Teva makes first foray into medical cannabis sector, with new distribution deal

Israeli pharma giant signs agreement with Cannbit-Tikun Olam to produce THC and CBD oils for Israeli, Palestinian Authority markets

Ricky Ben-David is The Times of Israel’s Startups and Business editor and reporter.

Illustrative. Cannabis plants grown for medical use in Israel. (Chen Galili)
Illustrative. Cannabis plants grown for medical use in Israel. (Chen Galili)

Israel’s Teva Pharmaceutical Industries, one of the world’s largest generic drugmakers, is taking its first steps into the medical cannabis industry. On Sunday, the pharmaceutical giant announced that it signed a new agreement with Cannbit-Tikun Olam, the largest medical cannabis supplier in Israel, to market and distribute medical cannabis products in Israel and the Palestinian Authority, as well as Ukraine in the near future.

According to the deal, Cannbit-Tikun Olam will produce medical cannabis oils rich in THC, the main psychoactive compound in cannabis, and CBD (cannabidiol), a compound that lacks the psychoactive component and is used in natural remedies. The oils will be based on cannabis strains developed by the Israeli company and selected by Teva, which will then market them under a new joint brand.

The oils will be processed according to the drugmaker’s “instructions and stringent standards,” the companies said.

Teva Israel and Cannbit-Tikun Olam said they will collaborate initially for a period of 10 years, with the option to extend by another nine years.

Avinoam Sapir, general manager of Cannbit-Tikun Olam who previously served as CEO of Teva Israel from 2013 to 2020, told The Times of Israel on Sunday that the agreement was “a huge, important deal,” and a show of confidence on the part of Teva in Israel’s budding medical cannabis sector.

“Teva is a huge brand and the cannabis market is a huge potential market for them. In order to be players in this arena… they are going to have another brand with Cannbit-Tikun Olam for medical cannabis,” he said.

Sapir said that the medical cannabis industry in Israel was an evolving market that is set to reach NIS 1.2 billion ($390 million) in 2021, up from NIS 700 million ($224 million) last year.

“We already have about 100,000 patients [in Israel] regularly getting medical cannabis,” said Sapir. He hopes to begin distributing the oils with Teva by the first half of 2022.

Illustrative. The process of making oil from cannabis plants. (Chen Galili)

Sapir said that although medical cannabis is not yet legal in the Palestinian Authority, there were ongoing conversations with Palestinian health officials to allow the consumption of medical cannabis “for specific therapeutic effects, like autism and pain and different disorders.”

He estimated that the market in the Palestinian Authority to be at about 50,000 patients.

The market in Ukraine, with a population of 45 million people, had “huge potential,” but “it depends on how they are going to legalize [medical cannabis],” Sapir said.

“We are proud of Teva Israel’s expression of trust in choosing us as its strategic partner for Teva’s entry into the market for medical cannabis products. I believe that this is one of the most important agreements concluded in the industry in recent years in Israel and that it will position Cannbit-Tikun Olam and Teva Israel as leading players in the ever-growing and developing medical cannabis market in Israel and worldwide,” Sapir said in the announcement.

“The medical cannabis arena is developing and being professionalized at a dizzying pace in Israel, and there is more openness to it in Israel and worldwide,” said Yossi Ofek, CEO of Teva Israel.

“Today, it is clear to many in the pharmaceutical industry and in the medical community that use of oils produced from specific cannabis strains may provide additional treatment options and respond to unaddressed medical needs of patients,” said Ofek.

Sapir said that over the course of 2021, Cannbit-Tikun Olam (a merged company following the 2019 acquisition of Tikun Olam by Cannbit) participated in 35 clinical trials using its cannabis strains to test treatments for different conditions including Crohn’s disease, epilepsy, and symptoms of autism in children.

The Cannbit-Tikun Olam deal with Teva Israel came two weeks after US pharmaceutical giant Pfizer appeared to make a major bet on medical cannabis with the intended acquisition of clinical-stage company Arena Pharmaceuticals for a total equity value of around $6.7 billion.

Cannabis in Israel

Medical cannabis use has been legal in Israel since the 1990s for patients suffering from serious illness, but the last decade has seen an exponential rise in the number of recipients, as the drug gained wide political and public support. Israel has become a global pioneer in medical cannabis cultivation and research, while doctors prescribe cannabis to help with a range of physical, mental and emotional conditions including PTSD, gastrointestinal conditions, palliative end-of-life care, chronic pain, and epilepsy.

