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Alternative tobacco product met with government scepticism

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Philip Morris ‘tobacco sticks’ court prosecution postponed

The heat has come on tobacco company Philip Morris for importing and selling “tobacco sticks”.

The company is facing two charges brought by the Ministry of Health over the sticks, called Heets.

The charges were to be called in the Wellington District Court on Friday but at the last minute they were adjourned by agreement until September 7.

That date was for a case review hearing, an indication that the company would plead not guilty although it appeared no pleas were entered.

The ministry said it considered Heets fell into a category of tobacco products for oral use, other than smoking, and so were banned under the Smoke-Free Environments Act.

Heets were described as tobacco sticks heated in an electronic device, rather than being burned like a normal cigarette.

Through a code-protected invitation-only website, the company was marketing its IQOS smokeless electronic devices, which heated the sticks to release the nicotine.

In March the company said it was confident the way it was doing business was legal.

General manager for Philip Morris New Zealand, Jason Erickson, said they complied with all sections of the Smoke-Free Environments Act.

“We are currently making our IQOS device and Heets available to registered adult smokers on a website. If requested, we will provide a demonstration on how to use the IQOS device, which as the Ministry of Health has acknowledged, is a consumer electronics product.”

The two charges the company faced had a maximum $10,000 penalty.

Heat-Not-Burn Tobacco Cigarettes: Smoke by Any Other Name

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Charges laid against Philip Morris

The Ministry of Health has laid charges against tobacco company Philip Morris New Zealand relating to a new type of non-burning tobacco product.

The product, Iqos, was launched at the end of last year. It was promoted through an invitation-only website and used a battery-powered holder to heats tobacco sticks known as heets to give off vapour rather than smoke.

Heets are heated rather than burned like a traditional cigarette, to give smokers a nicotine hit.

The ministry said it considered heets were tobacco products designed for oral use other than for smoking and were prohibited under the Smoke-Free Environments Act.

The charges have been laid at the Wellington District Court and the case has been set down for first hearing on June 2.

The Ministry said in February that the device was legal but the sticks were not.

Philip Morris said the Ministry’s move demonstrated the need for comprehensive reform so that smokers could switch from cigarettes to smoke-free alternatives.

General manager of Philip Morris New Zealand Jason Erickson said the company believed it was helping to advance the Government’s goal of making the country smokefree when it introduced Iqos to New Zealand.

​Erickson said the company was confident that the sale of Iqos and heets fully complied with the Smokefree Environments Act (1990) and other relevant legislation in New Zealand.

“The section of the law referenced by the Ministry in its action against Philip Morris was originally put in place in the 1990s to address American-style chewing tobacco,” Erickson said.

“We stand behind Iqos and heets,” Mr Erickson said. “But it’s clear that old 20th century laws are not sufficient to address new 21st century technologies that New Zealand smokers are embracing as they move away from combustible cigarettes.”

The New Zealand Government announced in March that it would legalise the sale and supply of nicotine e-cigarettes and e-liquid, and establish a pathway to enable emerging tobacco and nicotine-delivery products to be sold lawfully as consumer products.

Iqos is available in in more than 20 countries around the world, including the UK, Japan, Italy and Switzerland. Globally more than two million smokers have switched to IQOS and the company had plans to expand to key cities in 30 countries by the end of 2017, Erickson said.

Anti-smoking group Action on Smoking and Health (Ash) said Philip Morris had been working in opposition to the Government’s goal of the country becoming smokefree by 2025.

“Philip Morris have enough lawyers, have enough researchers and have enough intelligence to ensure they adhere to this country’s laws,” said spokesman Boyd Broughton.

“The fact they have knowingly broken the law is another example of their absolute contempt towards the laws of New Zealand. Is this product harmful? We don’t know. But this discussion is now about this product, it’s about the law. What we must remember is that Philip Morris remains responsible for selling and profiting off the sale of smoked tobacco, which is responsible for the preventable and premature deaths of over 5000 New Zealanders per year.”

Comparative studies of the component composition of cigarettes and sticks “Parliament” with tobacco heating system iQOS

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Justice Ministry says iQOS product will be treated as ordinary tobacco

Previously, the company asked the US Food and Drug Administration to recognize iQOS as “modified-risk product.”

The world’s largest tobacco company, Philip Morris International, faced an obstacle in Israel that has apparently influenced its position toward its heated-tobacco product iQOS.

Previously, the company asked the US Food and Drug Administration to recognize iQOS as “modified-risk product.”

Last week, Israel’s Justice Ministry notified the company that it accepted the position of three voluntary organizations in Israel that the product is actually a “tobacco product,” and all the restrictions that apply to tobacco products should apply to iQOS.

