Leading health organizations are now calling on the British government to stop the deal between the UK firm that manufactures medicines to treat lung diseases and Marlboro, one of the world’s largest cigarette manufacturers.
In an attempt to beat a compelling offer from US private equity firm Carlyle, Marlboro producer Philip Morris International (PMI) raised its offer for pharmaceutical business Vectura to more than £1 billion ($1.4 billion) on Sunday.
This new offer comes only weeks after the pharmaceutical industry announced that it would no longer sell Marlboro tobacco products in Britain within a decade.
Smoking deal with an asthma inhaler maker
Meanwhile, Philip Morris International (PM) announced in a statement that its offer to Vectura had risen to £1.65 ($2.29) per share, putting the asthma inhaler manufacturer at £1.02 billion ($1.4 billion).
This deal will help the tobacco company achieve its goal of generating more than half of its net income from smoke-free goods like e-cigarettes and respiratory medicines within four years, increasing from roughly 25% to the present. PMI nowadays has over 175 markets where it sells cigarettes.
For firms like Novartis (NVS) and GlaxoSmithKline (GSK), Vectura has produced 13 inhaled medications to treat respiratory diseases, including asthma. It is also collaborating with Inspira Pharmaceuticals, another UK firm, on an inhalation therapy for Covid-19.
PMI plans to manage Vectura as an independent business entity that will serve as the foundation of PMI’s inhaled therapeutic products.
PMI to expand horizons
There’s pressure for tobacco companies to diversify for several reasons. First, the number of smokers has declined. Second, governments now seek to decrease smoking’s prevalence and risks, and finally, investors are removing tobacco goods from their assets.
In response, Philip Morris International has also put $8 billion into developing cigarette alternatives, together with its trademark IQOS brand, which heats instead of burning tobaccos. They also purchased Fertin Pharma, which makes oral medicines to cure pain, allergies, and other illnesses.
In 2008, Philip Morris International (PMI) separated from New York’s Altria. Philip Morris USA has long been under Altria as it offers cigarette brands like Virginia Slims, Marlboro, Parliament, and Merit in the United States.
Health organizations are suspicious of Philip Morris International’s objectives. They have asked the British government to reject the Vectura deal, saying that it would give the cigarette industry too much power over public health policies in the UK.
According to Michelle Mitchell, CEO of Cancer Research UK, in her statement last month, it’s odd that a tobacco corporation wants to get involved in the lung health sector when their products are the leading cause of lung cancer. She even suggested that the PMI could instead stop selling their products if they want to help.
Vectura had also recommended the Carlyle bid to shareholders on Friday, as they express concerns about being under Philip Morris. They announced that it would be in better hands if owned by Carlyle. However, the firm has also retracted the same recommendation on Monday. Although, they still emphasized that they have no plans to endorse the Philip Morris International offer at this time.
According to British authorities, if competing bidders do not submit final bids by Tuesday, the takeover fight will proceed to auction.