NEW YORK -(Dow Jones)- Cigarettes and vaccines may not have much in common, but Philip Morris International Inc. (PM) is dabbling in research that has links to both.

The company - which sells Marlboro cigarettes outside the U.S. - recently invested C$16 million (US$13 million) in Canadian biotechnology company Medicago, which is tapping the tobacco plant to develop influenza vaccines.

The investment could potentially boost the company's understanding of the tobacco plant, but Philip Morris hasn't specified how it plans to use the research.

The investment is a small one for the giant tobacco company, but it highlights the pressure that cigarette companies are facing to boost their research and development capabilities.

Some consumers in developed markets are turning away from cigarettes on higher taxes, bans on smoking in public places and a greater awareness of health risks. These trends are pushing the companies to deepen their research into the science related to tobacco, set up large research and development centers and even test a variety of new products that might eventually be marketed as less harmful than conventional cigarettes.

"They are just exploring their options. These companies produce a tremendous amount of cash flow. Not everything is going to have an immediate payoff," said Standard & Poor's equity analyst Esther Kwon about Philip Morris International's investment in Medicago. "Investments here and there make sense."

Medicago Chief Executive Andy Sheldon said his company's strength lies in being able to use plants in developing proteins that protect against influenza. The company's vaccines are in the development stage. Sheldon said Medicago and Philip Morris International have a research and development management committee that looks at research spending and milestones that are met.

Philip Morris International spokesman Greg Prager said it was too early to say how the company will ultimately put the Medicago investment to use. He said the investment should be seen as an attempt by the company to explore an "adjacent technology."

Prager pointed out the company spends heavily on studying potential "reduced risk" tobacco products, and the investment in Medicago would be just a tiny fraction of that amount. Overall, the company has more than 500 scientists looking for ways to develop less-harmful tobacco products and is setting up a new R&D facility in Switzerland that is scheduled to open next year.

Philip Morris International, which operates outside the U.S., has the benefit of operating in many markets that are still seeing growth in volume. But for U.S. tobacco companies the research and development of new products, including they could highlight as less harmful than conventional cigarettes, is getting more crucial. Cigarette volume in the U.S. have been on a steady decline, partly due to smoking bans in many public places. The U.S. Food and Drug Administration may ultimately regulate tobacco products, and that development may determine the fate of new tobacco products in coming years.

The cigarette volume declines in the U.S. have the largest tobacco companies putting greater effort into their research and development, a move they hope will ultimately provide products that could help make up for those declines.

Bill Phelps, a spokesman for Altria (MO), which sells Marlboro cigarettes in the U.S., said the company's strategy has been to develop and commercialize new products that may reduce the health risk associated with tobacco products. But developing these products is a challenging task, he says. The company has to identify the components that are potentially the most dangerous and remove them, he said, and has to be able to communicate the benefits of such products.

Altria recently completed a new facility that it calls the Center for Research & Technology, a $350 million project.

At a recent investor meeting, Reynolds American (RAI) executives said the company is using innovation and launching new products - particularly in smokeless tobacco - to help offset pressures the U.S. cigarette industry is seeing.

The company, whose brands include Camel cigarettes and Grizzly smokeless tobacco - says its new lineup includes "dissolvable" smokeless products that don't require spitting that come in strips and other forms. A Reynolds American spokesman said the company isn't making health claims regarding those or any other products, but noted there is a large body of research that indicates smokeless products in general carry less risk than combustible products like cigarettes.

James Swauger, vice president for regulatory oversight for Reynolds American said the company scientists and researchers are particularly interested in this difference between the risk profiles of smokeless products and cigarettes.

S&P's Kwon said it will be a while before many of these new products actually benefit tobacco companies' financial results.