In parallel, Philip Morris reversed its previous position towards the FDA and now wants iQOS to first be recognized as a “tobacco product.”

The small Society for Progressive Democracy thus “made history,” as the new position will set the definition of the product for deliberations by the FDA.

The Israel Medical Association, the Israel Cancer Association and the small Society for Progressive Democracy thus “made history,” as the new position will set the definition of the product for deliberations by the FDA.

While the Israel Cancer Association and the Israel Medical Association sent letters to the authorities to protest against Health Minister Ya’acov Litzman for preventing restrictions on the sale and marketing of iQOS in Israel, the Society for Progressive Democracy headed by lawyer Shabi Gatenio actually applied to the High Court of Justice and asked for an Injunction againt him.

“It is a story of the little David toppling Goliath, Philip Morris,” commented lawyer Amos Hausner, the chairman of the Israel Council for the Prevention of Smoking.

The limitations that now apply to all tobacco products will include iQOS, such as prohibiting its sale to minors, prohibiting smoking it in all public places where conventional cigarettes may not be smoked, excluding it from advertising in the electronic media and media for children and teens, and other restrictions for which violators are fined.

Under the rules of administrative law, the position of Justice Ministry professionals is binding upon all governmental agencies in Israel, and their position supersedes the one expressed by any political figure – in this case, the health minister.

Attorney-General Avichai Mandelblit has yet to decide on a petition by Avir Naki, a voluntary organization that aims to fight smoking, to prohibit Litzman from having any involvement in decisions on tobacco matters.

Dubek, the Israel tobacco producer and importer, has also filed an application in the High Court against Litzman, arguing that he was giving Philip Morris benefits that Dubek did not enjoy.

Hausner said that Philip Morris “officially changed its position here while its application was pending in the FDA, as a negative consequence in Israel might have negatively influenced the company’s position in its deliberations with the US over iQOS. We clearly learn from this case that politicians cannot determine policy on major public health issues like this; they must leave it to ministry professionals to set policy.

It turned out that Litzman was more protective of Philip Morris than the company itself demanded. As to Philip Morris, Hausner said that their products should meet the requirements of professionals and not only of the politicians.”

Commenting on the Justice Ministry decision, Philip Morris Ltd.’s spokesman in Israel said that it would “continue to market iQOS in Israel in a responsible way according to law so that adult smokers would have better alternatives than continuing to smoke cigarettes.”

The ministry said in a statement after the court decision was announced that “while waiting for the FDA’s position, we plan at this stage to place on the product all restrictions on tobacco products regarding marketing, advertising and smoking in public places.”

PMI to convert Greek cigarette plant to make iQOS sticks

Philip Morris International (PMI) will invest EUR 300 million (USD 323 million) to convert a Greek cigarette factory to into a plant capable of turning out 20 billion tobacco sticks for its iQOS heat-not-burn device, the company said.

Expansion and remodeling the Aspropyrgos plant operated by affiliate company Papastratos will create 400 new jobs in addition to the 800 current ones, PMI said. Construction will begin immediately with operations expected to start in January 2018.

“This investment is further evidence of our progress towards a smoke-free future. We are encouraged by the 1.4 million smokers who have already switched to IQOS around the world, and we expect this momentum to continue,” said Frederic de Wilde, PMI regional president for the European Union.

Aspropyrgos will be the third facility dedicated to iQOS production. Production currently is centred in a specially built facility in Crespellano, Italy and a small scale Industrial Development Centre in Neuchatel, Switzerland.

When Public Health and Big Tobacco Align

Nobody trusts the tobacco industry, and it’s easy to understand why. For decades, industry executives knew that smoking caused cancer and heart disease yet publicly denied the dangers of cigarettes. It relentlessly attacked its critics. Documents that emerged in the 1990s showed that the industry targeted teenagers, knowing that the earlier someone became addicted to cigarettes, the more likely they would be lifelong smokers. And so on.

In the 1980s and 1990s, the public health community went to war with the tobacco industry. Though the war largely ended in 1998 with Big Tobacco agreeing to a multi-billion-dollar settlement with the states, it remains a powerful memory for public health.

To this day, most tobacco-control advocates view the cigarette companies as being every bit as duplicitous and evil as they were in the bad old days. Some years ago, I asked Stanton Glantz, perhaps the leading anti-tobacco scientist in the U.S., what his ultimate goal was. He didn’t say it was to eliminate the scourge of smoking. He said: “To destroy the tobacco industry.”

