Denmark medical cannabis sales mostly on the rise, but pilot program sputters

(This is the first in an occasional series on the international medical cannabis industry.)

Denmark’s medical cannabis sales took a breather in 2022 after experiencing consistent growth for half a decade, according to new data from the Danish Health and Medicines Authority.

Overall sales of all medical cannabis products in Denmark grew from about 30.8 million Danish kroner ($7.5 million) five years ago to 64.3 million kroner in 2021, then leveled off at 62.5 million kroner last year – representing a gain of 102% over the whole time period.

The sales data covers the four potential pathways to obtain medical cannabis products in Denmark.

The data shows that sales via the pilot program, which allows the sale of cannabis flower and oil with no proven efficacy, were 8.7 million kroner in 2022, accounting for 14% of medical cannabis sales in 2022.

Consistent with previous MJBizDaily reporting, sales outside the pilot program continued to account for the vast majority of medical cannabis products shipped in Denmark last year.

The category of magistral preparations - which are prepared in a pharmacy and include isolated THC and/or CBD - accounted for 25.5 million kroner last year, or approximately 40% of all sales.

Sales in 2022 of the categories of finished pharmaceutical products with and without marketing authorization were 24.2 million kroner and 4.1 million kroner, respectively.

The data is a reminder for international companies that Europe's medical cannabis industry tends to be more pharmaceutical and efficacy-orientated, whereas, in North America, the medical cannabis industry, including government regulations, tends to prioritize access and economic opportunity.

“And this is entirely natural, given the stage we (Europe) are at as an industry and in development. The standard here is EU-GMP (production),” Jeppe Krog Rasmussen, CEO of DanCann Pharma, a therapeutic cannabinoids company in Ansager, told MJBizDaily via email.

Pilot sputters

Sales of medical cannabis through Denmark’s pilot program peaked in the second quarter of 2019 - about a year after it started - at 5.7 million kroner and never fully recovered.

In the fourth quarter of 2022, only about 16% of total revenue generated by medical cannabis sales came from the pilot program, government data shows.

That’s down from mid-2019, when transactions in the pilot represented roughly 40% of the country’s total sales.

Morten Snede, CEO of Medican, a medical cannabis company headquartered in Helsinge, suggested one of the reasons for the low uptake of the pilot was that Danish authorities are slow to approve new cannabis products.

“The Danish Medicines Agency has been very, very, very slow in the product approval of new products so the availability of alternative products to Bedrocan has been close to zero,” he told MJBizDaily via email, referring to the Dutch medical cannabis company.

MJBizDaily previously reported that, as of 2020, only eight of the 63 applications to admit products to Denmark’s medical cannabis trial scheme had won approval from regulators.

Currently, only eight medical cannabis products have approval for sale within the pilot program by six companies, including Canada’s Aurora Cannabis, Denmark’s CannGros – which supplies medical cannabis produced by Netherlands' Bedrocan – and Australia’s Little Green Pharma

Snede also notes that the different reimbursement rules in Denmark for the four tracks factor into patient uptake, adding that the pilot program is limited to a maximum reimbursement of 50% of the cost, or up to 20,000 kroner ($2,880) per year.

“The result is most patients cannot afford to continue the treatment during the year," he said.

"With the other tracks, reimbursement can be much higher.”

Some industry players are optimistic the pilot, which was extended to 2026, still has better days ahead.

Peter Emil Sigetty, CEO of Valcon Medical A/S - a medical cannabis producer located in the greater Copenhagen area - said he expects to see growth in the pilot program throughout this year and “especially” in 2024.

“There has only been a very limited number of products available under the pilot program in the past five years,” said Sigetty.

“It takes time to register a product in Denmark, and the quality requirements are high.”

