Philip Morris International, a multinational tobacco giant, has entered into an agreement to acquire Syqe Medical, an Israeli cannabis tech firm, for a deal valued at up to $650 million. This acquisition highlights Philip Morris’ interest in the cannabis space and marks one of the largest investments made by a tobacco producer in recent years.
Introduction
The Israeli business newspaper Calcalist reported that Philip Morris International is set to purchase Syqe Medical, an Israeli cannabis tech firm, for a deal worth up to $650 million. This move by the multinational tobacco giant reflects their growing interest in the cannabis industry and signifies a significant investment in the sector.
Philip Morris International’s acquisition of Syqe Medical
Syqe Medical specializes in the development of a metered-dose pharmaceutical-grade inhaler that enables patients to measure precise doses of medical cannabis. This innovative product offers a controlled and accurate method of administering medical cannabis, ensuring patients receive the appropriate therapeutic dosage. The acquisition of Syqe Medical presents an opportunity for Philip Morris to expand its presence in the cannabis market.
Previous investments in the cannabis industry by tobacco companies
Philip Morris is not the first tobacco company to invest in the cannabis industry. In 2018, Altria Group, one of the largest tobacco companies in North America, invested $1.8 billion in Ontario-based cannabis producer Cronos Group. However, Cronos Group is currently seeking a buyer. In the same year, British tobacco giant Imperial Brands invested $123 million in Toronto-based cannabis producer Auxly Cannabis Group.
Implications of Philip Morris’ investment in Syqe Medical
If the deal goes through, the acquisition of Syqe Medical would make the Israeli company one of the most valuable cannabis firms globally. The agreement involves milestones, with an upfront investment of $120 million by Philip Morris in Syqe. Furthermore, if Syqe Medical’s inhaler receives approval from the U.S. Food and Drug Administration (FDA) following clinical trials, Philip Morris would acquire the remaining shares, bringing the total deal value to $650 million. This significant investment demonstrates Philip Morris’ confidence in the potential of the cannabis market.
According to Owen Bennett, a cannabis and tobacco equity analyst for Jefferies Group, the $650 million valuation would position Syqe Medical as the seventh most valuable cannabis company worldwide. Bennett also predicts that the vaped medical cannabis market could reach a value of $22 billion within the next 10 to 15 years, presenting a substantial opportunity for Philip Morris to expand its offerings.
Philip Morris’ previous involvement in the medical cannabis tech space
Philip Morris had previously invested $20 million in Syqe Medical during its startup phase. This prior investment demonstrates the tobacco company’s interest in the medical cannabis tech space and its belief in Syqe’s innovative approach to medical cannabis administration. The acquisition of Syqe Medical represents a further step for Philip Morris in solidifying its position in this emerging industry.
Philip Morris’ interest in the marijuana industry
Philip Morris has been closely monitoring the marijuana industry for potential market opportunities. In a statement to Bloomberg News, the then-CEO Andre Calantzopoulos stated that the company was analyzing the cannabis industry and exploring avenues for future pursuits. However, he emphasized that Philip Morris’ primary focus remained on their smoke-free products. With Calantzopoulos now serving as the executive chairman, the acquisition of Syqe Medical suggests a strategic move to diversify Philip Morris’ portfolio.
Syqe Medical’s patents and availability of the inhaler
Syqe Medical holds approximately 120 patents related to its pharmaceutical-grade inhaler. The company has made the inhaler available in Israel and Australia, where it has been well received. It received approval in Canada in 2021 as the fourth medical device for a cannabinoid vaporizer. However, it appears that the product has not yet been launched in the Canadian market. The development of the inhaler took eight years and involved an investment of $83 million.
Conclusion
Philip Morris International’s acquisition of Syqe Medical represents a significant milestone in the cannabis industry. With this deal, Philip Morris aims to capitalize on the growing market for medical cannabis and leverage Syqe’s innovative inhaler technology. The acquisition underscores the increasing interest of tobacco companies in the cannabis sector and signals a potential shift in the industry landscape.
FAQs
Q: What is the significance of Philip Morris’ acquisition of Syqe Medical? A: Philip Morris’ acquisition of Syqe Medical demonstrates the tobacco giant’s interest in the cannabis industry and its commitment to diversifying its portfolio. It marks one of the largest investments made by a tobacco producer in the cannabis space.
Q: How does Syqe Medical’s inhaler work? A: Syqe Medical’s inhaler is a metered-dose pharmaceutical-grade device that allows patients to measure precise doses of medical cannabis. It provides a controlled method of administering medical cannabis, ensuring accurate dosing for patients.
Q: What were the previous investments by tobacco companies in the cannabis industry? A: Altria Group invested $1.8 billion in Cronos Group, while Imperial Brands invested $123 million in Auxly Cannabis Group. These investments demonstrate the growing interest of tobacco companies in the cannabis sector.
Q: How does this acquisition impact the valuation of Syqe Medical? A: The acquisition of Syqe Medical by Philip Morris would make the Israeli company one of the most valuable cannabis firms in the world. This significant investment would increase Syqe Medical’s valuation.
Q: What are the implications of Philip Morris entering the vaped medical cannabis market? A: With its acquisition of Syqe Medical, Philip Morris aims to tap into the vaped medical cannabis market, which is expected to reach a value of $22 billion in the next 10 to 15 years. This move allows Philip Morris to expand its offerings in the rapidly growing cannabis industry.
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