Why Big Pharma Is Worried About CBD

Why Big Pharma Is Worried About CBD

Successful companies build moats – ones that suppress the competition. Failing to create these moats can lead to serious losses for the company and investors. Some of these moats come naturally, and are generally there because the company has a unique advantage over its competitors.

For instance, in the early days of the iPhone, Apple had tremendous power over the market, and it took several years for other companies to catch up and create real competition. But usually, companies that experience that kind of competitive advantage don’t hold that position for too long. Soon enough some other company enters the industry and carves up a chunk of the market share.

A long-lasting competitive edge usually comes from a company’s ability to fund the cost of complicated compliance policies and comply with state and federal legislation. The cost of compliance can be very high in some industries, and naturally, that puts many companies at a disadvantage, leaving only the most established players to rake in the money.

Another example is the banking industry, which is dominated by a few large institutions with very few newcomers. The regulatory framework is so complex, and so expensive for the banks, that competition is eliminated by the process.

Basically, the lobbyist horde that crowds Capitol Hill is responsible for building extensive legislative moats to govern entire industries and individual companies they represent. This is true of every industry from tobacco to Big Pharma.

Did you know that global spending on pharmaceutical research is nearing $8 billion in 2019?

And as you can imagine, with so much money going into research and development, the biggest drug companies have yielded significant patentable intellectual property, and are able to form huge moats that protect their market share. In the age of legal marijuana and non-psychoactive hemp, Big Pharma is actively building patent moats in a broad field of commercial cannabis.

From the way the things look the marijuana industry is set to become a significant part of the health sector, with serious money going into research for new products. The best part is, product developers can grab sections of the market share away from the pharma companies and there’s little anybody can do to stop it from happening.

CBD is much more than an area of interest and anybody paying attention to consumer interest can see the potential to create products that sell in today’s market. To give you a clear example, let’s look at the new epilepsy medication that uses CBD.

CBD will threaten the shallow Epidiolex moat

Global sales of pharmaceutical products have risen close to $1 trillion, and some parts of this market (e.g. skin care, fitness, etc.) have already been filled with CBD products that work just as well as pharmaceuticals. The U.S. Food and Drug Administration approved a CBD drug called Epidiolex to treat one form of epilepsy, and this led to significant changes in attitudes toward cannabis in general, and of course, legal policy was also adjusted. For example, the Travel Safety Authority recently announced that they won’t be restricting hemp-derived CBD at the airports. This of course, will make CBD more prevalent throughout the U.S., as