european business and law - medicinal cannabis 1.pdf

European business law final report

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Baptiste Rossi Jules Ponsolle Pauline Lefeuvre Luisa Castaneda Julie Gueulet

European Business Law Final Report

Sereinex Project


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I – Introduction

II-‐ The company

III – Locations

VI – Transportation and Logistics

V – Strategy

VI – Finances

VII – Conclusion

Table of contents


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Since decades, we know that the drug as a medicine was used throughout Asia, Middle East and down the eastern coast of Africa and even Hindu sects in India used marijuana for religious purposes and stress relief. In certain books, it is said that ancient physicians prescribed marijuana as pain-‐killer in order to dull earache to childbirth. Nowadays, lots of countries allow the free consumption of the marijuana as Netherlands, Uruguay, etc. Some countries have already started to allow the marijuana as a pain killer: in United States, since California became the first state to legalize medical marijuana in 1996, a dozen states have followed (doctors are allowed to prescribe medical marijuana to patients suffering from ailments ranging from AIDS to glaucoma) and in Europe some changes occurred. Indeed, nowadays in Europe, Netherlands is the first producer of medical cannabis. Some neighbors as Spain, Germany or even Finland have authorized the prescription of different pain-‐killer as the “Drobanibol”, the “Nabilone” and the “Sativex” whereas cannabis (even extracts) was completely forbidden before.

Nevertheless, again today people are afraid of cannabis and have a bad image of it. Some people are still associating the cannabis as a hard drug and not as a potential medicine (using some extracts of it). Different countries around the world seem to be reticent of the cannabis prescription allowance as France was. But recently in January 2014, France has decided to allow the prescription of one cannabis medicine, the “Sativex”. It is a big step that the French government has done! We know that there are huge opportunities in France and that France is one of the biggest producer and consumer of morphine in the world. That’s why we decided to create our own company producing one pot-‐base medicine named the “Sereinex”. As painkiller and having just one competitor on the market, our product can be a great opportunity to change the habits, mentalities and could be a bargain for us. Through this report we will expound you our idea, with a presentation of the whole company, our logistics/ transportation, following by the strategy of the company and we will finish the report by the finances.

Introduction


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1) Presentation

Lagon Pharma is a Dutch pharmaceutical laboratory producing pot-‐based medicine similar to the Sativex spray but ours is called Sereinex which relates to the French word “serein” which means “serene” in English. Lagon Pharma’ slogan is “ The one you now need” meaning that acting as a painkiller, people suffering from diseases do not have any more to suffer more by taking morphine for instance but they have now the alternative to choose something different, something softer.

Implemented in Rotterdam -‐Netherlands-‐, our company is well situated as at the mid-‐way from our main raw material supplier (Bedrocan) and the South-‐West border with Belgium. As Netherlands is the home market of Lagon Pharma and as we decided to export abroad our main pot-‐based medicine Sereinex we finally chose France as our target-‐market. Why France? Because as the French government allowed pot-‐based medicines to be

prescribed to doctors’ patients it is now a huge opportunity for Lagon Pharma to enter in this new market and compete hardly with its main competitor already on the market: GWPharma (Sativex producer).

Organized as a private limited company, Lagon Pharma is a company limited by shares meaning that the company has shareholders, and that the liability of the shareholders to creditors of the company is limited to the capital originally invested, i.e. the nominal value of the shares and any premium paid in return for the issue of the shares by the company. A shareholder's personal assets

are thereby protected in the event of the company's insolvency, but money invested in the company will be lost.

The company


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! The short term of our company is to export Sereinex to our targeted French market and get market shares.

! The mid-‐term objective is to diversify the range of our product in order to reach more patients and cover more diseases.

! The long-‐term objective is to create a laboratory in France using the mode of entry such as a joint-‐venture.

2) The product

Sereinex is Lagon Pharma’s lead cannabinoid pharmaceutical product, administered as an oral spray which is absorbed by the patient’s mouth.

What Sereinex contains

• The active substances are cannabis extracts. Each millilitre (ml) contains 38-‐44 mg and 35-‐42 mg of two extracts (as soft extracts) from Cannabis sativa L., leaf and flower, corresponding to 27 mg/ml delta-‐9-‐tetrahydrocannabinol (THC) and 25 mg/ml cannabidiol (CBD). Each 100 microlitre spray contains 2.7 mg THC and 2.5 mg CBD.

• The other ingredients (excipients) are ethanol, propylene glycol and peppermint oil.

3) Evaluation range of price

As it is difficult to tell the cost of the raw materials and the cost of production including the transformation and the package; we estimated that thanks to our location (proximity to suppliers), the small size of our laboratory (compared to GWPharma) and the competitive advantage we want to give to Sereinex (price) we will launch our pot-‐based medicine around 3€ and 6€ less expensive than the actual price of Sativex.

See table below.

