Philip Morris and Carlyle continue bidding war over Vectura

British tobacco giant Philip Morris International (PMI) and US private equity firm The Carlyle Group have both raised their bids to purchase 24-year-old biotech Vectura.

PMI, which owns a portfolio of tobacco products, announced a deal last month to acquire UK-headquartered Vectura for £927m ($1.2bn).

Vectura, which is developing inhaled drug delivery solutions for a number of diseases – including COVID-19 – previously received an acquisition offer from Carlyle in May, but withdrew its support for the offer after receiving a higher offer of $1.2bn from PMI.

For Carlyle, Vectura would provide an opportunity to continue to capitalise on the expanding life sciences industry.

Carlyle’s new offer is $1.33bn and in response PMI has increased its bid to roughly $1.4bn.

PMI has been investing in selected companies in a bid to move away from its core tobacco business, aiming to generate at least $1bn in net revenues by 2025 from its ‘beyond nicotine’ products.

“PMI’s Beyond Nicotine strategy, announced in February, articulates a clear ambition to leverage our expertise in inhalation and aerosolisation into adjacent areas – including respiratory drug delivery and selfcare wellness – with a goal to reach at least USD 1 billion in net revenues by 2025,” said Jacek Olczak (pictured above), chief executive officer of PMI.

On Monday, PMI acquired OtiTopic, a respiratory drug development company developing an inhaled drug for heart attacks, for an undisclosed sum.

PMI has announced that, by 2030, it plans to stop selling cigarettes in the UK and the firm is also looking at ways it can use its cigarette-making expertise to develop a COVID-19 vaccine.

The potential Vectura/PMI deal has faced criticism from medical research charities and anti-smoking groups. Last month, Kwasi Kwarteng, UK business secretary, reportedly asked officials to monitor the deal to ‘better understand’ PMI’s plans for Vectura.

Cancer Research UK CEO Michelle Mitchell said in a statement last month:“It’s ironic that a tobacco company wants to invest in the lung health industry when their products are the biggest preventable cause of cancer, including lung cancer. If PMI really wanted to help, they could stop selling and aggressively promoting their products altogether.”