Panaxia Pharmaceutical Industries Israel is the largest manufacturer of cannabis medications in Israel today, producing some 50,000 of its products per week on the Israeli market. The company is active internationally, is growing intensively, and currently turns over $13 billion a year with annual growth of 30%.
Panaxia Israel is part of the Segal family’s pharmaceutical group, a group now active for more than four decades that manufactures more than 600 different pharmaceutical products and markets them in more than 30 countries. Panaxia is the group’s cannabis division, founded by Panaxia CEO Dr. Dadi Segal and CTO Eran Goldberg.
“Nine years ago or so, we identified a need among various populations in the market – particularly the elderly and the chronically ill – who could be treated by medical cannabis for certain medical conditions but who, because today medical cannabis is consumed mainly by smoking, were in effect without access to it,” explains Dr. Dadi Segal. “In addition, physicians are very hesitant to recommend use of cannabis because it’s a product that isn’t replicated consistently and isn’t funded, so that they have difficulty monitoring patients treated with it.
"Imagine an 80-year-old woman, for example, suffering from Parkinson’s or from some other degenerative disease of the nervous system. And she needs to start rolling her medicine in the form of a joint. It’s not exactly practical. With that understanding, we started developing systems and processes that would bring the active ingredients from the cannabis plant to the level of a medication just like any other. And that’s what started our interest in our various development projects.”
“Today medical cannabis is taken by patients primarily for pain relief. As indications, chronic diseases such as bowel inflammation, degenerative diseases of the nervous system, AIDS, etc. are almost entirely excluded from the sphere of medical cannabis. We examined the matter and discovered that those extensive sectors of the population where today medical cannabis is not being requested would favor it if it were administered like other medications on the market.
"The market’s conventional treatments for those chronic indications are known to be very expensive; therefore cannabis-based pharmaceutical solutions will be priced similarly, mainly because of the technologies they are based on. In addition, the frequency of treatment for those indications is set on a daily basis in accordance with the prescription and the physician’s instructions, in contrast to the customary use today of medical cannabis for pain relief, which is based mainly on the patient’s judgment.
"So we believe that the products on the market today are only the tip of the iceberg and the huge market potential for pharmaceutical products that are replicable and are funded has not yet been awakened. We expect more patients, and more frequent consumption of the products, in this category.”
From a look at the chain of value in Israel’s cannabis sector, it emerges that as of today Panaxia is one of the only two manufacturers of cannabis pharmaceuticals authorized by Israel’s Ministry of Health, with IMC-GMP compliance.
Accordingly, Panaxia is a major factor at two critical nodes in the chain of value – production and distribution – and thus holds a position of strength in the chain of value. This point is especially meaningful in the potential situation where medical cannabis products are licensed for export from the State of Israel.
"Our group was the first in Israel to receive IMC-GMP approval in the sphere of medical cannabis, and one of the first two companies to start marketing medical cannabis products through Israel’s pharmacies. Our company currently manufactures 8 of the 10 medical cannabis brands sold in Israel, including the premium Axiban brand, in cooperation with the Rafa pharmaceutical company. A GMP-compliant company is one where the products are manufactured according to the strictest pharmaceutical standards.
"In order to be recognized as compliant, we developed an analysis system that can identify and quantify active ingredients. Today we can quantify 9 different cannabinoids, and in the near future we will complete a series of 20 different cannabinoids and terpenes in the manufacture of each of the products. At the next stage, the analysis system and all the various processes undergo validation, meaning that each product must be identical, with respect both to active ingredients and to shelf life, each time it leaves the facility.”
Some weeks ago, Panaxia entered a merger process with Herodium, which is a publicly owned company traded on the Tel Aviv stock exchange.
Dr. Dadi Segal: “By putting our Israeli activity under a public company, we expect to be able to take the same dominant position in the European and global markets that we have in the Israeli market, and to enable Panaxia to be ready from the regulatory, clinical, and operational standpoints to start exporting as soon as an export permit is received. In addition, we are enabling the public to be part of a different, unique player in the sector – one that comes from the pharmaceutical sector into the cannabis sector.
"Most other companies arrived from the opposite direction, into the cannabis industry from the cultivation sector. As a veteran pharmaceutical company, we are committed to the world’s highest pharmaceutical standards, so we can present medical-cannabis products to the community of patients in Israel and elsewhere just like any other medication, with clinical backup, exact and repeatable dosages, and manufacturing conditions that meet the strictest production standards.”
"In the USA, the market’s regulatory aspect is unique. At the state level, cannabis is permitted; but federally, cannabis is still considered a dangerous drug and an illegal substance. As a consequence, cannabis and its products cannot be brought across the borders. Instead, a local factory must be set up in each state where cannabis is permitted. That American market structure provides a great advantage to small Israeli companies on the one hand, while on the other hand it blocks the gigantic pharmaceutical companies from taking part in the industry.
"Panaxia has developed a unique system enabling it to build factories that are small by pharmaceutical standards but still can manufacture an extremely broad range of products. How do we do it? Because 95% of the dry materials in the products are inactive ingredients, everything is manufactured in Israel – including the marketing materials, packaging, and all the supporting materials – except what contains cannabis.
"We send the non-cannabis materials to the factories that have already been set up in the various states of the USA, including California, New Mexico, and Arizona. At those factories we’re responsible for producing the active ingredients, from the cannabis that local growers sell us, and we mix it with the inactive ingredients to produce a specific formulation. The goal is, of course, to expand operations and set up further factories during 2019.”
Some 90 employees currently work for the Panaxia group in Israel, with roughly 25% of them in R&D. The Panaxia group is advancing various clinical studies, all under its own administration. Panaxia Israel is working on the manufacture of some 30 pharmaceutical products based on medical cannabis, among them ordinary and sublingual tablets, lozenges, oils, inhalers, and more.
As of today, Israel allows the marketing of inflorescences and oils only. With respect to medical cannabis products for a broad variety of delivery methods, such as tablets, suppositories, and the second generation of products adapted for Parkinson’s, Alzheimer, psoriasis, and inflammatory bowel diseases, Panaxia is in the process of registering the products in Israel and expects to begin marketing them in Israel upon completion of registration in the course of 2019.
The company believes that the marketing of products in Israel and elsewhere at a high pharmaceutical standard will make for a broader base of potential customers for treatment – incorporating patients who do not currently use medical cannabis, such as patients whose diseases are not addressed by the existing products and, of course, aging and aged customers.
“Panaxia’s unique delivery methods are expected to allow for increased biological availability of the active ingredients, in turn increasing the promptness of the medication’s influence on the body,” says Dr. Segal. “Other formulations that the group is developing are for topical application (creams, lotions, transdermal patches, and other patches). In the future, we will have unique formulations for specific diseases, based on various concentrations of cannabinoids – both the common ones and the rarer ones – and all backed by clinical studies.”