Tobacco Company Investments in Pharmaceutical & NRT Products

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Key points

  • Historic interests in Nicotine Replacement Therapy – lozenges and gums, early inhalers
  • Addition of Swedish snus-style nicotine pouches in to product ranges – “modern oral”
  • Acquisitions of pharmaceutical and biotech companies developing “inhaled therapeutics” e.g. inhalers for chronic obstructive pulmonary disease (COPD)
  • Investments in cannabis industry with focus on inhalers, CBD and (potentially) drug delivery – “botanical therapeutics”
  • Investments are part of a trend in tobacco industry “Pharmaceuticalisation”: shifting business practices to mirror those of pharmaceutical companies either by acquiring pharma companies or presenting a pharma-like public image, despite tobacco sales.

Background

Research conducted using tobacco industry documents,  published in 2017, explores the history of tobacco industry interests in Nicotine Replacement Therapy (NRT) type products.1 Tobacco companies first developed nicotine replacement products in the 1950s, but the threat of regulation by the US Food and Drug Administration (FDA) meant that they stopped. After that medical NRT was produced by pharmaceutical companies, initially available on prescription, and later increasingly available over-the-counter.1 In the 1980s, the tobacco industry actively opposed NRT but, once the threat of FDA regulation had passed (with the regulation of tobacco products beginning in the US in 2009) tobacco companies re-entered the nicotine market.1 The authors note that:

Although the tobacco industry initially viewed NRT as a threat, it found that smokers often combined NRT with smoking rather than using it as a replacement and began marketing their own NRT products.1

The UK’s Royal College of Physicians (RCP) states that: “Nicotine replacement therapy (NRT) is most effective in helping people to stop smoking when used together with health professional input and support, but much less so when used on its own.”2

More recently the major transnational tobacco companies have invested in products such as non-electronic inhalers for nicotine and cannabis and, most controversially, for the delivery of medicines to treat lung disease (see PMI’s acquisition of Vectura). These interests are detailed below, by tobacco company.

For information on tobacco company investments in e-cigarettes (ENDS), heated tobacco products (HTPs) and oral tobacco products such as snus, see Next Generation Products.

British American Tobacco

Image 1: Slide from BAT presentation to investors (Source: British American Tobacco, Deutsche Bank Global Consumer Conference, 9 June 2021)

BAT had an interest in a nicotine inhaler, before it was abandoned in favour of its e-cigarettes, HTPs and, more recently, oral nicotine products. In a presentation to investors in June 2021, BAT said that it was “building an ecosystem beyond nicotine” and its target areas included “health and wellness” and developing products to help consumers “focus, energize and relax”.3 BAT subsequently launched a dedicated website for its Btomorrow Ventures investment arm.4 In July 2021, the website listed investments in cannabis and CBD products, meditation drinks, and other “wellness” products, including technology marketed at healthcare professionals.5

BAT investment in inhalers

Voke Inhaler

In 2010, British American Tobacco (BAT) acquired the licence to commercialise a nicotine inhaler called Voke, developed by a UK company called Kind Consumer.  This product was approved for medical use in 2014, making it potentially available as a cessation product on prescription in the UK. However, BAT decided instead to invest in e-cigarettes, and handed the license back in 2017. Kind Consumer did not successfully re-launch the product and at the end of 2020 the company closed down.

Zonnic Gum & Revel Lozenge

BAT own a nicotine gum called Zonnic, which it gained from its acquisition of US company Reynolds in 2017.  Reynolds had acquired this product with the Swedish company Niconovum in 2008, and marketed it from 2014, suggesting it could be used alongside cigarettes. 1  In Sweden, BAT’s nicotine pouches (see below) are also sold under the Zonnic brand. ”.67

BAT also gained Reynold’s Revel nicotine lozenge. In 2020, Revel was rebranded as Velo, the same name as BAT’s  nicotine pouches.89 In August 2020 BAT/Reynolds filed an application to the FDA for pre-market approval for Velo lozenges in the US.1011

In 2021, the UK Velo website did not mention Revel or Velo lozenges.12

Lyft & Velo Nicotine Pouches

BAT has marketed its most recently developed products, snus-type nicotine pouches, in multiple countries, including Pakistan and Kenya, mostly under the Lyft and Velo brands.

