Philip Morris International is considering selling off a stake in its largest pharmaceuticals unit.
The tobacco company, which makes Marlboro cigarettes, made inroads into the healthcare and wellness space in 2021 with the acquisition of Vectura, a UK-based pharmaceutical company that makes inhaled medicines and inhaler devices.
But more recently the division has struggled, and Philip Morris has had talks with Deutsche Bank on a range of options to try to grow its wellness and healthcare division, the WSJ first reported.
The company has been looking for a new partner to help boost Vectura, and it’s contemplating different options including a licensing or royalties deal, a commercial partnership, or a sale of a majority or minority stake in the business.
In recent years, Philip Morris has also acquired Fertin Pharma, a nicotine gum maker, and OtiTopic, a respiratory drug maker.
The three deals, which together totaled more than $2 billion, were a part of the company’s broader, long-term pivot toward developing smoke-free products and medicines aimed at treating respiratory diseases commonly associated with cigarette smoking.
The acquisitions, however, triggered backlash from the public health sector. And, in the second quarter of this year, the company took a $680 million impairment charge related to its wellness and healthcare division.
At the time of the Vectura deal, PMI said the acquisition would grow its “Beyond Nicotine” business and help the division achieve its goal of generating at least $1 billion in net revenues from these products by 2025. Following the setbacks, PMI walked back that goal and said it would begin reducing its investments in the division.
The company, in its Q2 earnings call, said it nevertheless will “remain committed to developing” its wellness and healthcare business and that it plans to “accelerate Vectura’s growth and will be exploring potential partnerships.”
The news comes as the tobacco company continues to face resistance from public health groups. This week, PMI had its CEO removed from the line-up at the Concordia Annual Summit, a side event to the UN General Assembly meeting held in New York every September, after health experts refused to speak at the conference in protest against his appearance.
Concordia also rescinded Philip Morris’s membership in the conference effective immediately.