defense, and to this day he receives home medicine through telepharma – there is no difference compared to medical cannabis patients, many of whom are chronic patients. ”
United is a small coffers, they only have 7,000 patients with a cannabis prescription. In Clalit and Maccabi it is 20-40 thousand. Why did you go for it?
“Because she was innovative and brave enough to go for it. No fund in the State of Israel has a similar agreement for the supply of cannabis. The innovative approach of CEO Sigal Regev-Rosenberg who wants to make the treatment as accessible as possible, instead of the patients chasing it. We believe the rest of the box office will follow suit, and when that happens I see no reason not to look at us first. Why? Because the funds are headed by doctors, and they want to see not whether the fund costs two shekels less, but what is called Evidence Based Medicine, and the only thing that can be said about its products from a clinically proven point of view is world repair. At Meuhedet, I got the impression that the scientific depth that exists in us is different from that of others. ”
“On the day the legalization is approved, a market of one and a half million people will open.” A world-correcting cannabis facility
“Unreasonable priority must not be given to local growth”
Tikun Olam is currently traded at NIS 230 million. Tikun Olam closed the first half of 2020 with revenues of NIS 10.8 million and a loss of about NIS 12 million. Since the publication of the half-reports, the Tikun Olam production facility has been opened, with a production capacity of 8-9 tons per shift. Because the contracts for cannabis that World Repair grows itself did not fill the entire quota, the company turned to manufacturing for other companies as well, including Intelica for example.
Agreements were subsequently signed for the export of THC and CBD-based medical cannabis products in England, Germany, Austria and Switzerland, but these are not smoking inflorescences. Due to these agreements the company is expected to operate a second shift at the production facility, and World Repair estimates that in 2021 they will produce more for others than for themselves.
Sapir replies that Tikun Olam is not lagging behind its competitors abroad. “We are not exporters of inflorescences,” he explains, “we are not interested in how many inflorescences we export, but what medicine and what problem – for pain, sleep, etc.” There are three markets that are parallel in the cannabis industry – medical cannabis, CBD and leisure. In the CBD field of cannabis with which we merged, there is an agreement with Love Dead Sea factories to develop 6 products, for example body lotion for the treatment of acne, psoriasis and more, and another agreement with a company called Donna Italia for the production of pizzas and ice creams with cannabis. “There is a growing demand for it in the world, instead of pizza with anchovies we will offer pizza with better nutritional value thanks to the CBD.”
“We wanted to do the pilot with Donna Italia in Israel and from here start publishing it,” says Sapir, “but the CBD permits were stopped in Israel and we had to take the pilot to Italy, and the first market we will turn to later will be the United States. Donna Italia sells in 18 countries. Frozen pizzas for the institutional market, such as restaurants, hotels or cafeterias. Another CBD collaboration in the CBD field is with the Carmit confectionery company that will produce chocolate with CBD. All these CBD agreements are global, because in the end the size of the market in Israel is like A city in the United States, or a neighborhood in Cairo. ”
Quite a crowded neighborhood, not afraid that the competitors will swallow you?
“I do not worry about it. I do not think there is a chance of such a thing.”
And you are thinking of swallowing another company?
“Anything can happen, absolutely. When I worked at Teva, the then CEO Eli Horowitz told me a sentence I will never forget: ‘In the world from the outline, either you eat from the menu or you are part of the menu – we will not be on the menu.”
Okay and back to the crowded neighborhood, it also has rich neighbors who came from abroad. What do cannabis imports do to you?
“My heart goes out to cannabis growers in the country, farmers, who relied on the words of the Ministry of Health and invested their best money in a breeding farm, and after living their lives they found themselves facing competition coming from abroad. I am sorry that the requirements in the country in terms of strict regulation compared to abroad, from adhesives to tests that need to be performed along the way. At the same time, we must not be in a place where unreasonable priority is given to local growth. I am in favor of competition, but it should be fair. For us, we compete with foreign companies abroad as well and we have no problem with any competition, no matter how high it is. ”
And what do you think about the Israeli medical cannabis industry? Some say we could have been number 1 in the world and lost the lead to Canada because of the regulation here.
“I’m not saying that. I think the competition is long and the global medical cannabis market is only evolving now. The global drug market is rolling in $ 900 billion and there is room for a lot of players. But there are two things to talk about: “Exporting. The State of Israel did the opposite, saying, until recently at least, that there are no exports, and there are only imports – it was a dramatic decision that changed an industry, and it gave Canada a serious boost that made it the largest cannabis exporter in the world.
“The second issue is the issue of research and development. A decade or more ago there was enough knowledge accumulated in the field in Israel, but over the years R&D operations have stopped, and today in some things getting R&D approvals around THC or CBD is very difficult, despite the high level of safety we have developed.” I am afraid that without R&D and without export capacity, the industry in Israel will be doomed to die. Teva was as successful as it was because there was good research and development in Israel, manufacturing plants, and because Israel was a testing ground for many drugs in the world thanks to Israeli patent law. We have the same model. Will the regulator allow us to take advantage of this advantage to beat the global pharmaceutical market? We do not know yet. ”
Which link in the value chain is the most profitable? The tumor? The production? Maybe in the field of training at all?
“This is a very interesting question. As for the crop, there is an advantage to size or a disadvantage to small size: if you grow 10 tonnes, in terms of cost per gram you are more efficient. As for production, our costs will almost zero this year because we produce for others as I told you.”
Maybe later on you will have to leave some of the activities?
“We are not emotionally connected to anything but patients. Yes I will say that we will certainly continue to grow ourselves because we continue to improve genetics for R&D needs. By the way, a lot of knowledge was also accumulated in the production plant, because enough that you changed the temperature in the production process, you got a different product. Packing for us is two shekels more or less, it’s less important. ”
What else can be a growth engine for you?
“The most significant engine will be that the State of Israel will finally recognize cannabis-based treatment as a medical treatment for everything and put it in the medicine basket or create a dedicated basket. Why does a fourth-degree cancer patient pay tens of thousands of shekels a month to stay alive, and at the same time send him to buy full price? “Medical cannabis? Why buy a pill for high blood pressure costs only NIS 17, but the family of an autistic or epileptic child, who suffered a disaster that costs her thousands of shekels every month, has to pay as much as she pays for cannabis?”
Is legalization also an engine of growth?
“Unequivocally yes. On the day it is approved, the prescription patients market, eight 75-80 thousand people will become a user market of one and a half million people. We are already developing varieties for leisure use with fewer medical effects.”
Do you know the prices at which cannabis is currently bought for non-medical purposes?
“Yes, today for 10 grams you pay between 600-800 shekels in Telegrass, while a patient on prescription pays between 200-300 shekels. I know Telegrass well and I can tell you that a fake bag of world repair costs much more than all the others.”