Creso Pharma Ltd (ASX:CPH, OTCQB:COPHF)’s integration activities with Health House International Ltd are progressing well, with the company continuing to expand its international presence and product approval initiatives through its established Swiss division.
The integration is expected to significantly increase CPH’s revenue. HHI is part of the company’s broader strategy to integrate businesses with complementary strengths across manufacturing, processing, formulation, sales and distribution.
On November 21, CPH entered into a scheme implementation deed to acquire the whole of the issued capital of HHI, an international distributor of medical cannabis.
Read more: Creso Pharma inks scheme implementation deed to acquire Health House International
CPH completed the transfer of funds to relinquish HHI’s debt to Zelira Ltd and will also seek shareholder approval for the issue of shares in order to settle the Zelira debt.
This will leave HHI in a strong financial position prior to the completion of the Scheme Implementation Deed.
Expansion opportunities and increased revenues
Creso Pharma is confident that the HHI acquisition will provide it with expansion opportunities related to medicinal cannabis sales.
In this aim, CPH will leverage HHI’s existing suite of strategic licenses to unlock growth across the Australian and UK cannabis markets.
Creso Pharma also expects its revenue profile to significantly increase.
During FY2022 (year ended June 30 2022), HHI generated A$15,644,524 in revenue which represented an increase of 85.1% on FY2021 (FY2021: A$8,449,564) and a 161.6% surge on FY2020 (FY2020: A$5,978,940).
Inclusion of HHI’s revenue in the pro forma Creso portfolio, takes Creso’s unaudited last quarter annualised revenue (based on September 2022 quarter) to A$24 million and growing.
Creso Pharma’s managing director and CEO William Lay said, “Creso Pharma has continued to progress a number of concurrent work streams, which have the potential to unlock considerable value for shareholders, as well as an increase in the company’s revenue.
“Work to acquire HHI is well progressed, with the Zelira debt now relinquished. Further, we continue to work with management towards growth opportunities upon the completion of the acquisition.
“Through the company’s Swiss division, the fast and efficient achievement of the anibidiol® product range registration in Korea exemplifies the excellent collaborative work between Creso Pharma and Providence Animal Health.”
South Korea product registration completed
In further good news for Creso and its shareholders, Creso has achieved product registration for its entire anibidiol® product range in South Korea as complementary feed.
The process was completed in collaboration with commercial partner Providence Animal Korea Ltd and comprises all products including anibidiol® 2.5mg, 8 granules anibidiol® 500, 3,500 and anibidiol® dogs biscuits.
Finalisation of the registry process follows a Letter of Intent between Creso and Providence and the subsequent signature of a Commercial Term Sheet on August 8, 2022, for the registration, importation and commercialisation of Creso Pharma’s anibidiol® product suite for the South Korean market.
Providence Animal Health Korea is a leading supplier of pet food products in South Korea and has an established customer base focused on B2B and B2C verticals.
Through B2B channels it covers veterinarian clinics and veterinarians and animal health shops in South Korea, particularly those that emphasise the sale of high-end prescription diets and pet foods. The group also has a strong consumer following through its established ecommerce channels.
Creso’s anibidiol® products are developed and produced in Switzerland. The products for South Korea will be exported from Switzerland and sold by Providence Animal Korea Ltd in Korea through veterinaries, clinics and via e-commerce.
The commercialisation and first sales of the anibidiol® product range in South Korea is expected to start during Q1 CY2023, underpinning the company’s Switzerland’s divisional revenue.
The storage and supply of the anibidiol® product range will be undertaken at Providence Animal Health’s GMP-certified pharmaceutical-grade facility in Anseong, Kyunggi-do.
The facility is one of the most advanced in South Korea and is used by large multinational companies including Bayer (ETR:BAYGN) and Pfizer (NYSE:PFE) for medicine and medical device storage.
Entry into the South Korean market will provide access to the growing domestic pet market, which in 2022 had an estimated 5.2 million dogs and 2.3 million cats registered as domestic pets.
“We are very pleased having achieved registration of the anibidiol® line in record time in Korea. This will address the substantial market of pets in need of plants-based complementary feed to support the management of stress situations,” Providence Animal Health Korea’s CEO Juneyoung Park said.
Lay was also buoyed by the partnership.
“This commercialisation initiatives and product launch in Korea are of strategic importance to Creso Pharma and the company’s ongoing international expansion opportunity.
"We are confident that the introduction of our leading, Swiss manufactured range will assist in addressing the needs of the Korean pet market, while laying a strong foundation for further expansion in the Asia-Pacific region.
"We are excited to continue working with such a well-established partner in as Providence Animal Health in Korea.”