Exclusive Interview with MediPharm Labs Co-Founder and President Keith Strachan
MediPharm Labs (TSX: LABS) (OTCQX: MEDIF) (FSE: MLZ), focused solely on creating cannabis concentrates, has a major income position in the Canadian cannabis marketplace. Co-Founder and President Keith Strachan spoke with New Cannabis Ventures about the company’s method to white label partnerships, the value of high-quality, and international expansion plans. The audio of the complete conversation is obtainable at the finish of this written summary.
MediPharm Labs Leadership
Strachan has a background in provide chain management. He worked in a quantity of government positions prior to he entered the healthcare space. It was then that he met Pat McCutcheon, Co-Founder and CEO of MediPharm Labs, who was operating the pharmaceutical space. Strachan has generally had an entrepreneurial sense, which led him to the restaurant business enterprise and then to freelance consulting. As a consultant, he helped some of his clientele by means of the cannabis application procedure. He crossed paths with McCutcheon once again, and the notion for MediPharm Labs was formed.
Currently, the firm has 200 staff. Some of the other essential members of the leadership group consist of Common Counsel Ahmed Shehata and CFO Bobby Kwon. Shehata comes from a background in corporate law. Kwon, a current addition to the group, previously worked with Weston Group and Unilever.
The MediPharm Labs facility is situated in Barrie, Ontario, about 45 minutes north of the Toronto airport. The proximity to the higher Toronto location has helped the firm to attract and retain talent, according to Strachan.
The facility is 70,000 square feet with 10,000 square feet becoming utilized for production. The firm at the moment is operating on a quantity of Overall health Canada amendments to expand the quantity of production space.
The company’s facility, situated in an industrial zone, was standing prior to MediPharm Labs was established, but it was a wide-open warehouse. This has permitted the firm to objective-make its facility for GMP certification, a signifier of the company’s commitment to high-quality.
MediPharm Labs has a deep marketplace attain in Canada. Seeking at the final quarter, the firm is third in Canadian cannabis firm income, behind Canopy Development and Aurora.
In the quick-term, domestic development may perhaps level out, according to Strachan. But, Cannabis two. is a massive chance for development in Canada. MediPharm Labs is positioned to present the active components firms require to make beverages, edibles, topicals, and vape items.
Cannabis Sourcing and Extraction
MediPharm Labs was the initial Canadian firm to do concentrate-only production. In early 2018, marketplace demand and the quantity of licenses created it tough for the firm to supply the dried cannabis it necessary. Now, dried cannabis is readily obtainable.
Higher provide has translated into reduced charges, but MediPharm Labs is not necessarily seeking to supply the least pricey material. Alternatively, the firm focuses on sustainability and high-quality. Will a supplier be in a position to give the firm solution on a month-to-month basis? Is that solution of higher high-quality? The firm vets all possible suppliers for a shared concentrate on high-quality, and all shipments of dried cannabis undergo third-celebration testing.
The company’s internal science group and scientific advisory board reviewed distinctive extraction methodologies and eventually decided COtwo extraction was the finest choice for the type of high-quality the firm was targeting.
MediPharm Labs wanted to scale immediately, so opting for an R&D method and establishing a new method to extraction was not a fantastic match. Hydrocarbon extraction, working with butane or propane, did not match with the company’s danger profile. In comparison to ethanol extraction, COtwo extraction makes it possible for for any earlier separation procedure of cannabinoids, according to Strachan.
White Label Partnerships
MediPharm Labs partners with other firms to give them a platform to launch their items and brands. In several other mature industries, like CPG and pharmaceuticals, brands outsource their production. MediPharm Labs is seeking ahead to exactly where the sector is most likely going, as an alternative of exactly where it is nowadays.
When it comes to deciding on its partners, MediPharm Labs appears for thriving firms with the potential to sell by means of. For instance, well-known brewery Ace Hill launched a dried flower line beneath the Ace Valley brand. The preroll became a single of the major-sellers in Ontario. When the firm decided to add a higher-high-quality vape pen, it was a fantastic match for MediPharm Labs.
Canopy Development is also a single of MediPharm Labs’ clients. The firm sells Canopy Development an intermediate solution, a winterized resin, by the kilogram, which then goes into a quantity of Canopy Growth’s solution lines.
In addition to its Canadian footprint, MediPharm Labs is expanding its international attain. In Australia, the firm has 80 % ownership in MediPharm Labs Australia. The firm is undergoing the procedure of earning government certification for that facility. Physicians are gaining a lot more energy to treat sufferers, and the quantity of health-related cannabis sufferers is expanding in this marketplace, according to Strachan.
In Germany, MediPharm Labs has partnered with ADREXpharma, which currently sells dry flower and CBD oil. MediPharm Labs will supply the firm the active components to make THC oil. Widespread government coverage of health-related cannabis in this marketplace assists producers since it alleviates value compression, according to Strachan.
MediPharm Labs is continuing to concentrate on international expansion, seeking at markets like Asia, South Africa, and South America.
Though MediPharm Labs does not conduct clinical trials, it is in a distinctive position to assistance this type of study. As a higher-high-quality manufacturer, the firm can supply clinical researchers with a repeatable solution. For instance, the firm is manufacturing CBD gel caps for a clinical trial run by Mount Sinai.
Trials like this also present a industrial chance. If a solution comes from a thriving clinical trial, MediPharm Labs could develop into the manufacturer of option, according to Strachan.
Funding and Capital Allocation
In June, MediPharm Labs closed on a $75 million purchased deal, oversubscribed and led by Scotiabank. And, in October, the firm closed a $38.7 million upsized credit facility. MediPharm Labs has however to pull down on the line of credit, save for the mortgage on its creating. The firm is properly-funded, money flow constructive, and not actively seeking for capital.
MediPharm Labs will be allocating its capital into a couple of distinctive places. The firm will be focusing on expanding and adding a lot more automation to its Barrie facility, staying existing with its GMP methodology, seeking at international possibilities, and acquiring the dried cannabis it requires to preserve up with orders and to assistance the massive-income quarters it has executed on this year.
Listing on the NASDAQ
The firm has had robust assistance from the retail investment sector, but now it is targeting new, institutional investors. MediPharm Labs has filed an application to list on the NASDAQ. In addition to access to institutional investment, listing on the NASDAQ will assistance the firm show its leadership position in the sector, according to Strachan.
Tracking the Company’s Development
MediPharm Labs reported $43.four million in Q3 income, 38 % development from Q2. Taking into consideration the regulatory atmosphere of Canada and slower than anticipated rollout of retail retailers, the firm, is not expecting yet another 38 % development quarter in Q4, but expects to develop more than time as a marketplace leader, according to Strachan.
Strachan sees space for a lot more competitors, especially on a international scale. Maintaining in thoughts the regulatory atmosphere and the reasonably modest population of Canada, the firm is excited about the international health-related chance. As the firm grows, Strachan recommends investors watch the company’s continued commitment to high-quality, as properly as income and profitability.
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