Vectura shareholders urged to reject Philip Morris takeover | Tobacco industry

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Shareholders in asthma inhaler maker Vectura have been urged to reject a £1.1 billion takeover by tobacco company Philip Morris International (PMI), in an open letter signed by 35 health charities, public health experts and clinicians from around the world.

Investors in the respiratory medicine company Wiltshire have until September 15 to decide whether to sell their shares to PMI, which has touted its ambitions for a “smoke-free” future but still derives 75% of its revenue from cigarettes.

Vectura board members have already recommended that investors accept the offer, which overrides a previous £958m bid from US private equity group Carlyle, citing PMI’s ability to fund research and development.

But the signatories to the open letter written directly to shareholders, led by Asthma UK and British Lung Foundation, warned the company’s investors that accepting PMI funds would “significantly impede Vectura’s ability to continue operating as a viable, research-oriented company”.

They warned that Vectura could lose access to government grants due to the United Nations Tobacco Control Treaty, under which 180 countries have agreed to limit the tobacco industry’s influence on health policy.

The signatories said aversion to ownership of a tobacco company could also sever crucial ties between Vectura and the medical community.

“Many university-hospital collaborations will likely be denied, and participation in clinical trials blocked, disrupting critical drug development – one of Vectura’s core business activities,” she said. “The acquisition by PMI is therefore likely to cause significant disruption to Vectura’s operations and future profitability for its shareholders.”

The signatories also warned that Vectura’s ability to publish research in medical journals and attract talented staff could be diminished.

They asked Vectura shareholders to “consider both the business risks and ethical inconsistencies arising from the proposed acquisition. Tobacco companies should not benefit from treating diseases caused by their products.”

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The main shareholders of the company are a series of American investment funds. The largest, with a stake of 6.7 per cent, is Brown Capital Management, a Baltimore company with $18 billion (£13 billion) in assets under management. Started in the 1980s by Eddie Brown, it is one of the oldest African American asset managers in the United States.

None of the individual funds at the top of the list of Vectura contributors appear to be withholding tobacco, although the fund managers behind it offer other products aimed at ethical investors.

The shadow health minister, Jonathan Ashworth, had previously called on the government to block the takeover.

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