Early this month, Neptune Wellness Solutions Inc (NASDAQ:NEPT) moved into the cannabis wellness sector. In a recent news release, Neptune joined hands with Lonza in an IP licensing deal. The deal will also incorporate sale of capsule technology to bolster Neptune’s cannabis production capacity.
Neptune Wellness Solutions to add manufacturing facility
Lonza is a life science company that specializes in capsule technology. The firm’s proprietary capsule technology provides one of the best capsules in the market today. Basically, the firm creates capsules called Licaps. The liquid-filled creations utilize hard-capsule technology.
Neptune Wellness Solutions is one of the leading firms in extraction and purification capabilities for cannabis. The firm has significant capacity which can handle large scale production of cannabis oil.
According to the release, the two firms will combine their strengths to dominate the niche. Particularly, Lonza has a capsule production capacity of up to 200 million pieces in a single year. With the license agreement, Neptune hopes that it will successfully dominate the Canadian cannabis industry. Already, Neptune is setting up space at its cGMP facility that is 50,000 square foot in size. The space will specifically focus on production cannabis oils.
The switch to the cannabis industry
Commenting on the developments, Jim Hamilton, President and CEO of Neptune said the move aligns with their overall strategy. Essentially, the goal is to offer value-added, differentiated product forms to the cannabis market.
Further, Hamilton notes that groundwork is already in progress regarding the construction of a new manufacturing line. Interestingly, once the whole facility is in place, it will represent a substantial investment running into $2.5 million. The investment incorporates IP transfer and other components like site infrastructure.
In a recent interview, Hamilton said that the decision to switch to the cannabis industry was strategic. According to him, the industry is much more lucrative compared to the Omega 3 Krill Oil previously produced. Interesting, Hamilton is confident that the strategy will pay off since Neptune has a wealth of experience in wellness. Hamilton hopes that profits will start trickling in very soon.
