Special Report: The biopharma company has signed a binding term sheet to enter into a joint venture with the BrasilInvest Group, paving the way for distribution into the huge Brazilian market.

“Seed-to-medicine” medicinal cannabis stock MGC Pharma (ASX:MXC) has made a key strategic announcement this morning, sealing the deal on a new agreement that will form the basis of a profitable push into Latin America.

The 50/50 joint venture will see MXC leverage the benefits of BrasilInvest’s extensive retail distribution network in Brazil, where it has operated as a successful merchant bank since 1975.

MGC co-founder and managing director Roby Zomer called the joint venture a “key milestone” in the company’s growth strategy.

The company’s half-share of the JV will also allow it to launch into Latin America on commercially attractive terms.

“Capturing a 50 per cent share of the retail margin for our company in Brazil and other Latin American countries is a very commercially significant development for MXC,” Zomer said.

“The new JV company will be able to register MGC Pharma’s pharmaceutical products in Brazil. We can then leverage BrasilInvest’s established reputation and contact base in Brazil market them into wider Latin America.”

Global ambitions

The deal gives MXC a sound framework to establish its “seed-to-medicine” distribution strategy in a new market, where it has already found success in Australia and Europe.

As a Brazil-based entity, the JV will be registered as an importer and product owner of MGC products, with regional distributors appointed as necessary.

The JV company has already received an import permit from Anvisa, the National Health Surveillance Agency in Brazil.

It also has the first purchase order in place from prescriptions that were issued by doctors in Brazil, and MGC will ship its first products to the Brazilian market in early December.

Ultimately, the deal gives MGC an early competitive advantage in the Latin American market for medicinal cannabis, which is estimated to reach $US8.5 billion by 2028.

The company said its JV agreement will allow it to capture “a significant share of retail sales margin in key medicinal cannabis growth markets, in addition to its existing wholesale business model”.

And it has the ideal partner to execute on that strategy in BrasilInvest, headed by chairman and principal investor Mario Garnero, which will leverage its extensive networks and commercial operations in the country.

“We look forward to implementing our seed-to-medicine strategy in this new marketplace and hope to replicate the success we have experienced in both the Australian and European markets thus far,” Zomer said.

This story was developed in collaboration with MGC Pharma, a Stockhead advertiser at the time of publishing. This story does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.