Is a Glaxo acquisition of NJOY in the works?

[Update: Not that I expect anyone is still reading this post, but just in case:  It turns out that the Pinney move was actually a move to drop Glaxo as a client and replace them with NJOY, which was one of those classic power-politics negotiations. I have yet to see any public acknowledgment about it, but that seems to be what happened.  Thus, half the clues supporting my hypothesis turned out to not be real.  Thus this seems much less likely than I originally thought.  Still a good question about how they plan to acquire drug trial skills, though.]

by Carl V Phillips

[I should lead off by saying that I have no evidence about the speculation in the title other than what I am presenting here, and that nothing here is meant to express judgment about whether this would be good or bad, though we might address that point later.]

Making and selling fast moving consumer goods (FMCG; basically anything that you might buy in a grocery store or C-store) is very different from making and selling medicines.  In addition to the obvious matter of navigating the medicines regulatory process, the distribution network and sales methods are very different, and the manufacturing and supply chain controls are much less flexible and more exacting.

So why would NJOY, a company that has mastered FMCG manufacture and sales, show enthusiasm about pursuing medicines approval for their products in Canada and seemingly support medicines regulation in Europe?  (Note that in the USA, they remain a leader in fighting against state and local restrictions that would hurt their FMCG business and consumers, and of course were the co-plaintiff in the lawsuit that prevented medicines regulation in the first place.) Medicines approval, marketing, distribution, and manufacturer are not part of their core expertise, and are expensive skills to acquire.

By the same token, one of the reasons pharma companies have not jumped into the e-cigarette space is that they are generally not all that good at selling FMCGs, though J&J’s consumer division certainly does a good job with Band-Aids and such.

Enter synergy.  How could NJOY possibly feel comfortable jumping into the medicines space?  Perhaps because they (a closely-held company that thus could easily cut such a deal) are discussing acquisition by someone who knows how to do it.

Why GlaxoSmithKline?  Today NJOY announced that they are hiring Pinney Associates — former home of FDA’s tobacco chief, Mitch Zeller, among other players — a consulting firm that is closely associated with Glaxo.  It is difficult to imagine that happening without Glaxo’s explicit approval, and difficult to imagine NJOY making that choice among such firms unless the connection was intentional.  Glaxo also has other advantages over their competitors, including being in the NRT space (along with J&J and others, of course) and having a near monopoly on asthma and COPD drugs, the medicines products that are most similar to e-cigarettes and that could yield some cross-technologies.

Of course, all this is also compatible with some sort of strategic alliance that does not involve full-on acquisition.  Presumably Glaxo would prefer an acquisition, but it is conceivable that NJOY’s owners might prefer to keep building their own small empire rather than joining a larger one.

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11 responses to “Is a Glaxo acquisition of NJOY in the works?

  1. Pingback: Is a Glaxo acquisition of NJOY in the works?

  2. Pingback: Is A Glaxo Acquisition Of NJOY In The Works? • The Spinfuel News Blog

  3. Speaking of pharmaceutical companies getting in on the e-cigarette business, there is a local e-juice company here in New Orleans that appears to have (?) a loose affiliation with J&J:

    “Our organic nicotine extraction is performed through partnership with one of the providing labs to Johnson & Johnson’s global line of nicotine based products for your assurance of chemical purity, quality control, and reliable results.”

    http://www.nolavape.com/new-orleans-ecig/

    Interesting…

  4. When it was announced by NJoy on the 21st Jan here in Nova Scotia they announced NJoy had been working with Health Canada seeking medicinal use licenses. The writing on the wall became very clear to me. Mr Phillips, I now believe there are far too many foxes in the chicken coop, so many in fact we could just rename the whole debate over electronic cigarettes ” The Fox and the Hounds” awaiting an epilog already familiar. Boring and making smokers just as stigmatized and sick. Wondering whether J%J knew or knows won’t make them any less eager to remain on the winning side. Myself amongst 5,999,999 other smokers scheduled to die in the next 12 months; if this ingenious device is manipulated to the point of becoming just another failed band-aid to sell to the masses by the “Fox and Hounds club.” I do pray a wondering thought becomes a roaring “GROWL” on behalf of the actual victims. I really admire your writings interviews etc on our behalf. I do however pray you know how to get a fox running with it’s tail between it’s legs, because I don’t. My voice is weak. My peers are not understanding because the message has been so distorted. Do you have any idea as to what we the victims of this distortion can do? Please let me know. I have been using an electronic cigarette, vaping device, whatever they want to label it, since Sept 2013. I choose to do so because chemo is not in my vocabulary and I could not stop smoking cigarettes even after being given a choice of quit or die. I’m past the 3-6 months and vaping. I’m trying to fight for myself but more importantly now, for those who don’t know if this is a safer and healthier choice. That is something I no longer have to wonder about. VAPE OUT LOUD.

    • Carl V Phillips

      There is no reason to assume that aggressive pharma moves into the THR space would bad for consumers. Best case scenario is that it just adds to the options, offering some better quality-controlled products. Of course, it would be bad for consumers if there were more restrictions that forced all THR products into a medical model, and that becomes rather more likely when big companies have medicalized products that they want to protect from competition from non-medical products.

  5. Pingback: Some follow-up questions for Richard Carmona | EP-ology

  6. Pingback: E Cigarettes – Big Numbers – Big Business

  7. You say, “Not that I expect anyone is still reading this post…” Well, I’m reading it. In fact, I found myself helplessly impelled to read ALL of your posts. But please bear in mind that I have an addictive personality, as evidenced by the fact that, alas, I was a long-term cigarette smoker, saved from that destructive habit, after all else failed, by e-cigarettes.
    Thank you for all you do and, by all means, godspeed and carry on.

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