What brings this to mind is an excellent cover story in the upcoming issue of Bloomberg Businessweek about the efforts of the tobacco industry to devise and market so-called reduced risk products like electronic cigarettes — products that give users their nicotine fix without most of the attendant carcinogens that come with combustible tobacco.

Although the tobacco companies have done decades of R&D on smokeless products, the business was dominated early on by startups like NJOY, which is today the largest independent e-cigarette company in America. From the start NJOY has said that a big part of its mission was “to end smoking-related death and disease.” And from the start, messages like that have been scorned by the public health community.

Ingesting nicotine in some smokeless fashion is vastly safer than smoking a combustible cigarette. (In the words of the late South African tobacco scientist Michael Russell, “People smoke for the nicotine but die from the tar.”) Last year, the Royal College of Medicine issued a report saying that e-cigarettes were some 95 percent safer than cigarettes.

Even so, the public health community in the U.S., led by the Centers for Disease Control and Prevention, has done everything it can to demonize smokeless products. Some of this has been with good reason: to try to keep kids from picking up an addictive habit. But this effort has also helped to create the impression that smokeless products are as dangerous as cigarettes. One result, sadly, is that many long time smokers have refused to try them, even though they could save their lives.

My sense in talking to tobacco-control officials over the years is that too many of them simply don’t believe in a reduced-harm approach. We give heroin addicts methadone not because methadone is good but because it is better than heroin. With cigarettes, however, the public health mindset appears to be all or nothing — that the only “right” thing for smokers to do is to go cold turkey.

But the lingering distrust of the tobacco industry has also had a lot to do with public health’s unwillingness to acknowledge the potential benefits of alternative products. Matt Myers, the president of the Campaign for Tobacco Free Kids, has often complained, for instance, about the marketing of e-cigarettes, saying that companies are using the same tactics to hook teenagers that Big Tobacco once used.

With the e-cigarette market clearly established, the four big tobacco companies — BAT, Reynolds American, Altria (formerly Philip Morris) and Philip Morris International (spun off from Altria) — have proclaimed themselves all in.

Philip Morris International is an especially interesting case: Not only does it have an array of e-cigarettes and other smokeless products, but as the Bloomberg Businessweek story points out, it has publicly proclaimed that its goal is to lead the world into “a smoke-free future.” The home page of its website asks, “How long will the world’s leading cigarette company be in the cigarette business?”

As astonishing as it is that a company with $26 billion in tobacco revenue last year would be calling for the end of cigarettes, I believe Philip Morris is sincere. It has spent around $3 billion in research. Its new flagship product, called IQOS, heats tobacco but doesn’t burn it — which the company believes will be more satisfying to smokers than vaping. IQOS already has 7 percent of the tobacco market in Japan, and is being rolled out in other countries.

Philip Morris recently asked the British government that tobacco products “be taxed according to their risk profile.” In other words, it wants the government to impose higher taxes on cigarettes to encourage smokers to move to reduced-risk products. What tobacco company has ever done that before?

In the U.S., Philip Morris has done something extraordinary: It has made a submission to the Food and Drug Administration to get the right to market IQOS as a reduced risk product. The expensive submission consumed 2.3 million pages and is backed by a great deal of research, including several clinical trials. So far, none of the U.S. e-cigarette companies have attempted to get such a designation, and it is a big problem. How do you sell a reduced risk product when you can’t tell anybody it reduces risk?

The business case for diving into this market is that it’s a product category that’s growing, while the cigarette market is shrinking. Philip Morris doesn’t want to be left behind. But there is no particular need for the company to set out such a transformative agenda, at least not yet. The small smokeless companies are not much of a threat. NJOY filed for bankruptcy last fall. And under a 2009 law, every company in the e-cigarette industry will have to file something called a premarket tobacco application with the FDA by August 2018. The submissions will cost, on average, over $450,000, and the companies will have to show that their products have some public health benefit. There is a legitimate chance that some small companies won’t be able to clear the hurdle.

No, Philip Morris is pushing as hard as it is, I believe, because it wants to get on the right side of the issue, finally — to be viewed as a good corporate citizen. When I spoke to Glantz the other day about the company’s new anti-smoking agenda, he said, “I don’t believe them.” (He added, “If they were serious, they would stop marketing cigarettes right now.”)

No doubt many others in the tobacco-control community feel the same way. They still loathe Big Tobacco, and view Philip Morris’s new strategy as just another deception. But the truth is, if there is ever going to be a serious move from cigarettes to less dangerous products, it will have to come from Big Tobacco. They have the R&D resources, they have the marketing apparatus — and, it appears, they have the will.

