Phillip Morris Buys Oral Drugmaker Fertin

07.07.2021 - Companies outside the drugs and private equity sectors are increasingly striking deals to buy pharmaceutical companies. In one of the latest, cigarette manufacturer Phillip Morris has bought oral drug delivery specialist Fertin Pharma. Seller is private equity investor EQT Private Equity.

In the deal valued at 5.1 billion Danish krone ($813 million), the erstwhile tobacco company with Marlboro as flagship brand is gaining control of a range of drug delivery technologies including chewing gums used in the administration of nicotine to help wean consumers off its earlier products. The takeover includes manufacturing and R&D sites in Denmark, Canada and India, where Fertin employs around 860 people.

When EQT acquired a 70% stake in Fertin in 2017, the company was focused on medical chewing gum. With the investor’s backing, it has since expanded its oral drug delivery portfolio to include controlled-release tablets, powders that dissolve under the upper lip and solid dosage forms that liquefy when chewed.

EQT’s investment has clearly paid off. Fertin’s EBITDA has grown almost 50% in the meantime. What’s more, the company now operates as a CDMO, providing technologies to pharma and healthcare companies.

Phillip Morris’s investment in the drugs sector is an obvious move to build a portfolio of products not associated with tobacco. “The acquisition of Fertin Pharma will be a significant step forward on our journey toward delivering a smoke-free future, enhancing our smoke-free portfolio, notably in modern oral, and accelerating our progress in beyond nicotine,” CEO Jacek Olczak acknowledged in a statement.

The erstwhile tobacco company now hopes to generate more than half of its net revenue from smoke-free products by 2025. Altogether, it aims for at least $1 billion of this revenue to come from products other than nicotine. 

Author: Dede Williams, Freelance Journalist