Tobacco firm PMI divests Vectura at a loss after backlash

Philip Morris International (PMI) is selling inhaled drug specialist Vectura to Molex Asia Holdings for a fraction of the £1.1 billion ($1.45 billion) it paid for the business three years ago.

The tobacco group – best known for brands like Marlboro cigarettes – has agreed to divest Vectura to the electronics group for £150 million ($198 million) upfront and potential milestones of another £148 million after experiencing "unwarranted opposition" to its ownership of the company. It has previously taken a $680 million accounting charge in connection with the deal.

PMI's takeover of the company was met with consternation by health charities, public health specialists and doctors' organisations – including the European Respiratory Society (ERS), Asthma UK and the British Lung Foundation – which had questioned the ethics of placing a pharma company in the hands of a big tobacco group. One concern was the potential for legitimising tobacco industry participation in health debates.

In a statement on the decision to divest the business, PMI's chief executive Jacek Olczak said that the takeover had played a key role in developing a pipeline of respiratory therapeutics at its Vectura Fertin Pharma subsidiary.

"We remain committed to driving innovation in this space over the long term," he asserted, but acknowledged that the backlash against PMI's ownership of Vectura had compromised the unit's "scientific engagement" and its ability to secure development and manufacturing contracts, a key part of its business.

When the acquisition was first debated, there had been suggestions that Vectura scientists' participation in medical meetings, publishing of research in medical journals, and establishing links with academia could be under threat, due to policies of non-engagement with the tobacco industry.

Molex is the parent of Phillips Medisize, which also operates in the contract development and manufacturing organisation (CDMO) market, specialising in products like autoinjectors, wearable pumps, continuous glucose monitoring systems, and at-home diagnostic tests.

"With its experience in pharmaceutical drug delivery devices and its global manufacturing footprint, Phillips Medisize is best placed to lead Vectura into the future – while releasing it from the unreasonable burden of external constraints and criticism related to our ownership," said Olczak.

Phillips Medisize chairman Paul Chaffin said the takeover of Vectura would give it a broader portfolio of inhaler device technologies and – with its greater reach and scale – bring Vectura's technologies to more patients around the world and "support our mission to help people live healthier, more productive lives."

PMI has long argued that it wants to go "beyond nicotine" and reinvent itself as a company focusing on health and wellness products, with a target of making sales of $1 billion next year from those activities. It should be noted that the Vectura Fertin Pharma website currently only lists nicotine replacement therapy as a programme in its inhaled therapeutics pipeline.

The pharma unit – which will be renamed after the Vectura divestment – is also developing cannabinoid (CBD) products for medical applications.

Molex said the acquisition is expected to close by the end of 2024, subject to regulatory approvals and other customary closing conditions.

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