BAT positions its nicotine pouches, alongside the nicotine gum and lozenge, as “modern oral” products.13 and has submitted PMPTAs in the US for velo pouches. BAT (Reynolds) stated that:

“Velo is an award-winning brand bringing consistently innovative products to adult tobacco users, and a potential marketing order for PMTA submission would help to ensure adult tobacco consumers have access to FDA-regulated, consumer-acceptable product alternatives to combustible tobacco”.10

Philip Morris International

Image 2: Slide from PMI presentation to investors, 10 February 2021. (Source PMI website)

In a presentation to investors in February 2021, Philip Morris International (PMI) stated that it planned to go “beyond nicotine” into “botanicals” and “respiratory drug delivery” (image 2).14

Image 3 Slide from PMI presentation to investors, 10 February 2021. (Source PMI website)

The company said that this was part of its “long term evolution into a broader lifestyle & consumer wellness company” (image 3).14 However the short-term goal was “additional growth”.14

PMI’s investment in inhaler devices

Syqe Medical

In 2016, PMI bought an Israeli company, Syqe Medical, which was developing a cannabis inhaler.15 PMI did not publicise this acquisition.

Vectura

Also in July 2021, PMI announced its intended acquisition of Vectura, a UK company specialising in inhaler products to deliver medicines, for nearly UK£1 billion (US$1.3 billion, figures rounded).16 PMI outbid a private equity firm, Carlyle, a deal which had been agreed by the Vectura board in May. According to PMI “the company has thirteen key inhaled products marketed by major global pharmaceutical partners, as well as a diverse portfolio of partnerships for drugs in clinical development.”17

Vectura’s products inhalers were originally developed at a research centre at the University of Bath. A spin-off company was merged with Vectura in the late 1990s.181920 This type of dry powder inhaler is used to help treat health problems like chronic obstructive pulmonary disease (COPD),20 a group of lung conditions often caused, or made worse by, smoking.21 Some products have been licensed to other pharmaceutical companies, including GlaxoSmithKline and Novartis.20

There was strong criticism of PMI’s acquisition, in particular from health charities and the World Health Organization.22The UK government was urged to investigate the deal.2324

On the 12 August, Vectura’s board of directors recommended to shareholders that they accept PMI’s UK£1.02 billion offer.25 The NGO Tobacco Free Portfolios wrote a letter to Vectura shareholders, on behalf of multiple public health stakeholders, explaining why they should reject PMI’s bid.26 The letter cited potential problems for the company accessing future grants and for scientific collaboration, as well as the ethical and reputational risks of associating with a tobacco company.26 In addition, the company would be excluded from influencing health policy by the Framework Convention on Tobacco Control (FCTC).262728

By 15 September, PMI owned 50% of the shares and had gained control of a further 25%.29 Despite further objections raised by public health stakeholders, this enabled PMI to get its £UK 1.1 billion deal approved.2930

Health NGOs Asthma UK and the British Lung Foundation warned that:

“There’s now a very real risk that Vectura’s deal with big tobacco will lead to the cigarette industry wielding undue influence on UK health policy.”29

Oti-Topic

In August 2021, PMI announced its intended acquisition of another pharmaceutical company Oti-Topic, which is based in the US and produces respiratory inhalers, including one used to treat heart attacks.31

No information was available on the Oti-Topic website, which at the time of the announcement stated it was “coming soon”.32

PMI stated that:

“This acquisition is part of PMI’s strategic plan to leverage its expertise, scientific know-how, and capabilities in inhalation to grow a pipeline of inhaled therapeutics and respiratory drug delivery Beyond Nicotine.”31

One market analyst estimated that the market for inhalation delivery could be worth US$18 billion by 2027.33

PMI investments in oral nicotine products

Fertin Pharma

In July 2021, PMI announced that it was acquiring Fertin Pharma for around US$820 million.  PMI described the company as “a leading developer and manufacturer of innovative pharmaceutical and well-being products based on oral and intra-oral delivery systems”.3435 In a press release PMI CEO Jacek Olczak listed products made by Fertin, including: “gums, pouches, liquefiable tablets, and other solid oral systems for the delivery of active ingredients, including nicotine” stating  that the company was a “leading producer of Nicotine Replacement Therapy (NRT) solutions”.34