Medicine Concentration Dosage Prix/unit Cost/week

Sativex 52mg/mL 1,5 mL 16.4219€ 24.6328€

Sereinex 52mg/mL 1,5 mL 10€ to 13€ < 20€

The price of Sereinex will be sold between 10 and 13€ in pharmacies in order to get advantage on the market shares of Sativex and be dominant on the market.


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4) Precaution for the patient are indicated in the leaflet

1. What Sereinex is and what it is used for Sereinex is used to improve symptoms related to muscle stiffness also called spasticity in multiple sclerosis (MS). Spasticity means there is an increase in 'muscle tone' which makes the muscles feel more stiff or rigid. In other words, when the muscle is moved, there is more resistance to this movement than there normally would be. Sereinex is used when other medicines have not worked to relieve your muscle stiffness. Your 4 week trial of Sereinex Only a specialist physician can start you on treatment with Sereinex. The specialist will assess you from time to time to see if you should carry on taking it. • Before you start using Sereinex your specialist doctor will conduct a thorough assessment of how bad your spasticity is and how it has responded to other treatments. • You will then have a 4 week trial of Sereinex after which your specialist will do another assessment to see whether Sereinex is helping you. • Only if you have shown a significant improvement in your spasticity related symptoms after these 4 weeks should you continue to be treated with Sereinex.

2. What you need to know before you use Sereinex Do not use Sereinex: • If you are allergic to cannabis extracts or any of the other ingredients of this medicine (listed in Section 6). • If you or anyone directly related to you has any mental health problems such as schizophrenia, psychosis or other significant psychiatric disorder. This does not include depression due to your multiple sclerosis. • If you are breast-‐feeding. Do not use this medicine if any of the above apply to you. If you are not sure, talk to your doctor or pharmacist before using Sereinex. Warnings and precautions Talk to your doctor or pharmacist before using Sereinex: • If you are pregnant or plan to become pregnant. Whether male or female you must use a reliable contraceptive method while using this medicine (see also ‘Pregnancy, breast-‐feeding, contraception’, below). • If you are under 18 years of age. • If you have epilepsy or regular fits (seizures). • If you have liver or kidney problems.


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• If you have a serious heart problem such as angina, a previous heart attack, poorly controlled high blood pressure or a problem with your heart rate or heartbeat. • If you are elderly, especially if you have problems doing everyday activities such as making hot food and drinks. • If you have previously abused any drug or substance. If any of the above apply to you (or you are not sure), talk to your doctor or pharmacist before using Sereinex. Other medicines and Sereinex Tell your doctor or pharmacist if you are using or have recently used or might use any other medicines. This is because Sereinex may affect the way some other medicines work. Also, some other medicines can affect the way Sereinex works. In particular, tell your doctor or pharmacist if you are using any of the following medicines:

• Medicines that reduce anxiety (sedatives) or make you sleep better (hypnotics). These medicines may increase the side effects of Sereinex and may increase the risks of falls and other accidents.

• Medicines to relax your muscles such as baclofen or diazepam. This is because taking Sereinex with these medicines may increase the risk of you falling over.

If any of the above apply to you (or you are not sure), talk to your doctor or pharmacist before using Sereinex. If you see a different doctor or go into hospital, let them know all the medicines you are using.

3. How to use Sereinex Always use this medicine exactly as described in this leaflet or as your doctor has told you. Check with your doctor or pharmacist if you are not sure. Only use Sereinex in your mouth – on the inside of your cheek or under your tongue. • You can take Sereinex with or without food. However, taking Sereinex with food can affect the amount your body takes in. You should try, as far as possible, to take Sereinex the same way in relation to food each time, so you get the same effect each time. Opening your spray and getting it ready to use 1. Take your spray out of the refrigerator (see Section 5 for important information on Storing Sereinex). 2. Write the date that you open your spray on the sticker provided in the box. Stick the sticker on the spray so that you can check the date. Do not use the spray after it has been open for more than 6 weeks (42 days). 3. Shake the spray container gently before use. 4. Remove the protective cap.


