Happy animal, happy human: Cannabis products for pets proving a financial hit for Creso

Only two ASX companies are developing legal, hemp and cannabis-based products for Fido and Fluffy and only one of these is selling anything.

There's CannPal (ASX:CP1), deep in clinical trials for dog treatments, and Creso Pharma (ASX:CPH) which has a commercialization  deal with European giant Virbac and an animal health division that contributed already to revenues in 2018.

The planned launches in 2019 into 14 new countries means the animal health segment could contribute substantially to Creso's financials.

Creso is the only listed Australian-Swiss cannabis company with pharma-grade, GMP cultivation and production operations and substantial assets in Canada, estimated to be worth over $C100m, allowing an efficient vertically-integrated approach.

"Our Creso-Mernova Medicinal facility in Nova Scotia, Canada, is a major cornerstone in our strategy to bring the best of hemp and cannabis to humans and animals. It provides us a strategic competitive advantage in high quality research & development, cultivation and production – from the plant to the animal and human, supporting their health and wellbeing," Creso CEO Dr Miri Halperin Wernli.

"Animal health was the jump start for Creso's vision to bring the best of hemp and cannabis to animals and humans. We launched our first products about one year after listing on the ASX and in the animal CBD wellness space are starting to grow revenues," Creso commercial director Jorge Wernli told Stockhead.

Animal CBD hemp oil products adopt the entourage effect

Creso's main pet product is called anibidiol® a range of hemp-based products that contains full spectrum cannabidiol (CBD) hemp oil — the non-psychotropic cannabinoid helping reduce stress and pain — as well as Omega 3, 6, 9 and vitamins B3 and B6.

The company uses a full spectrum plant formulation which means the complementary feed for cats and dogs delivers an 'entourage effect'.

This is the idea that all of the components of a plant — the fragrant terpenes, the cannabinoids and the fatty acids — work together to produce a stronger effect than if any one of those components would act alone.

"All these components optimise the benefits towards a well-balanced behaviour contributing to reduce stress and chronic pain. Vets, clinics and pet owners have reported improvements in animals with behaviour disorders, chronic pain and particularly in elderly "senior" dogs," Mr Wernli said.

Pets are an important family member

The opportunity for Creso is big as the pet health and wellness market continues to grow.

In 2017, a study by Animal Medicines Australia (AMA) found Australians spent $12.2 billion on their pets, up 42 per cent since 2013. Americans spend a whopping $72 billion.

In Europe, where Creso is already selling anibidiol® as complementary feed for dogs and cats, the pet care market is estimated by Statista to be €27 billion in 2020.

In terms of pot-for-pets, the market is growing just as speedily as the one for humans.

Mr Wernli says if Europe has a 1 per cent participation rate for cannabis, it represents a €200 million market.

To put it into perspective, in 2017, pet owners spent $7 million on animal CBD hemp products in California alone.

Growth in this industry could even beat the wider cannabis market.

According to BDS Analytics, in Colorado, sales of pet products grew 49 per cent in 2017 versus growth across all product categories at 15 per cent.

The animal market is one area that opened up to Creso after the US passed the 2018 Farm Bill in December, which legalised hemp and hemp-derived CBD.

Mr Wernli says they consider the US a key pet market and are preparing to commercialize anibidiol® through several channels, including planned local manufacturing.

Next steps

Creso launched its CBD animal health range in Switzerland and Lichtenstein in November 2017.

Its commercial partner Virbac is launching it into another 14 countries in Europe and South America in 2019.

"Creso and Virbac created a remarkable win-win collaboration. Having only one highly reputated commercialisation partner in 15 countries and more, who is well established in the markets with its own marketing, regulatory and sales infrastructure, is an extraordinary competitive advantage for Creso. Virbac on the other hand benefits from Creso's knowledge and experience in the hemp and CBD field," Mr Wernli said.

Mr Wernli expects further market penetration to come from selling through one targeted partner with global reach, and the rising use and acceptability of CBD and cannabis over the next five years.

He cited Yahoo Finance which, in January of this year, forecasted a compound annual growth rate of CBD and cannabis use for pets market over the next five years of 57 per cent, to touch $US125m in 2022.

"Animal health continues to be an attractive key strategic market segment for Creso as we observe the humanisation trend of pets and fast growth in the use in CBD hemp and cannabis," Mr Wernli said.

This article first appeared on Stockhead.

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Clarice Gomes

Clarice, a Melbourne-based writer, began her career covering the technology industry and now writes, edits and interviews subject matter experts in the Cannabis Industry.

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