PMI said that acquiring Fertin would enable them to develop various “botanicals and other selfcare wellness products”.34 It is not clear if PMI’s intention is for these products to be sold to customers over-the-counter rather than be independently tested and approved, or available on prescription. On 15 September 2021, PMI announced that it had closed the deal.36

AG Snus & Nicotine Pouches

In May 2021, PMI acquired Danish snus manufacturer AG Snus, which produces both tobacco leaf products and nicotine pouches.3738

In 2021,  PMI began referring to gums and nicotine pouches as “modern oral” products, as does BAT.34

Altria

Verve Lozenge

Philip Morris US (an Altria company) have a nicotine lozenge called Verve, which they developed in 2012.139

According to US researchers, Philip Morris believed it could avoid the use of warning labels,  because Verve was made with nicotine extract, not tobacco. However, from 2016 the lozenge only appeared to be on sale in Virginia.1

Altria & BAT Interests in Lexaria Bioscience

Altria and BAT have connections with Canadian company Lexaria Bioscience, relating to its drug delivery technology ‘DehydraTECH’.40

This appears to relate to the production of nicotine pouches and cannabis or CBD products.

Japan Tobacco

Japan Tobacco international (JTI) owns the Nordic Spirit brand of oral nicotine pouches.

Japan Tobacco has a pharmaceutical division, which has developed drugs designed to treat medical conditions, including heart disease and lung cancer.414243

In July 2021,  JT’s clinical trial list included a new drug (a PDHK inhibitor) to treat heart failure and “improve cardiac function”.44

Imperial Brands

Imperial owns nicotine pouch brands Skruf and zoneX.

 

Tobacco Tactics Resources

Next Generation Products
Nicotine Pouches
Cannabis
Harm Reduction

TCRG Research

For a comprehensive list of all TCRG publications, including TCRG research that evaluates the impact of public health policy, go to the Bath TCRG’s list of publications.

