Cigarette giant Philip Morris is getting in on the cannabis game, and is doing it through Israel. The corporation is set to buy out Syqe Medical, an Israeli company involved in the development of cannabis inhalers. What is Philip Morris up to?
Philip Morris to buy out Israeli cannabis company Syqe
On July 18th, Calcalist reported that major cigarette producer Philip Morris is planning to buy out Israeli company Syqe, the maker of cannabis inhaler technology. The deal is not complete, and the payout is expected to go up to about $650 million. Philip Morris has been helping out Syqe for awhile, in order to make this deal go down; it already paid a $120 million investment to help the company get FDA approval for its already existent inhaler.
Should Syqe get this approval, Philip Morris buys all the shares of the cannabis company. This purchase is contingent on Syqe getting its FDA approval, though. The product in question is a metered-dose cannabis inhaler, meant for pain treatment. Philip Morris isn’t new to inhalers, and even has a subsidiary company designated to them, Vectura. The British company, bought by Philip Morris in 2021, is handling the Syqe deal. Together, the two acquisitions show the cigarette giant’s move toward the smokeless arena.
Philip Morris previously invested in Syqe to the tune of $20 million, back in 2016. If the current valuation is actually $650 million, and the deal is completed, Syqe will jump in status under Philip Morris, to join the ten biggest cannabis operations in the world. To give an idea how much this helps Syqe’s investors, consider that prior to this deal, the company only received about $80 million in funding.
A little more about Syqe
What is this company which is interesting enough to Philip Morris to invest so much, at a time when cannabis companies are mostly having issues? Syqe was started in 2011 by founder and CEO Perry Davidson. The company has worked in inhaler development for eight years, leading to 120 patents.
The current main inhaler product provides a couple benefits to patients. For one, it allows patients to use raw cannabis flower, rather than a processed version. It also gives precise dosing, so patients get the exact amount of medication necessary, without getting unwanted psychoactive effects. Currently its difficult with either smoking or vaping, to get an exact dose; so though inhaler dosing exists for things like asthma medication, this is still a new method for cannabis administration.
The latter dosing aspect is definitely useful, but already exists with inhalers. The former point is interesting, in that this makes the inhaler almost like a vaporizer, just without the heat. You don’t stick dry flower or oil in there (often called inflorescence), but rather the inhaler comes with cartridges already set with the correct amount of plant material. The metered doses are loaded into a cartridge, which gets inserted into the device. The amount for a patient is predetermined and set, as either 250, 500, 750, or 1,000 mcg of THC per dose.
The inhaler is currently only available in Israel and Australia, and the markets are small. Israel’s is thought to service around 50,000 people, and is worth around $27.5 million. The inhalers are no longer given out by Israeli pharma company Teva. Syqe instead signed agreements with the Israeli government through the Ministry of Defense and a main healthcare provider. The goal now is to expand the market outside of Israel.
A little on Philip Morris
Philip Morris started out humbly in 1847, with one shop in London, England. It became known as Philip Morris & Co. Ltd. in 1885; and was incorporated in New York in 1902. It was incorporated as Philip Morris & Co. Ltd., Inc., in 1919 in Virginia. Philip Morris International came about in 1987, and was incorporated as the Philip Morris Companies Inc.’s operating company.
In early 2003, Philip Morris Companies Inc., rebranded itself as the Altria Group, in response to bad press attached to its name from lawsuits. Philip Morris International spun off from Altria in 2008. In 2015, despite declines in the industry, Philip Morris International sold 850 billion cigarettes globally.
Philip Morris is a Big Tobacco company, and the purveyor of the most popular brand of cigarettes worldwide, Marlboro. According to Statista, in 2022, Marlboro sales accounted for over $36 billion from global sales. The next biggest cigarette brand was L&M, which brought in $6.8 billion. L&M is also a Philip Morris company, as is Chesterfield, the 8th biggest seller that year with over $3.3 billion in sales. As per MacroTrends, as of July 2023, Philip Morris is worth $152.66 billion.
Of course, Philip Morris is also highly associated with the damage of cigarettes, and long-term cover-ups and denials of medical information, to maintain sales. In 2002, Philip Morris lost a case that left it paying out $28 billion to a single woman with lung cancer. This was one of many individual cases settled over the years. Another, from 2019, involved a $27 million payout to a single woman with cancer.
In the 1990’s more than 40 states litigated cigarettes companies, culminating in 1998, with the Tobacco Master Settlement Agreement, for which Philip Morris was one of four cigarette companies involved. The companies agreed to pay out $206 billion over 25 years to over 40 states. The deal also came with tons of restrictions for the cigarette companies; from advertising requirements to setting up organizations to keep young people from smoking.
The Philip Morris transformation
As per Harvard Business Revenue, back in 2016, Philip Morris, the manufacturer of the world’s most popular cigarette brand Marlboro, started getting into the smoke-free world. That year the company announced its desire to transform the business, and move toward healthier products for nicotine ingestion. It said in the initial announcement, that its goal was to get 40 million adults to stop smoking by 2025.
In 2017, it began the Foundation for a Smoke-Free World. The foundation was meant to be independent, but faced criticisms and doubts as to its independent nature. Its purpose is to “evaluate the impact that smoke-free alternatives can have on smokers and public health, assess the effect of reduced cigarette consumption on the industry value chain, and measure overall progress towards a smoke-free world.”
By 2020, the company claimed in a progress report that it shipped out 144 billion less cigarettes; and took credit for half this decrease due to its turn to smoke-free products. In that time it sold 52 billion smoke-free product units. At that time, the company took on a generally greener mentality for the future, with a stated desire to hit carbon neutrality by 2030, and to cut the amount of plastic litter it produces, in half.
It also instituted its “beyond nicotine” campaign, which brought it into the territory of natural compounds like fennel, chamomile, and sleep aids. Today 1/3 of its revenue comes from smokeless products, like its iQOS electronic cigarette smoking device.
Of course, not everyone likes that a cigarette company is selling healthier living, after so many low-down antics concerning cigarettes, and considering the company still sells them. Philip Morris is still often bypassed as a ‘sin’ company by many investors. Further to that, the company got criticized by the governments of several countries, and the WHO foundation. The WHO will not partner with or support Philip Morris’s changes, and encouraged governments and public health communities elsewhere to also avoid working with its foundation.
Conclusion
Big business, like government, is often more interested in its bottom line. Does Philip Morris care about our health, or is this a business move to stay in the game as cigarette sales decline. The UK just passed legislation to promote vaping over smoking, and intends to be the sole vape provider, which means it’ll profit greatly. One could argue that the policy is meant not to help people, but to corner a large illicit market. Perhaps the corporation and the government have similar goals.
It’s worth mentioning that despite the backlash Philip Morris got for its anti-smoking campaign, at least its doing something. On the other hand, the US government works tirelessly to keep people smoking. Whether through an attempted vape mail ban, targeting companies like Juul and Elf Bar, suppressing nicotine gummies, the many and varied vape smear campaigns, and an idea to decrease nicotine in cigarettes (something known to increase smoking); the US government seems to want you smoking, more than Philip Morris.
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