Markets

The Big Pharma Takeover of Medical Cannabis

Published

4 years ago

August 12, 2019

Katie Jones

INFO

The Big Pharma Takeover of Medical Cannabis

As evidence of cannabis’ many benefits mounts, so does the interest from the global pharmaceutical industry, known as Big Pharma. The entrance of such behemoths will radically transform the cannabis industry—once heavily stigmatized, it is now a potentially game-changing source of growth for countless companies.

Today’s infographic comes to us from CB2 Insights, and explores how and why the notorious Big Pharma are interested in the nascent cannabis industry.

Who are “Big Pharma”?

The term refers to some of the largest pharmaceutical companies in the world, considered especially influential as a group. To give a sense of their sheer size, the market cap of the top 10 Big Pharma companies is $1.7 trillion—Johnson & Johnson being the largest, with a market capitalization of $374 billion.

So far, Big Pharma has watched the cannabis industry from the sidelines, deterred by regulatory concerns. What we are seeing now is the sleeping giant’s takeover slowly intensifying as more patents, partnerships, and sponsored clinical trials come to fruition.

Could Cannabis be Sold Over the Counter?

The cannabis plant has been used in medicine for 6,000 years. However, there is still considerable debate around the role it plays in healthcare today. There are currently almost 400 active and completed clinical trials worldwide surrounding cannabidiol (CBD), a type of cannabinoid that makes up 40% of the cannabis plant’s extract.

Cannabis relies on CBD’s therapeutic properties, and recent studies suggest it may be useful in combating a variety of health conditions, such as:

Epilepsy
Schizophrenia
Multiple sclerosis
Migraines
Arthritis
Cancer side effects

As of 2019, 33 states and the District of Columbia have legalized cannabis for medical use. Its potential for pain management has led some experts to recommend it as an alternative to addictive painkillers, with one study of 13 states showing opiate-related deaths decreasing by over 33% in the six years since medical cannabis was legalized.

As the industry evolves, data is becoming increasingly important in understanding the potential of cannabis—both as a viable medical treatment, and as a recreational product. The shift away from anecdotal evidence towards big data will inform future policies, and give rise to a new era of consumer education.

Big Pharma’s Foray into Cannabis

Further legalization of cannabis will challenge Big Pharma’s bottom line, and poach more than $4 billion from pharma sales annually. In fact, medical cannabis sales are projected to reach $5.9 billion in 2019, from an estimated 24 million patients.

Seven of Canada’s top 10 cannabis patent holders are major multinational pharmaceutical companies, a trend that is not unique to Canada.

Company Rank	🇨🇦 Canadian Patents	Company Rank	🇺🇸 U.S. Patents
1. Novartis	21	1. Abbvie	59
2. Pfizer	14	2. Sanofie	39
3. GW Pharmaceuticals	13	3. Merck	35
4. Ericsson	13	4. Bristol-Myers Squibb	34
5. Merck	11	5. GW Pharmaceuticals	28
6. Solvay Pharmaceuticals	7	6. Pfizer	25
7. Kao Corporation	7	7. Hebrew University of Jerusalem	19
8. Ogeda SA	7	8. Roche	17
9. Sanofi	6	9. University of Connecticut	16
10. University of Connecticut	6	10. U.S. Health and Human Services	13

It comes as no surprise that many pharmaceutical giants have already formed strong partnerships with cannabis companies, such as Novartis and Tilray, who will develop and distribute medical cannabis together in legal jurisdictions around the world.

Data is the Missing Link

While the body of knowledge about the many uses of cannabis continue to grow, clinical evidence is key for widespread adoption.

Products backed by data will be a defining criteria for major companies to come into the market en masse. And ultimately, Big Pharma’s entry could accelerate public understanding and confidence in cannabis as a viable option for a range of ailments, and mark the next major milestone for the industry.

Related Topics:healthcare data cbd medical cannabis big pharma patent clinical trial cannabis

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Central Banks

Which Countries Hold the Most U.S. Debt?

Foreign investors hold $7.3 trillion of the national U.S. debt. These holdings declined 6% in 2022 amid a strong U.S. dollar and rising rates.

Published

1 week ago

March 24, 2023

Dorothy Neufeld

Which Countries Hold the Most U.S. Debt in 2022?

Today, America owes foreign investors of its national debt $7.3 trillion.

These are in the form of Treasury securities, some of the most liquid assets worldwide. Central banks use them for foreign exchange reserves and private investors flock to them during flights to safety thanks to their perceived low default risk.

Beyond these reasons, foreign investors may buy Treasuries as a store of value. They are often used as collateral during certain international trade transactions, or countries can use them to help manage exchange rate policy. For example, countries may buy Treasuries to protect their currency’s exchange rate from speculation.

