Vectura Fertin Pharma, Inc., a Subsidiary of Philip Morris International, Announces Agreement for Sale of Vectura Group to Molex

Rhea-AI Summary

Philip Morris International's (PMI) subsidiary, Vectura Fertin Pharma, has announced the sale of Vectura Group to Molex Asia Holdings for GBP 150 million upfront, with potential deferred payments of up to GBP 148 million. The deal includes master service agreements for developing inhaled therapeutics. Vectura will be operated by Phillips Medisize, a Molex company.

PMI CEO Jacek Olczak stated that while Vectura has been important in developing their inhaled therapeutics pipeline, opposition to PMI's transformation has impacted Vectura's scientific engagement and commercial relationships. The remaining Vectura Fertin Pharma units will continue under PMI, focusing on oral consumer health and inhaled prescription products.

Positive

• Sale of Vectura Group for GBP 150 million upfront with potential additional GBP 148 million in deferred payments
• Establishment of master service agreements for inhaled therapeutics development
• Retention of remaining Vectura Fertin Pharma units under PMI, focusing on oral consumer health and inhaled prescription products

Negative

• Opposition to PMI's transformation has negatively impacted Vectura's scientific engagement and commercial relationships
• Divestment of a key asset (Vectura Group) that was instrumental in PMI's inhaled therapeutics development

Insights

Financial Analyst

The sale of Vectura Group to Molex for GBP 150 million upfront, with potential deferred payments of up to GBP 148 million, is a strategic move for PMI. While this divestment might seem like a step back from their "smoke-free future" initiative, it's actually a shrewd financial decision. The deal allows PMI to monetize an asset that was facing challenges due to external criticism, while still maintaining access to Vectura's expertise through master service agreements.

This transaction could positively impact PMI's balance sheet in the short term, providing additional liquidity. However, the long-term implications are mixed. On one hand, PMI loses direct control over Vectura's CDMO capabilities, potentially slowing their transformation efforts. On the other, this move might improve investor perception by distancing PMI from controversies surrounding their ownership of a healthcare company.

Investors should closely monitor how PMI utilizes the proceeds from this sale and whether the master service agreements will effectively support their inhaled therapeutics pipeline development.

Healthcare Industry Analyst

This divestment highlights the challenges faced by tobacco companies attempting to diversify into healthcare. Despite PMI's substantial investment in smoke-free products ($12.5 billion since 2008), the "unwarranted opposition" mentioned suggests that public perception remains a significant hurdle in their transformation journey.

The sale to Molex, specifically Phillips Medisize, is intriguing. As a specialist in drug delivery systems and medical devices, Phillips Medisize might be better positioned to unlock Vectura's full potential without the baggage of tobacco industry association. This could lead to accelerated innovation in inhaled therapeutics, benefiting patients in the long run.

For PMI, retaining the remaining units of Vectura Fertin Pharma and focusing on oral consumer health and wellness offerings aligns with their diversification strategy while potentially facing less resistance. This strategic pivot could prove important for PMI's long-term sustainability as they navigate the complex landscape of transitioning from tobacco to health-focused products.

STAMFORD, CT--(BUSINESS WIRE)-- Vectura Fertin Pharma, Inc., an affiliate of Philip Morris International Inc. (PMI) (NYSE: PM), today announces the sale of its subsidiary Vectura Group Ltd. (Vectura) to Molex Asia Holdings Ltd., and the establishment of master service agreements to develop Vectura Fertin Pharma’s inhaled therapeutics proprietary pipeline. Vectura will be operated by Phillips Medisize, a Molex company. The sale includes upfront cash consideration of GBP 150 million, subject to customary purchase price adjustments, and potential deferred payments of up to GBP 148 million. The transaction is subject to customary closing conditions, including regulatory approval.

“In line with our ambitions, Vectura has enabled us to develop a proprietary pipeline of inhaled therapeutics, and we remain committed to driving innovation in this space over the long-term,” said Jacek Olczak, PMI Chief Executive Officer.

PMI’s 2021 acquisition of Vectura has been instrumental in kick-starting Vectura Fertin Pharma’s development of inhaled therapeutics, bringing to the company specialist knowledge, technologies, and formulation science. However, despite the investment and commitment to developing products and therapies vital to patients, unwarranted opposition to PMI’s transformation has impacted Vectura’s scientific engagement and commercial CDMO relationships.

Mr. Olczak added: “With its experience in pharmaceutical drug delivery devices and its global manufacturing footprint, Phillips Medisize is best placed to lead Vectura into the future—while releasing it from the unreasonable burden of external constraints and criticism related to our ownership.”

The remaining units of Vectura Fertin Pharma will continue to operate as a separate company under PMI’s ownership and will be given a new corporate identity. This business will focus on developing and commercializing oral consumer health and wellness offerings and inhaled prescription products for therapy areas that include pain management and cardiovascular emergencies.

Phillips Medisize is a global company that designs, engineers, and manufactures drug delivery systems, medical devices, and in vitro diagnostic products. The company’s more than 6,000 employees collaborate with customers at 29 sites throughout North America, Europe, and Asia. Adding the Vectura team and its market-leading capabilities in inhalation aligns with Phillips Medisize’s stated mission of working with customers to develop innovative products that help people live healthier, more productive lives.

