Marlboro owner sells UK inhaler firm over backlash

Philip Morris International (PMI), the company behind Marlboro cigarettes, has divested its UK inhaler firm, Vectura Group, at a significantly reduced price due to what it describes as an “unwarranted” backlash. The sale, finalized for £150 million ($198 million), comes just three years after PMI acquired Vectura for over £1 billion.

PMI’s initial decision to purchase Vectura, which manufactures inhalers for conditions like asthma, faced considerable criticism. Many viewed the acquisition as hypocritical, given PMI’s longstanding reputation as a tobacco giant. Nevertheless, PMI maintained that the move aligned with its broader strategy to transition away from traditional cigarettes and embrace “smoke-free” alternatives, including vaping.

On Wednesday, PMI announced its sale of Vectura to Molex Asia Holdings, an electronics firm. PMI characterized this sale as a means to free Vectura from the “unreasonable burden of external constraints and criticism” associated with PMI’s ownership. The transaction is pending regulatory approval and involves an upfront payment of £150 million, along with potential deferred payments totaling up to £148 million, contingent on meeting certain conditions.

Jacek Olczak, PMI’s CEO, expressed the company’s continued commitment to innovation within the inhaler sector, suggesting that PMI has not completely severed its ties to this market. The acquisition of Vectura was part of PMI’s initiative to create a “smoke-free world,” with the goal of having two-thirds of its sales originate from non-cigarette products by 2030.

Despite these ambitious goals, health charities have expressed skepticism regarding PMI’s commitment to reducing its tobacco sales, especially given the substantial revenue the company continues to generate from cigarettes. In its latest financial report for the quarter ending June, PMI revealed that over 60% of its total sales, which amounted to $9.47 billion (£7.19 billion), came from cigarette sales. Notably, PMI represented 23.6% of the global cigarette market by revenue during that period.

The timing of the sale coincides with growing discussions in the UK about smoking regulations, particularly as the newly elected Labour government considers implementing an outdoor smoking ban in pubs. While health experts have praised the potential ban, many pub owners have voiced concerns about the financial impact on their establishments.

This latest development highlights the ongoing tensions between public health objectives and the business strategies of tobacco companies. As PMI seeks to redefine its image and reduce its dependence on cigarette sales, the broader implications for health and safety in the UK remain a critical point of discussion.

In summary, PMI’s divestiture of Vectura reflects the company’s ongoing struggles to navigate a changing landscape marked by public health advocacy and regulatory scrutiny. As it aims to pivot towards smoke-free alternatives, the path ahead is fraught with challenges that could shape the future of both PMI and the tobacco industry at large.