In the above graphic, we show the foreign holders of the U.S. national debt using data from the U.S. Department of the Treasury.

Top Foreign Holders of U.S. Debt

With $1.1 trillion in Treasury holdings, Japan is the largest foreign holder of U.S. debt.

Japan surpassed China as the top holder in 2019 as China shed over $250 billion, or 30% of its holdings in four years.

This bond offloading by China is the one way the country can manage the yuan’s exchange rate. This is because if it sells dollars, it can buy the yuan when the currency falls. At the same time, China doesn’t solely use the dollar to manage its currency—it now uses a basket of currencies.

Here are the countries that hold the most U.S. debt:

Rank	Country	U.S. Treasury Holdings	Share of Total
1	🇯🇵 Japan	$1,076B	14.7%
2	🇨🇳 China	$867B	11.9%
3	🇬🇧 United Kingdom	$655B	8.9%
4	🇧🇪 Belgium	$354B	4.8%
5	🇱🇺 Luxembourg	$329B	4.5%
6	🇰🇾 Cayman Islands	$284B	3.9%
7	🇨🇭 Switzerland	$270B	3.7%
8	🇮🇪 Ireland	$255B	3.5%
9	🇹🇼 Taiwan	$226B	3.1%
10	🇮🇳 India	$224B	3.1%
11	🇭🇰 Hong Kong	$221B	3.0%
12	🇧🇷 Brazil	$217B	3.0%
13	🇨🇦 Canada	$215B	2.9%
14	🇫🇷 France	$189B	2.6%
15	🇸🇬 Singapore	$179B	2.4%
16	🇸🇦 Saudi Arabia	$120B	1.6%
17	🇰🇷 South Korea	$103B	1.4%
18	🇩🇪 Germany	$101B	1.4%
19	🇳🇴 Norway	$92B	1.3%
20	🇧🇲 Bermuda	$82B	1.1%
21	🇳🇱 Netherlands	$67B	0.9%
22	🇲🇽 Mexico	$59B	0.8%
23	🇦🇪 UAE	$59B	0.8%
24	🇦🇺 Australia	$57B	0.8%
25	🇰🇼 Kuwait	$49B	0.7%
26	🇵🇭 Philippines	$48B	0.7%
27	🇮🇱 Israel	$48B	0.7%
28	🇧🇸 Bahamas	$46B	0.6%
29	🇹🇭 Thailand	$46B	0.6%
30	🇸🇪 Sweden	$42B	0.6%
31	🇮🇶 Iraq	$41B	0.6%
32	🇨🇴 Colombia	$40B	0.5%
33	🇮🇹 Italy	$39B	0.5%
34	🇵🇱 Poland	$38B	0.5%
35	🇪🇸 Spain	$37B	0.5%
36	🇻🇳 Vietnam	$37B	0.5%
37	🇨🇱 Chile	$34B	0.5%
38	🇵🇪 Peru	$32B	0.4%
	All Other	$439B	6.0%

As the above table shows, the United Kingdom is the third highest holder, at over $655 billion in Treasuries. Across Europe, 13 countries are notable holders of these securities, the highest in any region, followed by Asia-Pacific at 11 different holders.

A handful of small nations own a surprising amount of U.S. debt. With a population of 70,000, the Cayman Islands own a towering amount of Treasury bonds to the tune of $284 billion. There are more hedge funds domiciled in the Cayman Islands per capita than any other nation worldwide.

In fact, the four smallest nations in the visualization above—Cayman Islands, Bermuda, Bahamas, and Luxembourg—have a combined population of just 1.2 million people, but own a staggering $741 billion in Treasuries.

Interest Rates and Treasury Market Dynamics

Over 2022, foreign demand for Treasuries sank 6% as higher interest rates and a strong U.S. dollar made owning these bonds less profitable.

This is because rising interest rates on U.S. debt makes the present value of their future income payments lower. Meanwhile, their prices also fall.

As the chart below shows, this drop in demand is a sharp reversal from 2018-2020, when demand jumped as interest rates hovered at historic lows. A similar trend took place in the decade after the 2008-09 financial crisis when U.S. debt holdings effectively tripled from $2 to $6 trillion.

Foreign Holdings of U.S. Debt

Driving this trend was China’s rapid purchase of Treasuries, which ballooned from $100 billion in 2002 to a peak of $1.3 trillion in 2013. As the country’s exports and output expanded, it sold yuan and bought dollars to help alleviate exchange rate pressure on its currency.

Fast-forward to today, and global interest-rate uncertainty—which in turn can impact national currency valuations and therefore demand for Treasuries—continues to be a factor impacting the future direction of foreign U.S. debt holdings.