In the Medical Science Laboratory, we see a beautiful black scientist focused on her work. She is peering through a microscope, carefully analyzing a test sample. This ambitious young biotechnology specialist is equipped with advanced equipment, dedicated to conducting thorough analyses. Her dedication and expertise contribute to the progress of medical science.
Philip Morris International (PMI), the world’s biggest tobacco company by market cap, is expanding its presence in the cannabis industry through its subsidiary, Vectura Fertin Pharma (VFP). In an overlooked press release, the company recently announced a collaboration with Avicanna, a Canadian biopharmaceutical firm that specializes in medicinal products derived from cannabinoids. The goal of this partnership is to advance research on medical cannabis and enhance its availability in Canada. By harnessing Avicanna’s expertise and its MyMedi.ca platform, PMI is steadily moving towards the realm of health and wellness.
PMI’s collaboration with Vectura Fertin Pharma and Avicanna signifies their ongoing strategic approach in the cannabis industry, with a specific emphasis on medical applications instead of recreational cannabis. Aaron Grey, the managing director at Alliance Global Partners, an investment firm actively involved in the cannabis sector, notes that PMI has consistently demonstrated interest in the medical aspect of cannabis. This is evident from their medical-focused investment in Syqe Medical in 2016, and their partnership with Avicanna further reinforces their commitment to the medical side of cannabis. PMI’s public engagement with cannabis has primarily revolved around its medical applications, rather than recreational or consumer products.
PMI Eyes The Future With Medical Cannabis Investments
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PMI’s strategic focus on medical cannabis is in line with its overall approach to research-driven innovation. Grey explains that this move reflects PMI’s ongoing interest in cannabis, especially in the medical sector. As evidence, he points out that PMI previously invested in Syqe Medical in 2016 and later acquired the remaining shares in July 2023. These investments were primarily centered around medical applications. Therefore, the collaboration with Avicanna seems to be a continuation of PMI’s medical-focused strategy.
PMI is not only focused on its medical cannabis initiatives but is also strategically positioning itself to cater to changing consumer preferences in the long run. According to Grey, the shift in usage trends among young adults is evident, as they are moving away from tobacco and alcohol towards cannabis. Recognizing this trend, major tobacco companies like British American Tobacco have established divisions like ‘Beyond Nicotine’ to tap into this growing consumer base. Embracing cannabis is not just a short-term strategy for these companies; it is a proactive measure to adapt to the anticipated long-term shift in consumer preferences.
According to Dan Ahrens, the managing director of AdvisorShares, Big Tobacco has shown a cautious approach towards investing in the cannabis industry. While they have made several investments and joint ventures in the Canadian market, they seem to be holding off on making significant additional investments. Ahrens believes that this hesitation is due to their desire to wait for federal reforms in the United States before expanding their investments in the American cannabis market.
Todd Harrison, the founder of CB1 Capital, states that the tobacco and alcohol industries have been showing interest in the cannabis industry for a while now. However, he believes that the extent to which they integrate with cannabis will depend on the regulatory environment.
A Strategic Detour: Why PMI Isn’t Following The Crowd
PMI has taken a different approach to cannabis compared to its competitors such as Altria and British American Tobacco (BAT). While Altria invested $1.8 billion in Cronos Group and BAT formed a CAD 125 million R&D partnership with Organigram in 2023, PMI has chosen to focus on medical cannabis as a key part of its diversification strategy.
According to Grey, many major players in the tobacco industry have made significant investments in the cannabis sector. For instance, Altria invested $1.8 billion in Cronos Group, Imperial Brands invested CAD 125 million in Auxly, and BAT invested CAD 125 million in Organigram. These investments not only demonstrate the tobacco industry’s interest in the cannabis space but also highlight PMI’s partnership with Avicanna as a part of this larger trend.
