The demand for medical cannabis is growing in Brazil and the market moves in response, facing many social stigmas and regulatory difficulties. One company that has embraced this challenge is Endogen, one of the assaults of Green Rock. Founded in 2022 by Lukas Fischer, Claudio Lottenberg, Dirceu Barbano and Luis Otávio Cabloco, Endogen is a healthtech for medical cannabis and nutrition products that combines education, science and technology.
Healthtech stands out for the competence with which it deals with the challenges of the medical cannabis market, with an authoritative discourse before the medical profession, well dissociating the issue of use for medical purposes from the idea of recreational use. Another strength lies in the generation of demand, which is well answered by the way in which Endogen is able to circulate through large pharmaceutical chains and combine a product platform that includes supplements and nutraceuticals, following a thesis of body care as a whole, maximizing results for the patient and for the company.
In an exclusive interview, the co-founder and CEO of Endogen, Lukas Fischer, told a little about the company's history, purpose, and plans, in addition to sharing his vision of the current medical cannabis market in Brazil, raising the main challenges, comparing with the international scene, and addressing the company's prospects for the coming years in relation to regulatory difficulties.
Check out the full interview below:
What is Endogen's story? What did you see in the medical cannabis market?
The name Endogen comes from the word “endogenous”, a term used to address substances and processes that originate within an organism. It's what comes from the inside out. When you say that you want to stimulate endogenous factors, you can stimulate organs, systems, and tissues in the body. Generally, this stimulus is induced through receptors. Cannabinoids, substances present in cannabis, mainly stimulate CB1 and CB2, which are the main receptors of the endocannabinoid system. We are expanding this concept beyond cannabinoids, by working with bioactive compounds and nutraceutical supplements that can potentiate effects on the body beyond the endocannabinoid system, acting on other systems, such as the immune, digestive, cardiovascular and endocrine systems.
That's when the idea of “let's position ourselves” came up as, I understand today, the first and only young company that has this approach. We work with medical cannabis, but since this is a very restrictive category in the sense that there are many regulatory barriers, we complement this line with amino acids, vitamins, minerals, bioactive compounds, proteins and fibers. Our idea is to create, together with the cannabinoids, a homeostasis, an internal balance. That is our concept and position.
How do you see the medical cannabis market in Brazil today? What is the biggest challenge?
There are four ways for you to consume cannabis in Brazil. One of them is the black market, which is very large and should still represent 80% of consumption in Brazil today. In addition to it, there are associations that, based on injunctions, can cultivate cannabis and sell with prescription to members who pay a fee. This production is not pharmaceutical-grade, but it is already more controlled and guarantees access for those in need.
In addition, there is the own individual import model, through RDC 660, in which you can, with a prescription, make a request with Anvisa to import the product. The fourth model, from RDC 327, is the Endogen model. In it, the supplier creates a technical dossier, must register this product and request a sanitary authorization to distribute in pharmacies in large quantities. That's a more recent model and that's what we're identifying ourselves with.
In terms of growth, the market is growing easily 150% each year. In the pharmacy, which is that last model, the growth is almost 300%. It is exponential, but due to the low supply, there are few products in pharmacies. Even so, today the biggest growth is in this sale in pharmacies. The illegal market will always exist. I believe that the self-import model will gradually decrease as the supply at pharmacies increases, because it may no longer make sense to import for your own use if you can buy at any pharmacy for the same price.
The issue of associations, injunctions, cultivation, is unknown. Tomorrow the president may pass a cannabis cultivation law. Anything is possible, but it's a political scenario where we don't know what the prospects are. The pharmacy model is certainly the fastest growing and should represent around 800 million in terms of revenue this year 2023.
How do you compare the international market with Brazil?
We are very far from the American, Canadian and European markets. We can't even compare. The barrier to product entry into Brazil is very high: you need a blue prescription that is controlled, the substance is a black stripe, difficult to access... these are very limiting factors.
I just returned from a cannabis and nutrition fair in Los Angeles and there are specialized stores where you enter, show your ID and buy the products without any restrictions. Here we're talking about CBD, cannabidiol, which has no psychoactive effect. There you can buy drinks, drinks, gummies, and cannabis gum with high THC content at these specialized stores. In every supermarket and pharmacy, CBD, which we're working with so hard here, is something my 10-year-old son could buy. This is a commodity, something without a prescription, considered a dietary supplement, not a medicine. This obviously makes it a lot easier. The growth and development of this category, for regulatory reasons, is still very timid in Brazil.
How many Endogen products are already approved by Anvisa?
