Vectura

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Vectura is a UK company specialising in inhaler products to deliver medicines.1

In September 2021, the company was acquired by Philip Morris International (PMI).

Background

Vectura’s 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.234 This type of dry powder inhaler is used to help treat health problems like chronic obstructive pulmonary disease (COPD),4 a group of lung conditions often caused, or made worse by, smoking.5 Some products have been licensed to other pharmaceutical companies, including GlaxoSmithKline and Novartis.4

PMI’s Interest in Vectura

In a presentation to investors in February 2021, Philip Morris International (PMI) stated that it planned to go “beyond nicotine” including into “respiratory drug delivery”.67

Vectura inhaler technology is licensed to other pharmaceutical companies, including Glaxo-Smith-Kline, Novartis and Mundipharma.8

PMI’s Acquisition Strategy

Outbid Carlyle

The Vectura board agreed an offer from a private equity firm, Carlyle, in May 2021.9  However, PMI then made a higher bid, which the board then recommended be accepted by shareholders.10

Carlyle increased its bid, and PMI then also raised its offer.11 On the 12 August, Vectura’s board of directors recommended to shareholders that they accept PMI’s UK£1.1 billion offer.12

Bought up shares

PMI purchased a large numbers of shares in Vectura before the final shareholder vote on 15 September 2021.1314 PMI was prevented from buying shares from US investors under market regulations, but these rules did not apply in the UK or other countries.15  (See below for criticism of UK company law in relation to the Vectura deal)

Gained control

By 15 September, PMI owned 50% of the shares and had gained control of a further 25%.15 Despite further objections raised by public health stakeholders, this enabled PMI to get its £UK1.1 billion deal approved.1516

PMI then applied to remove Vectura from the London Stock Exchange, and to re-register it as a private limited company.1718 By 1 October, PMI held 97% of shares and was in a position to force the purchase of the remainder.19

As a private company Vectura will have fewer obligations for reporting and disclosure.17  A campaigning organisation, The Better Business Act, argued that the Vectura takeover indicated that the UK’s Companies Act needed reform, so that “directors are required to align shareholder interests with wider society…” and “…the benefits of transactions are shared and potential harms avoided.”20

Acquisition Criticised by WHO and Public Health NGOs

There had been strong criticism of PMI’s acquisition, in particular from health charities and the World Health Organization (WHO).21The UK government was urged to investigate the deal.2223

The NGO Tobacco Free Portfolios wrote a letter to Vectura shareholders, on behalf of multiple public health stakeholders, before they voted on the deal. The letter explained why shareholders should reject PMI’s bid.24 It 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.24

In addition, the company would be excluded from influencing health policy by the Framework Convention on Tobacco Control (FCTC).242526827

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.”15

Repercussions for Vectura

Warnings by public health experts that a PMI-takeover would exclude Vectura from health forums appear to have been borne out.

It was reported that the company was excluded from a pharmaceutical conference after academics objected to its presence.28 Vectura was removed as a sponsor and participant in Formulation and Delivery UK event. A letter to organisers Oxford Global said that academics would refuse to participate if Ventura continued its association. Peter Barnes, professor of thoracic medicine at the National Heart and Lung Institute, who coordinated the letter said that he expected other pharmaceutical industry events to follow suit.28

A week later The Times reported that Vectura had been removed from the Drug Delivery to the Lungs conference as a sponsor and a company representative had stood down from the conference committee.29

Doctors and patients in the UK have indicated they may switch to alternative inhaler manufacturers following the company’s acquisition.30

PMI’s Other Pharmaceutical Acquisitions

Around the same time as its acquisition of Vectura, PMI also bought a US inhaler company Oti-Topic, and Fertin Pharma which specialises in nicotine products.31

In the media it promoted all three “pioneering pharmaceutical companies”.32

PMI also acquired a cannabis inhaler.33

Relevant Links

Vectura company website

STOP: Vectura Acquisition Means Tobacco Giant PMI Will Profit Twice From Smoking

Tobacco Tactics Resources

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. Vectura, About Vectura, website, undated, accessed July 2021
  2. Vectura, Executing on our inhaled specialist CDMO strategy, presentation to J.P. Morgan Healthcare Conference, 14 January 2021, accessed July 2021
  3. UK Research Excellence Framework, 2014 Impact Case Study: Inhaled delivery of life-saving medicines – The Vectura story, website, 2014, accessed July 2021
  4. abcUniversity of Bath, Lung patients benefit from new inhaler technology, website, 2014, accessed July 2021
  5. American Lung Association, COPD Causes and Risk Factors, American Lung Association website, accessed August 2021
  6. Andre Calantzopoulos/Philip Morris International, The Next Growth Phase, Investor day presentation, 10 February 2021, accessed July 2021
  7. According to PMI, Vectura:

    “has thirteen key inhaled products marketed by major global pharmaceutical partners, as well as a diverse portfolio of partnerships for drugs in clinical development.”[ref name=earningsjuly]Philip Morris International, Earnings Release – Qtr 2 2021, press release, 20 July 2021, accessed July 2021

  8. abA. 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
  9. J. Partridge, Two British healthcare firms to be sold in deals worth combined £2bn, The Guardian, 26 May 2021, accessed September 2021
  10. M. Sweney, Philip Morris International makes £1bn offer for UK pharma firm Vectura, The Guardian, 9 July 2021, accessed September 2021
  11. C, Gretler, D. Nair, Philip Morris and Carlyle to Face Off in Vectura Auction, Bloomberg, 8 August 2021, accessed September 2021
  12. UK inhaler firm Vectura backs £1bn bid by Marlboro-maker, BBC News, August 13 2021, accessed September 2021
  13. R. Davies, J Ambrose, US tobacco giant Philip Morris International snaps up 22.6% stake in Vectura, The Guardian, 18 August 2021, accessed September 2021
  14. S. Cavale, Philip Morris gets over a fifth of Vectura shares in takeover tender offer, Reuters, 18 August 2021, accessed September 2021
  15. abcdR. Davies, Tobacco firm Philip Morris seals £1.1bn takeover of UK inhaler maker Vectura, The Guardian, 16 September 2021, accessed September 2021
  16. P. Aripaka, Tobacco firm Philip Morris seals deal for UK’s Vectura with 75% support, Reuters, 16 September 2021, accessed September 2021
  17. abJ. Baxter-Derrington, Philip Morris Delists Vectura Following Acquisition, Investment Week, 20 September 2021, accessed September 2021
  18. A. Ralph, Vectura Takeover by Philip Morris Approved, The Times, 21 September 2021, accessed September 2021(behind paywall)
  19. C. Gretler, Philip Morris Takeover of U.K. Drugmaker Vectura Near Completion, Bloomberg, 1 October 2021, accessed October 2021
  20. C. Turner, Big Tobacco’s takeover of Vectura shows the holes in our Companies Act, City A.M., 17 September 2021, accessed September 2021
  21. A. Ralph, Global health body alarmed by Vectura bid, The Times, 17 July 2021, accessed August 2021
  22. K. Singh, British minister asks for monitoring of Vectura’s proposed takeover by Philip Morris -The Times, Reuters, July 14, accessed August 2021
  23. The World’s Biggest Tobacco Company Has No Business in Health, STOP press release, 13 August 2021, accessed September 2021
  24. 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
  25. S. Agrawal, Proposed takeover of Vectura by Phillip Morris International, BMJ, Editorial, 7 September 2021. doi:10.1136/bmj.n2186
  26. STOP, Vectura Acquisition Means Tobacco Giant PMI Will Profit Twice From Smoking, STOP press release, 16 September 2021, accessed September 2021
  27. abJ.Kollewe and R.Davies, Inhaler firm Vectura removed from conference over Philip Morris takeover, The Guardian, 16 September 2021, accessed September 2021
  28. A.Ralph, Pharma events bar Vectura after its takeover by Marlboro cigarette maker Philip Morris, The Times, 20 September 2021, accessed September 2021[paywall]
  29. C. Gretler, Vectura’s Inhaler Sales May Suffer Over Philip Morris Backlash, Bloomberg, 11 October 2021, accessed October 2021
  30. Philip Morris International Acquires Inhaled Drug Specialist OtiTopic; Growing Pipeline of “Beyond Nicotine” Inhaled Therapeutic Products, Businesswire, 9 August 2021, accessed August 2021
  31. Philip Morris International : PMI progresses on acquisition of three pioneering pharmaceutical companies to accelerate ‘Beyond Nicotine’ vision, Market Screener, 9 September 2021, accessed September 2021
  32. S. Solomon, Philip Morris investment in Syqe was 2nd-largest 2016 cannabis deal – reportThe Times of Israel, 9 January 2018, accessed July 2021
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