Challenges

Fleta Solomon, CEO of Little Green Pharma, said the local market faces several challenges, including:

• Medical cannabis prices are too high.
• There aren’t enough products to choose from.
• Not enough doctors have studied medical cannabis.
• A lack of guidelines from the doctors’ association, but the Danish Society for Clinical Cannabis Medicine is working on new guidance.

Little Green Pharma acquired a fully-operational greenhouse in Denmark from Canada's Canopy Growth in 2021.

The company's Billinol "LGP" was the first locally produced cannabis product approved for sale in Denmark.

“Traditionally in Denmark, medical care is essentially free; however medicinal cannabis is only partially reimbursed,” Solomon said.

“Denmark is certainly at the beginning of its journey, and while there are a few key advocates, there is a long way to go.”

“Interestingly, Denmark recently overtook Holland as the largest exporter of cannabis to Germany (after Canada). Bedrocan recently announced it is building a facility in Denmark. And Aurora’s only profitable part of the business is out of Denmark,” she said.

“All of which suggests Denmark is likely to be the leader in Europe.”

Potential solutions

Rasmussen, the CEO of DanCann pharma - which is a leader in the Danish industry via its subsidiary CannGros ApS - said the pilot program won’t take off unless key changes are made.

Some solutions include:

• Better processes that ensure more products are brought to market.
• Improved subsidy conditions for patients, ensuring there is no difference in the healthcare system between different treatments.

“There is no doubt that approved and marketed products, as well as magistral products, continue to gain ground,” Rasmussen said.

“This is due to the enormous lack of breadth and depth in the product portfolio under the pilot program with medical cannabis, as well as the responsibility borne by physicians in this regard.”

Rasmussen said doctors are far more likely to prescribe approved products, which also come with a financial subsidy that makes it more manageable for patients, “given the still very thin subsidy line for the pilot program with medical cannabis.”

Using Denmark as export hub

Some companies say Denmark’s business-friendly regulations and agritech expertise make the country a suitable hub for medical cannabis exports.

The proximity to Germany offers advantages. But the import market in Germany and elsewhere remains small, while the number of prospective medical cannabis exporters grows by the day.

To help facilitate domestic production, in 2021 the Danish government made permanent the ability for businesses to grow cannabis for medical use.

Sigetty, the CEO of Valcon Medical A/S, said the company’s focus is on both the export and domestic market. Among other things, the company exports white label products it manufacturers.

“The medical cannabis industry in Denmark continues to be among the frontrunners in Europe,” he said, making it suitable as an export hub.

“The industry consists of a strong ecosystem, with various companies across the value chain. There’s also an industry association representing a large proportion of the registered companies. These conditions support a stable platform for an international operation.”

Government support

Denmark is keen to promote itself as a destination for international businesses to set up shop, including cannabis businesses.

To that end, the government organization Invest in Denmark facilitates investment through general and specific efforts, according to Derek Light, special advisor for the Ministry of Foreign Affairs.

Medical cannabis is one of approximately 25 subsectors the agency prioritizes.

Its services include:

• Matchmaking and introductions to local stakeholders.
• Information provider on general framework conditions and specific industry insights.
• Guided fact-finding missions.
• Assistance with site selection - though not in all cases.
• Hosting events to connect investors and partners.
• Hosting events to highlight aspects of the industry.

Invest in Denmark does not offer grants, subsidies, or specific advisory, nor does it engage in advocacy to address regulatory requirements.

It does, however, provide periodic input to Danish government regulators on the state of the industry, along with other public agencies.

A counterpart organization within the Ministry of Foreign Affairs, the Trade Council, supports export promotion and market entry strategies in markets across Europe and further afield.

Any company based in Denmark, including companies in the medical cannabis industry, can engage with export advisors based in local Danish embassies in other countries to develop tailormade services to support exports and market entry. This includes:

• Partnership identification.
• Sector monitoring.
• Regulatory advisory and dialogue with authorities.
• Marketing and market development activities.

Matt Lamers can be reached at matt.lamers@mjbizdaily.com.