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5. Hold the spray between your thumb and second finger. Put your first finger on the nozzle. 6. Holding it upright, practice spraying into a tissue 2 or 3 times until a fine spray appears. These sprays prime the pump and ensure it is working properly. 7. The spray is now ready to use. You will not need to do any more priming sprays until you open a new spray container. Using your spray 1. Hold the spray between your thumb and second finger. Put your first finger on the nozzle. 2. Hold it upright and point into your mouth. Point the nozzle under your tongue or onto the inside of your cheek. Change the area in your mouth where you spray each time. This helps to stop any discomfort in one place. 3. Press the nozzle down firmly. Do not take more than one spray at a time, even if you feel that you only got a small amount of spray. 4. Replace the protective cap. If you get spray in your eyes by accident, wash them as soon as possible with water. • Do not breathe in the spray. • Do not spray near children or pets. • Do not use the spray near naked flames or heat sources. Working out how much to use The number of sprays you need each day depends on you as an individual. Each person needs a different number of sprays to give them the best relief from their muscle stiffness, with the fewest unwanted effects. • When you first start using Sereinex, you need to follow the days and times in the following table until you find the best number of sprays for you. • Stop increasing your sprays when you find the best number of sprays for you. This may only take a few days or it may take up to 2 weeks. Aim to use this number of sprays each day. You can then spread your sprays evenly over the whole day. • Do not use more than one spray at a time. Always leave at least 15 minutes between sprays. • Do not over-‐exert yourself during the first couple of days of using Sereinex until you know how it affects you. • If you start to feel unwanted effects (usually dizziness) use one less spray each day until you find the best symptom relief with the fewest unwanted effects.


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• When you find the best number of sprays for you, aim to use this number each day. You can then spread your sprays out evenly over the whole day, in a way that suits you. Still leave at least 15 minutes between sprays.

4. Possible side effects 5. How to store Sereinex 6. Contents of the pack and

other information.


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How to start up a company in Netherlands?

! Need to register to the IND (Immigratie en Naturalisatie Dienst, the Dutch immigration authorities) to have the right to start up a business in Netherlands

! These are the things we need to provide the Chamber of Commerce to start up: a permit to start a business in the Netherlands; -‐a business plan; -‐legal form and trade name of your enterprise; -‐taxation and necessary insurance; -‐business location, commercial lease; -‐a VAR’-‐statement from the Tax Administration, declaring you a self-‐employed entrepreneur 32,57€ for registration of the business and 11,00€ to have an original of that registration paper

Why did we choose to set up our company in Netherlands?

First of all, Netherlands tolerates cannabis consumption in coffee shops and home growing until 5 plants each. We can describe this policy as a tolerance and not legalization because regulations are still set up. The idea of the Dutch government was to make the law more flexible concerning this soft drug in order to allow it as a recreational drug. However, hard drugs are banned by the government and detention or consumption can be liable to fines or even imprisonment depending of the case.

Moreover, in our case, the Office of Medicinal Cannabis is the organization of the Dutch Government which is responsible for the production of cannabis for medical and scientifical purposes. The Office delivers medicinal cannabis of high quality. The office has the monopoly of the trade cannabis. Due to an international treaty the Netherlands are obliged to organize its Office this way. The OMC has also the monopoly on the import and export of cannabis and cannabis resin and the OMC decides about the exemptions of possession of cannabis and cannabis resin.

The OMC supplies the following products and services:

• Cannabis for medicinal purposes: ! In the Netherlands exclusively to pharmacies, pharmacy-‐holding GP’s,

hospitals and veterinarians. ! The OMC is willing to deliver also outside the Netherlands in case the

authorities of that particular country agree on that.

Location


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• Cannabis for scientifical research. • Import and export of cannabis and cannabis resin. • Opium act exemptions for cannabis and cannabis resin.

In our Lagon Pharma case, we planned to import raw material from our Dutch cannabis supplier (Bedrocan) to our laboratory and then, export our final pot-‐based medicine to France. In order to follow the rules we need to deal with the Dutch OMC such as:

Import • An import license is required for the import of cannabis or cannabis extracts. You can

apply for this using the import license application form. • Once the application form has been received the OMC will draw up a contract in

duplicate, and an invoice for delivering the cannabis. • The OMC will then apply to the Healthcare Inspectorate (Inspectie voor de

Gezondheidszorg) for an import license. • The OMC will forward the import license to the foreign business as soon as it is

issued. • Once it has the import license, the foreign business can apply to the appropriate

government agency in its own country for an export license. • Once the export license has been issued and the signed contract has been returned,

the cannabis or cannabis extracts can be imported via the OMC. • Costs include the application fee for the import license and contract and transport

costs.

Export In order to export cannabis or cannabis extracts the following documents are required:

• two original import licenses from the foreign business to whom the cannabis or cannabis extracts are to be delivered

• an export licence application form. Once the OMC receives the completed export license application form and original import licenses, it will draw up a contract in duplicate, and an invoice for delivering the cannabis. The OMC will then apply to the Healthcare Inspectorate (Inspectie voor de Gezondheidszorg) for an export license. Once the signed contract has been returned, the cannabis or cannabis extracts can be exported via the OMC. Costs include the application fee for the export license and contract and transport costs.

By following all those steps in Netherlands, our company would be allowed to move cannabis or cannabis extract from a point to another, but, crossing the border is another problem. Even if France and Netherlands are part of the European Union and is set the free movement of goods and services, it appears that Sereinex is not a product like others because of its pot-‐based composition…


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Why did we choose France as our target market?

