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Philip Morris International buys UK pharmaceutical company Vectura in a deal that will see a company synonymous with Big Tobacco buy out a company that makes asthma inhalers. The American Lung Association, Asthma UK and other health groups have spoken out against the takeover.
The purchase “is the last objectionable choice of a company that has profited from users’ addiction to its deadly products,” said leaders of the American Lung Association and the American Thoracic Society. in a joint statement.
“We are deeply concerned that PMI is using the inhalation service technologies developed by Vectura to make their tobacco products more addictive,” they said. “We are also deeply concerned that this company may benefit more from the disease its products have caused by now selling therapies to the same people who have been sickened by the consumption of PMI cigarettes.”
Philip Morris outbid Caryle in the takeover of Vectura
Philip Morris, whose name has long been associated with Marlboro, the world’s best-selling cigarette brand, says the deal is part of his plan to diversify his portfolio beyond tobacco and nicotine, by putting emphasis on “inhaled therapeutics”.
Vectura currently has a market cap of $ 1.36 billion. Philip Morris said he had acquired or had agreements to own nearly 75% of Vectura’s shares, making his offer “unconditional”.
Vectura has been sued throughout the summer by Philip Morris and the Carlyle Group, a major private equity firm, the latter of which strengthened its cash offer on August 6, at 155 pence per share. Two days later, Philip Morris raised his bid to 165 pence per share, and Carlyle then said he would not increase its price.
Philip Morris says Vectura will operate as a stand-alone unit although PMI CEO Jacek Olczak also said the company looks forward to working with the scientists at Vectura. The company says it has the resources to help the inhaler maker develop its own products, while expanding its reach in the market and dealing with regulatory challenges.
Philip Morris has also repeatedly mentioned his “Beyond Nicotine” goal of generating at least $ 1 billion in net annual income from sources other than tobacco by 2025, a plan that includes Vectura.
Health groups urged Vectura to reconsider
More than 25 health advocacy groups, including Asthma UK and the European Lung Foundation, recently co-signed a letter urging Vectura’s board to reject Philip Morris’ offer, calling the company’s post-nicotine strategy “dishonest” and saying the deal would raise ethical concerns.
“Despite the ambition to go beyond nicotine, PMI continues to make cigarettes (over two billion a day),” the groups said, adding that the company markets cigarettes “in low-income countries. and intermediate where large populations of young people and lax regulations have seen widespread adoption of smoking in recent decades. ”
In contrast, the letter says, Vectura derives the bulk of its hundreds of millions of dollars in annual revenue from products that treat smoking-related respiratory illnesses, such as chronic obstructive pulmonary disease.
The takeover would also put Vectura’s history of participating in important health research and policy decisions at risk, according to the signatories.
They note that because many agencies, universities and publications have strict policies against engaging with tobacco-related companies, Vectura could now be barred from receiving government grants, publishing in The Lancet and other journals, and conduct clinical trials alongside universities.
Vectura executives will not hold a shareholders’ meeting
Vectura directors said they recognized “the higher cash price” in Philip Morris’ offer. They also said the company would benefit from the tobacco company’s “significant financial resources”, its promise to boost research and development, and its plans to make Vectura a stand-alone business unit.
Advocacy groups called on Vectura’s board of directors and its shareholders to reject the takeover bid for both ethical and practical reasons. But shareholders will not have the opportunity to influence the change.
Due to the terms of the deal, including the large number of shares now under Philip Morris control and his takeover statement, Vectura directors said they “did not intend to reconvene shareholders’ meetings “which would have been required under Carlyle’s takeover bid.
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