Philip Morris International’s (PM) affiliate, Vectura Fertin Pharma, announced on Tuesday the sale of its subsidiary Vectura Group (Vectura) to Molex Asia Holding for an upfront payment of £150 million ($198 million), with potential deferred payments of up to £148 million. Additionally, Molex has entered into master service agreements to develop Vectura Fertin Pharma’s inhaled therapeutics proprietary pipeline. Notably, Vectura Group specializes in manufacturing asthma inhalers.
Why Did PM Sell Vectura Group?
In light of this development, it’s important to understand the backdrop. Marlboro maker PMI acquired Vectura in September 2021 for £1.1 billion as part of its strategy to evolve into a “broader healthcare and wellness” group. However, this acquisition faced significant backlash, described as “unwarranted opposition.”
Subsequently, as reported by Reuters, the company has experienced a $680 million impairment charge against the Vectura unit and abandoned its goal of generating $1 billion in net revenues from Vectura by 2025.
In response to these challenges, Philip Morris’ CEO Jacek Olczak emphasized that Molex, through its Phillips Medisize unit, is better positioned to lead Vectura. He remarked that the sale will relieve Vectura from “the unreasonable burden of external constraints and criticism related to our ownership.”
Is PM a Buy or Sell?
Analysts remain bullish about PM stock, with a Strong Buy consensus rating based on a unanimous seven Buys. Over the past year, PM has increased by more than 30%, and the average PM price target of $130.57 implies an upside potential of 5.2% from current levels.
