Special Report: An exclusive distribution agreement with Anden Bio Naturals S.A. is proof of the company’s ability to drive distribution into South America.

For medicinal cannabis company MGC Pharma (ASX:MXC), South America is proving to be a lucrative market.

This week, the Europe-based company — which specialises in a ‘seed-to-medicine’ pathway for its medical cannabis product range — announced an exclusive new distribution agreement into the Peruvian market.

By sealing the deal with leading Peruvian distribution company Anden Bio Naturals S.A., MXC will gain access to Anden’s distribution channels; a 7,500-strong network which includes one of the largest pharmacy retailers in Peru.

Anden runs operations across the US, Spain and Greece and is the first importer of medicinal cannabis products into Peru, through an agreement with the Ministry of Health.

The Anden network in Peru also expands to medical clinics and private insurance, leaving MGC Pharma products in “prime position” to drive sales through different providers. Those include an oncological (anti-cancer) platform “with over one million affiliated patients”, MXC said.

The term of the distribution agreement is for five years, and MXC will have the opportunity to produce a white-label line of nutraceutical products for which Anden will have exclusive distribution rights in Peru and Bolivia.

It also comes on the heels of a prior deal last June, which provided MXC with distribution access to the huge Brazilian market, where medical cannabis was legalised in November 2018.

NOW READ: Pot stock MGC Pharma is racing into Brazil with new distribution deal

More broadly, estimates put the size of South America’s medicinal cannabis market at more than $US8bn by the end of the decade.

In view of that, it makes sense for MXC to lay the groundwork so that the company is in position to reap outsized returns when the market expands.

Along with South America, MXC has also received distribution approval for one of its two core products – CannEpil – into Ireland.

Managing director Roby Zomer expects the efforts to expand its distribution network will result in an “immediate positive impact to cashflows”.

“We look forward to updating the market on further key milestones towards establishing MGC Pharma as a leading international producer and supplier of phytocannabinoid-based medicines,” Zomer said.

>> NOW WATCH: 90 Seconds With… Roby Zomer, MGC Pharmaceuticals


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.