Germany continues to see cannabis companies from around the world crowding into its medical cannabis market in hopes of securing their slice of the pie.
With limited domestic production capacity and by far the largest medical cannabis patient demographics in Europe, imports into the country have nearly doubled every year since the market was established in 2017.
The promise of a potential adult-use market within a few years has exacerbated the scramble for companies to gain a foothold in the medical market, giving them a head start when it eventually arrives.
Despite this rapid influx of investment and product, German medical cannabis telemedicine operator Nowomed says supply has now exceeded demand and product saturation is deterring some doctors from prescribing.
The German market
The German medical cannabis market continues to grow steadily, with a 43% increase in cannabis sales to pharmacies last year. There are now around 138 varieties of medical cannabis available in the country, almost three times the amount available in 2019.
This dramatic influx of products was laid bare in September 2021, when Germany’s Ministry of Health released data on medical cannabis imports by country.
Data showed that in the first half of 2021, 18 countries were recorded as having exported medical cannabis to Germany.
Conor O’Brien, industry analyst at Prohibition Partners, told BusinessCann: “The demand for medical cannabis in Germany is now being met by an abundant supply from growers in at least 18 different countries, and this list keeps growing. Based on the names of the flower strains, there are more than 100 available in Germany today. »
Exports to the country exceeded 20,566 kg in total throughout 2021, including 5,678 kg in the fourth quarter, the highest quarter on record.
However, there is a growing gap between the amount of cannabis that is imported and that which arrives on pharmacy shelves.
Data released this year by the German Parliament shows that in 2021 only 9,001 kg arrived on pharmacy shelves, less than half the amount imported.
It is understood that a significant portion of imported flower stock reaches its shelf life before it can be sold to pharmacies and end up in the hands of patients, while other stock is re-exported.
Florian Wesemann, medical director of young German medical cannabis digital therapy platform Nonomed, says the level of supply has gone “crazy”.
“Currently, there are so many new flowers and extracts coming in every month, it’s crazy. I have way too many options, more options for prescriptions than I actually need. »
He explained that part of the problem was the lack of data accompanying many of these new products, due to both their short presence in the market and often poor labeling.
“The kind of information producers actually give out about their products is very, very different. They should list the amount of THC and CBD, but what about terpenes or secondary flower ingredients? Some of them have nice tables of information, some have very limited information. »
Although many producers would visit clinics in the region and “show how their products work”, German doctors “take a long time to prescribe them” due to this lack of data.
Impact on industry
Although this is by far the largest market for medical cannabis in Europe, Mr Wesemann suggested that it was still a “very, very small niche within the medical market”, relatively speaking.
He added that only “1% or 2% of German doctors” currently prescribe cannabis.
This situation would be largely due to under-education, cannabis still not being part of the classic medical curriculum, a problem that Nowomed is trying to combat.
“They don’t have the necessary information, especially for the extracts for which they need a titration plan for the patient. It is something that is not easy to combine in an ordinary clinic, because it takes a lot of time. »
“Even doctors who are positive on cannabis treatments say ‘I don’t know how to prescribe this’ and refer patients to Nonomed. »
Wesemann says the overabundance of products adds to this problem, “confusing doctors who don’t know where to start,” especially those who work for public practices and who have less time to learn.
Mr O’Brien added that alongside imports, there is now “domestic supply from two or three government contractors who currently supply pharmacies at a very competitive price of 4.30 euros per gram”, which which exerts strong downward pressure on prices, which are historically around 20 euros per gram.
“A direct benefit to patients is the increased number of flower strains and oils available, which means they can experiment with their doctors and find the optimal product for them. »
“For operators in the sector, the current competition will have a direct negative impact on margins due to lower prices. »
“Producers and suppliers will have to invest time and effort in convincing doctors, pharmacies and patients to choose their particular strains, a task made more difficult given the legal limits on the marketing of cannabis in Germany. »
“The data is clear: the overall demand for medical cannabis is growing and the market for adult use is not that far, which could justify the presence of a wide range of products on the market, even if they are not immediately profitable, if operators are sure that they can bide their time and capture part of the market as it grows. »