References

  1. abcdefgD. Apollonio, S. A. Glatnz, Tobacco Industry Research on Nicotine Replacement Therapy: “If Anyone Is Going to Take Away Our Business It Should Be Us”, American Journal of Public Health, 2017,  107, p1636-1642, doi:10.2105/AJPH.2017.303935
  2. Royal College of Physicians, Nicotine without smoke: Tobacco Harm Reduction, April 2016
  3. British American Tobacco, Delivering Multi-Stakeholder Value through The Enterprise of the Future, Deutsche Bank Global Consumer Conference, Presentation slides, 9 June 2021, accessed August 2021
  4. British American Tobacco, Btomorrow Ventures website goes live, BAT media release, undated, archived 11 July 2021, accessed September 2021
  5. British American Tobacco, BTomorrow Ventures: Portfolio, website, undated, archived 20 July 2021, accessed September 2021
  6. British American Tobacco, Modern and traditional oral products, undated, accessed March 2021
  7. Lakemedelsverket [Swedish Medical Products Agency], Zonnic, search result for list of approved or registered drugs, website, accessed March 2021 (in Swedish)
  8. British American Tobacco, Same Lozenge New Name: Revel is Now Velo Nicotine Lozenges, Velo.com blog, 20 September 2020, no longer accessible in July 2021
  9. Reynolds Submits First VELO Dissolvable Nicotine Lozenge Premarket Tobacco Product Applications, PR Newswire, 24 August 2020, accessed August 2020
  10. abReynolds Submits First Velo PMTA, Tobacco Reporter, 24 August 2020, accessed July 2021
  11. E. Brodwin, Tobacco giant Reynolds just rolled out berry and cream nicotine lozenges as it faces new pressure from Juul for smokeless products, Business Insider, 27 March 2019, accessed August 2020
  12. British American Tobacco, Velo.com, accessed July 2021
  13. British American Tobacco, Modern and traditional oral products, BAT website, archived 9 August 2019, accessed November 2019
  14. abcAndre Calantzopoulos/Philip Morris International, The Next Growth Phase, Investor day presentation, 10 February 2021, accessed July 2021
  15. S. Solomon, Philip Morris investment in Syqe was 2nd-largest 2016 cannabis deal – reportThe Times of Israel, 9 January 2018, accessed July 2021
  16. Vectura, About Vectura, website, undated, accessed July 2021
  17. Philip Morris International, Earnings Release – Qtr 2 2021, press release, accessed July 2021
  18. Vectura, Executing on our inhaled specialist CDMO strategy, presentation to J.P. Morgan Healthcare Conference, 14 January 2021, accessed July 2021
  19. UK Research Excellence Framework, 2014 Impact Case Study: Inhaled delivery of life-saving medicines – The Vectura story, website, 2014, accessed July 2021
  20. abcUniversity of Bath, Lung patients benefit from new inhaler technology, website, 2014, accessed July 2021
  21. American Lung Association, COPD Causes and Risk Factors, American Lung Association website, accessed August 2021
  22. A. Ralph, Global health body alarmed by Vectura bid, The Times, 17 July 2021, accessed August 2021
  23. K. Singh, British minister asks for monitoring of Vectura’s proposed takeover by Philip Morris -The Times, Reuters, July 14, accessed August 2021
  24. The World’s Biggest Tobacco Company Has No Business in Health, STOP press release, 13 August 2021, accessed September 2021
  25. UK inhaler firm Vectura backs £1bn bid by Marlboro-maker, BBC News, August 13
  26. abcTobacco Free Porfolios, Re: Request to shareholders to reject the Vectura Board’s recommendation of the Philip Morris International (PMI) Offer for Vectura Group plc, open letter to Vectura shareholders, 17 August 2021, accessed September 2021
  27. S. Agrawal, Proposed takeover of Vectura by Phillip Morris International, BMJ, Editorial, 7 September 2021. doi:10.1136/bmj.n2186
  28. A. Branley, S. Scott, Tobacco giant’s takeover bid could affect COPD lung disease treatment and research in Australia, ABC News Australia, 13 September 2021, accessed September 2021
  29. abc
  30. P. Aripaka, Tobacco firm Philip Morris seals deal for UK’s Vectura with 75% support, Reuters, 16 September 2021, accessed September 2021
  31. abPhilip Morris International Acquires Inhaled Drug Specialist OtiTopic; Growing Pipeline of “Beyond Nicotine” Inhaled Therapeutic Products, Businesswire, 9 August 2021, accessed August 2021
  32. oti-topic.com, website, undated, accessed September 2021
  33. Global Inhalation Drug Delivery Devices Market $17.6 Billion by 2027, iHealthcare Analyst, 22 March 2021, accessed July 2021
  34. abcdPhilip Morris International, Philip Morris International Announces Agreement to Acquire Fertin Pharma, press release, 1 July 2021, accessed July 2021
  35. Fertin Pharma, Fertin Pharma and associated companies acquired by Philip Morris International, press release, 1 July 2021, accessed July 2021
  36. Philip Morris International, Philip Morris International Announces Closing of Fertin Pharma Acquisition; Advances PMI’s Goal of Becoming a Majority Smoke-Free Business by 2025 and Creates Growth Opportunities Beyond Nicotine, PMI press release, 15 September 2021, accessed September 2021
  37. Mazanti-Andersen, AG Snus Aktieselskab sold to Phillip Morris International, law firm website, 7 May 2020, accessed July 2021
  38. Open Corporates, AG Snus Aktieselskab, Company number 32883044, accessed July 2021
  39. R. Craver, Altria tests smokeless product that contains no tobacco, Winston-Salem Journal, 24 May 2012, accessed July 2021
  40. P. M. Graham, Lexaria Bioscience strikes R&D agreement with British American Tobacco to investigate its technology for potential use in nicotine products, Proactive Investors, 1 September 2020, accessed March 2021
  41. Unfair Tobacco, Japan Tobacco International, undated, accessed September 2021
  42. S. Murray, Kill or cure—confused messages from Japan Tobacco, The Lancet, 354: 9188, 1999,doi:10.1016/S0140-6736(05)77603-0
  43. Japan Tobacco, Pharma Day with Japan Tobacco Pharmaceutical Division, area of interest application form, 2018, accessed September 2021, available from bio-m.org
  44. Japan Tobacco, Pharmaceutical Business Clinical Development as of July 30 2021, summary report, accessed September 2021. Available from jt.com
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