Philip Morris strikes knockdown deal on inhaler maker Vectura

Philip Morris International has offloaded Vectura for just £150 million, three years after its contentious £1 billion acquisition of the respiratory drugs company triggered a backlash from the public health sector.
The maker of Marlboro cigarettes has sold the Chippenham-based company to Molex, a US company that owns the contract development and manufacturing organisation Phillips Medisize, in a setback for its transformation away from tobacco.
Philip Morris’s acquisition in July 2021, which topped an offer from Carlyle, a private equity firm, has been plagued by criticism as Vectura develops inhalers, including for smoking-related conditions.
A coalition of public health bodies, clinicians and charities wrote to Vectura’s shareholders and directors at the time to warn that it could “hamper [the company’s] ability to continue operating as a viable, research-oriented business”.
Jacek Olczak, Philip Morris’s chief executive, has staunchly defended the deal, saying Vectura was central to Philip Morris’s diversification into healthcare and wellness, and away from cigarettes.
The Times reported last year that Vectura had suffered a series of senior departures, amid other setbacks, shortly after the tobacco group booked a $680 million impairment charge and said it no longer expected to reach more than $1 billion of net revenues for its wellness and healthcare business by 2025, a key target at the time of the Vectura deal.
The Wall Street Journal reported in September last year that Philip Morris was considering selling a stake in Vectura.
Announcing the sale on Tuesday, Philip Morris hit out at its critics, saying that “despite the investment and commitment to developing products and therapies vital to patients, unwarranted opposition to PMI’s transformation has impacted Vectura’s scientific engagement and commercial relationships”.
Olczak, 59, said Phillips Medisize’s experience in pharmaceutical drug delivery devices and its global manufacturing base meant it was “best placed to lead Vectura into the future, while releasing it from the unreasonable burden of external constraints and criticism related to our ownership”.
Philip Morris expects to record a loss of about $220 million during the third quarter associated with the deal, which is expected to close by the end of the year.
Shares in Philip Morris were trading down 2.5 per cent at $122.80 in New York.
Nicholas Hopkinson, chairman of Action on Smoking and Health, the charity, and professor of respiratory medicine at Imperial College London, said that Philip Morris’s “attempt to reinvent itself as a company promoting health has been a repulsive spectacle”.
One source familiar with the acquisition in 2021 said last year that Philip Morris had been “so arrogant, they didn’t listen at the time on how difficult this is. Having a tobacco company as your parent puts so many more hurdles in place. They have taken a great company and destroyed value”.
Philip Morris acquired Fertin Pharma, a European business, for about $820 million at about the time of the Vectura deal.
The remaining units of Vectura Fertin Pharma, the subsidiary it created, will continue to operate as a separate company under PMI’s ownership, focused on oral consumer health and inhaled prescription products for therapy areas including pain management and cardiovascular emergencies.
The sale includes £150 million upfront and potential deferred payments of up to £148 million. The deal includes agreements to develop Vectura Fertin Pharma’s inhaled therapeutics pipeline.
The sale of Vectura raises uncertainty about the future of a new £58 million inhalation centre in the Bristol and Bath Science Park, for which planning permission was secured two years ago. Philip Morris had said then that the building would be completed in 2025. Molex declined to comment on the centre on Tuesday.