Perrigo Company plc (NYSE: PRGO), a global provider of affordable over-the-counter health products is entering the cannabidiol (CBD) market through a strategic investment in and long-term supply agreement with Colorado-based Kazmira LLC. Perrigo is also a leading producer of generic prescription pharmaceutical topical products like creams, lotions, and gels. The company’s second-largest category for sales is pain and sleep aids. Perrigo reported $1.3 billion in sales in the company’s last quarter.
Perrigo’s minority equity investment kicks off the first phase of the partnership where the two companies will collaborate to scale-up Kazmira’s facilities and laboratories, in accordance with current Good Manufacturing Practices (“cGMP”), to produce THC-free CBD from industrial hemp that meets Perrigo’s high standards for reliability and consistency. In the second phase of the partnership, Perrigo will work to launch THC-free hemp-based CBD products in a number of global markets, while leveraging its supply agreement with Kazmira, which is exclusive for the U.S. store brand market.
Perrigo CEO and President Murray S. Kessler said, “Science-based natural products are one of Perrigo’s 5 core growth pillars and THC-free CBD products fit perfectly into our self-care strategy. Until now, this emerging industry has lacked the regulatory expertise necessary to bring a trusted supply of CBD to market. Some have even described it as the wild, wild west. We believe that Kazmira’s deep understanding of CBD science, combined with Perrigo’s regulatory expertise and investment, allows us to lead the industry through the next phase of development of rigorous quality standards and proactive engagement with regulators.”
Kessler continued, “Consumers and retail customers want CBD products and we believe they deserve a reliable source of broad-spectrum, THC-free CBD they can depend on. Whether it is the specific concentration of CBD or a THC-free claim, consumers must be able to trust statements made on the label of a product and we believe Perrigo can provide this to the marketplace. We are excited to partner with the team at Kazmira, who share our passion for developing a science-based, regulatory approach to unlock the full potential of this emerging industry. This collaboration offers a great opportunity to enhance profitable growth for our shareholders over the long-term.”
Kazmira Co-CEOs Dr. Priyanka Sharma and Pulak Sharma said, “We are proud to launch a strategic relationship with Perrigo, the industry leader in delivering safe and effective OTC self-care products. As we continue to grow our business, we look forward to leveraging Perrigo’s regulatory and manufacturing expertise in concert with Kazmira’s proprietary technology for large-scale biomass processing and our established reputation for producing and marketing the highest quality THC-free CBD products.”
In addition to the supply agreement, Perrigo will acquire an approximate 20% equity stake in Kazmira for $50 million with $15 million paid upon close of the transaction and the balance within 18 months.