Public-health advocates don’t have to trust Philip Morris, or any other tobacco company. They don’t have to believe what I believe in order to arrive at the same conclusion: that the advocates should be rooting for the companies’ innovations — pushing them, double-checking their data, making sure regulations are in place to prevent their products from being marketed to kids. The advocates should also be spreading the word that there is an alternative to cigarettes. Who really cares whether it’s Big Tobacco or some other entity that reduces smoking deaths? What matters is that it happens.

The tobacco wars are long over. Continuing to fight the cigarette companies may bring a certain satisfaction to the veterans on the public-health side. But joining forces is the way to save lives.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

To contact the author of this story:
Joe Nocera at

To contact the editor responsible for this story:
Philip Gray at

Tobacco Giants Push New ‘Alternative Products’

The heat is on for tobacco and cigarette industry leaders to expand their products outside traditional markets in order to meet the evolving demands of a more health-conscious world. As governments push forward anti-smoking campaigns and a growing number of people in the U.S. and even in developing markets quit smoking, many big players have decided to get creative in order to survive.

Working ‘Across the Harm Spectrum’

Cigarette maker British American Tobacco (BTI) plans to quadruple the number of markets in which it offers products such as e-cigarettes and vaping products. The London-based company plans to expand its e-cigarette and vaping offerings from 12 markets to 48 by 2018. After acquiring Reynolds American in a deal worth $49 billion, BAT says the company won’t have the cash to do anything M&A-wise in the upcoming one to three years. Kingsley Wheaton, managing director of BAT’s next-generation products group, says the company is committed to “creating products across the harm spectrum” in order to reduce the public health burden of smoking. Earlier this week, BAT posted stronger-than-expected earnings for full-year 2016, following a previously announced Q4 beat.

Touting ‘No Burn’ Tobacco Products

Philip Morris International Inc. (PM) recently upped its full-year 2017 guidance as it focuses on new IQOS products—heat sticks that “warm” tobacco instead of burning it. The New York City-based international tobacco and cigarette company hopes to leverage pending FDA approval for its “reduced-risk” tobacco products in order to beat out the competition. Philip Morris has touted significant traction in the Japanese market, where its IQOS product now account for over 5% of the market. (See also: Philip Morris Ups FY17 Guidance.)

Earlier this month, the world’s third-largest tobacco company, Japan Tobacco Inc. (JAPAF), raised its dividend despite lowering annual profit forecasts. The company said its new dividend of 140 yen ($1.24) this year, up about 8%, is set to underline a “very strong feeling” on its Ploom Tech tobacco-based e-cigarettes. The product launch, which has been delayed due to supply issues, is set to begin in Tokyo this June, rolling out in other cities in the first half of 2018.

All eyes on iQOS

After a promising test-marketing phase, Philip Morris International’s iQOS is moving into additional markets.

By Stefanie Rossel

In the not too distant future, the Marlboro Man had better bring his power bank to the campfire—at least that’s what Andre Calantzopoulos, CEO of Philip Morris International (PMI), recently seemed to suggest. At the Consumer Analyst Conference Group of New York, in February, he said that it was his company’s stated ambition to convince all adult smokers who intend to continue smoking to switch to reduced-risk products (RRPs) “as soon as possible.”

He went on elaborate on iQOS, the company’s most prominent alternative to combustible cigarettes. Introduced in 2014, iQOS is a heat-not-burn (HnB) product consisting of a rechargeable, pen-like device into which a short, cigarette-like tobacco product, called a HeatStick, is inserted and heated to create a tobacco-flavored nicotine aerosol. No combustion takes place, and the product is heated to a temperature of less than 350 degrees Celsius (662 degrees Fahrenheit).

“For the first time in history, we have products with the real potential to both accelerate harm reduction and grow our business,” Calantzopoulos commented. He said he was confident that PMI’s range of RRPs could achieve a market share, net of cannibalization, of between 3 to 5 percent of the global cigarette market by 2020, with the incremental volume of 30 to 50 billion units generating a potential additional margin of between $720 million and $1.2 billion per year. One of the prerequisites, he added, was that regulators and anti-tobacco groups embraced the principle of harm reduction and implemented appropriate frameworks and unambiguous communication that would “drastically accelerate” current smoker adoption of RRPs and further foster innovation in this area.

Analysts share Calantzopoulos’ optimism, as the device not only mimics the smoking ritual but also provides real tobacco taste—something that has thus far proved difficult to achieve with e-liquid. James Bushnell, an analyst at Exane BNP Paribas, said iQOS was “the closest yet that the industry has got to the holy grail of a commercially successful ‘safe’ cigarette.” Wells Fargo Securities analyst Bonnie Herzog forecasts the device to achieve a volume of 5.3 billion sticks this year, which represents 0.6 percent of PMI’s total cigarette and HeatStick volume. By 2025, she estimated, iQOS will account for 366.9 billion sticks, excluding the U.S., or 35.9 percent of the company’s combined combustible and HeatSticks volume. Including the U.S., she predicted that as many as 420.1 billion HeatSticks could be sold per year by 2025. PMI’s new HnB technology, she said, could displace up to 30 percent of the combustible cigarette industry in developed markets by 2025 and had “the potential to change the trajectory of smoking.”