As we are doing a similar product as Sativex and as this product has been allowed on the French market since the 10th of January 2014 we have all the requirements to implement as well Sereinex on the French market. Indeed the composition of our product is similar to our main future competitor so any restrictions concerning the composition are rejected.

Moreover, Sativex has the monopoly of the pot-‐based medicine in France and as France is economically liberal, we can play on the fact that free competition, free trade and laisser-‐faire policy so the entry of a new competitor on this special medical market is totally allowed in order to break monopoly and in a second time propose new range of medicine or make the price lower it initially was.

Sativex such as Sereinex are made to cure or calm sclerosis diseases and this market represents around 2 000 persons according to the National Agency of Medicine’s Security (ANSM in French) but 5 000 according to the assessment of Almirall (Big Spanish pharmaceutical company). The targeted market is relevant but as we plan to enlarge the range of product and cover more diseases, our Sereinex is a good way to make our first prove on the French market. Moreover, France is one of the first world producer and consumer of painkillers such as morphine. If the mentality change, it could be a big opportunity for Lagon Pharma to reach new consumers/patients.

Indeed, there are lot of prejudices concerning morphine in France such as this product could create a strong dependence to the patient and create at least a drug addiction leading to certain forms of delirium. People often confuse the agony and delirium, as they believe that it is caused by morphine. It is possible that the morphine is the cause of confusion, this occurs only at the beginning of a treatment of morphine when the patient is not yet accustomed to the product or that the prescribed dose is too high.

And the other hand, morphine has been proved to create strong dependency and able to bring death when overdosed BUT cannabis has never been cause of death by overdose, death by cannabis is created by distortion of the sight when driving for instance leading to car accidents.

However, what do the French law says?

The French law allows the health professionals such as doctors, pharmacies, hospitals and all those following the code of the French Public Healthcare have the authorization to sell, order or advice pot-‐based medicines in presence of a recipe. Any transactions of this kind of product has to be controlled by health professionals. The Healthcare National Department and the European Health Agency control the aggregation and allow professional health to use/sell/advice/order those pot-‐based. Moreover, are allow to produce, transport,


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import, export, offer or to be in possession of pharmaceuticals “specialties” as are the pot-‐based medicines if we follow the article A below (in French).

ARTICLE A

JORF n°0130 du 7 juin 2013 page 9469 texte n° 13 DECRET

Décret n° 2013-‐473 du 5 juin 2013 modifiant en ce qui concerne les spécialités pharmaceutiques les dispositions de l'article R. 5132-‐86 du code de la santé publique relatives à l'interdiction d'opérations portant

sur le cannabis ou ses dérivés NOR: AFSP1308402D

Publics concernés : Agence nationale de sécurité du médicament et des produits de santé ; titulaires d'autorisation de mise sur le marché ; entreprises ou organismes exploitant un médicament ou un produit mentionné à l'article R. 5121-‐150 du code de la santé publique ; professionnels de santé ; pharmaciens exerçant dans les pharmacies à usage intérieur des établissements de santé ; pharmaciens d'officine.

Objet : permettre la délivrance d'une autorisation de mise sur le marché à des médicaments contenant du cannabis ou ses dérivés, conformément à la directive 2001/83/CE du Parlement européen et du Conseil du 6

novembre 2001 instituant un code communautaire relatif aux médicaments à usage humain. Entrée en vigueur : le présent décret entre en vigueur le lendemain de sa publication.

Notice : le texte modifie l'article R. 5132-‐86 du code de la santé publique pour permettre au directeur général de l'Agence nationale de sécurité du médicament et des produits de santé d'octroyer une autorisation de mise sur le marché à des spécialités pharmaceutiques à base de cannabis ou ses dérivés et autoriser les opérations de fabrication, de transport, d'importation, d'exportation, de détention, d'offre, de cession, d'acquisition ou

d'emploi relatives à ces spécialités. Références : les dispositions du code de la santé publique modifiées par le présent décret peuvent être

consultées, dans leur rédaction résultant de cette modification, sur le site Légifrance (http://www.legifrance.gouv.fr).

Le Premier ministre, Sur le rapport de la ministre des affaires sociales et de la santé, Vu le règlement (CE) n° 726/2004 du Parlement européen et du Conseil du 31 mars 2004 établissant des procédures communautaires

pour l'autorisation et la surveillance en ce qui concerne les médicaments à usage humain et à usage vétérinaire, et instituant une Agence européenne des médicaments ; Vu la directive 2001/83/CE du Parlement

européen et du Conseil du 6 novembre 2001 instituant un code communautaire relatif aux médicaments à usage humain ;

The product Sereinex could indeed enter on the French market as the main competitor Sativex (GWPharma) is already on the market and the article B below provides the relevant elements showing that the medicine can be based of any plants -‐ not modified -‐ and can be consumed by different ways: spray, pills, oil, and powder.

