Tobacco Giant Philip Morris Rethinks Pharma Dive, Mulls Vectura Stake Sale Amid Challenges: Report

Philip Morris International Inc PM is reportedly mulling to sell a stake in its U.K.-based Vectura pharmaceuticals unit.

The tobacco company is searching for a new partner to make the business work, possibly by selling a majority or minority stake, according to a report by the Wall Street Journal. Other alternatives include a licensing or royalties deal or a commercial partnership, the report read.

Back in 2021, PM made a bold leap into healthcare by snapping up three pharmaceutical giants, including Vectura, with a whopping $2 billion. 

Vectura, an inhaled medication company, was worth $1.24 billion, which was taken over after succeeding in a bidding war against private equity firm Carlyle Group, the report added.

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Over the summer, Philip Morris's challenges became evident as the company incurred a $680 million charge related to its wellness and healthcare sector, pushing back its aggressive revenue targets for that division.

In addition, the company didn't expect the long time needed to make medicine, especially inhaled medications, as the report highlighted, quoting people familiar with the matter. 

Philip Morris is reportedly in talks with Deutsche Bank AG DB, strategizing ways to supercharge its wellness and healthcare unit, the report further noted.

Apart from Vectura, Philip Morris, in 2021, spent over $700 million to get Fertin Pharma, a Danish company making special gums and lozenges. The report mentioned that they also got OtiTopic, a U.S. company making inhalable aspirin, but the price wasn't shared.

In its Q2 press release, CEO Jacek Olczak had said, "As we look to the longer term, we are complementing our smoke-free transformation with the further development of our wellness and healthcare business. While we have experienced some initial headwinds, we remain committed to wellness and healthcare, with a focused strategy on several attractive growth opportunities."

Price Action: PM shares closed higher by 0.37% to $97.32 on Tuesday.