In its latest attempt to diversify its income sources away from cigarettes, tobacco giant Phillip Morris is reportedly going through a list of Chinese start-ups to help it develop future inhalation technology products. The company that makes the popular Marlboro cigarettes and IQOS tobacco heating systems is reportedly planning to develop inhalation products for the medical field.
Leading the company's search for potential Chinese partners is PM Equity Partner. Both companies have reportedly established a $150 million venture fund with aims to build substantial stakes in health-related Chinese firms. Philipp Morris is reportedly focusing its efforts on finding Chinese firms that deal with inhalation and lung treatment technologies.
When it first launched its IQOS tobacco heating products, Philipp Morris had stated that it does have plans to fully move away from cigarettes. The company is currently spending billions of dollars in its efforts to shift its customers from its cigarettes to its IQOS system.
The company's IQOS system has seen massive success in Asia, particularly in Japan, South Korea, Malaysia, and New Zealand. However, the company has been having problems marketing the product to places such as Singapore and Hong Kong. In September, Philipp Morris received the green light to sell the product in the United States, making it the only heat-not-burn-system approved by US regulators.
According to analysts, Philipp Morris's strategic investments could lead to "new industries" that are somewhat related to its traditional business. Its IQOS system could potentially be retrofitted for medical applications, a possibility that the company is likely already exploring.
The technology used in Philipp Morris' IQOS is similar to existing medical delivery systems. This includes how the electronic device is able to heat tobacco to create a nicotine vapor without necessarily burning the substance.
Outside of China, Philipp Morris had already made various investments, including an investment in a Middle Eastern inhalation tech startup. The unnamed company is reportedly developing new methods of delivering chemicals from plants and herbs into the human body through inhalation.
When compared to injections, inhalation technology has been seen as a less painful and more effective way of delivering medications to the body. The technology has seen some success in certain treatments, including those for asthma.
According to its own website, Philipp Morris has apparently already spent more than $100 million in 10 different tech startups outside of China, including well-known names in the sector such as Biovotion, Softhale, Biognosys, and Bow Group. That figure is expected to increase as the company attempts to form new partnerships with Chinese tech startups.
