Philip Morris to Sell Vectura for $198 Million After Health Shift Criticism

Deal Ends Tobacco Giant's Foray Into Respiratory Drugs

Philip Morris International Inc. is selling Vectura Group Plc for 1.08 billion pounds ($1.98 billion) to private equity firm Carlyle Group Inc., ending the tobacco giant's foray into respiratory drugs after it faced criticism for its dual role in selling both cigarettes and treatments for smoking-related diseases.

The deal, announced on Friday, comes after Philip Morris in September abandoned its pursuit of Vectura, citing a lack of support from U.K. regulators who had concerns about the Marlboro maker owning a company that produces inhalers for asthma and other lung conditions.

Philip Morris's Shift Away from Cigarettes

The sale of Vectura is part of Philip Morris's broader shift away from cigarettes, which have been in decline for decades due to health concerns and government regulations. The company has been investing heavily in smoke-free products, such as e-cigarettes and heated tobacco, which it sees as less harmful alternatives to traditional cigarettes.

The acquisition of Vectura in 2021 was seen as a way for Philip Morris to gain a foothold in the respiratory drug market and potentially develop new treatments for smoking-related diseases. However, critics argued that it was a conflict of interest for a company that profits from selling cigarettes to also be involved in the production of drugs to treat the diseases caused by smoking.

Carlyle's Plans for Vectura

Carlyle, a global private equity firm, said it plans to support Vectura's management team and invest in the company's growth. Vectura, which has a portfolio of inhaled therapies for respiratory diseases, has been facing increasing competition from generic drugmakers and is under pressure to develop new products.

The sale of Vectura to Carlyle is expected to close in the first half of 2023, subject to regulatory approvals and other customary closing conditions.