ARTICLE B

Article R5121-‐1 Modifié par Décret n°2008-‐436 du 6 mai 2008 -‐ art. 2 Pour l'application du présent livre, on entend par :

1° Biodisponibilité, la vitesse et l'intensité de l'absorption dans l'organisme, à partir d'une forme pharmaceutique, de la substance active ou de sa fraction thérapeutique destiné à devenir disponible au niveau

des sites d'action ;


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[…] 9° Notice, le document d'information accompagnant le médicament et destiné à l'utilisateur ;

10° Substance végétale, l'ensemble des plantes, parties de plantes, algues, champignons, lichens, principalement entiers, fragmentés ou coupés, utilisés en l'état, desséchés ou frais, ainsi que certains

exsudats n'ayant pas subi de traitements spécifiques ; les substances végétales sont précisément définies par la partie de la plante utilisée et la dénomination botanique selon le système à deux mots -‐ genre, espèce,

variété et auteur ; 11° Préparation à base de plantes, les préparations obtenues par traitement de substances végétales, tel que

l'extraction, la distillation, l'expression, le fractionnement, la purification, la concentration ou la fermentation ; elles comprennent les substances végétales concassées ou pulvérisées, les teintures, les

extraits, les huiles essentielles, les jus obtenus par pression et les exsudats traités.

The article C below confirms that the National Agency of Health and Medicine’s Security controls before being launched on the market all the medicines, including insecticides, acaricide… but as well narcotic and psychotropic drugs.

ARTICLE C Article L5311-‐1

• Modifié par LOI n°2013-‐442 du 30 mai 2013 -‐ art. 8 I. -‐ L'Agence nationale de sécurité du médicament et des produits de santé est un établissement public de

l'Etat, placé sous la tutelle du ministre chargé de la santé. II. -‐ L'agence procède à l'évaluation des bénéfices et des risques liés à l'utilisation des produits à finalité

sanitaire destinés à l'homme et des produits à finalité cosmétique. Elle surveille le risque lié à ces produits et effectue des réévaluations des bénéfices et des risques.

L'agence peut demander que les essais cliniques portant sur des médicaments soient effectués sous forme d'essais contre comparateurs actifs et contre placebo. Si la personne produisant ou exploitant un médicament

s'oppose aux essais contre comparateurs actifs, elle doit le justifier. L'agence participe à l'application des lois et règlements et prend, dans les cas prévus par des dispositions

particulières, des décisions relatives à l'évaluation, aux essais, à la fabrication, à la préparation, à l'importation, à l'exportation, à la distribution en gros, au courtage, au conditionnement, à la conservation, à l'exploitation, à

la mise sur le marché, à la publicité, à la mise en service ou à l'utilisation des produits à finalité sanitaire destinés à l'homme et des produits à finalité cosmétique, et notamment :

1° Les médicaments, y compris les insecticides, acaricides et antiparasitaires à usage humain, les préparations magistrales, hospitalières et officinales, les substances stupéfiantes, psychotropes ou autres substances

vénéneuses utilisées en médecine, les huiles essentielles et plantes médicinales, les matières premières à usage pharmaceutique ;


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Is there any barrier from the European law?

Actually, we know thanks to the Article 28 from the TFEU (Treaty on the Functioning of the European Union) that there is a free movement of goods between the European Member States.

The article notices: “The Union shall comprise a customs Union which shall cover all trade in goods and which shall involve the prohibition between Member States of customs duties on imports and exports and of all charges having equivalent effect, and the adoption of a common customs tariff in their relations with third countries.”

By the way, trading goods such as Sereinex needs agreements and certificates to allow the transport of such pot-‐based medicines from a country to another. As we saw before, the agreement by the Dutch OMC allows the transport (import and export) and an agreement with the French HealthCare Security is needed after control of our product.

The European law supervises the process but exceptions such as ours can be made if it concerns special areas such as medicinal products.

How to register Sereinex’s patent in France and Netherlands?

France

In order to register and protect our product in France, we need to provide information to the INPI (Institut National de la Protection Industrielle) and follow the 16 steps as below:

! Step 1: Verify the state of the art and keep your invention secret ! Step 2: make sure that your innovation is patentable ! Step 3: fill in the submission form and write the text of your request

See the submission form: http://www.inpi.fr/fileadmin/mediatheque/pdf/db540.pdf

! Step 4: Send the folder to the INPI and pay the fees ! Step 5: INPI address you the national registration number and the filing date ! Step 6: INPI then forward your application for consideration at National Defense ! Step 7: INPI reviews your application ! Step 8: INPI address you the preliminary search report and an opinion on the

patentability of your invention ! Step 9: answer the documents cited in the search report ! Step 10: INPI publishes your patent in the Official Bulletin of Industrial Property

(BOPI) ! Step 11: INPI sends the notice of publication ! Step 12: INPI sends to you comments ! Step 13: answer to any observations


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! Step 14: INPI establishes a “definitive” research report ! Step 15: Pay the fee for grant and printing of the patent ! Step 16: INPI issued patent, send you a copy and publishes the mention of the grant

in BOP

Netherlands

In Netherlands, the process to register a patent and protect it is made by the Netherlands Patent Office and follow nearly the same steps than the France process

1) Request the validation of the patent from the NL Patent Office

2) Provide information about the product to the NL Patent Office

3) After acceptation, need to pay annual fees to the Office

On a general point of view, risks could be encountered in the future (in an extreme way) such as the modification of the law in France after few years for the citizen’s security for instance or overdose of people which are not following the instructions of using the spray.