Notes to Editor

Definitions:

• CDMO: contract development and manufacturing organization

Philip Morris International: Delivering a Smoke-Free Future

Philip Morris International (PMI) is a leading international tobacco company, actively delivering a smoke-free future and evolving its portfolio for the long term to include products outside of the tobacco and nicotine sector. The company’s current product portfolio primarily consists of cigarettes and smoke-free products. Since 2008, PMI has invested over $12.5 billion to develop, scientifically substantiate, and commercialize innovative smoke-free products for adults who would otherwise continue to smoke, with the goal of completely ending the sale of cigarettes. This includes the building of world-class scientific assessment capabilities, notably in the areas of pre-clinical systems toxicology, clinical and behavioral research, as well as post-market studies. In 2022, PMI acquired Swedish Match—a leader in oral nicotine delivery—creating a global smoke-free champion led by the companies’ IQOS and ZYN brands. The U.S. Food and Drug Administration has authorized versions of PMI’s IQOS devices and consumables and Swedish Match’s General snus as Modified Risk Tobacco Products, and renewal applications for these products are presently pending before the FDA. As of June 30, 2024, PMI’s smoke-free products were available for sale in 90 markets, and PMI estimates that 36.5 million adults around the world use PMI’s smoke-free products. Smoke-free business accounted for approximately 38% of PMI’s total first-half 2024 net revenues. With a strong foundation and significant expertise in life sciences, PMI announced in February 2021 its ambition to expand into wellness and healthcare areas and, through its Vectura Fertin Pharma business, aims to enhance life through the delivery of seamless health experiences. “PMI” refers to Philip Morris International Inc. and its subsidiaries. For more information, please visit www.pmi.com and www.pmiscience.com.

About Phillips Medisize

Phillips Medisize, a Molex company, collaborates with leading pharmaceutical, medical technology and in vitro diagnostic companies to design, engineer and manufacture life-saving innovations. A contract development and manufacturing organization (CDMO), Phillips Medisize leverages its 60 years of expertise and globally renowned capabilities to deliver products and solutions that annually help millions of patients, healthcare professionals and individuals live healthier, more productive lives. For more information, visit www.phillipsmedisize.com.

About Molex

Molex is a global electronics leader committed to making the world a better, more connected place. With a presence in more than 40 countries, Molex enables transformative technology innovation in the automotive, data center, industrial automation, healthcare, 5G, cloud and consumer device industries. Through trusted customer and industry relationships, unrivaled engineering expertise, and product quality and reliability, Molex realizes the infinite potential of Creating Connections for Life. For more information, visit www.molex.com.

Forward-Looking and Cautionary Statements

This press release contains projections of future results and goals and other forward-looking statements, including statements regarding the timing of and ability to complete the Vectura sale transaction; expected benefits of the transaction and of the continuing commercial relationship; the receipt of deferred payments; expected operational performance; and business plans and strategies. Achievement of future results is subject to risks, uncertainties and inaccurate assumptions. In the event that risks or uncertainties materialize, or underlying assumptions prove inaccurate, actual results could vary materially from those contained in such forward-looking statements. Pursuant to the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, PMI is identifying important factors that, individually or in the aggregate, could cause actual results and outcomes to differ materially from those contained in any forward-looking statements made by PMI. The factors that may adversely impact the anticipated outcomes include, among others: the occurrence of any event, change or other circumstances that could give rise to the termination of the transaction agreement; the outcome of any legal proceedings that may be instituted against the parties or others related to the transaction agreement; conditions to the completion of the transaction may not be satisfied, or the regulatory approvals required for the transaction may not be obtained on the terms expected or on the anticipated schedule; the parties' ability to meet expectations regarding the timing, completion and other elements of the transaction may be different than currently planned; and the possibility that the expected benefits of the transaction, of the continuing commercial relationship between the parties, or of PMI’s business plans and strategies may not materialize in the expected manner or timeframe, if at all. PMI is further subject to other risks detailed from time to time in its publicly filed documents, including PMI's Annual Report on Form 10-K for the fourth quarter and year ended December 31, 2023, and the Quarterly Report on Form 10-Q for the second quarter ended June 30, 2024. PMI cautions that the foregoing list of important factors is not a complete discussion of all potential risks and uncertainties. PMI does not undertake to update any forward-looking statement that it may make from time to time, except in the normal course of its public disclosure obligations.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240917390554/en/

Philip Morris International

David Fraser

T. +41 (0)58 242 4500

E. david.fraser@pmi.com

Source: Philip Morris International

FAQ

What is the value of the Vectura Group sale by Philip Morris International (PM)?

The sale of Vectura Group includes an upfront cash consideration of GBP 150 million, with potential deferred payments of up to GBP 148 million, subject to customary purchase price adjustments.

Who is acquiring Vectura Group from Philip Morris International (PM)?

Vectura Group is being acquired by Molex Asia Holdings and will be operated by Phillips Medisize, a Molex company.

Why is Philip Morris International (PM) selling Vectura Group?

PMI is selling Vectura Group due to unwarranted opposition to PMI's transformation, which has impacted Vectura's scientific engagement and commercial CDMO relationships.

What will happen to the remaining units of Vectura Fertin Pharma after the sale?

The remaining units of Vectura Fertin Pharma will continue to operate as a separate company under PMI's ownership, focusing on developing oral consumer health and wellness offerings and inhaled prescription products.