Panaxia sells Israeli cannabis pharmacy to focus on exports

Dadi Segal / Photo: Inbal Marmari

Panaxia Israel is selling its pharmacy, one of Israel's largest for cannabis products, to IMC for NIS 20 million.

Six months have gone by since the pilot scheme for exports of cannabis from Israel began, and although exports have not yet received a final official stamp of approval, the activity which for a long time was a dream and a promise is becoming real. Several Israeli cannabis companies, among them InterCure, Univo, BOL Pharma, and Seach Medical Group have already sent consignments to Europe. Tikun Olam-Cannbit has just signed a large marketing agreement in the UK.

Meanwhile Panaxia Labs Israel (TASE: PNAX) feels sufficiently confident about its export potential to cut back on some of its local activity. The cannabis company reported at the end of last week that it was selling its pharmacy and distribution business in Israel to IMC (CSE: IMCC, Nasdaq: IMCC) for NIS 20 million in cash and IMC shares. Panaxia's pharmacy is one of the largest in Israel for the sale and distribution of cannabis, and it has thousands of customers.

Panaxia, which has a market cap of NIS 300 million on the Tel Aviv Stock Exchange, owns a cannabis processing facility in Lod, where it has developed a range of cannabis products administered in various ways. The company sells its products in Israel, and since the end of 2020 it has also been selling in Europe. IMC, which has a market cap of over $300 million, grows and markets medical cannabis in Israel, Germany and Canada,

Panaxia invested about NIS million in its pharmacy, which is next to its production facility, so the sale is a profitable mini-exit. The company says that the sale will improve its operating profitability "along with the growth and anticipated improvement in profitability thanks to expansion of export activity and local production for the premium sector in Israel in the coming quarters."

Dr. Dadi Segal, CEO of Panaxia and the controlling shareholder in the company, said: "The pharmacy was an important asset for us under the old cannabis regulations, when each company sold its products directly to its customers, and afterwards when we switched to the new regulations but continued to support the same patients.

"We are now concentrating more on developing new products and marketing them overseas through partners, and running what is perhaps the largest pharmacy in Israel for providing cannabis, with all that that involves as far as stocks and customers are concerned, takes too much management attention from us."

Meanwhile, other Israeli cannabis companies are actually buying pharmacies that specialize in cannabis in order to own the whole value chain in Israel and to be closer to the end customer. "For IMC the Israeli market is substantial and they want to be close to the end customer," Segal said.

Panaxia recently announced that it would record revenue of NIS 19 million in its first quarter financials, which represents 56% growth in comparison with in the corresponding quarter of 2020. "Our products will continue to be sold in every pharmacy in Israel in which there is cannabis," Segal said. "At the same time, we continue to expand our activity in Europe, in Germany, which is our main market at the moment. We already have repeat orders from our local partner, and we are waiting to launch new products shortly.

"In Cyprus we are selling cannabis directly to the government. In France, we are taking part in a very prestigious pilot in which for the time being we are supplying products gratis, in the hope of becoming a significant player in this market, and from there too we have already received repeat orders. Our intention is to be in additional countries in Europe by next year.

"The Israeli market is important to us, but the European market represents a bigger opportunity, with the potential of higher profitability," Segal said.

Panaxia Israel is a subsidiary of Panaxia Pharmaceutical Industries, founded by Dr. Dadi Segal, Dr. Eran Goldberg, and Assi Rotbart, as the cannabis division of Segal Pharma Group

IMC is active in Germany, Canada, and Israel, and specializes in growing cannabis. It is controlled by Oren Shuster.

Significant agreement for Tikun Olam

Tikun Olam-Cannbit has signed an agreement for the sale of cannabis oils to the UK market worth NIS 37 million. The agreement was signed with British company ITH Pharma, and is exclusive for both sides in the territories in which ITH operates. Cannbit first contracted with ITH in October last year, and the agreement has now been extended to three years. Tikun Olam-Cannbit says that further deals of this kind are in the pipeline. Last week it announced that it would sell quarter of a tonne of cannabis to the Brazilian market, and the company also has marketing agreements in Germany, Austria and Switzerland awaiting import permits in the target countries.

Published by Globes, Israel business news - en.globes.co.il - on May 3, 2021

© Copyright of Globes Publisher Itonut (1983) Ltd. 2021

Dadi Segal / Photo: Inbal Marmari
Dadi Segal / Photo: Inbal Marmari
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