Why tobacco company Philip Morris invests in health



It is the marriage of the carp and the rabbit. Philip Morris, a global cigarette maker, takes over the British company Vectura, which specializes in medical inhalers to treat smoking-related illnesses.

Vectura accepted the tobacco company’s offer on Thursday August 12 at the end of the day. For this operation, Philip Morris will pay 1.1 billion pounds, or 1.3 billion euros. The day before, the American investment fund Carlyle, which also coveted Vectura, had announced that it was withdrawing from the buyout race, thus leaving the way open to the tobacco juggernaut.

The health sector in the sights

Philip Morris has been investing in the healthcare sector for several years. The group announced on 1er last July, the purchase of Fertin Pharma for 700 million euros. The Danish pharmaceutical company is developing tobacco substitutes.

In all, 3 pharmaceutical companies are about to fall into the fold of Philip Morris: Vectura, Fertin Pharma and Otitopic. The latter, specializing in inhaled drugs, received an offer from the tobacco giant on Monday, August 9. Otitopic has developed a myocardial infarction treatment for patients with advanced disease.

Diversify your offer to survive

Philip Morris is distancing himself more and more from his historical activity. In 2017, the group created the Foundation for a Smoke-Free World, which is supposed to encourage smoking cessation. A way for the cigarette manufacturer to promote alternative products, such as heated tobacco deemed less harmful to health because it does not burn, but criticized by anti-smoking associations and doctors because of the nicotine it contains.

In his latest annual report, Philip Morris indicates that alternatives to cigarettes represent 23.8% of his net income. Ultimately, the group has set itself the goal of generating 50% of its net income from non-combustion products and $ 1 billion by 2025 from nicotine-free products.

Tobacco decline

These alternative products to tobacco and these surprising alliances with pharmaceutical companies are the result of a context far from being in good shape for the tobacco companies.

→ READ. Tobacco companies will pay for polluting cigarette butts

The erosion of sales in recent years, particularly marked in rich countries, heralds the gradual decline of the tobacco economy. Globally, the number of smokers has fallen by 60 million in the space of 20 years, according to the World Health Organization (WHO). In France, their proportion within the population increased from 34.5% to 30.4% between 2016 and 2019.

States engaged in the fight against tobacco

This trend can be explained in France by prevention campaigns combined with anti-smoking laws such as the Evin law of 1991, the ban on smoking in public spaces in 2006 and the implementation of the neutral package in 2016. The increase The constant price of the package, now exceeding 10 €, also weighs on the wallet of smokers. Taxes now represent 80% of the price of cigarettes.

Other countries have taken anti-smoking measures. This is the case of the United Kingdom, which is experimenting with areas where outdoor smoking is prohibited, or of Japan where the Olympics have accelerated the ban on smoking in most public places. Aware of this reality, the leaders of Philip Morris have indicated that they could completely stop selling tobacco within “10 to 15 years” in some countries, citing Japan and the United Kingdom. To survive, Philip Morris must diversify to imagine a tobacco-free future.

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