PMI’s strategic focus on Canada’s well-regulated cannabis market not only provides a valuable testing ground but also allows the company to gain insights into patient-focused care and market dynamics. Grey highlights the early investments and joint ventures made by companies like Altria, Constellation Brands, and Molson Coors when cannabis was first legalized in Canada. However, not all of these initial moves yielded the expected results. In recent times, we have observed a shift towards more targeted investments, such as BAT’s partnership with Organigram.
Avicanna: A Key Player In PMI’s Long-Term Game Plan?
Avicanna has a strong track record of forming significant collaborations. In 2023, the company acquired Shoppers Drug Mart’s Medical Cannabis by Shoppers platform and seamlessly integrated it into its MyMedi.ca ecosystem. This integration empowers Avicanna to provide curated medical cannabis products and pharmacist-led support. Moreover, Avicanna has had a long-standing presence at Johnson & Johnson’s JLABS incubator, where it has focused on conducting research and development in the field of cannabinoids. Furthermore, the partnership between Avicanna and Daabon, a leading organic agribusiness, bolsters the company’s supply chain by incorporating sustainably cultivated cannabinoids.
Avicanna’s selection by PMI is notable, considering its smaller market capitalization compared to other cannabis companies that have attracted investments from tobacco giants. What sets Avicanna apart is its strong emphasis on medical cannabis. From the beginning, the company has dedicated itself to research and development (R&D) and clinical studies, prioritizing the advancement of cannabinoid-based therapeutics and evidence-based solutions for patients rather than focusing on consumer-driven recreational markets. This long-term commitment has positioned Avicanna as a leader in the medical cannabis industry.
Several companies in the cannabis industry have made significant investments in medical cannabis research. One notable example is GW Pharmaceuticals, which is now part of Jazz Pharmaceuticals. They have developed Epidiolex, the first cannabis-derived drug to receive FDA approval for the treatment of epilepsy. Tilray is another company that has focused on medical research and has formed partnerships with institutions such as New York University and the University of Sydney. Their research aims to explore the potential of cannabis in treating conditions like anxiety and chemotherapy-induced nausea. While these companies have made strides in specific therapeutic areas, Avicanna takes a broader approach. They are involved in research collaborations with institutions like the University Health Network and SickKids Hospital in Canada, investigating the potential of cannabis in treating epilepsy, dermatological disorders, and pain management, among other conditions.
Avicanna stands out from companies like Canopy Growth and Cronos Group by taking an integrated approach to patient care through MyMedi.ca. While other companies have focused on developing consumer-facing products, Avicanna has also made significant advancements in medical cannabis and research and development (R&D). This broad focus on clinical development makes Avicanna a specialized partner for advancing cannabinoid-based therapeutics in various medical applications.
What’s Next For PMI And Cannabis?
The partnership between PMI and Avicanna has sparked curiosity regarding PMI’s future plans. Analysts speculate that this collaboration could potentially lead to an acquisition. Grey, an industry expert, points out that PMI’s previous investment in Syqe Medical eventually resulted in full ownership in 2023. It remains to be seen if PMI’s partnership with Avicanna will follow a similar trajectory, which will largely depend on the progress of their collaboration and any regulatory changes that may occur.
According to Ahrens, it is still too early to determine if PMI will end up acquiring Avicanna. The information regarding their collaboration is currently limited.
Ahrens speculates that PMI’s aspirations extend beyond Canada as well, particularly to the United States. He points out that there have already been some limited instances of similar activity in Canada, suggesting that big tobacco and big alcohol are biding their time for a chance to enter the US markets and collaborate with MSOs.
Avicanna’s collaboration with PMI positions the company as a significant partner for multinational firms in the future. By prioritizing medical cannabis, PMI avoids the uncertainties of recreational markets and establishes a foundation for long-term diversification. Harrison emphasizes that traditional consumer packaged goods (CPG) industries have maintained a cautious distance until clear regulations emerge. However, this partnership serves as further evidence of the growing integration of cannabis into established industries’ portfolios.