Patients must apply for licenses to consume medical-grade cannabis, which they receive through pharmacies. According to the Israeli Medical Cannabis Agency (IMCA), operating under the auspices of Israel’s Health Ministry, 108,013 licenses had been issued in Israel by November 2021, up from 104,907 in October. In February this year, just over 94,000 licenses had been issued.

A worker tends to cannabis plants at a growing facility for the Tikun Olam company near the northern Israeli city of Safed. (Abir Sultan/Flash 90)

“The rate at which the number of patients in Israel is increasing is dramatic,” said Sapir.

He also indicated that although the deal with Teva Israel is initially focused on oils, the opportunities ahead are tremendous. Medical cannabis, said Sapir, “is a very good and efficient drug” amid a growing body of studies showing its benefits.

Recreational use of cannabis is currently illegal in Israel, though the Public Security Ministry partially decriminalized it in 2017, setting fines and treatment for initial offenders instead of criminal procedures.

In June, a bill to decriminalize recreational cannabis use failed to clear a vote in the Knesset plenum, due to opposition from lawmakers in the coalition’s Islamist Ra’am party.

A new version of the legislation was drafted that would create major reforms in the medical cannabis industry in Israel and expand its ease of access, while not decriminalizing recreational use. That bill passed a preliminary reading in the Knesset in October, with Ra’am’s support.

Under the terms of the bill, those granted a license from the Health Ministry will be legally allowed to grow, distribute, and possess cannabis for medical purposes. The new legislation is aimed at overcoming a chronic shortage in medical cannabis available to those with a prescription, due to strict regulations over producers.

Earlier this month, the Health Ministry said it had set up a committee to examine the implications of excluding substances or products containing CBD from the list of dangerous drugs.

The ministry said it would be examining the possibility of removing CBD from the list, meaning that it would be possible to market products containing the compound in Israel, with an emphasis on oral and topical consumption. The committee will additionally examine any potential benefits in products containing CBD, as well as review the testing and supervision processes.

The Knesset agreed in December to form a cannabis committee, pushed by New Hope MK Sharren Haskel, that will explore further legalization and other cannabis-related issues.

Teva legal troubles in the US

Teva Pharmaceuticals, the US subsidiary of Teva, has been facing legal proceedings in a number of US states including New York and California amid ongoing claims that the company and other drugmakers like Johnson & Johnson, Endo International and AbbVie’s Allergan engaged in misleading marketing of opioid drugs and downplayed the risks of addiction.

The opioid use epidemic linked to more than 500,000 deaths in the US in the past two decades. There are currently thousands of lawsuits in the US over the painkillers.

Johnson & Johnson and three major US drug distribution companies are proceeding with a $26 billion deal to settle these claims. Teva was initially part of the group of drugmakers that, in 2019, offered a settlement valued at $48 billion combined to settle. The company offered $250 million in cash and $23 billion in free drugs.

But the $26 billion national deal was struck without Teva, which is now navigating the lawsuits as they come.

In September, Teva’s US subsidiary reached an agreement with the attorney general of Louisiana to pay $15 million to settle the claims.

In New York, a jury ruled on Thursday that Teva Pharmaceuticals contributed to the opioid crisis. A separate trial will follow to determine what Teva will have to pay in the case.

Teva is known for making generic drugs, but the lawsuit focused on Actiq and Fentora, two brand-name fentanyl drugs approved for some cancer patients. Teva repeatedly promoted them more broadly for other types of pain, in a “deceptive and dangerous marketing strategy,” the lawsuit said.

Teva said it “strongly disagrees” with the verdict and plans to appeal.

Earlier this week, Teva announced the launch of the first available generic version of a nasal spray used to treat opioid overdose. Naloxone hydrochloride nasal spray, currently sold under the brand name Narcan, is used in emergencies to block the effects of opioid drugs.

In mid-December, a US federal judge rejected OxyContin maker Purdue Pharma’s sweeping deal to settle thousands of lawsuits over the toll of opioids

Yaakov Schwartz, TOI staff, and agencies contributed to this report.

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