So far this year, Tilray, Inc. (TLRY) has reported several significant announcements as it relates to the international cannabis opportunity and has been increasing market share in several key emerging markets.
As it relates to the international side of Tilray’s business, we are most excited about the leverage that it has to the opportunity in the European Union (EU). We believe the EU cannabis market is attractive due to the size of it and the economics that are associated with the vertical. When compared to North America, the cost of medical cannabis in the EU is much higher. This is due to the market being much less saturated and do not expect this trend to change in the near future.
A Leading Play on the EU Cannabis Market
A few weeks ago, the Canadian cannabis company reported to be one of a handful of operators that were selected to participate in a new French medical cannabis experiment. The market responded favorably to the development and we are bullish on the leverage that Tilray has to strategic international cannabis markets.
Yesterday, Tilray announced an important milestone and reported to have received the necessary approvals and market authorization to offer branded medical cannabis products in Portugal. The Tilray branded cannabis products will come from its EU Good Manufacturing Processes (GMP) state-of-the-art facility in Portugal and we are bullish on how the company has been executing on the EU cannabis market.
Tilray received the market authorization from Infarmed, which is the Portuguese National Authority of Medicines and Health Products. The company is the only cannabis business to be granted this type of market authorization in Portugal and the development enhances its leadership position in the Europe, the Middle East and Africa (EMEA) region.
As it relates to Tilray’s leverage to the international cannabis market, Portugal will be the 16th country that sells the company’s products. We are bullish on the leverage that Tilray has to the international cannabis market and expect this aspect of the story to play a key role in the growth of the entire business.
The process associated the with the market authorization was complex and Tilray was required to submit a full quality dossier for a medical cannabis product. The approval from Infarmed confirms the quality and safety standards its GMP certified production and is a testament to the strength of Tilray’s ability to execute.
Tilray Seeing Increasing Demand for Cannabis in the EU
Tilray reported that it has seen increasing demand from patients in Portugal and throughout the EU. Patients are able to access Tilray’s products through major pharmaceutical distribution channels throughout Portugal and other markets in the EU. Going forward, the company expects to see continued increases in demand as emerging international medical cannabis markets continue to gain traction. Tilray’s EU campus is well positioned to capitalize on the demand trend in the EU and in other international markets and we will monitor how quarterly numbers reflect the increasing demand on a going forward basis.
Last year, Tilray was granted its third GMP certification for the facility in Portugal and we are bullish on this aspect of the story. The certification allows Tilray to manufacture medical cannabis extracts in the facility and export medical cannabis products to certain markets and expect these certifications to support growth on the international side of the business.
Another important aspect of the certification is related to it allowing Tilray to manufacture bulk extracts in the approved facilities and sell them as cannabis active pharmaceutical ingredients (APIs). The certifications also let the company have additional quality control lab capacity to further advance its product innovation and research capabilities.
Merger with Aphria is Expected to be a Catalyst for Growth
In late 2020, Tilray reported to have entered into an agreement to merge with Aphria (APHA.TO) (APHA) and we are bullish on the growth prospects of the combined company. Aphria is a Canadian Licensed Producer (LP) that has been highly focused on the cannabis opportunity in the EU and expect the combined company to be a leader in the region.
Aphria’s EU cannabis business has been highly focused on the opportunity in Germany and we expect this aspect of the story to support the growth of Tilray. We expect the combined company to be a major beneficiary of the growth of the global cannabis market and expect the businesses to find significant synergies between each other.
The market responded favorably to the merger agreement and several broker-dealers have raised their price target on both Tilray and Aphria. We are favorable on how the market responded to the development and will monitor how the businesses are able to integrate. We expect the business transition to be seamless and believe the combined company has the ability to overtake Canopy Growth Corporation (WEED.TO) (CGC) as the leading play on the global cannabis market.
If you are interested in learning more about the growth prospects that are associated with the combined company, please send an email to firstname.lastname@example.org with the subject “Aphria and Tilray” to be added to our distribution list.