- 3 years ago
14 July 2021
Tobacco giant Philip Morris has sparked outrage after the US-listed maker of Marlboro cigarettes made a £1 billion takeover bid for lung treatment specialist Vectura late last week, a company with business connections to Novartis.
The move by Philip Morris has horrified sections of the UK community, with Government Ministers being called on to intervene and prevent the cigarette company’s entry into healthcare. Opponents say the tobacco giant should not be allowed to treat the very diseases its products directly caused.
Vectura specialises in inhaled medicines to treat asthma and other respiratory diseases. It entered into a deal with Novartis’ generic arm Sandoz in 2017 to develop and manufacture batches of an inhaled combination treatment for asthma and chronic obstructive pulmonary disease. The product was due to be launched mid-2020.
Vectura’s Board recommended shareholders accept Philip Morris’ offer, but the question remains – should a tobacco company be allowed to purchase a drug company, especially one focused on lung conditions?
One UK politician described the move as “totally wrong” while another said the company “should be investing their millions in helping people stop smoking, rather than trying to profit on the results of smoking”.
The opposition is claiming the deal will be “a massive test” of UK Health Secretary Sajid Javid’s commitment to public health, but while the merits of government intervention in the deal may be hotly debated in the halls of Westminister, it is unlikely to impact the outcome.
For its part, Philip Morris is looking to transform its business in the wake of falling cigarette revenues, declaring last week it planned to become a “healthcare and wellness” company and was moving towards a “smoke-free future”.
The company wants to generate at least US$1 billion in annual revenues by 2025 from what it calls “beyond tobacco and nicotine” products and says Vectura would operate as an autonomous business unit and become the backbone for its inhaled therapeutics business.
Far less controversial is ASX-listed Wesfarmers bid for Australian Pharmaceutical Industries this week, although the Pharmacy Guild appeared concerned. The guild issued a statement saying it was monitoring the bid and evaluating any potential ramifications.
Like Philip Morris, Wesfarmers also claimed the move was nothing more than a move to expand its role in pharmacies and pharmaceuticals. Wesfarmers owns Bunnings, Kmart, Officeworks, Target, Catch of the Day and Coles and CEO Rob Scott said API would form the basis of a significant new arm of the Wesfarmers business and build on its retail experience.
Probably most concerning for the Guild is the potential for Wesfarmers to move medicines into Coles, although the company appears to have ruled this out.
In the US, Amazon and Walmart have already stated their intentions to move into the healthcare space with Amazon buying PillPack – a company that delivers pharmaceuticals through the post.
In Australia, the pharmacy model is already evolving with entrepreneur Matthew Cullen launching Chemist2U, a pharmacy delivery service he describes as “UberEats, MenuLog, Deliveroo meets community pharmacy”.
Whether pharma is ready to partner with a tobacco giant to bring new medicines to market is unknown but given the ageing population and growing attraction of the health sector, industry may need to get used to a growing number of unusual bedfellows with shady pasts they might just rather forget.