Any other risk could be that new competitors enter on the pot-‐based medicines French market and steal our market shares. That is the reason why to counter that we decided on the mid-‐term to enlarge our range of product in order to make new entries more difficult because of our diversification and spread on the market to cover lot of diseases.

The target was not super easy to get. Obviousely, as our product is a disputed product, we have to be very careful to sell it at the right persons. In France, more than 5000 persons need that product, and are aware enough to take it without any reluctance. The problem is that we cannot sell our produt directly to the costumers because of different legislations in France.

Actually we have to sell our product to the persons who are « in charge » of our direct costumers, and those persons are doctors.


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This company will be our supplier: Bedrocan BV (Inc.). It was founded in 1984 and historically they are a agricultural and horticultural company from the north of the Netherlands. Around 1990 they started cultivating culinary herbs and with the knowledge they obtained during this period,

they started the cultivation of cannabis. In 2003 they made an agreement with the Dutch Ministry of Health to produce cannabis for a medical use.

They produce now three different products that are not an actual medicine, they are sold to pharmaceutical laboratories as raw material.

This extracts that they produce are taken from dried and manicured flowers from female plants and they are called Cannabis flos. They grow the plants indoor due to the weather of the Netherlands and they follow the guidelines of Good Agricultural Practice (GAP) stated in the country. This way they guarantee that it is free of pesticides, agricultural chemicals, and heavymetals, enforcing the hygienic measures throughout all the production line. At the same time, Bedrocan is continuously studying and developing in the laboratories new cannabis varieties formedicinal purpose to increase the quality and uses.

Logistics and Transportation


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In the Netherlands it is allowed to smoke cannabis or inhalate its steam, so wholesale pharmacies can also order the materials to be directly delivery to the patient as whole flowers or granulated.

We will have a contract of sales with them, it will be easier and cheaper to transport because weare both companies in the same country. We will buy from them every four weeks, since they harvest every two weeks and this way we will not have too much amount in our store room in the building at the same time. They will do the shipping since they are allowed to transport those big amounts of cannabis.

Amcor They are a originally Australian company founded in 1860 that growed a lot by acquiring other smaller companies and making business partnerships with companies from all over the world until they became the biggest packaging company of the world. Their omnipresence is the main reason why we will work with them, specially because of the safety and innovation since we are producing a pharmaceutical. They have a big range of products in many areas like food, household items, cosmetics or medical devices, ours will be the pharmaceutical one We will buy from them the empty bottles with oral dispenser and the boxes that will contain them, both of them with our design and logo. The shipment will be made by them every two months, and then we will store the packaging products in our store rooms so that we pack it in our packaging area of the company.

Alloga :

This will be the transportation company that will carry our products from the laboratory in the Netherlands to France, they are specialized in multi-‐country deliveries and logistics. It is a subordinate of the company Alliance Healthcare, which is one of the only 17 full-‐line allowed wholesalers of medicines in France. The fact that they have factories and storehouses both in France and the Netherlands is important because it shows that we can have contact with them in our home market and target market. Only in France they have 51 storehouses and 850 trucks.


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The company ensures the safe international cross border of all classes of products, even narcotics. They also keep the products in a controlled temperature and humidity during the transportation and the storage (2-‐8oC to 15-‐25oC).

Our contract will, again, be of sales. Alloga will buy from us a set of products and pick them up from our company, then they will store them in their storehouses of France and distribute it through the pharmacies of the country. Once the products leave our company in the Netherlands they will take care of everything, the maintenance, storage, distribution and everything that it entails.


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New pharma codes and guidelines:

The Pharmaceutical Research and Manufacturers of America released updates to its voluntary Code on Interactions with Healthcare Professionals on July 10. The new guidelines take effect January 2009."In addition to prohibiting small gifts and reminder items such as pens, notepads, staplers, clipboards, pill boxes, etc., the revised Code: 1. Prohibits company sales representatives from providing restaurant meals to healthcare

professionals, but allows them to provide occasional meals in healthcare professionals’ offices in conjunction with informational presentations"

2. Includes new provisions requiring companies to ensure their representatives are sufficiently trained about applicable laws, regulations, and industry codes of practice and ethics.

