Biopharmaceutical company MGC Pharmaceuticals (ASX: MXC) is entering the Chinese health market, inking a deal with e-commerce import platform YuShop Global to sell its range of cannabis-based nutraceutical products.
The company today announced the signing of a marketing and distribution agreement, under which YuShop will provide a “turn-key” service including sales, marketing, logistics and customer service within China.
The nutraceutical products the Chinese e-commerce retailer will sell include CBD hemp protein powder, BCAA CBD capsules, CBD water soluble solution and the CBD herbal V-Pen.
The contract does not contain specified minimum contract amounts or volumes, with YuShop being responsible for collecting and transferring sales proceeds to MGC immediately post-completion of transactions.
YuShop has already commenced an eight-week market test campaign to gather data to enable the launch of a full-scale marketing and sales campaign, which is scheduled for June.
The Chinese health consumer market
YuShop specialises in the import and commercialisation of innovative health and wellness consumables, targeting sales directly to “the middle-class and affluent Chinese consumer” through its cross-border digital commerce platform.
In addition to its online and app-based platform, YuShop has a network of 1,500 retail channel partners including a luxury spa chain.
According to market data, China hosts a large market of more than 350 million middle-class vitamin and supplement consumers, which are forecast to purchase more than US$20 billion (A$27.8 billion) of these products in 2020.
MGC said foreign products are currently in high demand due to the perceived “superior quality” and “reduced counterfeit products often associated with domestic brands”.
YuShop chief executive officer Nathan Halsey said MGC’s current product offering, along with its product road map, is expected to “lead a technology-backed CBD product demand surge in China”.
“Where most CBD brands today are limited to CBD oil tinctures and gel capsules, MGC Pharma’s expanded line of CBD-infused protein powders, multi-purpose vitamins and nutraceuticals are not only advanced for the UK and North American markets, they are in a category of their own currently in China,” Mr Halsey said.
First CannEpil and CogniCann orders
Earlier this week, MGC announced it had received a controlled drug import licence permit to import its CannEpil product, used to treat patients suffering from drug-resistant epilepsy, into the UK.
This follows the company’s approval in October 2018 to market the product in Australia.
In the same announcement, MGC confirmed it has received its first formal purchase orders for CannEpil in both countries through its licenced distribution partners.
These initial purchase orders also included the company’s CogniCann product, designed for patients with mild dementia and Alzheimer’s disease, with the combined orders equating to more than A$200,000 in total revenue.
The delivery of products to fulfil these initial orders are scheduled for this month, MGC stated.