Economics

In the News

Vertical integration - Cigarette manufacturer bids to buy an inhaler business

Geoff Riley

15th July 2021

Philip Morris, one of the world's largest tobacco companies, is bidding to acquire UK asthma drugmaker Vectura which manufactures inhalers and nebulisers.

For some this is beyond the pall of smoke that flows from Marlborough cigarettes - the most popular brand of Philip Morris International, one of the world''s biggest tobacco manufacturers.

They have offered £1bn for Vectura, a company that has developed a pioneering inhaled treatment for Covid-19.

The takeover bid is a classic example of strategic change (as Philip Morris looks to accelerate the shift from tobacco to pharmaceuticals).

One of their key objectives is achieve $1bn in non-tobacco sales by 2025 and the rapid growth of inhaled therapeutics market will no doubt help them achieve this.

As to their stated aim of following a natural evolution into becoming a broader healthcare and wellness company - well that statement takes the breath away. Their products have contributed to the premature death of millions over the years.

Their CEO is fast-forwarding to a time when their main product will largely cease to exist (one hopes).

Advantages and Drawbacks of Vertical Integration I A Level and IB Economics

Geoff Riley

Geoff Riley FRSA has been teaching Economics for over thirty years. He has over twenty years experience as Head of Economics at leading schools. He writes extensively and is a contributor and presenter on CPD conferences in the UK and overseas.

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