3. Provides that each company will state its intentions to abide by the Code and that company CEOs and compliance officers will certify each year that they have processes in place to comply.

4. Includes more detailed standards regarding the independence of continuing medical education.

5. Provides additional guidance and restrictions for speaking and consulting arrangements with healthcare professionals.

However, the Good Works Health government-‐approved platform offers physicians and other health care professionals the opportunity to direct donations to charities of their choice in exchange for participation in pharmaceutical promotional/educational programs

As we are a company selling a product, we need a strategy to advert our product the best way we can. Our main aim is to make our product trustable. In pharmaceutics industry, if the doctors and all the medicine academies are trusting your product, then you will succeed to sell your product in a long term. The most difficult thing to achieve is actually to go to the doctors and convince them using our product, with a well built campaign with all the proofs and documents needed.

Sereinex will be designed as a normal spray of 20ml. The name is related to the French word « serein » which mean unfazed in English. The aim is to make people trust our product by make them understand the medical aspect of it.

As we have only one competitor in France: Sativex. The arrival of that product relieved a lot of people, because France was one of the last country allowing medicines with cannabidiol in Europe. Around 5000 people were allowed to consume Sativex in France in 2012.

Strategy


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After many studies about it, the ANSM (the agency of the security of medicines) decided that Sativex could be now delivered in every single pharmacy in France instead of just Hospital pharmacies.

The price for 4 sprays of Sativex is about 514eur not refundable by the social security, which is quite expensive.

B2B in Netherlands :

Business-‐to-‐business (B2B) describes commerce transactions between businesses, such as between a manufacturerand a wholesaler, or between a wholesaler and a retailer. Contrasting terms are business-‐to-‐consumer (B2C) and business-‐to-‐government (B2G). B2B branding is a term used in marketing.

To make our product first famous in Netherlands, we’ll have to use the NCSM (Dutch Association for Legal Cannabis and its Constituents as Medicine ). They are organising conferences about the medicinal cannabis all around the world but especially in Netherlands.

This strategy consist in first having all the approvals of all the medicine responsible in the country, in order to weigh more in our target country, France.

B2B in France :

First of all we will have to deal with the ANSM. Make the visa and the advertising campaign approved. Once it is done, then we can begin our promotion. In our case, to embrace the entire professional sector we will have to publish ourselves in catalogs of new medicines, and go to the “ Congret Medical “ to present our spray.

We can apply here : http://www.congres-‐medical.com/ and chose to which congret we want to participate to. As we will have the agreement from the french national organisation, we will have the right to promote our brand and product in front of doctors, medicine ingeneers and other heath staff.

B2C in France :

As our product can be delivered only with prescriptions, we are not allowed to do direct advertising as a normal company usually does. We cannot publish in magazines, either on TV, radio, and all the street marketing ways of promoting a product.


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But we find an intermediary : use the INPES. It will permit us to touch the population deeply and use and alternative way to promote our cause and our product. Under the supervision(guardianship) of the Ministry of Health, the INPES has for missions:

1-‐ To implement, for the State and for its public institutions, the programs of public health,

2-‐ To perform a function of expertise and advice(council) regarding prevention and health-‐promoting,

3-‐ To assure(insure) the development of the education for the health on the whole territory,

4-‐ To participate, at the request of Minister for Health, the management of the urgent or exceptional situations having collective sanitary consequences, in particular by participating in the distribution(broadcasting) of sanitary messages in emergency situation,

5 -‐ To establish training programs in the education in the health.


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It takes a lot of time and money to get a new small business up and running. We have to make sure we don’t overlook any of our expenses. So we can improve and lead our business to success.

To finance and start our company we will need money. We looked for loans and we found out that European Government was giving an amount of their yearly research to start up company in health that improve and protect human health. It is the case for the product we want to launch, indeed this medicine will be to improve and relief people suffering of diseases as cancer but also others.

Below is the article found on the website of the European Union http://ec.europa.eu/ concerning the grants given to health start up.

The EU provides funding in the form of loans and grants for a broad range of projects and programmes covering areas such as health.

The Health Programme supports actions alongside the 23 thematic priorities of the Health Programme that improve and protect human health and help Member States in their efforts for innovative and sustainable health systems. Different funding mechanisms are available depending on the type of the action.

There are mainly two funding mechanisms: grants and tenders. The grants may be grants for projects, operating grants, direct grants with International organisations and grants to Member States authorities and bodies for co-‐financed actions.

We also found out that national government like Netherlands was according money to small and innovative project. For this, we have to fulfil an application and make sure everything is written clearly and simple enough to sure that our project is serious and realizable. This amount of money is quite a lot and could really help our business to start and we have to take it seriously. In that way,

Finances


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we will increase our chance to get this money from the Dutch government.

