The health industry seems to be moving way from opioids as a pain-treatment towards cannabis — but it’s the community’s opiate habit that’s been good for TPI Enterprises.

The poppy-grower has just reported a 280 per cent jump in half-year revenue to $22.7 million

It’s also reduced a $7 million half-year loss in 2017 to a $4 million loss.

A shift from Tasmania to growing in NSW, South Australia and Victoria has generated better poppy harvests and lower transport costs, while the acquisition of a drug maker in Norway is behind a big ramp in revenue.

TPI (ASX:TPE) grows poppy straw which is turned into narcotic raw material, which is sold or used in the Norwegian factory to make active pharmaceutical ingredients (API).

That is either sold or, again in Norway, turned into a final dose formulation, or the final drug.

It also sells poppy seeds.

The jump in revenue was almost all due to active pharmaceutical ingredient (API) sales.

“The principal strategic benefit of acquiring the Group’s Norway operations [in October 2017] was to enable the group to fast track its entry into the API market for codeine phosphate and pholcodine,” the company said.

“The acquisition has delivered a number of new API customers and fast-tracked regulatory approvals to access other API markets.”

The low cost of producing raw material in Australia combined with an upstream drug maker is helping to increase margins, the company says.

TPI shares rose 9 per cent after the annual report landed to $1.55.

TPI shares over the last six months.

US opioid crisis

The company does not appear to have been affected by any pull-back in demand driven by public fears about crisis levels of opioid addiction in the US.

The problem was labelled a public health crisis last year after 63,600 people died from overdoses in 2016.

In June the US House of Representatives passed a package of more than 50 Bills designed to help communities fight opioid addiction. The package is still before the Senate.

TPI says there has been a drop in demand from the US for thebaine, an opioid used to make oxycodone and also the drug naxolone, which can reverse an opioid overdose.

In the first half, TPI harvested its first large scale thebaine crop.

It plans to start supplying small volumes of the raw material to customers this year and start pushing it into the US market predominantly for the anti-addiction market.

TPI plans to add to its drug portfolio in the next two years morphine sulphate, dihydrocodeine tartrate, codeine base and naloxone.

Stockhead is seeking comment from TPI.

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