Tobacco company Philip Morris International (PMI) has made a controversial £1bn bid for UK inhaler company Vectura, the BBC reports. The bid has been backed by directors, despite concerns from health groups and some shareholders.
PMI is best known as the manufacturer of Marlboro cigarettes, while Vectura makes inhaled medicines and devices to treat respiratory illnesses such as asthma. US private equity group Carlyle launched a rival £958m bid in May, which received backing from Vectura’s board.
However, on 8 August, PMI made an increased bid of £1.65 per share, which is a total bid of about £1.02bn. This beat Carlyle’s final offer of £1.55 per share. Since May, shares in Vectura, whose customers include GSK and Novartis, have soared by 33% in value. The company told the BBC that its primary duty is to shareholders.
However, there is some controversy and concern about the proposed takeover bid among a number of health organisations throughout Europe. PMI have claimed they are focussing on alternatives to cigarettes, and have stated a goal of deriving half its revenue from non-tobacco products within a decade. This does not go far enough for many.
Labour’s shadow health secretary Jonathan Ashworth said: “Philip Morris’s attempted takeover of a key player in lung health products beggars belief. It is bitterly disappointing that Vectura has so far failed to exercise a duty of care to patients and scientists and reject this takeover by big tobacco.”
He added: “This is now a test for Sajid Javid. When we know smoking causes so much serious illness and premature death, it’s time this government takes the right course, stands up to this tobacco giant and blocks this takeover.”
Meanwhile, health charity Ash pointed out that PMI was responsible for selling over a tenth of all cigarettes globally, and said it was sceptical about the firm’s claims that it intended to stop selling cigarettes in the UK within the next 10 years.
The move by PMI has been compared with the hypocrisy of oil and gas companies investing in renewable energy. The final takeover will need the approval of at least 51% of shareholders in Vectura, so it remains to be seen whether the majority will feel comfortable with the deal, and if they value the best price over wider implications for society.
If the deal is accepted, it may be a fleeting win for shareholders in any case, as health groups have warned that the takeover will deter top lung researchers and scientists from working with the company in the future.
More than 20 health organisations from the UK, the US, and Europe have sent a joint letter to Vectura’s board urging them to “put sustainability and ethics first”, the BBC reports.
There are fears that research into crucial drug development could be disrupted, as there is the threat of Vectura being blocked from participating in clinical trials.
The BBC reports that signatories of the letter include the heads of Asthma UK, the British Lung Foundation, the Royal Society for Public Health and the Royal College of Physicians, as well as public health directors of several councils and some distinguished medical professors from King’s College, Imperial College and University College London (UCL).
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