Philip Morris considers selling stake in pharmaceuticals unit to boost health-care division

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 health care and wellness space in 2021 with the acquisition of Vectura, a U.K.-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 health-care division, The Wall Street Journal 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 drugmaker.

The three deals, which together totaled more than $2 billion, were 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. In the second quarter of this year, the company took a $680 million impairment charge related to its wellness and health-care division.

At the time of the Vectura deal, Philip Morris 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, Philip Morris walked back on 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 health-care business and 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, Philip Morris had its CEO removed from the lineup at the Concordia Annual Summit, a side event to the United Nations 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Concordia also rescinded Philip Morris’ membership in the conference effective immediately.