We have a health permit and today we sell a plant extract of cannabis sativa 200 mg in 10 ml in large pharmacy chains. We have another one under review at Anvisa this week of the same product in 30 ml, the second product to come, in addition to eight new products registered. We expect to receive the first return from Anvisa at the beginning of the second semester with the expectation that at the end of the year we will have some of these eight products already authorized for import so that at the beginning of next year Endogen can have a portfolio that I could call the largest portfolio of medical cannabis in Brazilian pharmacies.
Regarding the Anvisa process, what is the biggest difficulty?
Today the situation is as follows: for you to bring a product from outside, it needs a pharmaceutical grade. What does that mean? It must have a GMP (Good Manufacturing Practices), which is a certificate proving that this product is made in a pharmaceutical environment. This is a very expensive production because it involves a lot of standards. The ideal would be if Anvisa established that it is an herbal product or supplement, as in the United States and Canada.
People are afraid and the problem is in the word “marijuana”. We need to demystify that term. We don't talk about marijuana, we talk about medical cannabis. It's an extract from a plant, how is that a black stripe? Regulatory migration from a black-striped product to an herbal medicine with a red stripe, a simple medical prescription, would be better. Today, this black-striped product that we have here does not allow shipping on e-commerce, for example, because you have to keep the duplicate copy of the prescription at the pharmacy. This is another limiting factor when buying the product.
Anvisa created its own category for this product, called “cannabis-based products”. So there are medicines, foods, and that category in the middle that nobody knows exactly how to treat. Ideally this would go to the supplement category and not to medicine. To develop the medical cannabis market in Brazil, it would be important to relax the regulatory requirement. I'm not talking about giving up quality, but about reducing the requirement in terms of prescribing for the patient.
Besides, it's not just doctors who should prescribe it. Dentists, nutritionists, and nutrologists should also be able to prescribe this product in a simpler way. Coupled with this, registration time would need to be reduced. If we had a simpler way to launch quality products with less time, this would increase product supply, prices would fall and the patient would be able to access it in a simpler way and with less bureaucracy.
We know that there is a very strong stigma because of recreational use. What do you understand that is missing before we reach a higher degree of maturity?
I think that starts with the doctor. We must continuously stimulate and educate the prescribing medical community. Many doctors don't know what medical cannabis is and are biased. We have 300, 400 thousand doctors in Brazil... how many are prescribing? Between 8 and 10 thousand. We need to increase the prescribing medical base and provide prescription aptitude for nutritionists, nutrologists, and dentists who know and study the benefits of cannabinoids and the endocannabinoid system. That's why we're holding several congresses. We hold “mini meetings” where we invite doctors to restaurants with speakers. Yesterday in Brasilia we did one for 25 doctors. We are going to the Medical Cannabis Fair and on the same weekend we will also go to the São Paulo Sleep Congress.
So we acted with an aggressive scientific agenda to be able to show these health professionals the benefits of this relatively new category. This is something that helps with this demystification. Today you can't advertise any such product and we can't make direct contact with the consumer. So we understand that this process must take place through the opinion forming doctor.
Where do you see the greatest potential of medical cannabis?
We hear a lot in the media about complex diseases such as Alzheimer's and Parkinson's, in addition to palliative oncology treatments, but they have very limited market potential. The mainstream is in post-pandemic diseases, such as anxiety, insomnia, depression, pain, and stress. Out there is a huge market where you replace a chemical with an extract from a plant. A clinical study is now being carried out on migraines, for example.
In the second semester, we at Endogen have a plan to structure and participate in a clinical study of endometriosis and another in the area of anxiety and insomnia. To this end, we are waiting for a review of our current legislation, from RDC 327, because it was promised that it would come out at the end of last year. We want to see exactly what are the requirements to conduct such a clinical study, what steps we have to complete, what patient sampling is, how we should structure it. Our plan is to transform a cannabis-based product into a cannabinoid-based medicine if that's the legislation. We don't believe that now Anvisa will determine that this is a supplement, it would be very optimistic on our part.
What are Endogen's next steps?
There are steps that we can achieve with our own efforts and there are steps that remain more in the sphere of utopia. For example, this idea of “we are going to set up a marketplace for RDC 327/19, an e-commerce of medical cannabis for Brazilians” is not feasible. Today we can't. There are already proposals and initiatives in this regard, but today it is not yet possible. Then we're going to do what we can.
Our next step is to increase the portfolio, from one to ten products. We want to be the company with the largest medical cannabis portfolio in Brazil in the pharmacy. The second step is to increase distribution in pharmacies across Brazil. We have more than 100,000 pharmacies in the country and we want to join all the renowned chains, in all regions and states. The third step is to increase our demand generation team, which visits doctors and disseminates the concept. Those are our three main steps. Then, as the law changes, we adapt with clinical studies, new products, and new forms of sales.