By looking at the different bank in Holland, we found this one. It is operating internationally and is also well known. Their website is in English, a good point for us that are non-‐Dutch speaker. As mentioned above, they offer opportunities for start-‐up business with advantageous loans.

Whether you’re just getting started, or already well established, Business Resource loans from The Bank of Holland can help your company reach its goals. With our SBA Preferred Lender status and through established channels for USDA Business Loans, we can help your business take advantage of traditional government-‐sponsored lending programs to provide expedient, creative financing solutions focused on a likeminded goal: your success.

https://www.tboh.com/Wealth-‐Management.aspx

" Why did we choose this price?

As a little reminder, we decided to position our company in France as being the most competitive one with the cheapest price. Indeed the only product available in the French market is the Sativex (from GWPharma) sold at the price of 16€. Our competitive advantage is the price, so we decided to sell it between 10-‐13€.

However, we don’t have to forget the cost that we will have but there will be still cheaper than the laboratory cost of GWPharma because we are a smaller company and as the result our costs will be less expensive.

" Different types of costs

When it comes to start a business we have to think of the costs we’ll be having. First, the fixed costs which are the costs that do not change when the quantity of output changes.

In our case, it would be the rent of the laboratory will have in Rotterdam, but also the bills regardless of how much power we’ll use for the machines, the electrical equipment as well as the lighting. Without forgetting the corporate tax on Dutch company, which is subject to a 25% tax on its final profits.


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The salaries expenses are also considered as fixed costs as they are set from the start of the business. For our company, we have set the group of staff we’ll hire and calculated the amount of money we will be giving to them yearly. Below the list of employees followed by the yearly salary they will get.

Executive directors (in €)

-‐Chief executive officer = 155,000

-‐R&D executive officer = 130,000

-‐R&H Director = 99,000

-‐Chief Financial officer =120,000

-‐Chief Operating Officer = 149,000

Team management (in €)

-‐Director of quality = 100,000

-‐Technical director = 99,000

-‐Manufacturing operations director = 100,000

-‐ Vice president professional relations =149,000

-‐Director of pharmacology = 100,000

-‐Director of botanical research and cultivation = 99,000

-‐Clinical operations director =99,000

-‐Supply chain director =99,000

-‐Director of the canabinoid research institute = 100,000

-‐Vice president, investor relations = 81,000

-‐Scientific and partners liaisons lead = 41,000

-‐Director of research and development relation= 100,000

-‐Director of regulatory affairs =100,000

As a new business, we need to apply to an entrance company and it is as important as any of the other planning we have to do for our business. When applying to this insurance contract, we have to insure our company to:

• Property insurance


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• Business interruption insurance • Liability insurance • Key person insurance • Workers’ compensation insurance • Health insurance • Life and disability insurance

Those different insurances don’t only protect and cover just our company but also our employees that are our assets.

We also don’t have to forget the marketing costs that we’ll spend to make pharmacies and doctors aware of our products. Indeed, those costs are sometimes forgotten but are however very useful for a start up business. Those expenses are the ones to track marketing campaigns. They are split in two categories again the fixed and the variables costs. The fixed costs are the fees for agencies and consultants we’ll work with to make our product known. Then comes the variable marketing costs, the ones that vary with the number of people who views the advertising. For example, the e-‐mails quantity, text messages that we’ll send to doctors or to the people in charge of representing our product.

A variable cost is a cost that changes in relation to variations in an activity. For example, the materials we’ll use as the components in a product are considered variables costs, because they vary directly with the number of units of product we’ll produce. If our activity decreases we’ll use less raw material and as a results our spending for raw materials falls and other way round.

Concerning the logistics part, we will have to establish a contract between Amcor and Alloga (the two companies we will be using to export our products). The price will depend of the quantity of boxes and pallets that will be exporting. Indeed the biggest quantity will export the cheapest the price will be and other way round.


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Through this report, you have seen that our company gets the best factors in order to succeed. Indeed, attended by the best partners in their respective sectors, our company will be able to face all the problems which could occur. Moreover, with our competitive product Sereinex soon launched on the French market, we could aspire to steal lot of market shares from our only competitor GW Pharma thanks to our competitive price and the multiple diseases our product could cover.

Nevertheless, we can’t neglect different risks which could appear as the fact not to have the contribution of the European Union or even the Dutch loans. We need to change the mentality of French people. People are still very reserved concerning the cannabis. Indeed, as long as people hear “cannabis” they always associate it to the drug and not to the actual medicine. So, changing the mentality of people and change them into cannabis is a drug but a smooth one that can also relieves in the case of grave diseases.

Finally, one of the difficult parts would be to convince doctors not to buy the Sativex spray but ours. We’ll have to be convincing and to make them understand that our product on the long-‐term period would be embracing not only the bones disease but also a wider range of disease.

Conclusion

european business and law - medicinal cannabis 1.pdf

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