Fresh approach

Whether the analysts have looked into the correct crystal ball remains to be seen. The introduction of iQOS followed a series of hapless launches of other HnB products, among them R.J. Reynolds’ Premier (1988), Eclipse (1994) and, most recently, Revo (2014), for which marketing support was discontinued after five months of test-marketing in Wisconsin, USA, last year. Philip Morris had its Accord (1998) and Heatbar (2007). Most of these products failed because of poor consumer reception. During the recent TMA conference in Williamsburg, Virginia, USA, one speaker derided his company’s first HnB product as “smelling like a fart and tasting like shit.”

IQOS is different from its predecessors in many aspects. For starters, it is backed by significant investment. In 2014 PMI built a €500 million (then $680 million) new factory near Bologna, Italy, to produce the tobacco components of its HnB products. Altogether, the company has invested $2 billion in its RRP product portfolio over the past decade. Furthermore, iQOS features a slimmer, lighter design and new technology. Importantly, it offers an improved taste and sensorial and ritual experience over former HnB devices, according to PMI. At the same time, iQOS appears to deliver on its promise to reduce output of harmful and potentially harmful constituents (HPHCs). According to comprehensive studies carried out by a 300-strong scientific team dedicated to PMI’s novel product portfolio, the aerosol generated by iQOS contains on average 90 percent less of all classes of HPHCs compared with the smoke of the standard reference cigarette. Further studies showed that the product does not negatively affect indoor air quality. Toward the end of 2016, PMI intends to submit a modified-risk tobacco product application to the U.S. Food and Drug Administration.

Into the world

First launched in Japan and Italy, iQOS is currently being test-marketed in selected cities in seven countries, among them Switzerland, Russia, Romania, Portugal and Ukraine. PMI plans to introduce the device to another 13 markets globally by the end of the year.

At the Goldman Sachs Global Staples Forum in May, PMI Chief Financial Officer Jacek Olczak said that in its main test market Japan, iQOS had by now achieved a full conversion rate of 60 percent from combustible cigarettes. Sales figures look promising, too: According to PMI’s 2015 annual report, the device generated an “off-take” share of 2.4 percent in Tokyo and 1.6 percent in the expansion areas outside Tokyo; the weekly off-take share was reported to be growing. PMI said it had to postpone the national rollout date for iQOS in Japan to mid-April, citing potential supply shortages due to the popularity of the device.

While iQOS is not the only product currently competing in this segment—in November 2015, British American Tobacco started to test-market Glo iFuse in Romania, and in January 2016, Japan Tobacco launched Ploom Tech in its home market—PMI’s timing may have been just right: The device enters the market as the initially phenomenal growth rate of vapor has ebbed, and some smokers who had switched to e-cigarettes have returned to combustibles. According to Euromonitor International, vapor sales have decelerated considerably; the research company has cut the category’s forecast five-year compounded annual growth rate of 114 percent to 57 percent.

In addition to being a “first mover” with regard to commercialization and clinical trials, PMI also benefits from its ability to leverage the ubiquitous Marlboro brand globally. Except for Russia, where HeatSticks are sold under the Parliament brand, iQOS is offered with Marlboro HeatSticks.

To ensure communication with potential users of their new device also in highly restricted marketing environments, PMI has created specialized points of sale—dedicated flagship stores the company calls “iQOS embassies,” which are reminiscent of Nespresso shops. It also uses grass-roots marketing and an e-commerce platform for distribution.

IQOS is one of four RRP platforms PMI is currently developing and the first of two HnB platforms; the other one—for the time known as Platform 2—uses a pressed carbon heat source that, once ignited, heats the tobacco to generate a nicotine-containing aerosol. Platform 2 has been designed to resemble a cigarette as closely as possible, the company says, and is scheduled for an initial city test still this year. At the end of 2015, the device passed a four-week whole-offer test in Romania, where it led to 60 percent of smokers using the device predominantly.

Platform 3 is an inhaler more similar to the current e-cigarettes. Using acquired technology, it creates an aerosol of nicotine salt formed by the chemical reaction of nicotine with a weak organic acid. Product development was also progressing for Platform 3, PMI said. The company expects to conduct a city test for the device in early 2017.