Tobacco giant Philip Morris has considered selling his Marlboro business to quit the cigarette industry, boss says
Tobacco giant Philip Morris International has considered selling its Marlboro business to get out of the cigarette industry, its chief executive has revealed. But Jacek Olczak said that although he had discussions about unloading Marlboro, he decided to keep the company to help fund its growth in âwellnessâ products.
His comments come as Philip Morris faces a growing backlash from health activists over his controversial plans to buy UK inhaler company Vectura.
Philip Morris said the move was part of his move from cigarettes to a âsmoke-freeâ future, where he sells electronic cigarettes and less harmful âwellnessâ products.
Life is a drag: Philip Morris said move was part of his move from cigarettes to a ‘smoke-free’ future
Olczak told the Mail on Sunday: âYes, we had this discussion [about selling Marlboro]. Our conclusion was that if we kept the cigarettes, it would actually speed up our journey. [from traditional tobacco revenues] because I can allocate resources. I am able to take the resources from the cigarettes and move them to reduced risk products or move them to Vectura, which I wouldn’t be able to do if I didn’t have access to the resources.
Philip Morris edged out private equity firm Carlyle’s bid for Vectura with a Â£ 1.1 billion bid for the FTSE 250 pharmaceutical business. Vectura investors are in the process of voting on the deal.
Philip Morris needs more than 50% of the shareholders to back his bid by September 15. The battle escalated on Friday after Carlyle announced she had extended the timeline for her offer, reminding shareholders that she was still in the fight.
Philip Morris, who is based in Switzerland but whose roots go back to London in 1847, owns a range of cigarette brands including Marlboro, Chesterfield and Red & White. The company aims to become a âwellnessâ company that generates 50% of its revenue from âsmoke-freeâ products by 2025. The company still sells more than 700 billion cigarettes a year.
In an escalation of his war with critics, Olczak said Philip Morris had to buy Vectura to make this vital decision, otherwise he would have to keep selling cigarettes indefinitely.
‘Technically [by selling the Marlboro business] we could fix the problem, but that doesn’t mean the problem is solved, âhe said.
âIt’s a shortcut that, from a societal point of view, does not solve this problem.
âAnd, because we are a big part of the cigarette and tobacco market, we are better equipped for the right allocation of resources: three quarters of my resources are devoted to finding alternatives. I have seen a number of markets where, if everything is aligned, you can stop selling cigarettes within ten years. If I were just a cigarette company, I wouldn’t have an alternative.
But doctors and health experts have warned that the deal could derail key Vectura contracts and government grants.
A group of 35 health experts wrote an open letter earlier this month claiming that a takeover by the tobacco company would “significantly hamper” Vectura’s strategy of operating as a drug company focused on the research.
Dr Nick Hopkinson, one of the signatories, claimed that Philip Morris was inextricably linked with a large number of smoking-related deaths. He said it was “inevitable” that medical experts would boycott Vectura if it was bought by the tobacco giant.
âSince there are alternatives, not using these inhalers is easy,â he said. âFor most people, the change is easy – there is no practical difference – although some need these inhalers because they are the only thing that works for them.